Weekly China Trademark News Updates

March 02, 2022

1. RMB 50 million lesson for using “Delu in Chinese” as a corporate name without authorization

The Suzhou Intermediate Court of Jiangsu Province concluded a trademark infringement and unfair competition case in favor of the plaintiffs raumplus Besitz-und Entwicklungs-GmbH & Co.KG, Kasten Dirk Bergmann, Delu (Taicang) Furniture Technology Co., Ltd. against the defendants Delu Furniture (Shanghai) Co., Ltd., Delu Furniture (Nantong) Co., Ltd., and Zhu Peijun. The court ordered the defendants to compensate the plaintiffs for economic losses and reasonable legal costs of RMB 50 million (USD 7.9 million).

The defendants Delu Furniture (Shanghai) Co., Ltd. and Delu Furniture (Nantong) Co., Ltd. were jointly established by the plaintiff Kasten Dirk Bergmann and a third party, Shanghai Leidini Company. Kasten Dirk Bergmann then subsequently transferred all its equity to Shanghai Leidini Company. According to the joint venture contract between the two parties, after Kasten Dirk Bergmann withdraws its capital, the joint venture established by the two parties will no longer use the trade names and trademarks authorized by raumplus Besitz-und Entwicklungs-GmbH & Co.KG, and the joint venture company name needs to be modified.

Defendants Delu Furniture (Shanghai) Co., Ltd. and Delu Furniture (Nantong) Co., Ltd. continued using “Delu in Chinese” as the corporate name and promoted “Leidini in Chinese (LEDINI) is Delu’s customized high end sub-brand” after the plaintiff ended the joint venture with Shanghai Leidini Company. In addition, Delu Furniture (Nantong) Co., Ltd. registered and used the domain name “Delu.com.” The plaintiffs had repeatedly sent demand letters, but it has not effectively stopped the defendants’ infringement.

The court found that in this case, the “raumplus” and “Delu in Chinese” trademarks of raumplus Besitz-und Entwicklungs-GmbH & Co.KG. were all in Class 20 including furniture and other goods, which were identical with furniture sold by the defendants. At the same time, the defendants used the “Delu in Chinese” trademark in furniture invoices, brochures, design drawings, WeChat accounts, store decoration, store fronts, exhibition halls, bidding documents, and used the “raumplus” logo on furniture invoices and public promotion. These marks and logos were identical with the trademarks of raumplus Besitz-und Entwicklungs-GmbH & Co.KG. Accordingly, the defendants’ conduct constituted as using the plaintiff’s registered trademarks without authorization in Class 20 goods. The defendants’ conduct also amounted to unfair competition. Based on the evidence submitted by both parties, the court determined that the sales revenue obtained by the defendants from the alleged infringement through various modes such as bulk business, direct sales, and franchise should be far more than RMB 200 million (USD 31 million), and the profit should be at least RMB 28.1 million (USD 4.4 million). The court found that the defendants had malicious intent to infringe, which met the conditions for the application of punitive damages, so the court fully supported the plaintiffs’ claim of RMB 50 million (UDS 7.9 million) in damages.

2. Assigning squatted trademark to the original rightsholder would not change determination of bad faith hoarding

High-tech Zone Tonganlayashen Trading Firm (“HZTT”) applied for the registration of the “Maviret” trademark with reg. no. 25515429. AbbVie Ireland Unlimited Company (“AbbVie”) later filed an invalidation against the said trademark on January 18, 2019. The CNIPA found that HZTT had applied for registration of more than 50 trademarks on various types of goods and services, including “graboplast,” “joon,” “Amtrust,” “Skytap,” “herbol,” and many other trademarks that were identical or similar to others’ prior trade names and marks. AbbVie had applied to the EUIPO for registration of the “MAVIRET” trademark on September 30, 2016, which was identical with the disputed trademark “Maviret.” And HZTT failed to submitted evidence to show that it had created the disputed trademark independently. The CNIPA reasoned that, as a trading firm, HZTT should be aware of the trade names or logos in the related industries. HZTT’s applications of other’s marks had exceeded general business needs, and had obvious intent to copy, plagiarize, or imitate other’s prior trademarks and trade name. HZTT’s conduct not only caused the relevant public to misunderstand the source of the goods, but also disturbed the normal order of trademark registration and management and damaged the market order of fair competition. Therefore, the registration of the disputed trademark constituted as the situation of “obtaining registration by other improper means” as stipulated in Article 44, paragraph 1, of the Chinese Trademark Law 2013.

On December 10, 2019, HZTT and AbbVie jointly submitted an application for trademark assignment to the CNIPA to assign the disputed trademark from HZTT to AbbVie, which was approved and published on March 13, 2020.

Subsequently, the Beijing Intellectual Property Court made a judgment to dismiss the plaintiff’s claim. The court held that although the disputed trademark has been assigned to AbbVie, the malicious intent of the registration of the disputed trademark cannot be changed. Accordingly, it can be determined that HZTT disrupted the normal order of trademark registration management, damaged the market order of fair competition, and violated the principle of good faith. The registration of the disputed trademark has constituted the circumstance of “acquiring registration by deceptive means or other improper means” as stipulated in Article 44, paragraph 1, of the Chinese Trademark Law. Even if the assignment took place prior to this lawsuit, it would not affect this court’s decision.

3. Manufacture and sell bottles of another’s registered 3D trademark constituted as trademark infringement

Recently, the Shandong High Court ruled in favor of SOCIETE JAS HENNESSY & CO. (“Hennessy”) against Shandong Yuncheng Xinde Packaging Co., Ltd. (“Xinde”) in a trademark infringement case for selling the infringing wine bottle. The court found that Xinde’s manufacturing and selling of the infringing bottle constituted as manufacturing and selling Hennessy’s 3D trademark.

Hennessy owns trademark nos. 3240985, 4842349 and 16269635 as shown below. Many win bottles as shown on Xinde’s website were familiar with Hennessy’s registered trademarks.

The court found that the trademark involved was approved on wine (beverage), and the infringing products were wine bottles, namely, a container for wine. Although the infringing goods and the trademark involved were not the same kind of goods, the 3D shapes of the accused infringing goods and the 3D trademark involved were both wine bottles. In general, wine existed in liquid form and were usually packaged in wine bottles for distribution, and wine sellers and makers usually need to purchase wine bottles to fill wine. Therefore, from the general understanding of the relevant public, wine bottles and wine were closely related in use and function and were related goods. They must be used together in order to be circulated and sold to meet consumer needs; and because wine as a liquid need to be sold in wine bottles, and the two have overlapping sales channels; in terms of consumption objects, due to the relevance of their functions and uses, consumers will also buy wine bottles when purchasing alcohol products. Therefore, the consumption objects of the two also had a certain coincidence and consistency. Therefore, for the relevant public, it was generally believed that wine and wine bottles were goods with a specific connection, and the two should be deemed to constitute similar goods.

Xinde advertised and displayed the infringing wine bottle by displaying the wine filled with the wine bottle. Comparing the infringing wine bottle with the wine bottle in the 3D trademark involved, the shape of the wine bottle, the sticker position of the wine bottle, the shape, size, height, and the overall shape and style of the wine bottle, and the embossed style, shape, and overall appearances were basically identical. The infringing wine bottle and 3D trademark wine bottle involved constituted the same trademark. A 3D trademark had dual attributes, namely, as a container for holding wine and as a trademark logo. Therefore, Xinde’s manufacturing and selling the accused infringing wine bottle was an act of manufacturing and selling Hennessy’s 3D trademark involved in this case.

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Weekly China Trademark News Updates

February 22, 2022

CNIPA answers the frequently asked questions regarding the Trademark Adjudication and Examination Guideline

Part I – Adjudication and Examination of Trademark Distinctive Features

1. How is trademark distinctive features adjudicated?

The types of “other lack of distinctive features” stipulated in Article 11(i)(3) of the Chinese Trademark Law gradually increases. To meet new technologies and new business formats developments, the Trademark Adjudication and Examination Guidelines (“Guidelines”) comprehensively summarizes practical experiences of trademark examinations in recent years, which refines and supplements “other lack of distinctive features” that are more common in practice:

First, modify the distinctiveness determination of packaging, container, or decorative pattern of the goods designated by the trademark. The Guidelines further clarifies that the outer packaging of goods where “consumers will not generally regard it as a trademark that distinguishes the source of goods or services” does not have distinctive features of a trademark, and the container or decorative patterns of the goods themselves do not have distinctive features of a trademark.

Second, in practice, “commonly spoken words,” “Internet buzzwords and popular emoji packs,” and “aphorisms” are part of the public’s daily expressions and do not have distinctive features that a trademark should have.

Third, marks that “only contain the full name of an applicant (excluding natural persons),” “commonly used symbols,” and “festival names” are difficult to be identified as trademarks and lack distinctive features that trademarks should have. Common signs and symbols include a variety of those used in daily life or work. Festive names include not only the legal festival names, but also customary ones.

The Guidelines, however, cannot exhaustively enumerate all situations in which a sign “lacks distinctive features.” As for whether a certain sign lacks distinctive features, it is still necessary to make a case-by-case judgment in light of the actual situation.

2. How to determine distinctiveness if a mark is used as the full name of its corporate name?

Generally speaking, if there is only the full name of an applicant (excluding natural persons), it does not have distinctive features that a trademark should have, except for those with graphics and other elements that make the entire mark have distinctive features.

But it is worth noting that in recent years, more and more universities, research institutes, hospitals, social groups and other institutions or other organizations have registered their full names as trademarks. The brand value of its name increases the use of intangible assets. The full names of some institutions or organizations have been used for a long time and have a high reputation, and have created a one-to-one correspondence with the goods or services actually used by the relevant institutions or other organizations, which will not cause confusion and misunderstanding to consumers. Such marks can be used to distinguish the source of goods or services provided and shall be deemed to have distinctive features of a trademark.

