Li’s Case of Impersonating a Registered Trademark

[ Keywords 】

Counterfeiting a registered trademark; forward counterfeiting; reverse counterfeiting; insufficient evidence; no prosecution.

[ Counseling Attorney 】Zou Donghui (Shendu Lawyers Team)

[ Basic Facts of the Case 】

The suspect, Li, is the operator of a sugar factory.

Facts and Opinions Established by the Investigative Authorities: The suspect, Li, purchased a certain brand of brown sugar from a sugar company in Guangxi. However, during transportation, the brown sugar melted and contaminated the packaging bags. Consequently, Li privately manufactured packaging bags bearing the trademark of the brand and, in the process of repackaging, added edible glucose and edible caramel coloring. Moreover, Li arbitrarily introduced an additional mixing process step, thereby altering the production process and ingredient composition of the brand’s brown sugar. At the scene, authorities seized brown sugar with a value exceeding 80,000 yuan.

The investigative authorities believe that the suspect, Li, with the intent of illegal profit, privately manufactured packaging bags bearing the trademark of a certain brand. During the packaging replacement process, he added edible glucose and edible caramel coloring, arbitrarily introduced additional mixing procedures, and thereby altered the production process and ingredient composition of the brand’s brown sugar. His actions are suspected of constituting the crime of counterfeiting a registered trademark. Therefore, this case has been referred to the People’s Procuratorate for review and prosecution.

During the review and prosecution phase of this case, the defense counsel submitted a defense argument stating that the facts were unclear and the evidence was insufficient. After the procuratorial organ listened to the defense’s arguments and returned the case twice to the public security organ for supplementary investigation, it concluded that the criminal circumstances in this case were minor and that punishment could be waived. Consequently, the procuratorial organ decided not to prosecute Li.

[ Case Highlights 】

Considering comprehensively the defense’s arguments and the objective circumstances of this case, the procuratorial organ decided not to prosecute Li.

[ Typical significance 】

The objective acts constituting the crime of counterfeiting a registered trademark can manifest either as positive counterfeiting or as reverse counterfeiting.

In this case, the suspect engaged in two types of conduct: first, partially altering the ingredients of a certain brand’s products while simultaneously replacing the original packaging with counterfeit packaging bearing the same brand’s label; and second, without altering the original product’s ingredients, merely replacing the original packaging with counterfeit packaging bearing the same brand’s label. The nature of the latter type of conduct should not be characterized as infringement upon a registered trademark.

According to the Trademark Law, counterfeiting a registered trademark includes “forward counterfeiting” and “reverse counterfeiting.” In forward counterfeiting, the counterfeit goods bearing a registered trademark refer to the same type of product or a similar product—meaning that the counterfeit goods are not produced or sold by the enterprise whose trademark is being counterfeited. In reverse counterfeiting, however, the counterfeit goods bearing a registered trademark refer to the very same product—that is, the counterfeit goods are still produced or sold by the enterprise whose trademark is being counterfeited.

The act described in Article 57, Item 5 of the Trademark Law—“replacing the registered trademark without the consent of the trademark registrant and then placing the goods bearing the replaced trademark back onto the market”—is precisely what is known as “reverse counterfeiting.” According to this provision, two conditions must be met simultaneously for an act to constitute reverse counterfeiting: First, the goods bearing the counterfeit trademark must be identical to the goods produced or sold by the enterprise whose trademark is being counterfeited; in other words, the counterfeit goods must not have been altered and must still be the same goods originally produced or sold by the enterprise being counterfeited. Second, the trademark on the goods of the enterprise being counterfeited must be replaced with the trademark of another enterprise. Both of these conditions are indispensable; otherwise, the act cannot be considered trademark infringement constituting “reverse counterfeiting.”

In this case, the suspect’s act of adding substances such as glucose powder to brown sugar originally produced by the original enterprise, drying the mixture, and then repackaging it in imitation packaging bearing the original enterprise’s brand labels for sale can be considered a modification of the original product’s composition. Accordingly, this behavior qualifies as “positive counterfeiting” under the definition of trademark infringement. However, the evidence in the case indicates that not all of the brown sugar in the packages exhibited signs of melting. Moreover, the outer surfaces of these packages were also found to be contaminated with brown sugar that had melted and seeped from other packages. Consequently, the suspect did replace the packaging, but the replacement packaging was itself an imitation. Under these circumstances, it is clearly impossible to characterize the act as “positive counterfeiting.” Furthermore, since the replaced packaging remained an imitation of the original enterprise’s packaging—meaning no other enterprise’s trademark was substituted—the conduct does not constitute “reverse counterfeiting” under the law either. Therefore, the mere act of replacing the packaging with an imitation without causing the brown sugar to melt should not be deemed trademark infringement. Indeed, this very practice demonstrates that the suspect lacked any subjective intent to infringe upon the trademark rights.

Moreover, whether the red sugar involved in the case was produced by the brand enterprise in question or whether the suspect’s actions had altered the composition of the brand’s products can only be determined through ingredient analysis; however, the investigative authorities have not conducted such an investigation.

For the reasons stated above, in the absence of specific evidence regarding the exact quantity of raw brown sugar that did not require drying treatment, and given that the total amount involved as determined in the prosecution opinion is close to the threshold for initiating a criminal investigation, it should be concluded that the facts of this case are unclear and the evidence is insufficient. Moreover, even if the facts were verified, the amount involved might still fall below the threshold for initiating a criminal investigation. Therefore, after careful consideration, the procuratorial organ has decided not to prosecute this case.