China IP,[Trademark]

CASE 7 :
◆ First instance (2016) Yue 73 MinChu 2529
◆ Second instance: (2017) Yue MinChu 2659
Guangdong Province
If the trademark is not changed but the product contents are substantially replaced and the product is then sold, the quality of the product changes substantially. This behavior hinders the function of the trademark and constitutes trademark infringement. Recycling of sold products, in line with the concept of full utilization of resources and conservation, whether the trademark rights of the original goods are exhausted, depending on the specific methods and circumstances of recycling, including recycling contents, trademark display methods, trademark functions, etc.
Plaintiff: Domino Printing Sciences PLC (Domino)
Defendant: Guangzhou Dugao Precision Electromechanical Co., Ltd. (referred to as Dugao Co., Ltd.), Guangzhou Xinke Industrial Design Co., Ltd. (referred to as Xinke Co., Ltd.)
Domino registered the trademark  in Class 9 for inkjet printers. Dugao Co., Ltd and Xinke Co., Ltd recycled the main board of A200 inkjet printer produced and sold by Domino, and assembled their own inkjet printer products. The two companies also recycled the E50 inkjet printer produced and sold by Domino, refitting and modifying the internal ink system, after which the whole machine was to be resold. Domino believes that Dugao Co., Ltd and Xinke Co., Ltd are infringing on their trademark rights, which constitutes both a criminal offence and a civil tort.
After the criminal proceedings in the case were appealed, sent back for retrial, appealed again, and reconsidered, the court found that the defendant was not guilty of using the trademark on the “same commodity”, which ultimately did not constitute a crime of counterfeiting the registered trademark; but for the civil litigation portion of the case, the court found that Dugao was guilty of using the trademark on “similar goods” and Dugao had to bear tort liability. In the civil litigation portion, the court of second instance held that the recycling the A200 printer main board exhausted but did not infringe the trademark rights; modifying Domino A50 inkjet printer prevented trademark recognition and thus constituted trademark infringement. The court decided for Dugao to assume responsibility for stopping infringement and to compensate losses.
[Judge's Comment]
This is a classic case which demonstrates the intersection of criminal and civil cases; it reflects the difference in the function and orientation of criminal law and civil law in trademark protection, and the complementarity in the IP protection system.
This case is also a typical case of exhaustion of rights. Both alleged infringements involve the modification of genuine goods, but one act constitutes infringement because it hinders trademark recognition, and the other because the trademark rights are exhausted but not infringed. There is a strong qualitative contrast, which highlights the dialectical relationship and the balance of interests between the development of trademark functions and the free circulation of commodities.

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