3. Why amend the distinctiveness determination criteria for trademarks containing signs that do not have distinctive features?

The second part of the “Examination of Distinctive Features of Trademarks” in the outdated Trademark Adjudication and Examination Standards stipulates that a trademark is composed of signs and other elements that do not have distinctive characteristics. If other elements or the trademark as a whole can play the role of distinguishing the source of goods and services, that trademark has distinctive features.

However, in practice, if a trademark is composed of a design and a text, independently, where the design has certain distinctive features but the text lacks distinctive features, if directly determined such mark has distinctive features just because the design has distinctive features would create a series of problems. First, this determination method is contrary to the principle of overall determination of trademark distinctiveness and would easily create ambiguity as to the scope of trademark protection. Second, in practice, some trademark registrants use such trademarks on e-commerce platforms for the purpose of blackmailing or filing malicious infringement complaints. Third, this standard is also inconsistent with the current practice of trademark authorization and confirmation. In relevant trademark administrative or judicial cases, it is generally believed that a trademark is composed of design or text alone, and the text part is the dominant part of the trademark. If the text part lacks distinctive features, the entire trademark shall be deemed to lack distinctive features.

Therefore, after sorting out and summarizing relevant cases, soliciting opinions from courts and scholars at all levels, and rounds of discussions, the Guidelines updated the standard for determining trademark distinctiveness containing signs that do not possess distinctive features by clearly stating that “if a trademark is composed of an independent text part and other independent where the text part does not have distinctive features, the entire trademark shall be deemed to lack distinctive features.” At the same time, in order to fully protect the rights and interests of applicants and regulate the conduct of trademark adjudication and examination, the Guidelines points out, “If other elements have strong distinctive features, and the trademark registration department believes that it is possible to distinguish the source of goods or services based on these elements, it may issue an examination opinion requiring the applicant to give up the exclusive right to the part lacking distinctive features. If the applicant does not give up or fails to respond to the examination opinion within the prescribed time limit, its application for trademark registration shall be rejected.”

Part II – Adjudication and Examination of Well-Known Mark

1. What changes are made to the evidentiary requirements for the recognition of well-known trademarks?

The well-known mark determination part of the Guidelines has updated the scope of submission of some evidence, use evidence formed by non-traditional business methods and non-traditional media are now recognized. Additional forms of evidence submission are allowed according to the situation. For example: in addition to traditional evidence such as contracts, invoices, bills of lading, bank receipts, import and export certificates, etc., relevant materials such as online e-commerce sales records are added as evidence of trademark use. When examining relevant evidence of geographical areas of sales, point of sales, sales channels and methods, traditional business methods and non-traditional business methods are included. When reviewing media advertisements, comments, reports, rankings and other promotional materials, traditional media and non-traditional media, etc. are included. When reviewing tax payment for relevant evidence, in addition to the original tax payment certificate issued by the tax authority and the notarized copy of the tax payment certificate, a notarized electronic version of the tax payment certificate printed copy is now allowed.

2. What other amendments to the “Guidelines” concerning the recognition of well-known marks should applicants and agents pay attention to?

First, provisions on the re-protection of well-known marks that have been previously identified have been added, which added specific conditions for application. Evidence materials that the well-known trademark holder needs to submit when requesting to re-protect a well-known mark are also added. In particular, evidence during the time when the mark was protected as a well-known mark and other relevant evidence should be submitted.

Second, the definition of “translation” of other’s well-known mark is refined based on practice. If the disputed trademark expresses another’s well-known mark in different languages, and if those languages have established a corresponding relationship with that other’s well-known mark and are well known or used by the relevant public, such translated mark constituted as a “translation” as stipulated in Article 13(ii) of the Chinese Trademark Law. If such use of the words in another language is likely to make the relevant public mistakenly believe that it has a considerable degree of connection with the well-known trademark of others, such mark shall also be deemed as a “translation.”

Third, no longer make a clear distinction between “confusion” and “misleading,” and to combine the description of “specific situations,” so as to better meet the requirements of trademark examination and adjudication practice.

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Weekly China Trademark News Updates

February 15, 2022

1. LEGO successfully enforced its minifigures 3D trademark

Recently, the Huadu District Court of Guangzhou, Guangdong rendered a trademark infringement decision in favor of LEGO against Guangzhou Zhongnuo Trading Co., Ltd. (“Zhongnuo”) and Shen Xiaoyu for using the “LEGO” logo and LEOG’s minifigures logo on school bags, stationery boxes, and wallets, which infringed LEGO’s prior trademark rights. LEGO’s “LEGO” and “LEGO in Chinese” marks were recognized as well-known trademarks by the Beijing High Court in 2017 on toy products. LEGO also owns the “LEGO” mark and the minifigures 3D trademark on school bags, backpacks, etc. in Class 18.

Reg. No. 4912052	Reg. No. 10461954

The court found that the accused infringing goods were schoolbags, stationery boxes and wallets, which were the same or similar to the approved use scope of LEGO’s trademarks No. 4912052 and No. 10461954, and the accused infringing logos were used on the front of the goods, hang tags, zipper pullers, shoulder straps, sewing labels, etc., which carried the function of identifying the source of goods. After comparison between the infringing logos and LEGO’s registered trademarks, the accused infringing logos are identical or similar to LEGO’s trademark with reg. no. 4912052. Comparing the alleged infringing logo with LEGO’s trademark with reg. no. 10461954, the composition elements, design style, and visual effects were similar, which constitutes as similar. Although the defendant claimed that the pattern used on the accused infringing goods was the same as its own artwork “Robots and Small Yellow Minions,” the court found that the pattern to be similar to the LEGO’s trademark with reg. no. 10461954. What’s more, the trademark with reg. no. 10461954 has been registered since December 14, 2013. The completion date of the artwork “Robots and Small Yellow Minions,” however, was on October 10, 2015. The defendant used evidence created after LEGO’s prior right, which cannot be supported. The court ruled in favor of LEGO and ordered the defendant to pay LEGO’s economic losses and reasonable legal costs of RMB130,000 (USD20,471).

2. The CNIPA cracks down on trademark squatting related to popular keywords used during the 2022 Beijing Winter Olympics

On February 14, 2022, the CNIPA issued the “Notice on Combating the Malicious Squatting of “Bing dun dun,” “Gu Ailing,” and Other Trademarks.” Prior to the start of the 2022 Beijing Winter Olympics, the CNIPA have been cracking down on squatted trademark applications and registrations based on its mascot “Bing Dun Dun” and other famous athletes. So far, 427 of such squatted applications or registrations have been rejected or invalidated.

The CNIPA attaches great importance to the protection of intellectual property rights during the 2022 Beijing Winter Olympics and the 2022 Beijing Winter Paralympics by carrying out special campaigns against malicious trademark squatters. In addition to protecting the trademarks applied by the Beijing Winter Olympics Organizing Committee, and the names of popular athletes such as “Gu Ailing” and others, the CNIPA cracked down on other bad faith trademark squatters by rejecting bad faith applications of “Bingdundun” and “Gu Ailing” and some 429 other applications. The CNIPA also invalidated 43 other registered trademarks sua sponte, including “Xue dun dun” and “Gu Ailing.”

3. The CNIPA’s Q&As regarding its ruling based on “bad faith trademark registration not for the purpose of use” of the Chinese Trademark Law

The CNIPA released a series of Q&As regarding its ruling based on “bad faith registration not for the purpose of use” of the Chinese Trademark Law. We have selected a few of the important Q&As for your attention.

a. What is the difference between “bad faith registration not for the purpose of use,” “taking advantage of famous brands,” and “taking advantage of hot topics”? How does the CNIPA determine “not for the purpose of use” and “bad faith”?

It is generally believed that bad faith registration can be roughly divided into two types according to the interests infringed. One is bad faith registrations, namely, “taking advantage of famous brands,” and “taking advantage of hot topics,” and squatting others’ goodwill, civil rights, and legitimate rights and interests. The other type is “bad faith registration not for the purpose of use,” that is, “batch applications” and “occupation of resources” to disrupt or impact the general trademark registration and trademark registration management.

The Trademark Examination and Adjudication Guide (“Guide”) clarifies that the “bad faith registration not for the purpose of use” in the first paragraph of Article 4 of the Chinese Trademark Law refers to applicants who submitted a large number of trademark applications not based on the needs of production and business activities, lacking genuine intention to use, improperly occupied trademark resources, and disrupted the order of trademark registration. Here, “bad faith” refers to the intention to applying for a large number of trademarks not for the purpose of use and its intention to profit from such large profits, which is not the same as the “bad faith” in “bad faith squatting.” Bad faith squatting such as taking advantage of famous brands” and “taking advantage of hot topics,” and if such bad faith only damages the civil interests of a specific subject and does not involve damage to public interests, it does not belong to “bad faith registration not for the purpose of use.” Of course, if the number of trademarks registered in bad faith was relatively large, which caused trademark resources to be improperly occupied, and the order of trademark registration to be disturbed, Article 4(1) of the Trademark Law shall be applied. The so-called “not for the purpose of use” means that when the applicant applies for the registration of the trademark, he has neither the actual purpose of using the trademark nor the act of preparing to use the trademark, or based on a reasonable inference, there is no possibility of actually using the trademark.

b. Do I need to submit evidence of use to file an application for trademark registration? How to understand the two exceptions to which Article 4 of the Trademark Law does not apply?

China adopts a first-to-use trademark system, which does not require submission of evidence of use. Thus, it is not required to submit evidence of use when filing a trademark application.

