First-instance case number: (2018) Zhejiang 8601 Preliminary Criminal Judgement No. 33

The sale of products knowingly counterfeiting a registered trademark for a large or huge amount constitutes the crime of selling products with counterfeit registered trademarks. The sales amount refers to the total illegal income earned and due from the sale of counterfeit registered trademark products.

Case introduction

Public Prosecution: People's Procuratorate of Hangzhou Economic and Technological Development Zone, Zhejiang Province

Defendants: Xuan Hongwei, Ren Linli, Lu Guoxing, Liu Hao, Liu Yuan

In 2015, Xuan Hongwei and Zhan Mengsi (handled in another case) used the identity information of Zhan Mengsi, Zhang Peng, Li Caiyan, Li Dapan and others to set up the " Fat Donkey Outdoor" and " The Second Store of Fat Donkey Outdoor" on Taobao e-commerce platform to sell counterfeit “始祖鸟(Arc'teryx in Chinese characters)” and “Arc'teryx” registered by AMER SPORTS CANADA INC., and “萨洛蒙(Salomon in Chinese characters) ”, “Salomon” registered by Salomon SAS in France, and clothing, shoes, water bags and other products with trademarks "Marmot" registered by Marmot Mountain, LLC. in the United States.

From December 2015 to December 2017, Xuan Hongwei, together with Zhan Mengsi, set up offices in Hangzhou Economic and Technological Development Zone, including Room 102, Unit 3, Building 7, and Room 102, Unit 3, Building 1 of Longhu Yanlanshan Villa, and set up a warehousing department at Ping'an Garment Factory in Hanchuan City, Hubei Province, and hired Ren Linli, Lu Guoxing, Liu Hao, and Liu Yuan to participate in the operation. Ren Linli, Lu Guoxing, and Liu Hao, knowing that Defendant Xuan Hongwei sold counterfeit trademarked goods, still engaged in customer service, copywriting, and photography artwork at the online stores they operated, helping defendant Xuan Hongwei commit crimes. As of early December 2017, the total amount of counterfeit trademarked goods sold at the online store operated by Xuan Hongwei and others was RMB 9,085,359.16.

In early December 2017, Xuan Hongwei transferred the sales department of the online store to Room 501, No.1050, Zhonghuan West Road, Jiaxing City, in order to evade investigation by the public security authorities. Subsequently, Xuan Hongwei, together with Ren Linli, Lu Guoxing, Liu Hao, and Liu Yuan, posted counterfeit information through WeChat Friend Circle and continued to sell products with counterfeit registered trademarks. The total sales amount was RMB 3,515,747.

In summary, Xuan Hongwei and Ren Linli sold a total amount of RMB 12601106.16, Lu Guoxing participated in the sale of a total amount of RMB 11945860.53, Liu Hao participated in the sale of a total amount of RMB 4230892.86, and Liu Yuan participated in the sale of a total amount of RMB 3515747.

On December 18, 2017, the public security authorities arrested Xuan Hongwei, Ren Linli, Lu Guoxing, Liu Hao, and Liu Yuan in Jiaxing. They seized 1,881 pieces of unsold goods, including 1,332 items of counterfeit goods involving the registered trademarks of "始祖鸟(Arc'teryx in Chinese characters)", "Arc'teryx", "萨洛蒙(Salomon in Chinese characters)", "Salomon", and "Marmot", with a value of RMB 235,000.

After trial, the Hangzhou Railway Transportation Court held that defendant Xuan Hongwei, in cooperation with defendants Ren Linli, Lu Guoxing, Liu Hao and Liu Yuan, had sold counterfeit goods which he knew to be counterfeit and the amount of the goods sold was huge, and their acts constituted the crime of selling counterfeit registered trademarks. The crime charged by the public prosecution agency was established. The defendant Xuan Hongwei played a major role in the joint crime and was the principal offender; the defendant Ren Linli, Lu Guoxing, Liu Hao, and Liu Yuan played a secondary role in the joint crime and were accomplices, and the punishment should be mitigated according to law. The defendants Xuan Hongwei, Ren Linli, Lu Guoxing, Liu Hao, and Liu Yuan voluntarily pleaded guilty in court and were given a lighter punishment as appropriate. The defendant Xuan Hongwei argued that he had a meritorious performance in reporting and exposing other people's crimes, but it shall not be confirmed as the public security organs did not verify it. The defender's defense opinions on the defendant's declaration that Xuan Hongwei can apply probation shall not be adopted, but other relevant reasonable defense opinions with lighter punishment shall be accepted. According to the facts and circumstances of the case, the probation may be applied to the defendants Ren Linli, Lu Guoxing, Liu Hao, and Liu Yuan.

In summary, the court’s first instance ruled that: the defendant Xuan Hongwei was guilty of selling products with counterfeit registered trademarks and was sentenced to five years in prison and fined RMB 5.8 million; the defendant Ren Linli was guilty of selling products with counterfeit registered trademarks and was sentenced to two years and ten months in prison, suspended for four years, and fined RMB 450,000; the defendant Lu Guoxing was sentenced to two years and six months of imprisonment and three years of suspension with a fine of RMB 400,000; the defendant Liu Hao was guilty of selling goods with counterfeit registered trademarks and was sentenced to two years in prison, suspended for three years, and a fine of RMB 64,000; defendant Liu Yuan was guilty of selling goods with counterfeit registered trademarks and was sentenced to one year and six months’ imprisonment, suspended for three years, and fined RMB 60,000; the remaining illegal proceeds of crimes shall continue to be pursued; the seized infringing counterfeit goods and criminal tools, including nine mobile phones and four computers were confiscated according to law.

Typical meaning

The case involved a large number of defendants, who cooperated with each other, and involved huge sums of money, involving registered trademarks of right owners in the United States, Canada and France, and was a typical intellectual property rights criminal case involving the sale of counterfeit registered trademarks through Taobao online e-commerce platform and WeChat Moments. The trial of this case demonstrates China's determination to combat IPR infringement and its judicial transparency, as well as China's position of protecting foreign right holders' intellectual property rights on an equal footing. The counterfeit trademarks in the case were all well-known international brands with wide distribution channels and long chains, which had great social impact. During the handling of the case, it was a sensitive period of Sino-US trade disputes. The Hangzhou Railway Transportation Court focused on combining punishment of crimes with the protection of rights and interests, fairness and justice, and took the initiative to communicate with the trademark owner to coordinate the compensation for damages on the one hand, and on the other hand, examined the evidence of the case comprehensively and actively guided the investigating authorities to take additional evidence, playing an important role.

The handling of this case has achieved an integrated crackdown on the crime of selling counterfeit registered trademarks, effectively protecting the intellectual property rights of foreign merchants, and enhancing their trust in China's legal environment.