In the “Changcheng” trademark infringement case, the attorneys for the parties have other controversies regarding the scope of protection for the exclusive users’ right to “series of trademarks” and registered trademarks and the computation of damages. Concerning these issues, the attorneys present their arguments as follows:

1. The scope of protection for the exclusive users’ right to “series of trademarks” and registered trademarks
     In the complaint, during the first instance and second instance trials, and in the appellate pleadings, COFCO mentioned several times that the so-called “series of Changcheng trademarks” owned by it had been infringed. In the appellate pleadings, COFCO claims, “the trademark of ‘Changcheng Pai, GREATWALL and graphic’ is famous. Moreover, COFCO has registered the text and graphic of ‘Changcheng’ or the Great Wall as separate trademarks. During their many years of use, ‘Changcheng’ trademarks have had a group effect and should be protected by law”. In the statement, containing the so-called “group effect”, COFCO is transforming all of its trademarks bearing “Changcheng” into a so-called “Changcheng series” of trademarks which can enjoy unfettered special protection given to “Changcheng Pai, GREATWALL and graphic” (Trademark No. 70855), the so-called “famous trademark” (that trademark No. 70855 is a famous trademark is questionable, as a trademark cannot be famous if it has never or seldom been used. The fame or reputation of a trademark comes from its use); COFCO even believes that anyone who infringes any of its trademarks bearing “Changcheng” has infringed the entire “Changcheng series” of trademarks.
     In this author’s view, to determine trademark proximity and infringement, a comparison should be done between the alleged infringing trademark and a particular registered trademark cited for this purpose, so that a judgment can be made on whether the two are the same or similar and may easily confuse or mislead the relevant public. This, however, has a prerequisite that two specific trademarks – not the so-called “series of” trademarks – are compared with each other with regard to every aspect. Also, in this case, it would be impossible for the court to extract the word “Changcheng”, a constructive element, from all of COFCO's trademarks bearing “Changcheng”, compare the word “Changcheng” with “Jiayu Changcheng and graphic”, and finally decide that the word “Changcheng” shall be exclusively used by COFCO. Moreover, both the first instance judgment from the Beijing High People’s Court and the second instance judgment from the Supreme People’s Court separately compare “Jiayu Changcheng and graphic” with “Changcheng Pai, GREATWALL and graphic”, rather than the whole so-called “series of Changcheng trademarks” of COFCO. Further, after it rendered a judgment, in the Q&A mentioned hereinbefore in March 2003, the High People’s Court of Beijing explains this issue in Article 19 of the Q&A and invalidates COFCO’s claim of “series of trademarks”.
     As to the scope of protection for the exclusive user’s right to a trademark, COFCO complains that Jiayu Company has infringed “Changcheng” (as it exists in the trademark), trademark No. 1447094, as being one of the so-called “trademark series”. Although grape wine is not included as a commodity approved for the registered trademark “Changcheng”, the first instance court held that Jiayu Company’s use of “Jiayu Changcheng and graphic” constituted an infringement upon “Changcheng” on account that the rice wine or fruit wine that is included as one of the commodities approved for “Changcheng” is similar to grape wine. The holding in this case, however, has resulted in a contradictory situation in which a disputed infringement not only covers the same commodities, but also similar commodities. According to Article 51 of the Trademark Law, “The exclusive user’s right to a registered trademark is limited to trademarks which have been approved for registration and to the commodities on which the use of the trademarks have been approved”. In the case of a dispute involving the same commodities, COFCO does not have the right to exclusively use “Changcheng” (Trademark No. 1447904) on grape wines because grape wines are not included as a commodity approved for “Changcheng” (Trademark No. 1447904).
     In the case of a dispute on similar commodities, COFCO acknowledges in its appellate pleading that the case is not a dispute about similar commodities, but one involving the same or proximate trademarks, which refer to similar commodities. To be more precise, this is an infringement dispute concerning the same or proximate trademarks for the same commodity of grape wines, but not a dispute of trademark infringement arising out of COFCO’s use of "Changcheng” (Trademark No. 1447904) on rice wines and fruit wines or Jiayu Company’s use of a similar trademark on grape wines. The first instance judgment also constitutes a breach of Article 52.1 of the Trademark Law that states that it is an infringement “to use a trademark that is the same or similar to a registered trademark in respect of the same or similar commodities without the authorization from the applicant of the registered trademark”. Please note here that Article 52.1 refers to “the same OR similar commodities”, but not “the same AND similar commodities”. Thus, a trademark infringement dispute concerning the same commodities and a trademark infringement dispute concerning similar commodities cannot exist together in one case. The second instance judgment corrects the above error of the first instance court, unfortunately not in light of the provisions of the law, but mistakenly, by stating that the application for “Changcheng” (Trademark No. 1447094) was submitted later than “Jiayu Changcheng and graphic” (in fact, “Changcheng” was submitted in December 1998, and “Jiayu Changcheng and graphic” was submitted in May 1999).