The legislative intent of Article 4 of the Chinese Trademark Law is to regulate bad faith applications and hoarding of registrations that are “not for the purpose of use,” and to enhance the use obligations of registrants. The “Guide” clarifies that “the applicant applies for a trademark that is identical or similar to its registered trademark for defensive purposes” and “the applicant applies for a trademark in advance for a future business with realistic expectations” are the two exceptions. “Application for defensive purposes” mainly refers to applications that are identical or similar to its core brand on goods or services other than its main business, in order to prevent others from damaging the goodwill built on its core business and brand. “Applies for a trademark in advance for a future business with realistic expectations” mainly considers that in actual commercial activities, there is a certain time lag from business planning to actual publicity, promotion, and market launch of related products or services, and some market players have trademark filing plans in advance to prevent possible squatting or to avoid possibility of infringing other’s prior rights and interests.

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Weekly China Trademark News Updates

February 9, 2022

2021 Annual Trademark Right Authorization and Confirmation Statistics

In 2021, the CNIPA received a total of 7.739 million applications and has accumulated a total of 36.65 million valid registrations. Please see below some of the more important statistics, including rejection appeal, opposition, invalidation, and cancellation. Please note that these statistics are collected from a third party website and are not official statistics released by the CNIPA.

Rejection Appeal and related administrative litigation statistics

In 2021, among all 308,000 rejection appeal cases, 209,000 cases can be collected from a third party website to show that 63% of the rejection appeal are unsuccessful and that leaves 37% successful challenges.

The success rate for first instance appeal against unfavorable rejection appeal decision is only 29%, however, the success rate at the second instance appeal increases slightly to 32%.

Trademark opposition statistics

In 2021, among the 155,000 cases that can be collected from a third party website, opposition success rate, including partially rejected case, is 48%.

Invalidation and related administrative litigation statistics

In 2021, the CNIPA decided 58,000 cases and 49,000 can be collected from a third party website, invalidation success rate is 73%.

 In 2021, the first instance invalidation success rate is 16% and the second instance success rate is only 8%.

 Cancellation and related administrative litigation statistics

In 2021, among all 13,000 cancellation appeal cases, 11,000 can be collected from a third party website, cancellation appeal success rate, including partially cancelled, is 56%.

In 2021, the first instance cancellation appeal success rate is 22% and the second instance success rate is only 11%.

Please note that in 2021, the success rate to appeal the application not allowed for registration is only 15% before the CNIPA and that low success rate remains the same at first instance and drops to 5% at the second instance. Obviously, if a trademark application is not allowed for registration, it is recommended to discuss further with your Chinese trademark attorneys.

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Weekly China Trademark News Updates

January 25, 2022

1. The Guangdong High Court released its first typical cases of intellectual property punitive damages – Part II

Recently, the Guangdong High Court released 6 typical cases of intellectual property punitive damages for the first time, involving disputes in many fields such as well-known marks, financial products, and e-commerce. These 6 cases include the determination of infringement, the judgment criteria of subjective malice and serious circumstances in the application of punitive damages, the determination of the base and multiple in the amount of compensation, the relationship between criminal fines and punitive damages, and the application of punitive damages in criminal-civilian cases. Following last week’s post, we will share the rest 3 cases today.

1. Ulthera v. Ke Pai – enforcement of criminal fines cannot be cited to reduce punitive damages for trademark infringement
   Ulthera has registered the trademark “ULTHERA.” In October 2016, Ke Pai Company (“Ke Pai”) was administratively punished by the Administration for Market Regulation (“AMR”) for selling an ultrasonic imaging therapy device that violated Ulthera’s trademark right of “ULTHERA.” In August 2017, Ulthera and Ke Pai settled on Ke Pai’s trademark infringement. However, Ke Pai continued to produce and sell the said ultrasound therapeutic device labeled with “ULTHERA” trademark. Ke Pai was sentenced and fined for the crime of counterfeiting registered trademark in September 2019. Ulthera sued Ke Pai for trademark infringement based on Ke Pai’s unauthorized use of the “ULTHERA” trademark on the said ultrasound therapeutic device. Ulthera claimed that Ke Pai had subjective malice and requested the Guangzhou IP Court to order Ke Pai to stop the infringement and compensate Ulthera economic losses and reasonable expenses of RMB 1 million (USD158,000).The Guangzhou IP Court found that after receiving administrative punishment and reaching a settlement with Ulthera, Ke Pai continued to infringe on Ulthera’s trademark. Ke Pai’s sales amount was enormous, the infringement was done in bad faith, and the circumstances were serious, thus punitive damages should be applied in accordance with the law. Ke Pai raised its defense based on the execution of said criminal fines but the court held that such defense cannot be used to reduce its punitive damages and would not be supported. Considering Ke Pai’s subjective bad faith, severe infringements, the court access a doubled punitive damage based, which had exceeded Ulthera’s damage claims, thus the court fully supported Ulthera’s damage claim of RMB 1 million (USD158,000).
2. Lanyan Company v. Bai Fen Bai Company and Ke Wei Company – The defendant’s continued use of the mark after it had been invalidated should be deemed as intentional infringement
   

   Cited Mark	Disputed Mark 1	Disputed Mark 2

   Lanyan Company (“Lanyan”) owned the Cited Mark in Class 3 for cosmetics and facial cleansers, which obtained certain fame after Lanyan’s promotions and uses. Bai Fen Bai Company (“Bai Fen Bai”) entrusted Ke Wei Company (“Ke Wei”) to process and produce cosmetics and skin care products labeled with the Disputed Marks, and sold them through the “Lanyan Mei” app. The accused products’ sales amount reached RMB12.69 million (USD2 million). Bai Fen Bai later acquired the Disputed Mark 1 in Class 3 for cosmetics. Lanyan subsequently filed an invalidation against the Disputed Mark 1 and succeeded. However, during the invalidation proceeding, Bai Fen Bai refiled the Disputed Mark 1 and continued to use it after it was invalidated. Lanyan then sued Bai Fen Bai and requested the court to order Bai Fen Bai and Ke Wei to immediately stop their infringements and compensate Lanyan’s economic loss and reasonable legal costs of RMB 1 million (USD158,000).

   The Shenzhen Qianhai Cooperation Zone Court found that Bai Fen Bai knew the existence of Lanyan Company’s Cited Mark but still deliberately applied for registration and used the Cited Mark 1 that was similar to Lanyan’s Cited Mark, which showed obvious subjective bad faith. Bai Fen Bai’s infringement lasted for a long time, the sales amount was huge, and it was the source of the infringement. Bai Fen Bai’s infringement should be considered as serious and punitive damages should be applied. The sales amount of the alleged infringing goods was RMB 12.69 million (USD 2 million) and when the said amount factored in average profit margin of the four listed companies in the same industry submitted by Lanyan, Bai Fen Bai’s profit can be calculated to RMB 450,000 (USD71,120). According to the degree of subjective fault of Bai Fen Bai and the seriousness of the infringement, the court determined that the compensation should be trippled. The amount of compensation determined on this basis had far exceeded Lanyan’s claim of RMB 1 million (USD158,000), the court fully supported it. Regarding Ke Wei, the existing evidence was not sufficient to prove Ke Wei’s subjective bad faith and punitive damages were not applicable. The court, however, held that Ke Wei should be jointly liable for RMB 100,000 (USD15,800) of Bai Fen Bai’s damages.

3. Huawei v. Liu – Application of punitive damages in criminal-civilian cases
   

   Cited Mark 1	Cited Mark 2

   Huawei owned the Cited Marks which obtained relatively high fame through promotions and uses. An individual Liu who, without Huawei’s authorization, purchased materials such as liquid crystal displays and glass outer screens labeled with the Cited Marks to assemble and process them into monitors for sale since May 2018. In May 2020, the Shenzhen Municipal Public Security Bureau arrested Liu and seized the monitors labeled with the Cited Marks. In October 2020, the procuratorate instituted a public prosecution and the court found out that Liu sold 14,139 counterfeits labeled with the Cited Marks and the total sales amount of RMB 2.16 million (USD341,400). The court found Liu liable for the crime of counterfeiting registered trademarks and sentenced Liu to three years and six months in prison and a fine of 1.2 million (USD190,000). Huawei subsequently filed a civil lawsuit which requested Liu to be ordered to stop the infringement and compensate Huawei for economic losses of RMB 500,000 (USD79, 000).

   The Longhua District Court of Shenzhen found that Liu had been infringing Huawei’s Cited Marks by manufacturing and selling counterfeit screen assemblies since May 2018. Liu’s subjective intention was obvious and the circumstances were serious, which met the factors for applying punitive damages. Liu’s gross profit from infringement should be used as the basis of the punitive damages. The court used the said basis with the annual report of the listed company in the same industry to calculate that Liu’s actual profit is RMB 283,000 (USD 44,730). After considering factors such as the nature of Liu’s infringement, circumstances, and obvious subjective intention, the court doubled the compensation amount to RMB 565,560 (USD 90,000), which exceeds Huawei’s damages claim, so the court fully supported it.

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Quarterly China Trademark News Updates

October – December 2021

1. Notable trademark and anti-unfair competition cases

a. Ralph Lauren prevailed in the second instance unfair competition dispute regarding the “POLO” logo and was awarded RMB 3 million in damages

The Beijing IP Court concluded a copyright infringement and unfair competition dispute between appellants Ralph Lauren Corporation (“RLC”), Polo/Lauren Company, LP. (“PLC”) and appellees Guangzhou Gangpai Garment Co., Ltd. (“Gangpai”), Guangzhou Huaren Garment Industry Co., Ltd. (“Huaren”), Beijing Dahongmen Fuhai International Trading Co., Ltd. (“Fuhai”), which revoked the first-instance decision and ordered Gangpai and Huaren to stop using PLC’s corporate name and compensate PLC RMB 3 million in damages and RMB 100,000 in reasonable litigation expenses.

