Now in China, well-known trademarks can be determined by courts, besides administrative agencies that once had the say alone. With more well-known trademarks recognized by courts, more litigants file false suits for judicial recognition of their trademarks. Such false litigations, sometimes, infringe the legal rights and interests of third parties, and what's more, injure the fairness in court judgments and the authority of the judiciary. Through an empirical study and a comparative analysis of cases, I analyze and expound on the properties, causes, expressions and elements of false litigation, and its differences from malicious litigation. I propose a few ways to curb false litigations when courts’ determination of well-known trademarks is involved. Courts should make efforts to examine more carefully well-known trademark-related cases, authorize non-litigants to apply for canceling judgments on false litigations, regularly publish in the media cases concerning judicial determination of well-known trademarks, improve the criminal penalty mechanism for false litigants, and establish a compensation system for the victims. I wish these measures may help deter false litigations in judicial determination of well-known trademarks.
I. The Question
The earliest provisions on well-known trademark protection were laid down in the Paris Convention for the Protection of Intellectual Property (PCPIP). PCPIP, when revised in Hague in 1925, provided for the concept of well-known trademark and nailed it to the convention. The Agreement on Trade Related Aspects of Intellectual Property Rights (TRAIPS) of 1995 expanded those PCPIP provisions by extending the protection of registered well-known trademarks to products and services dissimilar to those for which the well-known trademarks are registered. China had no provisions on well-known trademarks in its first Trademark Law. It was until 1985, when the country joined the PIPCP, that it began to undertake related international obligations of protecting well-known trademarks.
As to the determination of well-known trademarks, SAIC stipulated, in its Notice on Greatly Improving Work on Corporate Trademarks in 1990, that well-known trademarks should be recognized by the general public other than by any government agency. From 1991 until 1995, 18 well-known trademarks, including Haier and Guizhou Moutai, were selected through public questionnaires by Legal Daily, China Central Television (CCTV) and China Consumer Daily. The result was accepted by SAIC. SAIC provided, in Article 3 of the Provisional Regulation on the Determination and Management of Well-known Trademarks issued on August 14, 1996, “The trademark office of SAIC is responsible for determining and managing well-known trademarks. Any other organization or individual is not allowed to determine or otherwise cause the determination of well-known trademarks.” The trademark office of SAIC is hence the only agency with the authority and power to determine well-known trademarks.
Judicial determination of well-known trademarks began late in China. The first such determination was made by the High People’s Court of Sichuan Province in the decision on recognizing the trademark of “郎” as a well-known one in 1992, but the case pitifully had little influence. The first official stipulation on judicial determination was the Interpretation of the Supreme People’s Court on the Application of Law to the Trial of Civil Disputes over Computer-based Internet Domain Names in 2001. Article 6 of this document provides that “When trying domain name-related disputes, the people’s court may, upon the request of a litigant and in accordance with the circumstance of the case, determine whether the registered trademark concerned is well known”. That was the first time for the highest judicial organ to give legal force to judicial determination of well-known trademarks, while the determination was restricted to “domain name-related disputes” and “registered trademarks” alone.
Thereafter, the Trademark Law and the Interpretation of the Supreme People’s Court on the Application of Law to the Trial of Trademark-related Civil Disputes marked a further step in erecting a mechanism for judicial determination of well-known trademarks. Article 22 of the above Interpretation provided, “When trying trademark-related disputes, the people’s court may , upon request by a litigant and in accordance with the circumstance of the case, determine whether the registered trademark concerned is a well-known trademark pursuant to law.” This provision expanded judicial determination to covering “trademark-related disputes”. With the above provision, determining well-known trademarks came onto a dual track of both administrative agencies and courts.
Since then, judicial determination cases had been increasing. According to a review in 2004, “Since July 2001, the courts nationwide, upon request by litigants, have recognized 11 well-known trademarks in concluded cases.” A survey in 2005 said, “from July 2001 until the end of April 2005, the people’s courts recognized 29 well-known trademarks”. By May 2005, the number of such marks had reached 200. Judicial determination obviously enjoyed an increasingly higher speed and more enthusiasm from all parties involved.
