3 Chinese companies charged with trademark notice mailing fraud

The Yiwu Administration for Market Regulation of Zhejiang province on June 8 filed a criminal complaint against three Chinese companies engaged in the mailing of about 80,000 fraudulent trademark Notices of Publication under Article 68 Paragraph 1 Item 2 of the Trademark Law of the People’s Republic of China with the Yiwu Public Security Bureau of Zhejiang province, where prosecutors will formally investigate the case. Yiwu is world-famous for its light industry commodity trade, hence a robust market for trademark registration.


The local market regulator was informed of the mail scam by a certain source in May, and afterwards discovered batches of trademark Notices of Publication in hard copy format addressed to specific trademark applicants at two physical retail stores of delivery and courier services. These express mails unanimously featured “Freight Collect” on their waybills, where their carriages were uniformly indicated to be 48 yuan or 49 yuan ($7) each. In shipping terms, when a charge is billed on a “Freight Collect” basis, a consignee or receiver of a cargo is responsible for its payment. It is also called “Collect upon Arrival,” as opposed to “Freight Prepaid” denoting that the charge is payable by the shipper or consignor.


In most jurisdictions worldwide, a Notice of Publication is a milestone in a life cycle of trademark registration application. The notice is issued by a trademark examining agency to signify that the application has received preliminary approval, being one step away from registration. It also gives any member of the public a window of feedback as long as three months to oppose the application. Evidently, the scammers purposefully took advantage of the critical procedural point. The Trademark Office of the China National Intellectual Property Administration (CNIPA) had fully stopped delivering paper trademark Notices of Publication to trademark applicants and instead adopted electronic form retrievable and accessible to applicants anytime since May 2016.


The Yiwu Administration for Market Regulation’s follow-up investigation found that the three scammer shippers of these paper notices were three Yiwu city, Zhenjiang province-based companies Yiwu Zhishang Intellectual Property Agency Co., Ltd. (义乌市致尚知识产权代理有限公司)、Yiwu Jingshiyuan Consumer Goods Co., Ltd. (义乌市晶世源日用品有限公司)、and Yiwu Bianfeng Agricultural Produce Co., Ltd. (义乌市边峰农产品有限公司). They conspired to gamble and abuse the gap in information between an intellectual property agency and its clients, which, in this very case, were simply trademark applicants represented by Zhishang, unaware of the phase-out of the paper Notice of Publication. Other than these represented applicants, the three shippers also victimized thousands of trademark applicants whose contact information had been appropriated from the CNIPA’s website by delivering the notices to them and billing on a “Freight Collect” basis in the name of falsified trademark agencies.


Between 2019 and 2022, 78,427 fraudulent notices had been delivered by express to take chances and 7,300 of them were received and paid by deceived trademark applicants, with the varied freight charges being 23 yuan ($3), 48 yuan, 49 yuan, and 100 yuan ($15), as of the investigation. The cost of each shipment was known to be 2.1 yuan ($0.3) to 2.6 yuan ($0.4) in China. By rough estimation, the three scammer shippers had gained over 300,000 yuan ($45,000) as net profit from these fraudulent notices.


The Trademark Office of the CNIPA in April 2020 published a notice alerting about this kind of fraud and reiterated the revocation of the issuance of the hard copy of the trademark Notice of Publication.


Article 68 Paragraph 1 Item 2 provides that in extreme circumstances, an offender who disturbs the market order of trademark registration by improper means can be held liable in criminal law. By the look of things, the amount of the net profit gained by the three scammer companies has qualified them as criminal offenders. Article 1 of the Judicial Interpretation (JI) of the Supreme People’s Court and the Supreme People’s Procuratorate of the Criminal Law of the People’s Republic of China in Criminal Fraud Lawsuits (《最高人民法院、最高人民检察院关于办理诈骗刑事案件具体应用法律若干问题的解释》) provides that criminal offenders of fraud with illegal gains in excess of 30,000 yuan ($4,500) to 100,000 yuan ($15,000) can be sentenced to three to ten years in prison and a fine in a certain amount.