The Beijing IP Court found the following facts in its judgment:

Regarding the issue of whether the appellees use the appellants’ trade names without authorization amounted to unfair competition. First, the appellants continued to promote and use the “POLO” logo on clothing products in China through media reports and the establishment of retail stores. The “POLO” logo enjoyed high reputation among the relevant public in China. “POLO” was the main part of the trade name that the appellants have been using since their establishment. According to the relevant public’s long-term exposure of the term “POLO,” the relevant public was accustomed to using the “POLO” logo to refer to the appellants, which constituted as the abbreviation of the appellants’ trade name. Therefore, “POLO,” as the appellants’ name and abbreviation, should be protected under the Anti-Unfair Competition Law of China (“AUCL”). Second, the appellants accused Gangpai and Huaren of unauthorized use of the marks “LEYUDN POLOPOS,” “POLO SIMON, “POLO SIMON,” and “Paul Simon in Chinese & POLO SIMON.” Gangpai and Huaren argued that these were legally registered trademarks, however, these marks were invalidated by the courts. According to Article 47 of the Chinese Trademark Law 2019 and Article 30 of the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Administrative Cases for the Authorization and Confirmation of Trademarks (Amended in 2020), the above-mentioned trademarks were not protected by the exclusive right to use from the beginning. Therefore, the appellees’ arguments were untenable. Third, the accused clothing products such as T-shirts, casual pants, belts, etc. were identical or similar to the appellants’ famous clothing products; the alleged infringing luggage had strong relevance to clothing goods in terms of function, use, sales channels, target consumer, etc., especially in this case, where these products were all placed and sold in the same retail store, which had caused consumers to be confused. Thus, the alleged infringing goods constituted as similar goods to the appellants’. The use of “LEYUDN POLOPOS,” “POLO SIMON,” “POLO SIMON,” “Paul Simon POLO SIMON,” and other marks containing the words “POLO” on the above-mentioned accused infringing goods constituted as similar to the appellants’ trade name “POLO” in terms of overall visual appearances, which was likely to cause the relevant public to misidentify the sources of goods. Gangpai and Huaren were ordered to stop using the infringing logo, to publish news to eliminate negative impacts, and to compensate for losses.

Regarding the issue of compensation for losses, since PLC did not provide direct evidence of the actual losses suffered due to the infringement and the infringer’s gains due to the infringement, the court referred to the duration of the infringement involved, scope of implementation of the infringing actions, sales price of infringing goods, and other subjective infringing factors to ascertain an economic compensation within the scope of statutory compensation. Especially considering the fact that the official website of Gangpai introduced that “the brand “POLOSIMON” has been created since 2010, and there are nearly a hundred stores across the country,” it can prove that its infringement duration was long and the profits were huge; Gangpai has never applied for the registration of a separate “POLO” word mark, but clothing displayed in its business premises has a separate “POLO” logo, and its official website emphasized that its products “incorporate American style,” which proved that Gangpai had obvious bad faith in taking advantage of other’s goodwill. Although the appellants filed a separate lawsuit against Huaren and Gangpai’s infringement of its trademark rights and claimed financial compensation, the above facts were sufficient to prove that Huaren and Gangpai have made huge profits from the infringement and its gains obviously exceeded the amount of economic compensation claimed by the appellants. Therefore, the Beijing IP Court fully supported PLC’s economic compensation.

b. Mary Kay lost in a trademark infringement and unfair competition dispute

Recently, the Zhejiang High Court rendered a second instance judgement against Mary Kay Inc. (“Mary Kay”) in a trademark infringement and unfair competition dispute. The court found that even if barcodes were scratched, such action cannot be seen as a trademark infringement because Mary Kay’s trademark right was exhausted on first sale.

Mary Kay registered the trademarks “Mary Kay in Chinese” and “MARY KAY” in Class 3 for “cosmetics” related goods. Since Mary Kay entered China in 1995, it has continued to use and extensively publicize the said trademarks. The “Mary Kay in Chinese” trademark had relatively high fame. The defendant, Ma Shunxian, was the operator of the Taobao shop “Pink Shop Authentic Beauty Mall.” Various pictures of beauty and skin care products marks with the “Mary Kay” logo were found in the shop’s page. The shop’s front page indicated that all products sold were authentic and had explanations regarding reasons for scratched barcodes. Mary Kay sued Ma’s shop for trademark infringement and unfair competition based on the scratched barcodes to the Zhejiang Intermediate Court and requested relief to immediately stop infringement actions and pay compensation for economic loss of RMB 500,000 (USD 77,971). The Zhejiang Intermediate Court found for Mary Kay and Ma appealed to the Zhejiang High Court.

The Zhejiang High Court reasoned that in a trademark infringement case, if the alleged infringing product was a genuine product, it would be an objective fact that the product originated from the right holder, although some of the barcodes and production batch numbers of the alleged infringing product that can be traced back to the dealer’s partial information were scratched, but if the seller had fully notified the code scratching, it would not harm Mary Kay’s trademark function as to identify the source of the goods, nor would it cause confusion or misunderstanding to the relevant public. It would certain not affect consumers’ perception of Mary Kay’s product and Mary Kay’s reputation. Therefore, the trademark exhaustion principle could be applied in this case and the defendant did not infringe upon Mary Kay’s trademark.

c. Theory was awarded RMB 3.2 million in a trademark infringement and unfair competition lawsuit

The Shanghai IP Court recently rendered the final decision for a trademark infringement and unfair competition lawsuit for Theory LLC (“Theory”) against  defendants Xierrui (Shanghai) Apparel Co., Ltd. (“Xierrui”), Shaanxi Wangfujing Outlets Commercial Co., Ltd. (“Shaanxi Outlets”), Xi’an Xien Hot Spring Outlets Cultural Tourism Co., Ltd. (“Xi’an Outlets”), Shandong Bailian Haina Commercial Co., Ltd. (“Shandong Bailian”), Beijing Saite Outlets Trading Co., Ltd. (“Beijing Outlets”), Wuxi Bailian Outlets Commercial Co., Ltd. (“Wuxi Outlets”), and Nanjing Tangshan Bailian Outlet Commercial Co., Ltd. (“Nanjing Outlets”). The court revoked the first instance’s decision, ordered the defendants to immediately stop infringements, and compensate Theory for RMB 3.2 million (USD 501,500).

The Shanghai IP Court held that although the alleged infringing mark was a graphic and word mark, its distinguishing part was the word “TheoryLuxe,” and “TheoryLuxe” completely includes the word “THEORY,” which was similar to “Theory” in terms of text composition, pronunciation, and meaning. And the said mark was used on apparel products, packaging, and related commercial activities. Therefore, Xierrui’s use of the alleged infringing logo may easily cause the relevant public to confuse the source of the goods or misunderstand that there was an association between the two, and infringe upon Theory’s trademark right. Xierrui claimed that it had obtained the exclusive right to use the “TheoryLuxe” mark in Class 35 as a service mark on shop signboard, apparel product packaging, hangers, store decorations, etc. The court found that although Xierrui had the right to use “TheoryLuxe” in Class 35 as a service mark, the approved services, promotion of apparel, shoes, hats, etc. (for others), etc., the promotion services (for others) were services to provide assistive services to other’s sales but not for the mark owner itself. In this case, however, Xierrui promoted its own apparel products but not the service approved. Given that Xierrui’s use of the “TheoryLuxe” logo was able to allow its apparel products to be recognized, Xierrui had infringed upon Theory’s rights. Moreover, Xierrui’s domain name theoryluxe.com completely included Theory’s registered trademark. Xierrui used its website to introduce and promote its apparel products to the public. Xierrui used the “theory” logo on its packaging. These uses can easily cause relevant consumers to be confused regarding the source of the goods and infringe upon Theory’s rights. Likewise, Shaanxi Outlets, and Xi’an Outlets, Shandong Bailian, Beijing Outlets, Wuxi Outlets, and Nanjing Outlets all used the marks “TheoryLuxe,” “TheoryLuxe Xierrui in Chinese,” “THEORY and Xierrui in Chinese,” and “THEORY” in its respective shop’s directory and guides. Among them, Beijing Outlets also used “TheoryLuxe” and “Theory” on its Weibo. These uses infringed upon Theory’s trademark rights.

d. Beijing Chaoyang District Court issued an injunction for the first direct one-sided price comparison case in China

In October 2021, the Beijing Chaoyang District Court rendered a favorable decision for Markor International Home Furnishings Co., Ltd. (“Markor”) against the defendants Baichuan Times (Beijing) Trading Co., Ltd. (“Baichuan Times”), Beijing Baichuan United Technology Development Co., Ltd. (“Baichuan United”), and Baichuan Wujie (Beijing) Technology Co., Ltd. (“Baichuan Wujie”) for behavior preservation in a trademark infringement and unfair competition dispute. The court ordered the defendants to immediately stop one-sided price comparison of the Markor brand and stop using the slogans “remove the undue price bubble,” “restore the original price,” and “the product price is the lowest in the industry.”

Markor and the three defendants are owners of American styled furniture companies. Markor owns the trademarks “Meike Meijia in Chinese and MarkorFurnishings,” “Palaluoli in Chinese.” The three defendants are affiliated companies who promoted as a whole through brick and mortars, websites, WeChat public accounts, Weibo, and exhibitions. In its promotions, the defendants did not fully disclose its products’ quality, size, raw materials, production technology, and after sale services but excessively focusing on price comparison against Markor’s products while claiming its “products have the lowest price in the industry” because it has “removed the undue price bubble” and “restore the original price” of the products. Such promotions would easily cause confusion to the public that Markor’s prices were marked up. The defendants’ actions amounted to false advertisement and commercial slander of unfair competition.