Accompanying the increasing cases of judicial determination are false litigations. Some litigants filed lawsuits to the court for the purpose of “winning a well-known trademark” rather than winning the case. A typical example is the case of 康王Kangwang trademark dispute. The plaintiff in the case, Kangwang Fine Chemicals Industrial (Shantou) Co., Ltd., owned the trademarks of “康王KANGWANG”, “康王Kanwan” and “Kanwan”. The first instance court recognized the three marks as well-known marks in its decision, but Xuancheng Intermediate People’s Court revoked the judgment at the retrial. That was the first time that a court-recognized “well-known trademark” was nullified. The case was a typical false case where the case details, the defendant and its attorney were all falsified. Chinese media also reported other false litigations.
As we all know, judicial determination is an enhanced protection by law and its purpose is to prevent preemption of well-known trademarks. False litigations, which are intended to obtain well-known trademark recognition, will not only damage the legal interests of third parties, but seriously injure the fairness of court judgments and the authority of courts. There must be solutions in law.
II. Properties and Causes
As false litigation is not expressly defined by any legislation, scholars and judges have distinctive understandings. One of them is that a false litigation is a civil suit raised by litigants who, for the purpose of gaining illegal benefits, collude with other parties by fabricating legal relations and related facts, or by filing an application for enforcing a falsified arbitral award or notarial deed, to mislead the court into making an erroneous judgment or enforcement.
(I) False suit actions False litigants have two kinds of actions judged by the existence of parties and collusion. The first is the defendant does not exist and the plaintiff fabricates the case; the second, the plaintiff and the defendant collude in a false suit. A litigant might, all by himself, raise a false litigation by fabricating the case, the defendant and his attorney (or even by engaging and paying for the defendant’s attorney), in order to have his trademark recognized by the court as a well-known trademark. He might also collude with the defendant, who aims at illegal gains from helping the plaintiff, have his trademark recognized by the court. There is still another type of false litigation where the plaintiff, eyeing on the plaintiff ’s legitimate interests, commits perjury. This type of false litigation is, in my eyes, a malicious litigation. The plaintiff ’s perjury in the false litigation aims to infringe the legitimate rights and interests of the defendant, rather than cheat for a judicial decision.
(II) Constitutive elements A false litigation consists of subjective and objective elements. On the subjective side, the parties conspire rather than contend with each other. They jointly start the action, knowing that their behaviors are not justly grounded, to mislead the court into an erroneous decision for their unjust enrichment. On the objective side, one or more litigants intentionally cover up the truth by fabricating evidence, the parties’ identities, facts, or legal relationship, or commit conspiracy. The establishment of false litigation is not dependent upon the action result. In other words, false litigation can be established even if a party or litigants fail to retain the court decision they have expected.
When screening for false litigations, courts should be very careful to differentiate erroneous perceptions from malice. A litigant’s loss of his case, for erroneous understanding of law which results in his incomplete or inadequate proof, is distinctive from a false suit. One’s loss of suit does not mean there is a malice. Any malice must be proved with evidence. To prove a false litigation, evidence should be given for the litigant’s fabricating facts and covering up the truth.
(III) Causes and consequences A false litigation has many causes. Under the adversary system in China, litigants may dispose of their rights at their own discretion. Courts will render their judgments when no contention arises over case facts, despite any party’s attempt for illegal gains through the legal means. China has no regulations on false litigations, and the adjudication management has loopholes. For harmony after court decisions, Chinese courts, leaving aside strict examination of false litigations, heavily rely on mediation for the solution of problems.
False litigations infringe the legal rights and interests of unspecific persons. When a trademark is determined as a well-known trademark, similar or identical trademarks are not allowed on other products. Therefore, measures must be taken to prevent false litigations and to protect judicial credibility and the third party interests.
III. Legislative Countermeasures against False Litigations
False litigations for such determination have aroused the concern of courts. The Intermediate People’s Court of Xi’an has, with strict examination of proceedings and facts, succeeded in preventing false litigations. The Supreme People’s Court issued, on November 12, 2006, the Notice on the Establishment of a Filing System on Judicially Determined Well-known Trademarks. However, the filing system, based on ex post document filing and information collection, can not prevent problems in the court hearing process.