2. The standard for computation of damages in trademark infringement disputes
     According to Article 56 of the Trademark Law, “the damages for infringement upon the exclusive user’s right to a trademark shall be the profit that the infringer has earned from the infringement during the period of infringing activities or the loss that the infringed has suffered due to the infringement during the period of infringement. Where it is difficult to determine the profit that the infringer has earned or the loss that the infringed has suffered, the People's Court shall impose an amount of damages of no more than RMB 500,000 according to the circumstances of the infringement”. The Interpretation hereinbefore explains the above situation in Articles 14, 15 and 16 that “the profit from the infringement may be computed by multiplying the quantity sold of the infringing commodity by the unit profit of the infringing commodity; where the unit profit of the infringing commodity cannot be ascertained, the unit profit of the commodity under the registered trademark shall be used”. “The loss from the infringement may be computed by multiplying the quantity unsold of the infringed commodity or the quantity sold of the infringing commodity by the unit profit of the commodity under the registered trademark". “For infringement of the exclusive user’s right to a registered trademark, the limitation for an action is two years which shall begin to run when the owner of the registered trademark or the other interested party knows or should have known that its rights have been infringed. Where the owner of the registered trademark or other interested party files an action after two years, the infringing action continues until the time of the action, and the exclusive user’s right to the trademark is still valid, and the People's Court shall judge that the infringer cease the infringing action, and the amount of damages for the infringement shall be computed on the basis of the two years before the date of action”.
     According to my understanding of the above legal provisions and the Interpretation, the judgment on the damages in this case, if it is a textbook judgment as the attorney for COFCO acclaims, is really beyond cognizance to me, a lawyer for trademark infringement cases.
     Firstly, “the unit profit of the infringing commodity cannot be ascertained”. The court of first instance has taken measures to preserve evidence and the account books of the defendant so preserved are all complete. Then, can we say, “the unit profit of the infringing commodity cannot be ascertained”? Can we just rely on one party’s view and say the evidence is not credible? Can we determine that “the unit profit of the infringing commodity cannot be ascertained”, without doing any audit, and then compute the amount damages with the unit profit of the commodity under the registered trademark of the plaintiff? The point illustrated here is who has the power to determine that the profit of the infringing commodity cannot be ascertained; if the account books of the defendant are not credible, then, what do the legal provisions on evidence preservation mean? The choice of either “the unit profit of the infringing commodity” or "the unit profit of the commodity under the registered trademark" depends solely upon the judge, or that the latter cannot replace the former unless the former cannot be ascertained (generally if no evidence is available to ascertain)? As far as this author is concerned, in light of the original idea expressed in the Interpretation, I am afraid that “the unit profit of the commodity under the registered trademark” cannot be used as a substitute, unless no account books of the defendant are available for audit or ascertainment and the profit of the commodity cannot be determined. This, however, is never mentioned in the judgments of both the first instance and second instance courts, although the court of first instance has preserved all the account books of Jiayu Company.
     Secondly, as to the evidence for “the unit profit of the commodity under the registered trademark”, can we rely upon a written statement from the plaintiff, which indicates the unit profit of the commodity, or a certificate from a tax office to determine this unit profit? I am afraid we must choose the latter, but the court did not. It relied solely upon the unilateral statement of COFCO and determined “the unit profit of the commodity under the registered trademark”.
     Thirdly, as to the period of infringement for computation of damages, the relevant law has set up two years as the limitation for actions to urge the plaintiff to timely exercise its litigious rights. For a trademark infringement case, the limitation of two years also is designed to avoid the issue that the trademark right stays in a state of uncertainty for a long time. There is also a third objective, in this author’s opinion, to avoid the plaintiff willfully delaying the exercise of its litigious right and allowing the losses to grow. In fact, in this case where this author was the attorney for the defendant, the period for computation of the loss from infringement was extended by two years, i.e. the real loss from infringement is computed on the basis of four years.

1. How extensive is the scope for protection of the exclusive users’ right to series trademarks and registered trademarks?
    This issue was also noted in the case. The plaintiff used two “Changcheng” trademarks for the action. Actually the plaintiff applied for several “Changcheng” trademarks whose registration has been approved. Thus, with the same constructive elements, these “Changcheng” registered trademarks form a “Changcheng series”. The registration of a series of trademarks offers protection to trademark owners to prevent repeated or confusing registrations by others of a well-known trademark. Some may worry that a series of trademarks will weaken the famous trademark being used, which is totally unwarranted. A trademark means to differentiate, associate and designate. For a series of trademarks, the same person applies for registration, and after the registration is approved, the same person owns them. The fact that many trademarks are registered will not damage the differentiating, associating and designating function of any one among them. Moreover, registration of a series of trademarks acts as a precaution against any possible infringement under certain circumstances, and leaves less opportunities to potential infringers. For example, the “Changcheng” brand, appraised as the plaintiff’s famous trademark, is a combination of the Chinese “Changcheng”, the graphic “Changcheng” and the English “Changcheng” – the Great Wall. If such constructive elements as the Chinese “Changcheng”, the graphic “Changcheng” and the English “Changcheng” are each registered as a trademark, any use of some or all ofthem, either combined or separate, will expose the user's malice. Thus, the “Changcheng” trademark will receive stronger and more effective protection with a lowered cost
    For a series of registered trademarks, the scope of protection for each of the series of trademarks is limited to the commodities approved in the trademark's registration; and an unapproved commodity cannot connect naturally with other trademarks in the series. This fact should be particularly noted by the owner of a series of registered trademarks.