The defendants promote online and offline within a broad peripheral, if the said actions were left untreated, the relevant public was likely to continue to be mistaken and falsely believe that Markor’s products prices were marked up, which would increase the popularity of the defendants’ products on the market and harm Markor’s goodwill and market share. If such actions were not stopped, the potential harm to Markor would be irreparable. Accordingly, the court supported Markor’s request to have the defendants remove the said slogans and order Baichun Times to stop using “Palaluooli in Chinese” as a slogan in selling its furniture.

e. Hyatt won well-known mark recognition in court appeals

Recently, the Beijing High Court rendered a second instance judgment, affirming “Hyatt in Chinese” in respect of hotel services has constituted a well-known mark and accordingly invalidated the registration of “HyattSen in Chinese (凯悦森) and HyattSen” on clothing and other goods in class 25.

Zhi-Peng Corporation applied the mark “HyattSen in Chinese and HyattSen” (presented as HyattSen in Chinese stacked on HyattSen)(“Disputed Mark”) in 2014 on clothing, belts, gloves, swimming suits, tops, pants, shoes, hats, hosiery, and ties. Hyatt cited its registrations of “Hyatt in Chinese” and “HYATT” in class 43 in an opposition and later an invalidation against the Disputed Mark, but received unfavorable decision on both proceedings.

Hyatt brought the invalidation case to the Beijing IP Court and obtained a favorable judgment based on the well-known mark clause.

The court found that: Hyatt submitted publicity reports on many newspapers, magazines, and websites from 2000 to 2013, award rankings, hotel introductions, protected records, and other evidence, which can prove that through continuous use and extensive promotion, the cited mark “Hyatt in Chinese” has gained high reputation in hotel services and is widely known by the relevant public. Therefore, the evidence in the case can prove that the cited mark “Hyatt in Chinese” has constituted a well-known trademark on hotel services. The Disputed Mark contains the cited mark “Hyatt in Chinese” in its entirety, the two marks are similar in terms of composition, pronunciation, and overall appearance. So the Disputed Mark has constituted a copy and imitation of the cited mark. Although clothing and other goods designated under the Disputed Mark fall into a different class from the hotels services under the cited mark “Hyatt in Chinese,” those goods and services all belong to the field of daily consumables and the target consumers are also related in a certain extent. In the case that the Disputed Mark has constituted a copy and imitation of the cited mark, the relevant public could easily deem the registrant of the Disputed Mark is closely related to the registrant of the cited mark, thereby weakening the distinctiveness of the cited mark or improperly taking free ride of the goodwill of the cited mark. Such misleading is likely to damage Hyatt’s rights based on its well-known mark. Accordingly, the application for registration of the Disputed Mark has violated Article 13 of the Chinese Trademark Law and should not be approved for registration.

The CNIPA disagreed and further appealed the case to the Beijing High Court. The second instance court affirmed the first instance judgment, holding that:

According to the evidence, it can be determined that before the application date of the Disputed Mark, the cited mark “Hyatt in Chinese” had been widely known by the relevant Chinese public in hotel and other services and had constituted a well-known mark. The Disputed Mark is composed of the Chinese characters “HyattSen in Chinese” and the English letters “HyattSen,” of which “Hyatt in Chinese” is the distinctive and recognizable part for the mark; the two marks are similar in terms of composition and pronunciation. Given the fame of the cited mark and the recognition sensitivity of the public, the Disputed Mark has constituted a copy or imitation of the cited mark. Although the clothing goods under the Disputed Mark and the hotel services fall into different classes in the Similar Goods and Services Classification, these goods and services are closely related in terms of target consumers. As the mark “Hyatt in Chinese” has been widely known to the public, upon seeing the Disputed Mark being used on the above-mentioned goods, the public is likely to associate it to the well-known mark of Hyatt. Based on such association, the relevant public may mistakenly believe that the Disputed Mark has a certain connection with the well-known mark of Hyatt, thereby misleading the public and splitting the inherent connection between the cited mark and Hyatt’s services in hotels, which would further lead to the detrimental consequences of weakening the distinctiveness of the Hyatt’s well-known mark and harming the legitimate rights and interests of Hyatt.

f. MUJI prevailed against Wuyinliangpin in a trademark infringement lawsuit

Based on its “Wuyinliangpin (MUJI in Chinese)” registered trademark in Class 20 for “pillow” related goods (“Cited Mark”), MUJI sued Beijing Wuyinliangpin Investment Co. Ltd. (“Wuyinliangpin”) for using the Disputed Mark on its u-shaped pillow product without authorization and infringed upon MUJI’s trademark rights. Wuyinliangpin defended by citing its licensed trademark “Wuyinliangpin” in Class 24 for “fabrics; pillowcase, duvet.”

The court found that the said goods in Class 20 and Class 24 largely overlapped in function, use, and target consumer. Given that both parties have its registered or licensed trademarks, both parties should use its trademarks within the scope of its approved goods. The alleged infringing products in this case were labeled as “u-shaped pillowcase” or “neck pillowcase,” but the products photo showed “u-shaped pillow with filler.” The invoice showed the product name as “textile product neck cushion.” Thus, the alleged infringing product was in fact a neck pillow product, which falls into the same product category as the Cited Mark’s approved goods “pillow.” Meanwhile, Wuyinliangpin prominently used its licensed mark “Wuyinliangpin” on the alleged infringing product’s hangtag, packaging, washing labels. Wuyinliangpin’s licensed mark and MUJI’s registered trademark had identical composition, pronunciation, and meaning, and the only differences were the use of simplified and traditional Chinese. The two marks were similar marks. Accordingly, the first instance’s decision against Wuyinliangpin was affirmed.

g. New Balance prevailed again in the second instance court winning RMB18 million in damages

New Balance Athletics, Inc and New Balance Trading (China) Co., Ltd. (together as “New Balance”) sued Putian Shengfengsheng Shoes Co., Ltd. (“Shengfengsheng”), Putian Wobaili Trading Co., Ltd. (Wobaili”), Wang Jinbiao, Gusu District Meibailu Shoe Store (“Meibailu”) for infringing its registered trademark the “N” logo on Class 25 for “sneakers” (“Cited Mark”) in Suzhou Intermediate Court. The defendants cited its registered trademark “N & design” (“Disputed Mark”).

Disputed Mark	Cited Mark

The court found that New Balance is the registrant of the Cited Mark and New Balance is the authorized party in China, which gave New Balance the exclusive right to use the trademark and its rights should be protected under the law. The alleged infringing product are sneakers, which prominently used the N logo on two sides of the shoe and significantly weakened the arrow design appeared at the lower portion of the Disputed Mark. When paying ordinary attention, consumers could recognize the Disputed Mark as used appeared as an “N” logo in bold font, which was highly similar to the Cited Mark. Considering New Balance have been selling sneakers with the N logo for many years through continuous promotion and publicity, its N logo has obtained relatively high fame. Thus, the Disputed Mark was likely to cause confusion and mistake the public regarding the source of the goods of the two marks. The evidence also proves that there were actual confusions on the market. Therefore, the Disputed Mark constituted as an infringement on the Cited Mark. Meanwhile, the New Balance sneakers have been using the N logo on two sides of the shoes as its decoration for a fairly long time. With extensive publications, the N logo can be seen as a special decoration of New Balance’s sneakers. Wobaili and Shengfengsheng, as competitors in the industry, knowing the popularity of New Balance sneakers and the distinctiveness of using the N logo on both sides of the shoes, they still used the unique decoration of well-known goods without authorization. Their actions showed subjectively malicious to free-riding others fame, and objectively crouching a large number of New Balance sneakers market share, which violated the good faith principle and amounted to unfair competition. Comprehensively considering the circumstances of the case, the first instance court ruled that the three defendants should compensate New Balance for economic losses and reasonable expenses of RMB18 million. The second instance court upheld the judgment of the first instance court.

h. Christian Louboutin prevailed in a trademark infringement against an online reseller

Christian Louboutin is one of the world’s leading designer brands for men’s and women’s shoes, bags, and related accessories created in 1991 by Christian Louboutin himself. The Christian Louboutin brand has become a world-famous manufacturer of luxury shoes and opened retailers in more than 60 countries. Christian Louboutin registered the “CHRISTIAN LOUBOUTIN” mark, the “Louboutin” mark, and the “Louboutin and Design” mark in China. Lanli Co. opened a store named “Guangzhou Lanli International Trade Co., Ltd.” on the 1688 platform, used the said trademarks without Christian Louboutin’s authorization, and sold goods that infringed the said trademarks. Another company, Shiyu, posted a moment story on a WeChat account using the said trademarks without authorization and sold goods that infringed the said trademarks. The infringing activities of Shiyu can be traced back to 2015, which lasted for quite some time.

Lanli Co. and Shiyu jointly sold infringing goods, but did not submit evidence to prove the source of purchase of the infringing goods at issue. In addition, Lanli Co. operated the shop involved in this case as a manufacturer and advertised in details that “the disputed shoes can be customized and all shoes can be made.” Combining with Shiyu’s statements, such as “we are manufacturer” “can start making shoes tomorrow,” etc. the court found both Lanli Co., and Shiyu were manufacturing the infringing goods.

Lanli Co. and Shiyu produced and sold the infringing goods at issue, which infringed upon Christian Louboutin’s registered trademark rights, and the court ordered the defendants to pay the Christian Louboutin RMB150,000 (USD23,540) in damages.

i. Kluber Lubrication won over RMB 2 million in damages in a trademark infringement lawsuit

On November 29, 2021, the Shanghai IP Court made a final judgment in the case of Kluber Lubricant (Shanghai) Co., Ltd. (“Kluber Shanghai”) against Shanghai Xinyu Lubrication Technology Co., Ltd. (“Xinyu”), Zou Ming and Yuan Jianguo for trademark infringement disputes, and affirmed the first instance judgment. Xinyu and Zou Ming should jointly and severally compensate Kulber for economic losses of RMB2 million (USD313,819) and reasonable expenses of RMB150,000(USD23,536).

