Insights from the case
When the same act involves infringement of multiple rights of the right holder, the right holder can choose the most effective right to claim according to the specific circumstances of the case. When the infringement occurs in multiple places, in order to achieve the best effect, it is advisable to communicate with the relevant administrative organs and take actions simultaneously as far as possible.
Case information
Case summary
Sega Group is involved in a wide range of game content businesses such as home devices and arcade products, as well as entertainment-related businesses such as the toy business, animation business and the amusement facility operation business. The trademark “UFO CATCHER” of Sega Games Co., Ltd. (hereinafter referred to as “Sega”) was registered on August 21, 1994 with the registration number of 702519, used on goods “amusement machines installed in corridors, parks or other places for business purposes” in Class 9.
Sega discovered that Ji Cai and Long Meng Gong produced and sold crane gift machines (also known as “claw machines”) that allegedly infringed its intellectual property rights. The trademark used on the crane machines of Ji Cai is identical with the above-mentioned registered trademark “UFO CATCHER” of Sega, while the trademark used on the crane machines of Long Meng Gong is “OFO CATCHER”, with only the initial letter different from that of Sega.
After the preliminary investigation and evidence collection, Sega decided to file an application for administrative investigation of trademark infringement against Ji Cai and Long Meng Gong based on the exclusive right over the above-mentioned trademark registration. The two companies both have sales showrooms and factories respectively, and they also have business contacts. In order to maximize the effect of investigation, it was decided to investigate and deal with the four bases of the two companies at the same time. The sales showrooms of the two companies are both located at Yingxing East Road, Donghuan Street, Panyu District, and their factories are both located at Huachuang Animation Industrial Park, Shiji Town, which requires joint investigation by the Donghuan Market Supervision and Administration Office and Shiji Market Supervision and Administration Office in Panyu District.
On August 28, 2019, Panyu District Administration for Market Regulation as well as Donghuan Market Supervision and Administration Office and Shiji Market Supervision and Administration Office were equipped with a total of 12 staff members led by Captain Li and Section Chief Lei assigned to four infringement bases. As Sega’s attorney, our firm appointed four attorneys in total with each of them accompanied one team on on-site investigation. In the showroom and factory of Ji Cai, 4 sets of crane gift machines with infringing logo and 1 set of semi-finished product were found, and a total of 18 sets of crane gift machines with infringing logo were found in the showroom and site of Long Meng Gong.
As to the allegedly infringing products of Ji Cai, since the trademark is identical with Sega’s prior registration in terms of composing letters, the authorities held that there is not much problem in finding infringement for the four finished products, but there is doubt whether the semi-finished product constitutes infringement. On this point, we clearly claimed in the appraisal that according to the Reply on Issues Relating to Infringing Goods of the former State Administration for Industry and Commerce (Industry Commerce Trademark [2003] No. 99), “in the course of inspecting and handling trademark infringement cases, the trademark signs infringing the exclusive right of others and the raw and auxiliary materials seized at the scene only for manufacturing infringing goods belong to the infringing goods referred to in Article 53 of the Trademark Law”, the above semi-finished product marked with “UFO CATCHER” logo is also infringing product. Regarding the suspected infringing products of Long Meng Gong, the authorities considered that there was a certain doubt of infringement due to the different initial letters. On this point, we emphasized that the “O” used by Long Meng Gong is closely similar to the “U” of the above-mentioned registered trademark of Sega in terms of appearance, which is very likely to cause confusion and misunderstanding among the relevant public, and also reveals that Long Meng Gong has the malice to free-ride the goodwill of Sega’s trademark right. In addition, we submitted several precedents with similar situations for the authorities’ reference to make a decision. In the end, the authorities confiscated four crane gift machines and one semi-finished product of Ji Cai, and 18 crane gift machines marked with “OF CATCHER” of Long Meng Gong were also found to constitute trademark infringement and were confiscated and destroyed.
Attorney’s Opinion
In this case, in addition to infringing Sega’s trademark exclusive rights, the framework of crane gift machines of Ji Cai and Long Meng Gong are also suspected of infringing Sega’s design patent rights and their operation panels are also suspected of infringing Sega’s copyright. However, infringement of these three rights is not handled by the same department, and the administrative processing requests of the three rights cannot be applied for in one case. Thus, it is usually necessary for the right holder to request the administrative organ to handle the case based on one of the rights with the highest chance of success and the most effect. In this case, we conducted infringement analysis including the the possibility of infringement identified by the authorities from the perspective of trademark right, design patent right and copyright respectively, and we finally suggested our client to exercise the rights based on trademark right in combination with the investigation and evidence collection results and the infringement situation involved in the inventory of infringing products. The advantage of administrative investigation based on trademark rights is that the procedure is simpler than that of patent rights, i.e., no oral trial is set up, and the suspected infringing products are generally seized directly on site, unlike patent infringement disputes in which infringing products can only be recorded but not seized. And once it is found to constitute trademark infringement, a fine can be imposed according to the infringement circumstances, to a certain extent, which can curb the recurrence of infringement.
The special point in this case was that the investigation targets involved 4 bases, and in order not to alert the adversary parties, it was necessary to investigate the 4 bases simultaneously. Due to the tight schedule of the authorities and the tripartite collaborative work of the Panyu District Administration for Market Regulation as well as Donghuan Market Supervision and Administration Office and Shiji Market Supervision and Administration Office under its jurisdiction, our firm continued to communicate with the responsible persons of the authorities after the submission of the application for investigation and emphasized the necessity to investigate and deal with the case on the same day. In the end, four teams accompanied by our attorneys, successfully seized the suspected infringing products in each base.
During the trial of case after the on-site investigation, the authority in charge of the case of Ji Cai also wanted Sega to submit additional materials on the popularity of the trademark “UFO CATCHER”. Although the infringer is not required to have the subjective malice of infringement in a trademark infringement dispute, we still collected and submitted the evidences to prove trademark popularity, considering that the popularity can prove that Ji Cai has the malice of infringement and thus affect the final amount of fine. As a result, although the illegal operation amount of Ji Cai was RMB46,000 and that of Long Meng Gong was RMB116,000, the fine amount of Ji Cai was RMB145,000 and that of Long Meng Gong was RMB180,000 taking into account that it was actively cooperative in the investigation. In addition, Ji Cai was deregistered on August 24, 2020 after being investigated and punished.
In summary, when dealing with infringement disputes through administrative means, it is necessary to take into account the nature of each right, the advantages and disadvantages of various administrative means and then select the best approach for the protection of the rights of the right holder, in combination with the actual needs of the right holder and the specific circumstances of the case, and always maintain close communication with the authorities in order to obtain the most favorable results for the right holder.
