Actions seeking a declaration of non-infringement have attracted increasing attention in intellectual property litigation and have significant practical implications. This article briefly examines such actions concerning trademarks.
1. Conditions for bringing an action
1.1 The claimant must have an interest in bringing proceedings
Without an interest, there is no action. A legitimate interest in litigation is a prerequisite for a claimant to sue and for a court to adjudicate. It concerns the need to obtain relief through civil proceedings when civil rights or interests are infringed or disputed.
In a trademark non-infringement action, the proprietor’s warning places the recipient’s rights in an uncertain position. The recipient has an interest in testing the legality and justification of that warning, resolving the uncertainty, establishing whether its conduct infringes, and deciding whether to adjust production or business operations. That interest provides a basis for bringing a non-infringement action.
1.2 Conditions for the court to accept the action
In Ocean Press’s copyright non-infringement case against Zhou Xiaopu and others, the Beijing Second Intermediate People’s Court declined to accept the case because the defendants had not sued the claimant and there was no direct relationship between the parties. This reasoning treated litigation as dependent on a substantive right, regarded non-infringement as a defence rather than an independent substantive right, and expressed concern that allowing such actions against holders of absolute intellectual property rights could expose them to endless proceedings.
That reasoning merits discussion. It conflates parties’ substantive rights and obligations with their procedural rights and obligations, suggesting that only the holder of a substantive right may sue while the person subject to an obligation may only defend. Although intellectual property rights are absolute rights, a warning directed to a specific person identifies the parties and creates a relative legal relationship between the proprietor and the recipient.
Nevertheless, the concern about unnecessary litigation is legitimate. Conditions for accepting non-infringement actions are needed to protect proprietors from needless litigation burdens.
The principal restriction is drawn from the Supreme People’s Court’s Reply (2001) Min San Ta Zi No. 4, referring to a letter stating that the claimant’s product is suspected of infringement. A letter is only one form of warning. A proprietor may also issue a statement through a lawyer, seek administrative investigation and enforcement, or publicise the allegation through the media. Such warnings establish a specific relationship between the parties and may support acceptance of a non-infringement action. If the proprietor has already filed an infringement action, however, the court should not accept a separate non-infringement action.
2. Main issues in determining trademark non-infringement actions
2.1 Burden of proof
The parties’ roles are reversed compared with an infringement action. The claimant affirmatively seeks a declaration of non-infringement, while the proprietor’s infringement allegation becomes a defence. This changes the allocation of the burden of proof.
In practice, the claimant must first prove that the defendant issued an infringement warning. It must then establish the absence of infringement by showing, for example: (1) that the alleged infringement facts do not exist; (2) that there is no causal relationship between the conduct or goods and the alleged damage; or (3) that there is no fault.
Generally, establishing the absence of one of these elements can establish non-infringement and support the requested declaration.
The defendant must prove both its registered trademark rights and that the claimant has infringed them.
2.2 Fair use of a registered trademark
Whether the use is fair is another important issue. Article 49 of the Implementing Regulations of the Trademark Law provides that, where a registered trademark contains a generic name, design or model of the goods; directly indicates their quality, principal raw material, function, intended purpose, weight, quantity or other characteristics; or contains a geographical name, the proprietor may not prohibit another person’s fair use of those elements.
This provision is broad, and there are no further supporting interpretive rules. In practice, courts consider whether the goods possess the characteristics described by the sign, whether the user’s purpose is legitimate, whether the user deliberately intends to create confusion, whether the sign is used prominently, and whether the use may mislead the public.