There are two types of alleged infringements in this case. One was filling other brands of lubricants as “Kluber in Chinese” brand lubricants. The other was filling large bottles of “Kluber in Chinese” brand lubricants into small bottles of “Kluber in Chinese” brand lubricants.

As Xinyu’s legal representative and actual controller, Zou Ming organized Xinyu’s employees, including Yuan Jianguo et al., to pack low-priced lubricants of other brands into customized containers, affix the self-printed Kluber trademark and sell the lubricant under the guise of Kluber. Under the Chinese Trademark Law, said action performed without Kluber’s authorization and used a mark identical to Kluber’s registered trademarks on identical goods, which violated Kluber’s trademark right.

The issue in this case was whether the sub-packaging acts of the accused genuine lubricant involved in this case constituted trademark infringement may be analyzed from the following aspects:

1. The alleged act of attaching a trademark to a small bottle for sub-packaging falls within the use as mentioned in the Chinese Trademark Law. In this case, Zou Ming instigated his employees to purchase 1kg of lubricant cans from the market, load the genuine large “Kluber” lubricant bottle into the aforesaid small bottle, and affix the forged registered trademark that were made. The attachment of such a trademark did not change the function of identifying the source of the trademark. Therefore, Zou Ming’s use of the trademark involved in this case was not within the reasonable scope of use, and thus he could not be deemed to have used the registered trademark of Kluber in good faith.
2. The accused sub-packaging damaged the quality assurance function of the trademark. The act of sub-packaging of goods will involve the change of the original packaging or product itself, so that the sub-packaged goods are different from the original goods, and the owner has lost control of the quality of goods, such change may directly affect or even damage the owner’s reputation of goods. Especially for lubricant, which is a product that has strict storage conditions and refined internal material requirements, which make the quality assurance function of the trademark more prone to damage.
3. The principle of exhaustion of trademark rights shall not apply to the accused act of sub-packaging. Xinyu, as a dealer of Kluber, purchased genuine Kluber lubricant, and its source of products was legal. However, when Xinyu resold the lubricant, it damaged the packaging of the lubricant for its own greater benefit, or labeled low-grade lubricant as high-grade ones, which damaged the quality of products and the fame of the trademark owners. Therefore, the sub-packaging involved in this case shall not be governed by the principle of exhaustion of trademark rights.

Accordingly, the sub-packaging involved in this case fall within the trademark infringement act of “causing other damage to the exclusive right of others to use a registered trademark” as prescribed in Article 57(7) of the Chinese Trademark Law.

j. Sale of Michael Kors parallel imports were found to infringed upon Michael Kors’ trademark rights

The Dongguan Intermediate Court of Guangdong Province recently concluded a trademark infringement case between Michael Kors (Switzerland) International Co., Ltd. (“Michael Kors”), Shanghai Yiteng Brand Management Co., Ltd. (“Shanghai Yiteng”), Dongguan International Trade City Branch, Shanghai Yiteng Brand Management Co., Ltd. (Shanghai Yiteng), etc. The court upheld the first instance court’s judgment that Shanghai Yiteng’s sale of parallel imported “MK” handbags constituted infringement.

In this case, the court found that the alleged infringing products were the same as the products approved for use in the registered trademark of Michael Kors. “MICHAELKORS” and “MICHAELMICHAELKORS” used on the alleged infringing products sold by Shanghai Yiteng were the same as the registered trademarks of Michael Kors. The use of “MKMICHAELKORS” on the packaging of the alleged infringing products sold by Shanghai Yiteng constituted trademark use in the meaning of the Chinese Trademark Law, which was similar to the registered trademark of Michael Kors, and was likely to cause confusion among the relevant public. As the owner of the exclusive right to use the registered trademark involved in this case, Michael Kors issued an appraisal report after appraising the alleged infringing handbag and confirmed in the first instance trial that the alleged infringing products were not authorized products produced by Michael Kors. Shanghai Yiteng claimed that the alleged infringing products were genuine products purchased from Yunnan Aishe Trading Co., Ltd. through parallel import, and the alleged infringing products sold by it had lawful sources. Since the registered trademark involved in this case has a relatively high popularity in China, Shanghai Yiteng, as a company specialized in selling alleged infringing products, shall have a higher duty of care when purchasing from lawful sources. The scanned copies of its sales contracts, bank transfer records, the power of attorney issued by Shenzhen Huarui Ri-Sun Watch Co., Ltd., and the Import Goods Declaration Form and other evidence submitted by Shanghai Yiteng could not prove the corresponding relationship between the alleged infringing products it sold and the goods indicated in the Import Goods Declaration Form. Shanghai Yiteng failed to prove that the entire procurement channel for the alleged infringing products it sold and the products it obtained were genuine products obtained through parallel imports. Therefore, the evidence submitted by Shanghai Yiteng could not negate the arguments of Michael Kors regarding the non-genuine products, and its claim that the infringing products were parallel imports lacked sufficient evidence. In accordance with Article 57(3) of the Chinese Trademark Law, the sale of the alleged infringing products by Shanghai Yiteng infringed upon Michael Kors’ exclusive right to use its trademark.

k. The Beijing High Court cited claim preclusion in affirming the “Rejoice in Chinese” trademark invalidation case

The “Rejoice in Chinese” trademark (“Disputed Mark”) was filed by an individual He Dun on September 19, 2002. Proctor & Gamble (“P&G”) filed an opposition against the Disputed Mark when the Chinese Trademark Law 2001 was still in force. The Disputed Mark was later approved for registration after an opposition appeal, first instance, and second instance appeals.

While the Chinese Trademark Law 2013 was in force, P&G filed an invalidation against the Disputed Mark. After adjudication, the CNIPA invalidated the Disputed Mark because the Disputed Mark violated Article 13(2) of the Chinese Trademark Law 2013. He Dun was unsatisfied with the CNIPA’s decision and appealed to the Beijing IP Court.

The Beijing IP Court found that the opposition filed by P&G in 2001 has clearly cited P&G’s prior registered trademark “Rejoice in Chinese” and claimed that the Disputed Mark violated Article 13(2) of the Chinese Trademark Law 2001, which was an identical claim to this case. Evidence submitted for this case were identical to those submitted for the opposition filed based on the Chinese Trademark Law 2001, the evidence cannot reflect whether the time of its formation was after the opposition decision was made, there were no evidence showing that there were circumstances that could not be previously obtained due to objective reasons, or the evidence would have substantially affected the application of Article 13(2) of the Chinese Trademark Law 2001 in the opposition. Thus, P&G’s invalidation constituted as claiming identical facts and reasons to a prior case, which violated the principle of claim preclusion. P&G’s new citation of its registered trademark “Rejoice & Rejoice in Chinese & Design” did not violate the principle of claim preclusion, but the registration date was later than the application date of the Disputed Mark. Even if such mark was recognized with well-known mark status, P&G would not be able to prove that such mark had obtained well-known status prior to the Disputed Mark’s application date, because well-known mark protection for non-similar or non-identical goods can only extend to the registration date of the well-known mark. Accordingly, the Beijing IP Court concluded that the P&G’s invalidation was claim precluded because the same issue was previously decided on merit citing Article 13(2) of the Chinese Trademark Law, and revoked the CNIPA’s invalidation decision. The Beijing IP Court’s decision was then appealed to the Beijing High Court.

The Beijing High Court in its decision affirming the Beijing IP Court’s decision reasoned that “the scope of the administrative power of the court for trademark granting and verification shall generally be determined based on the plaintiff’s litigation claims and reasons. If the plaintiff did not raise a claim in its complaint but the relevant findings of the Trademark Review and Adjudication Board were obviously improper, the court may review the relevant matters and make judgments after the parties have stated their opinions.” The evidence in the case can prove that He Dun filed and obtained hundreds of trademarks identical or similar to other famous trademarks in Classes 3, 5, 16, 20, 24, 30, and 32, and failed to provide reasonable explanations on his intention and creative sources of the designs of his massive filings for distinctive and famous trademarks, which can be seen as He Dun has the subjective malice of plagiarizing and imitating others’ trademarks, and constituted as bad faith registrations that should not be limited by the five-year limitation for filing invalidation under the Chinese Trademark Law. Considered that the CNIPA’s invalidation decision was revoked and the CNIPA was ordered to issue a new decision for the Disputed Mark, the Beijing High Court ordered the CNIPA to reexamine the case based on Article 45(1) of the Chinese Trademark Law for He Dun’s bad faith.

2. Notable trademark laws, regulations, and news updates

a. Starting January 1, 2022, the CNIPA will no longer issue paper trademark certificates

Recently, the CNIPA announced that starting from January 1, 2022, applicants who filed paper trademark applications will receive a “Notice of Issuing a Trademark Registration Certificate,” and the trademark registrant can use the web address and access code provided to retrieve electronic trademark registration certificate from the Trademark Office’s website. Applicants who filed trademark applications electronically can log into the Trademark Office’s online platform to view, download, and print electronic trademark registration certificate. The CNIPA will no longer issue paper trademark registration certificates.

b. The CNIPA has cracked down on 376,000 malicious trademark registration applications in 2021

Since this year, the CNIPA has launched a special campaign to severely crack down on abnormal patent applications and malicious trademark registration. The CNIPA has focused on high quality development of intellectual property rights, launched a crackdown on malicious trademarks, and cumulatively cracked down on 376,000 applications for malicious trademark registration.

c. The CNIPA: Stop handling the trademark agency business of these two companies for 12 months / forever!

On December 10, 2021, the CNIPA issued two administrative penalty decisions: Permanently stop accepting the trademark agency business of Jiangsu Bainian Trademark Agency Co., Ltd. (“Bainian”), and stop accepting the trademark agency business of Guangzhou Zhongchuang International Brand Management Co., Ltd. (“Zhongchuang”) for 12 months.

