China’s State Administration for Market Regulation Releases Typical Unfair Competition Case List
On July 16, 2021, the State Administration for Market Regulation (SAMR) published a Notice entitled “Innovating the way of popularizing the law, strengthening the case analysis activities of anti-unfair competition through case interpretation, and achieving good results” (创新普法方式 强化以案释法反不正当竞争案例解析活动取得良好效果). The Notice includes a list of ten typical anti-unfair competition administrative cases with comments, of which 4 are intellectual property related (trade secret and trademark). SAMR summaries and comments follow.
On October 31, 2018, the Market Supervision Bureau of Jiaohe City, Jilin Province, received a complaint, stating that: “There is a sale of soybean oil in Jiaohe Market that uses the registered trademark of ’93’ [Jiu San] without authorization, which infringes upon the exclusive right to use a registered trademark.” The “Jiu San” soybean oil brand has a good reputation and popularity in the market, is well known by the relevant public, and has certain influence in the edible oil market. The “Jiu San Yi Teng” soybean oil produced by the parties concerned was similar to the “Jiu San” soybean oil in terms of commodity name, package, decoration, and other marks indicated on the commodities, as well as the external features of the overall package and decoration, and the prominent position, overall background color, picture location, layout, and element combination of the trademarks indicated on the package and decoration marks, which visually caused confusion or misrecognition of the relevant public.
In this case, knowing that the parties did not have any relationship with “93” soybean oil, they used the name, packaging, decoration, etc. of commodities similar to “93” soybean oil, which was extremely easy to mislead people and had subjective intent. In addition, when the parties concerned sold Jiu San Yi Teng soybean oil in the shopping mall, the salespersons displayed the “Jiu San Yi Teng soybean oil special price promotion” billboard under the commodity display cabinet, which had caused the relevant public to mislead the relevant public into believing that the two products were the same brand or had certain relationship.
The acts of the parties violate Article 6 of the Anti-Unfair Competition Law: The provision of Item (1) constitutes an act of confusion. In accordance with the provisions of paragraph 1, Article 18 of the Anti-Unfair Competition Law, the Anti-Unfair Competition Bureau made an administrative penalty decision on January 4, 2019 on confiscating 1,233 packages of packaging and decoration marks used on the products of the party concerned and imposing a fine of 150,000 yuan on the party concerned.
In recent years, some illegal business operators have continuously innovated in the aspect of “free riding” on famous brands in order to seek profits, which have disrupted the market economic order and impaired the legitimate rights and interests of consumers. The Anti-Unfair Competition Law was amended to include market confusion into the scope of regulation and intensify the administrative punishment, not only for the purpose of promoting the sound development of the market, protecting fair competition between business operators and regulating competition acts, but also for the purpose of better protecting the rights and interests of consumers.
The main reason for the occurrence of unfair competition is that the enterprises, in order to quickly occupy the market and make profits, adopt the act of market confusion and conduct unfair competition. This is the theft of the previous efforts of the original commercial brands. At the same time, whether the quality of the new brand meets the standards and whether it really meets the needs of consumers cannot be tested by consumers.
On the one hand, enterprises shall pay attention to lawful, compliant, and honest operation, and on the other hand, enterprises shall master relevant laws and regulations and actively protect their own lawful rights and interests according to law. It is not easy for an enterprise to develop into a well known enterprise with certain influence. The trade name, abbreviation, trademark, packaging and decoration of an enterprise are all business cards of the enterprise. Therefore, an enterprise shall strengthen the protection of its legitimate rights and interests, and at the same time, it shall operate in good faith and according to laws and regulations. We hope that we will make greater contributions to cracking down on unfair competition, maintaining fair competition and promoting the high quality development of China’s economy through joint effort.
In July 2019, the Market Supervision Bureau of Suzhou Industrial Park received a tip-off from a right holder that a party was suspected of obtaining by illegal means drawings, supplier data and other relevant information involving its trade secrets from its senior executives and employees, so as to produce and sell products of the same type.
The data in the electronic equipment of the party concerned shall be validated by the forensic identification institution after the on-site inspection of the party’s business premises. The expert conclusion is that the technical secret claimed by the right holder is non-public, and the technical secret claimed by the right holder is identical with the technical information obtained from the electronic equipment of the party. Meanwhile, the senior executives, employees and relevant suppliers of components and parts of the parties and the right holders were investigated, and it is found that the drawings of the party’s optical modules, partial purchase and sale contracts, production and sales data, correspondence between suppliers and customers, company personnel materials, financial information, etc. can be mutually proved, which fully proves that the parties have obtained optical modules products bearing the right holder’s technical secrets by illegal means. In early 2019, it was in Suzhou that the parties set up production lines in an industrial park to produce similar products and sell them to other to profit from the the theft, and their behavior has constituted an act of unfair competition that violates trade secrets.
According to the statistics, the total sales amount of the photo module and semi-finished products of the parties was approximately 1.552 million yuan. With reference to the 48.94% profit rate of the rights holder’s products, it was estimated that the amount of illegal proceeds of the parties exceeded 500,000 yuan after conversion. Therefore, the Market Supervision Administration of Suzhou Industrial Park transferred the entire case to the public security authority, and the directly subordinate branch of the Public Security Bureau of Suzhou City placed the case on file in November 2019.
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