In November 2008, the High People’s Court of Zhejiang Province issued the Opinions on the Prevention and Identification of False Litigations in Civil Trials, requiring the inferior courts of the province to pay special attention to cases involving such determination. Related stipulations can also be found in another two documents of the Supreme People’s Court: the Notice on the Jurisdiction on Civil Disputes Involving the Determination of Well-known Trademarks issued in January 2009 and the Interpretation on the Application of Law to the Trial of Civil Disputes Involving the Protection of Well-known Trademarks issued in April 2009 (Articles 3, 7 and 13). The above provisions and documents indicate the improvement of legislation on judicial determination of well-known trademarks.
Under this background, my suggestions for solving the problem is as follows,
(I) Courts may do a higher-standard pretrial examination The conditions to bring a civil action are vastly different from those to start a criminal prosecution. A criminal case will not go to a court until the investigation has been finished by the public security department or the procuratorial department, and the facts and evidence from the investigation agency have been examined by the procuratorial department before they decide to begin the prosecution. In this way, mostly the facts will be clear and the evidence sufficient when the case is received by the court. This helps prevent abusive actions. In civil actions, however, courts will examine complaints in writing only in accordance with the four elements as required by Article 108 of the Civil Procedure Law. As a result, a falsified case will enter the trial as long as the complainant has prepared a written complaint and other necessary documents. Considering the frequent occurrence of false litigations in the judicial determination of well-known trademarks, the case acceptance division of the court should examine cases carefully and substantively and inquire the litigants, if necessary, so that evidently unreasonable cases will be filtered.
I suggest that judges tighten their examinations against false litigations during the entire trial process and be specially concerned about whether:
a. there is any special relationship between the plaintiff and the defendant;
b. the plaintiff demands comparatively a smaller compensation;
c. the plaintiff, if it is a firm, was incorporated not long before the case;
d. the trademark concerned is not well-known in the market;
e. the defendant is a natural person;
f. the profession of the defendant is obviously irrelevant to the sued infringement;
g. the defendant does not defend itself or defend itself non-substantively;
h. the defendant does appear in court, or if he has an attorney on his behalf, the attorney dose not check the original evidence of the plaintiff or challenge its validity;
i. the defendant does not produce any evidence, or provide less-than-necessary evidence; or
j. the defendant admits all the facts that the plaintiff claims.
In addition, in judicial determination of well-known trademarks, judges may prevent false litigations by:
a. examining if the identities of the litigants are real; Judges may require both the plaintiff and the defendant to attend the trial in person. If either litigant is body corporate, its legal representative should appear before the judges; if an attorney appears before the judges, the court should call the principal to attend the trial. If the defendant is a natural person, judges should check his or her profession and require him or her to answer the charges that the plaintiff has made for infringement. They should also inquire the defendant in detail regarding his or her answers.
b. examining if the attorney is properly authorized; If the principal authorizes an attorney to appear before the judges on his behalf, judges should examine if the attorney is properly authorized and when they have any doubt, warn the attorney of the legal liabilities for fabricated authorization and falsified litigation. A court at the second instance, which finds that a litigant engages in false litigation by fabricating authorization for an attorney, should immediately overturn the original judgment.
c. examining if the evidence is authentic; The judge should demand the plaintiff to produce, and check, the original evidence, no matter whether the defendant requests the court to do so. The judge should also ask the witness, if there is any, to appear in court for examinations and cross examinations, no matter whether either litigant has such a request.
d. examining the facts that the plaintiff and the defendant have admitted; The judge should be cautious about the parties’ failure to make substantial defense or admission, restrict the applicable scope of admission rules, and restrain from concluding a case on the ground of admitted facts. If necessary, the judge may examine by duty whether an admitted fact is true.
e. refusing a false litigant to withdraw his case. If the plaintiff pleads to withdraw his complaint, the judge should examine this request in connection with the case. The withdrawal should not be allowed, if evidence shows that the plaintiff may have complained on false facts and if this complaint has created an influence in the market. This is because, if the court does not reach a substantive conclusion for the case, the legal rights and interests of the related public will be infringed. The judge may rule to disallow the withdrawal, dismiss in a decision all the plaintiff's claims and impose civil punishments on the plaintiff.
