Summary
TiKeDi Center is a subsidiary company of Shanghai Cuihui, which was the exclusive agency in China of the German company TKD Kabel GmbH (hereafter referred to as TKD Kabel). TiKeDi applied to register No. 8703076 mark "TKD KABEL" on Sept. 27, 2010. TKD Kabel requested the TRAB to invalidate No. 8703076 mark based on the provision of Article 15 of the Chinese Trademark Law (2001), that "an agency shall not register its principal's trademark without authorization". The TRAB maintained the validity of No. 8703076 mark. TKD Kabel appealed to Beijing IP court. During the court proceedings, TiKeDi Center denied several times any affiliation with Shanghai Cuihui and the sibling relationship between Ms. Li Shen (the legal person of TiKeDi Center) and Mr. Li Yongxue (the legal person of Shanghai Cuihui), even though TKD Kabel provided evidence proving the opposite. Even after the Court informed TiKeDi Center that producing false evidence or statements would constitute obstruction of litigation and it would have to bear adverse consequences, TiKeDi Center still denied the above. As a result, based on Paragraph 1(2) of Article 59 of the Administrative Litigation Law of China, the Court imposed the maximum statutory fine of RMB10,000 on TiKeDi Center for making false statements and obstructing litigation proceedings in an administrative lawsuit. The Court also reversed the TRAB's decision and remanded the case to the TRAB for retrial.
Importance of the Case
This is the first administrative litigation case in which a party is fined for making false statements. The principle of good faith is the basis of legal proceedings. Though an involved party does not have an active obligation of helping judges to form correct fact recognition, it does have a passive obligation of not impeding the judges to form correct fact recognition. Therefore, no party shall claim facts which it perfectly knows are false to be true or deny the opposite party's claims when it knows such claims are actually true. This case is named as representative cases which help "maintain good litigation order and ensure good-faith ligation".
Detailed Discussion of the Case
This case relates to a dispute over an invalidation decision made by the Trademark Review and Adjudication Board (TRAB). The applicant of the disputed mark "TKD KABEL" (Class 9) is TiKeDi Center, the mark was applied in Sept. 27, 2010, registered on Oct. 7, 2011, and will be valid through Oct. 6, 2021. On Dec. 26, 2013, TKD Kabel requested the TRAB to cancel the mark "TKD KABEL", based on the grounds that TiKeDi Center was TKD Kabel's agency in China and the registration of the mark by TiKeDi Center was against the provision of Article 15 of the Chinese Trademark Law (2001) ("an agency shall not register its principal's trademark without authorization"). On April 24, 2015, the TRAB ruled that the disputed trademark was valid. TKD Kabel appealed to Beijing IP Court.
Evidences provided by TKD Kabel show that:
- Back to September 2003, TKD Group and Kabel Wächter GmbH & Co. KG (later merged and renamed TKD Kabel) designated Shanghai Cuihui Trading Co., Ltd. (hereafter referred to as Shanghai Cuihui) as its sole agency in China.
- In June 2005, Mr. Li Yongxue, the legal person of Shanghai Cuihui, signed a five year contract with TKD Group and Shanghai Cuihui became solely responsible for sales of all TKD Group's products in mainland China.
- In April 2007, Mr. Li Yongxue noticed TKD Group by email that all rights and obligations under the contract were transferred to Shanghai TKD Cable Co., Ltd., which is a subsidiary company of Shanghai Cuihui.
- TiKeDi Center's declarations as filed to Shanghai Customs show that its English name is "SHANGHAI TKD CABLE CO., Ltd."
- TiKeDi Center's legal person as recorded with AIC is Ms. Li Shen.
- China Construction Bank's records shows that "SHANGHAI TKD CABLE CO., Ltd." has the Chinese name of TiKeDi Center and its bank account is the same as recorded in transaction documents such as shipping order and invoices made between 2008 and 2014 by TKD Kabel and SHANGHAI TKD CABLE CO., Ltd.
- Register of residence produced by local police at Luoyang, Henan Province shows that Ms. Li Shen is the sister of Mr. Li Yongxue.
During the court hearing, TiKeDi Center tried to prove that the disputed mark was legitimately registered and denied any affiliation between Shanghai TKD and TiKeDi Center as well as the sibling relationship between Ms. Li Shen and Mr. Li Yongxue. Even after the Court informed TiKeDi Center that producing false evidence or statements would constitute obstruction of litigation and it would have to bear adverse consequences, TiKeDi Center still denied the above.
Based on the above facts, the court decided that TiKeDi Center has a sales agency relationship with TKD Kabel, which is against Article 15 of the Chinese Trademark Law; the registration of the mark "TKD KABEL" by TiKeDi Center is squatting of a trademark that is already in use by another person and has certain influence. The Court reversed the decision of the TRAB and remanded the case to the TRAB for retrial.
In the meantime, based on Paragraph 1(2) of Article 59 of the Administrative Litigation Law of China, the Court imposed the highest statutory fine of RMB10,000 to TiKeDi Center for making false statement and obstructing litigation proceedings.
Remarks
The legal aspects of the case are relatively straightforward. The more important thing is the Court's attitude towards evidences. TKD Kabel supplemented many evidences (such as 1, 4, 5, 7 as listed above) during the court proceedings, some of them are just printouts, neither notarized nor legalized as normally required by Chinese courts. Instead of rejecting these evidences, the Beijing IP Court considered these evidences together with those originally submitted to the TRAB. The Court reasoned that a plaintiff may submit new evidences to prove the illegality of a decision made by an administrative authority (Article 37 of the Administrative Litigation Law of China). Whether evidences submitted during the litigation stage would be accepted shall be determined based on if such evidences would affect legal rights of the parties and remedies available through the administrative litigation. This shows that the Court is adopting a more open attitude towards evidences.
Another thing is that in its decision the Beijing IP Court cited several precedent cases. Though China is not a case law country, for IP cases the courts are trying to follow important precedent cases, and the involved parties are also encouraged to submitt prior cases for the courts' consideration. It shows that Chinese courts are trying to follow international practice.
One last remark, though the fine of RMB10,000 is not heavy in terms of amount, it is already the maximum statutory limit, which shows the Court's determination in regulating court proceedings.
References:
- TRAB (2015) No. 0000031042
- Beijing IP Court (2015) Administrative First Instance Case No. 5005
- SPC (2014) Administrative Reopened Case No. 3
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