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The public prosecutor V. Guo Mingsheng, Guo Mingfeng and Sun Shubiao (2015) SZZXCZ No. 0004, Suqian Intermediate People’s Court of Jiangsu

The public prosecutor V. Guo Mingsheng, Guo Mingfeng and Sun Shubiao (2015) SZZXCZ No. 0004, Suqian Intermediate People’s Court of Jiangsu

 

Cause of action: Criminal case alleged counterfeiting

 

Collegial panel members: Cheng Liming | Zhu Geng | Bai Jin

 

Keywords: amount of illegal business revenue, crime of counterfeiting, criminal, online sales

 

Relevant legal provisions: Criminal Law of the People’s Republic of China, article 213

 

Basic facts: The public prosecutor charged the defendants with the following.

From the end of November 2013 to June 2014, without the authorization of Samsung (China) Investment Co., Ltd. (hereinafter “Samsung Investment”), and for the purpose of seeking illegal profits and in collusion with Sun Shubiao and Guo Mingfeng, Guo Mingsheng made wholesale purchases from other persons of counterfeit bare SΛMSUNG mobile phones and accessories, assembled them, promoted them as “genuine and authentic” in his online store “SΛMSUNG Digital Shoppe” on Taobao, and sold them at a price significantly lower than the market price. The three sold a total of more than 20,000 counterfeit SΛMSUNG mobile phones, achieving sales revenue of over RMB20 million and illegal profits of over RMB2 million. This formed the basis of their criminal liabilities for the crime of counterfeiting. In the joint criminal proceedings, Guo Mingsheng was found to have played a leading role and was the principal offender; Guo Mingfeng and Sun Shubiao were found to have played an assisting role and were accessories, entailing lighter punishments.

 

Guo Mingsheng, Sun Shubiao, Guo Mingfeng and their counsel confirmed, without dissent, the criminal facts that they, without authorization from the holder of SΛMSUNG trademark, had assembled counterfeit SΛMSUNG mobile phones, and had promoted and sold them through their online store on Taobao, but they filed an objection to the amount of illegal business revenue and illegal profits achieved. They contended that the real volume of business was no more than 10,000 sets, because they had hired some “click farmers” to boost the feigned credibility of their online store. Upon investigation, the court found that “SΛMSUNG” is a trademark that has been registered in China by Samsung Electronics Co. Ltd. (hereinafter “Samsung Electronics”) with validity until July 27, 2021; Samsung Investment is a company established by Samsung Electronics in China, and is specially authorized by Samsung Electronics to deal with the management and legal affairs concerning trademarks, patents, copyrights and other intellectual property rights owned by Samsung Electronics. In November 2013, Guo Mingsheng had purchased a Taobao online store (account no. play2011-1985), the storekeeper of which was “Wang Liang”, and then changed its name to “SΛMSUNG Digital Counter”. Without authorization from Samsung Investment, he made wholesale purchases of counterfeit bare SΛMSUNG I8552 mobile phones and accessories from Yuanwang Digital Mall at Huaqiangbei, Shenzhen, and from Tongtiandi Telecommunication Market in Futian District, Shenzhen, assembled them, and then promoted and sold them as “genuine and authentic” through his online store “SΛMSUNG Digital Counter” on Taobao. Guo Mingfeng was responsible for customer service and managing customer service staff at the online store, and Sun Shubiao was responsible for sourcing, packaging and contracting with delivery companies for shipment of the counterfeit SΛMSUNG I8552 mobile phones. Up until June 2014, the online store assembled and sold a total of more than 20,000 counterfeit SΛMSUNG I8552 mobile phones, on an aggregated basis, achieving total sales revenue of over RMB20 million and illegal profit of over RMB2 million.

 

Held: Suqian Intermediate People’s Court of Jiangsu issued its judgment on September 8, 2015, finding that:

 

(a) Guo Mingsheng had committed the crime of counterfeiting and issuing a sentence of five years’ imprisonment, plus a fine of RMB1.6 million;

 

(b) Sun Shubiao had committed the crime of counterfeiting and issuing a sentence of three years’ imprisonment, with a five-year probation, plus a fine of RMB200,000; and

 

(c) Guo Mingfeng had committed the crime of counterfeiting and issuing a sentence of three years’ imprisonment, with a four-year probation, plus a fine of RMB200,000.

 

None of the three defendants appealed the decision and the judgment took effect.

 

Reasoning: The court held, in its effective judgment, that Guo Mingsheng, Guo Mingfeng and Sun Shubiao, without Samsung Investment’s authorization or licensing, purchased counterfeit bare SΛMSUNG mobile phones and accessories, assembled into mobile phones under the registered trademark “SΛMSUNG”, and promoted and sold them as “genuine and authentic” through their online store. Their activities constituted illegal behavior in using the same trademark on the same product without the authorization of the holder of the registered trademark. With sales revenue of over RMB20 million and illegal profits of over RMB2 million, it constituted the very severe crime of counterfeiting. Guo Mingsheng, Guo Mingfeng and Sun Shubiao filed an objection to the amount of illegal business revenue and illegal profit assessed by contending that they had hired “click farmers” to boost the feigned credibility of the online store. However, the three defendants’ confessions, as well as delivery bills, records of payment transfers from Alipay to Guo Mingfeng’s bank account, records of payments from Guo Mingfeng’s bank account, records of the Taobao online store “SΛMSUNG Digital Counter”, data records of delivery companies, records seized on site by the Public Security Department and other evidences collected by the Public Prosecution Department, corroborated each other to establish the prosecution’s charge that the defendants had in fact sold a total of more than 20,000 counterfeit SΛMSUNG I8552 mobile phones, achieving sales revenue of over RMB20 million and illegal profit of over RMB2 million. The defense put forward of “click farming” to feign sales and boost credibility was not supported by the evidence, and hence was found to be inadmissible. Guo Mingsheng, Guo Mingfeng and Sun Shubiao were jointly liable for the offence, in which Guo Mingsheng played a leading role and was the principal offender, and Guo Mingfeng and Sun Shubiao played an assisting role and were accessories, and therefore should be given lighter punishments.