Shanghai Hehui Safety Products Manufacture Co., Ltd. vs. Wang over Confirming Non-infringement of Trademark - Procedure for interpellation in an action for confirming non-infringement [Case Brief] Appellant (Defendant in the original trial): Wang Appellee (Plaintiff in the original trial): Shanghai Hehui Safety Products Manufacture Co., Ltd. (“Hehui”) On November 24, 2008, the combined trademark“tanke” “坦克” (No. 7071430) involved in the case was applied by Yang for registration; in August 2010, the trademark in the process of application was transferred to Wang; in November 2010, the trademark was approved for registration with ratified use of safety helmet and so forth under trademark class 9. On October 11, 2014, Wang entrusted a lawyer to send a letter to Hehui, stating that Hehui’s use of “坦克” in the production promotion constituted infringement. In the same month, Taobao received a complaint from Weichuang Company with Yang as its legal representative about Hehui’s infringement of Wang’s trademark, and then deleted product information of helmets sold online by Hehui. In June 2016, Hehui filed an action to the court of first instance, requesting the court to confirm that its use of Chinese “坦克” in the sale, advertising and packaging & decoration of helmets and other products did not infringe Wang’s exclusive right to use the registered trademark No. 7071430. On August 25, 2014, Hehui applied to Trademark Review and Adjudication Board of the State Administration for Industry and Commerce for the invalidation of No. 7071430 trademark. In November 2015, the Board made the decision that Wang’s registration of the disputed trademark for five commodities including safety helmets constituted the preemptive registration of a prior used trademark with certain influence and that the registration of the disputed trademark for five commodities including safety helmets shall be invalidated. Wang filed an administrative action to Beijing Intellectual Property Court against this decision. Before the judgement of second instance of this case, the administrative case was still pending. One of the reasons mentioned by Wang in his response in the first instance and for the appeal was that Hehui did not send a written interpellation to Wang for exercising the right of action and Hehui’s filing an action for confirming non-infringement did not meet statutory requirements. [Adjudication] After the trial, the court of first instance concluded that Wang neither withdrew the warning within a reasonable time limit after the issuance of a warning, nor filed an action regarding infringement of relevant trademark, which made it uncertain whether Hehui constituted trademark infringement, while Hehui’s filing an action for confirming non-infringement complied with relevant laws and regulations. In view of the evidence presented by Hehui, which proved that Chinese “坦克” had been linked to “tanked” and had had some influence in this process before the application for registration of the involved trademark, Wang had no right to prohibit Hehui from using the trademark within the original scope. Therefore, the court made a decision to confirm that Hehui’s use of “坦克” for its helmet products in domestic business contract and advertising did not infringe the exclusive right of Wang to use registered trademark No. 7071430. After the trial, the court of second instance concluded that Wang not only entrusted a lawyer to issue a warning letter to Hehui, but also lodged a complaint to Taobao in the same month. The latter hence deleted the information about the allegedly infringing product; Hehui received the warning, but did not file this action to the court of first instance until 8 months later, during which the online sale of the alleged infringing product was actually influenced. Although Wang replied to the court of first instance that Hehui had not issued a written interpellation, Wang separately filed an infringement action against Hehui during the trial, which indicated that Wang had no intention of withdrawing the warning. Later, Wang applied for the withdrawal of the above infringement action, which made it uncertain whether Hehui constituted infringement. Under such circumstance, it would not be inappropriate for the court of first instance to continue the trial. With sufficient evidence to prove the prior use of Chinese “坦克” and its accumulated influence, the decision of the court of first instance to confirm that Hehui’s use of “坦克” for its helmet products in domestic business contract and advertising did not infringe the exclusive right of Wang to use registered trademark No. 7071430 has factual and legal bases. Therefore, the court rejected the appeal and affirmed the original judgement. [Comment] An action for confirming non-infringement of intellectual property refers to the action filed by an actor to the court against the obligee of the intellectual property, requesting to confirm its acts did not infringe the intellectual property, upon receiving the infringement warning from the obligee of a specific intellectual property, who has not brought the dispute to the people’s court in accordance with legal procedures within a reasonable time limit. It mainly covers confirmation of non-infringement of patents, trademarks andcopyrights. As for the prosecution and acceptance conditions of such cases, it has been clearly and strictly defined in Article 18 of the Interpretations of the Supreme People's Court on Certain Issues Concerning the Application of Law in the Trial of Patent Infringement Cases that: “where the obligee has issued a warning of patent infringement, but neither withdraw the warning nor file an action within one month upon the reception of the written interpellation from the warned or the stakeholder for the exercise of action or within two months from the date of issuance of the written interpellation, the action filed by the warned or the stakeholder to the people’s court for the conformation of its non-infringement of patent shall be accepted. ”It is clearly stated in the cause of the Civil Ruling Paper (2011) MTZ No.48 of the Supreme People’s Court that the principle set forth in above Interpretations shall be applicable to actions for confirming non-infringement involving other types of intellectual property rights. For the purpose of this provision, the action for confirming non-infringement shall be filed after the procedure of issuing written interpellation to the obligee. This procedure is aimed to prevent the warned from filing such action at will and try to guide the parties to solve disputes through infringement action. Only when the procedure of written interpellation is performed to make sure that the obligee will not initiate the dispute solution procedure within a reasonable time limit, will the warned be entitled to file an action for confirming non-infringement. In this case, the warned had not issued a written interpellation to the obligee to exercise the right of action before filing an action for confirming non-infringement. On the grounds that the obligee neither withdrew the warning within a reasonable time limit after the warning issuance, nor filed an action regarding infringement of relevant trademark, which made it uncertain whether the acts of the warned constituted trademark infringement, the court of first instance held that Wang’s argument that Hehui’s filing of action was inconsistent with statutory acceptance requirements was not justified, but did not respond to whether the absence of interpellation would affect the acceptance of case. With due attention to Wang’s objection based on the absence of interpellation, the court of second instance noticed that Hehui filed an action after a period of as long as 8 months upon the reception of the warning letter; during the same period, Wang did not actively seek the solution of dispute through an infringement action after the issuance of the warning letter by the entrusted lawyer, indicating that Wang was remiss in filing an action, but it is difficult to tell whether Wang insisted on the warning of infringement issued to Hehui when the latter filed an action for confirming non-infringement. Therefore, centering on the legislative intent of the acceptance conditions for confirming non-infringement, the court of second considered multiple factors and held that the failure of the warned to perform the interpellation obligation in this case did not impact the continuous trial and judgement of the case in the first instance. Relevant factors include the sale of product of the warned on Taobao was substantially affected for months, the obligee’s separate filing of an infringement action indicated the intent of not withdrawing the warning of infringement, and the obligee’s withdrawal of the action of infringement before the conclusion of this case made it uncertain whether the warned constituted infringement. In this case, the statutory acceptance conditions are properly applied to the action for conforming non-infringement, which has guaranteed the balance of interests between parties and will play an exemplary rolefor similar cases. Index First instance: Shanghai Huangpu District People's Court (2015) HPMS(Z)CZ No. 75 Members of collegiate panel: Jin Ying, Wang Weijia, Liu Meilin Second instance: Shanghai Intellectual Property Court (2016) H73MZ No. 207 Members of collegiate panel: Liu Jing, Wu Yingzhe, Fan Jingbo Prepared by: Liu Jing