2. How to compute the damages in a trademark infringement case?
    According to Article 56.1 of the Trademark Law, the amount of compensation for infringement of a registered trademark is the gains that the infringer obtains from the infringement during the period of the infringing act. According to Article 14 of the Interpretation of the Supreme People’s Court about Several Issues in the Application of Law in Hearing Civil Disputes of Trademark (the Interpretation), the profit from the infringement may be computed by multiplying the quantity of the sold infringing commodity by the unit profit of the infringing commodity; and where the unit profit of the infringing commodity cannot be ascertained, the unit profit of the same commodity under the registered trademark shall be used. The above formula provides the main basis for the computation of damages in trademark infringement cases.
     In this case, the plaintiff requested the court of first instance to preserve the evidence of the infringing act of the defendant. In light of the quantity of commodities so preserved and the production contracts concerned, the Supreme People’s Court finally decided that the alleged infringing wines produced and distributed for and by the defendant totaled 1,213,926 bottles. As 274,626 bottles had been preserved as evidence by the court of first instance during the trial, the Supreme People’s Court, the court of second instance, decided that Jiayu Company et al had sold 939,300 bottles under the trademark of “Jiayu Changcheng and graphic”.
     Both the plaintiff and the defendant had submitted computation methods for the wines profit. In the first instance trial, COFCO argued that the average price per bottle of Jiayu Company’s wines was RMB 24.5, that the cost per bottle was RMB 7.75, and the profit per bottle was RMB 16.75; thus the total profit should be RMB 15,000,000 or more. Jiayu Company argued that the average price per bottle of its wines was RMB 17.17; the cost per bottle was RMB 12.4738, and the profit per bottle was RMB 4.7491. In the second instance trial, COFCO provided the court with another computation method showing its profit of every bottle was RMB 11.3 for sales of COFCO’s common wines.
     The real profit of the defendant could not be ascertained because the profit that Jiayu Company et al provided was too low and no substantive evidence was given during the entire proceedings. Additionally, Jiayu Company did not present evidence and have reasonable grounds to deny the unit profit COFCO provided for the commodity under the registered trademark. Finally, in light of the data from the relevant trade societies, the court basically adopted the unit profit COFCO provided from the production and sale of the wines as the basis for computing damages. Therefore, it was concluded that Jiayu Company received a profit of RMB 10,614,090 from the sale of 939,300 bottles of wine at a price of RMB 11.3 per bottle. Moreover, by referring to the statistics provided by the Wine Branch of the China Alcoholic Drinks Industry Association, the court of first instance determined that the unit profit for the wines was RMB 11, which demonstrated that the unit profit provided by COFCO was reliable. On the grounds that the unit profit of the infringing commodity cannot be ascertained, the court of second instance determined that Jiayu Company received a total profit of RMB 10,614,090 by multiplying the quantity sold of the infringing commodity by the unit profit provided by COFCO of the commodity under the registered trademark. 
     Thus, it can be seen that the basis for computation of damages in trademark infringement cases should be determined in light of the practical situation. If the data are available from the relevant trade associations, it should be compared with the data from the different computation methods provided by the parties. It is more credible to adopt the computation method that is closest to the data provided by the trade societies.

     The following is an excerpt from the decision of the Supreme People’s Court on the above disputes:
     Considering that the grape wine is not included as the commodity approved for “Changcheng”, Registered Trademark No. 1447904 of COFCO, “Changcheng” was applied for later than “Jiayu Changcheng and graphic” of Kaixin Company, and COFCO has not provided any evidence regarding the real use and the market reputation of “Changcheng”, there is not enough evidence to determine that sufficient market confusion may have resulted among the relevant public with the commodities under the two trademarks – “Changcheng” and “Jiayu Changcheng and graphic”. 
     Concerning the computation of damages and the compensation measures in the case
     According to Article 56.1 of the Trademark Law, the damages for the infringement of a registered trademark is the gains that the infringer obtains from the infringement during the period of the infringing act. According to Article 14 of the Interpretation, the profit from infringement may be computed by multiplying the quantity of the sold infringing commodity by the unit profit of the infringing commodity; and where the unit profit of the infringing commodity cannot be ascertained, the unit profit of the same commodity under the registered trademark shall be used. In this case, as the unit profit of the infringing commodity cannot be ascertained, this court determines that Jiayu Company received a total profit of RMB 10,614,090 by multiplying the quantity sold of the infringing commodity by the unit profit provided by COFCO of the commodity under the registered trademark. 
     When the first instance trial court took preservation measures, COFCO agreed that sealed goods could be used to off set the damages, to which Jiayu Company also agreed. Therefore, this court approved this off setting measure.