Case Summary:

 The plaintiff, Intercontinental Great Brands LLC, is a subsidiary of Mondelēz International.Known globally for its diverse portfolio of food and beverage products that includes biscuits, chocolate, gum, candy, and powdered beverages, Mondelēz International owns several brands each generating revenue in the billions of dollars. Amongst these, “OREO” stands out as highly recognized. However, amidst growing Chinese consumer demand, counterfeit “OREO” biscuits began surfacing in the market, ultimately prompting the plaintiff to undertake extensive protective measures in China.

Between September 2022 and February 2023, the defendants Xu, Lin, and Hong produced counterfeit “OREO” biscuits in a factory near University Road in Jinping District, Shantou City, Guangdong Province. Aware of “OREO” being a legally registered trademark and lacking any authorization from the plaintiff, Xu orchestrated financing and marketing, Lin managed production and procurement of equipment and packaging, while Hong initially packaged and eventually assisted in production. The counterfeits were then sold via online stores on major e-commerce platforms by Fang in Wuxi and Jiang in Huai’an, Jiangsu. Following customer complaints and subsequent notification by Fang and Jiang, the Wuxi Public Security Bureau’s Hui Shan Branch launched a criminal investigation on March 25, 2023.

Upon transfer to the Hui Shan District People’s Procuratorate for review and prosecution, Chang Tsi & Partners acted expediently, appointing attorneys Michael Fu and Yang Luo to examine the case records and develop a comprehensive protection strategy. This proactive approach enabled the initiation of Wuxi’s first Civil Case Attached to Criminal Case, merging claims for compensation and a public apology in “China Food Safety Daily” to mitigate the infringement’s negative impact. On January 3, 2024, a hearing took place in the Hui Shan District People’s Court of Wuxi City, with a judgment rendered on January 18.

Judgment Results:

    1. Defendant Xu: Guilty of counterfeiting a registered trademark, sentenced to three and a half years in prison, and fined 90,000 RMB.
    2. Defendant Hong: Guilty of the same, sentenced to three years and three months in prison, and fined 30,000 RMB.
    3. Defendant Lin: Guilty as well, sentenced to a three-year suspended prison term, and fined 50,000 RMB.
    4. The defendants are ordered to forfeit their illegal earnings – 60,000 RMB for Xu, 21,000 RMB for Lin, and 26,000 RMB for Hong – to the state treasury.
    5. The seized counterfeit OREO biscuits and an iPhone 13 used in the criminal activities were disposed of by authorities.
    6. Defendants Xu, Hong, and Lin must jointly compensate Intercontinental Great Brands LLC with a total of 225,700 RMB; Xu and Hong are further liable for an additional 54,300 RMB.
    7. Defendants must publish a public apology in the “China Food Safety Daily”.

Non-appeal of the first-instance judgment has made it final and conclusive.

Our Comments:

Intellectual property rights holders have long been plagued with the challenges of arduous enforcement, lengthy processes, high costs, and insufficient punitive measures. Civil Case Attached to Criminal Case effectively allays many of these concerns, boasting numerous advantages including concurrent criminal and civil trials, efficiency, short duration, no litigation fees, strong punitive measures, and high societal benefits. However, the issue of whether and how rights holders can initiate Civil Case Attached to Criminal Case in intellectual property cases has been a continuous subject of debate in theory and practice, without a consensus being reached.

In recent years, as the emphasis on and protection of intellectual property rights has increased, we have gradually seen the potential for breakthroughs in this area. In January 2021, the Zhejiang Province High People’s Court published the “Implementation Opinions on Comprehensively Strengthening Judicial Protection of Intellectual Property Rights”, calling for “intensifying criminal enforcement… guiding rights holders to initiate Civil Case Attached to Criminal Case according to the law”; in April 2021, the Jiangsu Province High People’s Court released the “Trial Guide for Cases Concerning Infringement of Trade Secrets (Revised Edition)”, which prompted “prosecutorial plaintiffs or victims in criminal lawsuits of trade secret infringement to explore initiating Civil Case Attached to Criminal Case in a timely manner to concurrently resolve civil compensation issues”; in March 2022, the Supreme People’s Procuratorate issued the “Opinions on Fully Strengthening Intellectual Property Prosecution Work in the New Era”, calling for “comprehensive advancement of legal protections for intellectual property… exploring the conduct of Civil Case Attached to Criminal Case to enhance the quality and efficiency of comprehensive protection.”

Against the backdrop of comprehensive strengthening of intellectual property rights, Chang Tsi & Partners successfully drove Intercontinental Great Brands LLC’s Civil Case Attached to Criminal Case, ultimately achieving full protection of the involved intellectual property in both criminal and civil aspects within the same case. The lawsuit not only pursued criminal responsibilities of the three defendants but also mandated them to bear civil liabilities such as compensation for damages, reasonable expenses, and a public apology, effectively optimizing protection, minimizing costs, and maximizing deterrence. Chang Tsi & Partners’ successful representation in Wuxi’s first intellectual property Civil Case Attached to Criminal Case also demonstrates the necessity and efficacy of such litigation, which is bound to provide valuable reference and promotion for subsequent similar cases.

Authored:  attorneys Michael Fu and Yang Luo of Chang Tsi & Partners

 

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