In the process of engaging in trademark agency business, Bainian, in order to avoid the requirement that trademark agency companies cannot apply for registration of trademarks other than trademark agency services, it preemptively registered trademarks that were previously used by others and have certain influence in the names of three affiliated companies. A malicious trademark application for the purpose of use violates the principle of good faith and constitutes Article 19(3) of the Chinese Trademark Law, which states that trademark agency knows or should know that the trademark applied for by the client belongs to Article 4, Article 15, and Article 32 of this law shall not accept their entrustment.” Article 19(4) states that “trademark agencies shall not apply for the registration of other trademarks except for the registration of trademarks for their agency services.” Bainian implemented the above-mentioned illegal acts, which showed its subjective bad faith, and the duration of its operation was long, and there were a large number of malicious trademark applications, which seriously disrupted the order of trademark registration management, which should be considered as serious circumstances. In accordance with the provisions of Article 68(1)iii of the Chinese Trademark Law, Article 68(2) and Article 90 of the Regulations for the Implementation of the Trademark Law, the CNIPA decided to permanently stop accepting trademark agency business from Bainian, and announced this news on the CNIPA’s website.

Entrusted by 58 overseas companies, Zhongchuang filed 224 trademark applications with the CNIPA that were identical or similar to the trademarks registered and used by others, which interfered with the normal trademark examination, and at the same time, its behavior had server impact against some of the other companies, which belonged to the situation of “disrupting the order of the trademark agency market by other improper means” and “serious circumstances” as stipulated in Article 68(1)ii of the Chinese Trademark law. According to Article 68(1)ii, Article 68(2), and Article 90(1) and (2) of the Regulations for the Implementation of the Trademark Law, the CNIPA decided to stop accepting the trademark agency business of Zhongchuang for twelve months and announce this news on the CNIPA’s website.

d. The Standards for Judging General Trademark Violations was recently issued by the CNIPA with a view to further tightening trademark administration

The CNIPA recently issued the Standards for Judging General Trademark Violations (“Standards”), which unify the standards for judging violations of the trademark administration order, with a view to strengthening trademark administration, unifying law enforcement standards, and improving law enforcement.

The Standards include 35 articles and detail nine types of violations against the administrative order of trademarks, including the failure to use of a registered trademark as prescribed by the existing Trademark Law, regulations and departmental rules, the use of a mark that shall not be used as a trademark, the use of the word “well-known trademark in Chinese” in commercial activities, the failure of a trademark licensee to indicate its name and the place of origin of goods, the change of a registered trademark, the name, and address of a registrant by itself, falsely using of an unregistered trademark as a registered trademark, failure to perform the obligation of managing collective trademark and managing certification trademark, filing bad faith trademark application. The Standards shall come into force on January 1, 2022.

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Weekly China Trademark News Updates

January 19, 2022

1. The Guangdong High Court released its first typical cases of intellectual property punitive damages – Part I

Recently, the Guangdong High Court released 6 typical cases of intellectual property punitive damages for the first time, involving disputes in many fields such as well-known marks, financial products, and e-commerce. These 6 cases include the determination of infringement, the judgment criteria of subjective malice and serious circumstances in the application of punitive damages, the determination of the base and multiple in the amount of compensation, the relationship between criminal fines and punitive damages, and the application of punitive damages in criminal-civilian cases. We will share 3 out of the 6 cases today.

1. Opple v. Huasheng Company in a trademark infringement dispute – clarifying the applicable standards for punitive damages and the refined calculation of damages
   

   Cited Mark 1	Cited Mark 2
   Disputed Mark 1	Disputed Mark 2

   Opple is the right holder of the Cited Marks in Class 11 for “lamps and fluorescent tubes” and Cited Mark 1 had been recognized as a famous trademark in Guangdong Province for many times and was recognized as a well-known mark in 2007. Huasheng Company is the owner of Disputed Mark 1 approved for use in Class 21 including “mosquito repellents, fly swatters, housework gloves,” etc. Huasheng Company used the Disputed Marks on its production, sales, and offer to sell lamps, as well as on related promotional pages. The accused products are sold in major physical supermarkets and on e-commerce websites. The lamp products produced by Huasheng Company were punished by administrative organs for their unqualified quality. Opple filed a lawsuit with the People’s Court of Nansha District, Guangzhou, Guangdong Province, petitioned the court to find that Huasheng Company’s actions constituted trademark infringement, and requested the court to apply punitive damages and order Huasheng Company to compensate its economic losses and reasonable legal expenses of RMB 3 million (USD472,000).

   The court found that the Cited Marks had strong distinctiveness and had reached well-known status. Huasheng Company did not use the trademark within the scope of its approved trademarks, and its cross-class use of the trademark on lamp products constituted as a similar mark to Opple’s Cited Marks, which was likely to cause confusion, and constituted as trademark infringement according to the law.

   The court reasoned that, first, Huasheng Company, as a business operator in the same industry as Opple, knowing Opple’s Cited Marks that enjoy a high reputation and goodwill, and knowing that the Disputed Mark 1’s application in Class 11 for lamps and lanterns was rejected, still deliberately filed the Disputed Mark 1 in Class 21, using it on lamps in Class 11 by mass-producing and selling infringing products, and the quality of the products were not up to standard, the subjective malicious intention of infringing Opple’s trademark rights was obvious. Second, Huasheng Company produced and sold the accused infringing products on multiple e-commerce websites for a long period of time. Huasheng Company’s infringement not only caused market confusion, but also violated administrative regulation for producing inferior products, which harmed the interests of consumers and affected social and public safety. Huasheng Company’s infringement had a great impact and serious consequences, which was enough to be considered as a serious circumstance.

   Accordingly, the court held that Huasheng Company’s subjective malice was obvious and the infringement was serious, and treble punitive damages should be applied. In calculating the punitive damages base, the court concluded the base as RMB 1,277,500 (USD197,000) based on the Cited Marks’ license fee, Huasheng Company’s infringement duration, comprehensively considering the subjective bad faith, the nature, circumstances and consequences of the infringement, and other factors. Huasheng Company was ordered to compensate for economic losses and reasonable legal expenses of RMB 3 million (USD472,000).

2. Guosen Securities v. Guoxin Equity Investment Fund for trademark infringement and unfair competition disputes – Punitive damages calculated based on the logic of the private equity fund industry
   
   Since 1997, Guosen Securities has used “Guoxin in Chinese” as its corporate name. Guosen Securities and its subsidiaries have a large scale of assets under management, ranking among the top in the financial industry, and have won many honors and awards. Guoxin Equity Investment Fund (“Guoxin Fund”) was established in 2013. It used “Guoxin People”, “Guoxin Fund”, “GUOXIN FUND”, “+ Guosen Fund” and “+ Guosen Wealth” on its official websites, magazines, Weibo, Wechat, and promotional materials. Guosen Securities filed a lawsuit alleging that the aforementioned acts of Guoxin Fund infringed its registered “Guoxin” trademark, as well as the use of the “Guoxin” in its corporate name, and its false promotions that it was a state-controlled enterprise constituted unfair competition, and requested a compensation of RMB 10 million (USD1.57 million).

   The Guangdong High Court found that Guoxin Fund’s infringements were in line with “bad faith infringement” and “serious circumstances” and punitive damages should be applied. When determining the base of the punitive damages, the court analyzed the profit model of the private equity fund industry, the annual fund management fee charged by Guoxin Fund, and the total scale of funds raised by Guoxin Fund, fund management rate, and profit rate. It was found that Guoxin Fund made at least RMB 8.54 million (USD1.34 million) while it was infringing Guosen Securities. Considering the market reputation and popularity of the “Guoxin” trademark owned by Guosen Securities, the nature and circumstances of Guoxin Fund’s infringement, and the characteristics of the private equity fund industry, the court carefully quantified the contribution rate of the involved trademarks to 30% and determined that the amount of compensation was more than RMB 7.69 million. On this basis, after cumulating the unfair competition compensation and Guosen Securities’ reasonable legal expenses, the total amount has exceeded RMB 10 million (USD1.57 million) as claimed by Guosen Securities. Therefore, the court fully supported Guosen Securities’ claim of RMB 10 million (USD1.57 million).

3. Xiaomi Technology Company v. Shenzhen Xiaomi Company, etc. for trademark infringement and unfair competition disputes – Specific considerations for punitive damages for trademark infringement in e-commerce

   Xiaomi Technology Co., Ltd. (“Xiaomi Tech.”) owns the No. 8228211 “” trademark on mobile phones and other goods, and carried out various publicity and extensively used its trademark and trade name. Shenzhen Xiaomi Company (“Shenzhen Xiaomi”) was established later than Xiaomi Tech. and opened a store on the Tmall platform which sold labeled products produced by others. Shenzhen Xiaomi was selling 182 accused products such as chargers, mobile power supplies, fans, and massagers on its Tmall store. The sales pages of the products were marked with “Xiaomi Digital Store,” and 114 of the accused products links were marked with “Xiaomi Digital Franchised Store,” “Xiaomi Franchised Store,” and “Xiaomi.” Shenzhen Xiaomi sold its products for RMB 154 million (USD24.2 million) in the past three years on its Tmall store. Xiaomi Tech. requested the court to order Shenzhen Xiaomi to compensate its economic losses and reasonable legal costs of RMB 30 million (USD4.7 million).