(II) Courts may authorize non-litigants to apply for judgment revocation On December 23, 2002, the High People’s Court of Beijing issued the Rules on Handling Appeals and Retrial Petitions. Article 10 of the rules provides that “a non-litigant to a civil or administrative case, believing that his legal rights or interests are infringed directly by any effective judgment or mediation, shall file, with a specific explanation of reasons, related evidence and the court instruments, to the deciding or mediating court a written request for correcting the judgment or mediation, within two years since he knows or should have known the infringement.” This provision gives non-litigants a remedy for their infringed rights and interests, but it is pitifully applicable in Beijing alone. I argue that this provision can be modeled on by other courts so that non-litigants nationwide can protect their own rights and interests as people in Beijing do.
(III) Courts may build up a public notice system Allowing in a third party to a suit is an effective measure for regulating the judicial determination of well-known trademarks. But it is a serious challenge for judges to know all the third parties of each individual case. I hold the view that a public notice system should be established for the determination of well-known trademarks. In other words, courts should publish in public media their cases involving the determination of well-known trademarks, including the trademark names, the category of products and services that the trademarks are registered for, and the information of the litigants, so that related third parties may learn about the cases and opt to be a party in the suits. Moreover, in practice, the Supreme People’s Court may require that the first instance court, before making any decision on a case on determining well-known trademarks, should report it to the Supreme People’s Court for a public notice at the latter’s website or in other media.
(IV) Penalty should be duly imposed on false litigants There have been no other legal provisions on penalties on false litigants, except Articles 102 and 104 of the Civil Procedure Law which provide that anyone who fabricates or destroys evidence or otherwise acts to hinder civil proceedings is subject to detention or a fine of 10,000 to 300,000 Yuan. However, compared with the huge profits that well-known trademarks could bring, neither the detention nor the fine could deter false litigants. The crime of perjury defined in the Criminal Law is not applicable to civil suits. And disputes still exist on whether false litigation can be determined as a crime of fraud. In this respect, Japan and the Taiwan region have expanded their interpretations of the crime of fraud to penalize fraudulence in litigation.
In my opinion, reprimand, fine and detention can be imposed, in light of the circumstances, on the persons committing or participating in false litigations under the Civil Procedure Law. The court may advise relevant judicial administrative agencies to deregister the license of lawyers who have participated in making false litigations, in accordance with the Law of Lawyers; and subject judges who have helped falsify litigations to severe punishments pursuant to the Methods for Punishing Law-violating Trial Judges (trial version) and the Methods for the Disciplinary Punishment of Court Employees (trial version). Meanwhile, for false litigations, special crimes and corresponding criminal penalties should be covered in the Criminal Law. In this respect, there is much foreign experience for us to borrow from. For example, Article 329 of the Penal Code of Spain provides, “Anyone who provides fake evidence in a civil suit shall be subject to a long-term custody and a penalty between 5,000 and 50,000 Euros.” Similarly, Article 371 of the Penal Code of Italy provides, “Anyone who makes a false pledge in a civil suit shall be sentenced to 6 months to 3 years in prison.” To change the status quo that the punishment for false litigations is weak, China should formulate criminal penalties over such litigations in accordance with its judicial needs and legislative tradition.
(V) Victims should be justly indemnified If a suit is found false, courts should allow infringed third parties to begin a separate suit to claim losses from the false litigant, so that false litigants are subject to heavy costs for infringement. Such a suit is a tort action under the provision on “other civil rights” of Article 2 of the Law of Tort Liabilities. Under this Article, tort can be established when the following elements are present,
a. The effective court decision of a prior case has found a false litigation conduct;
b. a third party has suffered a loss;
c. causation is established between the third party’s loss and the false act. The damages should cover the third party’s losses, legal costs, attorney’s fee and other expenses. Article 178 of the Code of Civil Procedure of Austria has a similar provision. China can draw upon this experience to establish its own system on the victim’s damages from unjust judicial determination of well-known trademarks.
For a society that is in fast transition, it is unavoidable to see numerous problems emerge in its court hearings. False litigations do not occur in the determination of well-known trademarks alone. All other fields of the intellectual property industry can see this phenomenon. This is caused by the following inherent features of intellectual property: the object of intellectual property rights is intellectual achievement which is highly technical; IP-related litigations last for a long time; infringing acts are always covert.
Luckily, the Supreme People’s Court has taken some measures to fight false litigations on well-known trademarks. China should curb the false litigations for judicial determination of well-known trademarks as soon as possible, so as to protect the rights and interests of non-litigants, and maintain the authority of the judiciary.
(Translated by Ren Qingtao)