   The Shenzhen Intermediate Court found that Shenzhen Xiaomi’s use of Xiaomi Digital Franchised Store,” “Xiaomi Franchised Store,” and “Xiaomi” in the sales titles of the 114 products involved in the case constituted trademark infringement, and the total sales amount was RMB 135 million (USD21.2 million). The court ordered Shenzhen Xiaomi to produce evidence of its transaction, but Shenzhen Xiaomi refused to provide it without justifiable reasons. The court then supported Xiaomi Tech.’s claims and used the profit rate of 30.78% as found in their industry. According to the popularity of the trademark involved, the way of use and operation of Shenzhen Xiaomi, the court determined that the contribution rate of the trademark involved to the defendant’s profits was 30%. Shenzhen Xiaomi’s infringement was long-term, wide-ranging, large-scale, and profitable. It also committed multiple infringements at the same time. The circumstances were serious. Therefore, considering the above factors, the court applied triple punitive damages. Accordingly, the amount of compensation was calculated to be more than RMB 37.4 million (USD5.8 million). On this basis, the court fully supported Xiaomi Tech’s RMB 30 million (USD4.7 million) infringement claim.

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Weekly China Trademark News Updates

January 11, 2022

1. New trademark related regulations effective from January 2022

The new Trademark Examination and Adjudication Guidelines issued by the CNIPA came into force on January 1, 2022, and the original Trademark Examination and Adjudication Standards was abandoned at the same time.
https://www.cnipa.gov.cn/art/2021/11/22/art_74_171575.html

The revised trademark related forms issued by the CNIPA came into force on January 1, 2022, and the outdated forms was discontinued at the same time.
https://www.cnipa.gov.cn/art/2021/12/10/art_75_172047.html

The Standard for Judgment of General Trademark Illegalities issued by the CNIPA came into force on January 1, 2022.
https://www.cnipa.gov.cn/art/2021/12/16/art_75_172237.html

From January 1, 2022, the CNIPA will no longer issue paper trademark registration certificates. Trademark registration certificate generate through published trademark gazette, other trademark applications, and other applications filed in paper format will received Notification of Retrieving Trademark Registration Certificate (“Notification”). Registrant can retrieve electronic trademark certificate by log onto the CNIPA’s website using the web address and retrieving code provided on the Notification. Trademark applications filed electronically should log onto the CNIPA’s website to retrieve view, download, and print the electronic certificate.
https://www.cnipa.gov.cn/art/2021/10/12/art_74_170694.html

2. Ferrari invalidated the “Horse and Serpent Design” trademark

Recently, the Beijing High Court rendered an administrative second instance dispute over the request for invalidation of trademark rights between the Qingdao Fulin Tire Co., Ltd. (“Qingdao Fulin”), the CNIPA, and Ferrari. The court rejected Qingdao Fulin’s appeal and upheld the lower court’s decision.

Disputed Mark	Cited Mark 3	Cited Mark 4
TM App. No. 20312692	TM Reg. No. 4854897	TM Reg. No. G1085878

The main issue of this case was whether the Disputed Mark and the Cited Marks 3 and 4 constituted similar trademarks on the same or similar goods. Regarding the similarity of goods, Qingdao Fulin clearly recognized in the first instance lawsuit that the approved goods for the Disputed Mark and the approved goods for the Cited Marks 3 and 4 constituted the same or similar goods, and the Beijing High Court confirmed this fact after review. Regarding the similarity of trademarks, the Beijing High Court reasoned that the distinctive identification part of the Disputed Mark and the distinctive identification figures of the Cited Mark 3 and 4 were obviously horses, and all showed a posture of prancing to the left, and the overall visual effects were similar. Moreover, the evidence in the case can prove that the prancing horse design used by Ferrari on automobiles and related products had a certain reputation. When the Disputed Trademark and the Cited Trademarks were used simultaneously on the same or similar goods that have been approved, it was easy to cause confusion and misunderstanding to the relevant public, and cause them to mistakenly believe that it was a series of trademarks provided by the same supplier of goods, or that there was a certain relationship, an association, or other specific relationship between the suppliers. The evidence in the case was not enough to prove that the Disputed Mark had a certain popularity after use, so that the relevant public can distinguish the Disputed Mark from the Cited Marks, which will not lead to the possibility of confusion and misidentification. At the same time, in order to determine whether the Disputed Mark constituted as the situation stipulated in Article 30 of the Chinese Trademark Law 2014, only the possibility of confusion and misidentification was required, and the actual occurrence of confusion and misidentification was not a requirement. Accordingly, it was correct for the first instance judgment to rule that the Disputed Mark and the Cited Marks constituted as similar trademarks used on the same or similar goods.

3. Obtaining and exercising trademark rights in violation of the principle of good faith constitutes abuse of rights and shall not be protected

The Zhejiang High Court rejected the retrial petition field by the retrial petitioner Jinxu Geng against the respondent Yiwu Dongge Trading Co., Ltd. (“Dongge”), Weifeng Li, and Hangzhou Alibaba Advertising Co., Ltd. (“Alibaba”) in a trademark infringement dispute.

The main issue of this case is whether it is correct that the first and second instance courts did not protect Jinxu Geng’s trademark rights involved in the case. The Zhejiang High Court found that the Article 7(1) of the Chinese Trademark Law stipulated that the application for registration and use of a trademark shall follow the principle of good faith. In trademark infringement cases, the principle of good faith should also be considered. Any act that violated the legislative intent and purpose of the Chinese Trademark Law, damaged the legitimate rights and interests of others, and maliciously obtained and exercised trademark rights shall be deemed as abuse of rights, and relevant infringement claims should not be supported by the Chinese Trademark Law. In this case, first of all, according to the evidence submitted by Dongge and Weifeng Li in the first instance, the outsider CGE Company launched the “CODENAMES” board game in 2015 and gained a certain popularity. This board game was marked with “CODENAMES” on the front of the product packaging. Jinxu Geng registered the trademark “CODENAMES” with registration number 25812260 (the “Disputed Mark”) that was identical with the name of CGE’s board game. The application date of the Disputed Mark was later than the initial public sale time of the “CODENAMES” board game, and the board game had been sold in the China market. Domestic consumers can purchase or learn about the board game through the Internet and other means. Jinxu Geng may had exposure to the “CODENAMES” logo, and he could not provide evidence or explain the exact source of the Disputed Mark’s logo. At the same time, Jinxu Geng had marked the CGE logo on the products he sold, which he could not provide reasonable explanation. The purpose of registering and using the trademark “CODENAMES” involved in the case can hardly be regarded as legitimate. Second, Jinxu Geng registered a large number of foreign board games related logos as trademarks, and then filed a large number of infringement lawsuits. Jinxu Geng’s way of obtaining and exercising trademark rights violated the principle of good faith and constituted abuse of rights. According to the ruling on the invalidations of the Disputed Mark submitted by Dongge and Weifeng Li, the CNIPA also ruled that the application for registration of the Disputed Mark constituted as the situation of “obtaining registration by other improper means,” which violated the Article 44(1) of the Chinese Trademark Law, and the Disputed Mark shall be declared invalid. Finally, although Jinxu Geng submitted evidence of his actual use of the trademark in question, on the premise that the trademark in question was not acquired and exercised in good faith, even if Jinxu Geng actually used the Disputed Mark, it would be difficult to make up for the legality of his behavior. Considering the above circumstances, it was not incorrect for the first and second instance court to not protect Jinxu Geng’s trademark right in this case. Accordingly, Jinxu Geng’s retrial petition did not meet the circumstances stipulated in Article 200(6) of the Civil Procedure Law of China, and shall not be supported.

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Weekly China Trademark News Updates

December 29, 2021

2021 turned out to be year one for all of us learning how to live with COVID-19. Across the world, various strategies have been implemented to adapt the new normal such as continuing wearing mask in crowded areas, keeping social distance, getting at least two doses of vaccine, and occasionally countries around the world would still implement partial or full lock down in order to contain the virus from spreading into the community. That said, social activities around the world have picked up where they left in 2019. 2020 Summer Olympics resumed in Japan, Tom Brady won another ring at Super Bowl LV, Tennis Grand Slams were held as scheduled around the world, Villarreal CF won the 2020 UEFA Euro. Many intellectual property related conferences were also resumed around the world. Beijing East IP attended INTA via its online platform and joined many table topics with our colleagues around the world. Although it was not the same as seeing them in person, definitely better than exchanging emails.

At Beijing East IP, we had to adapt new communication channels and our weekly China trademark news updates was one of the new channels. Our first update was published on January 15, 2021, and the one today will mark the end of the first full year of providing weekly China trademark news updates to our subscribers. We hope the contents have been interesting and informative to you and we will continue to provide this weekly updates into 2022. There may be new ideas from us to you in 2022, so stayed tuned and we will let our subscribers know as soon as the new materials are prepared. Stay tuned and wish everyone a Happy New Year of the Tiger!

1. Schneider Electric was awarded RMB 1 million in compensation in an unfair competition lawsuit

Schneider Electric (China) Co., Ltd. (“Schneider China”) sued Hangzhou Dongheng Electric Co., Ltd. (“Dongheng”) for using the domain name “www.schneider-china.com” and the corporate name of “Hangzhou Schneider Electric Co., Ltd.” in an unfair competition lawsuit.

The Second Instance Court found that Schneider China has invested in and established a number of companies with the name “Schneider in Chinese” since its establishment in 1995 in China and has won many awards. After continuous and extensive publicity, Schneider China’s “Schneider in Chinese,” “Schneider Electric in Chinese,” ” Schneider Electric,” and other trademarks obtained a high fame in the field of electrical products. At the same time, Schneider China has established a specific relationship with the products it provides. The “Schneider in Chinese” tradename has become an influential company brand that can be protected under the Chinese Anti-Unfair Competition Law. Dongheng used the words “Hangzhou Shinaide (Schneider in Chinese) Electric Co., Ltd.” on the “http://www.schneider-chinacom” website to offer for sale and sold electrical products such as circuit breakers. The “Shinaide” and the foreign language “schneider” used on Dongheng’s tradename and its domain name constituted as identical or similar marks to Schneider China’s “Schneider in Chinese” trade name. As a business operator of the same industry, Dongheng should be aware of the reputation of the “Schneider in Chinese” brand name. Dongheng continued to use “Shinaide” as its tradename and as part of its domain name of the accused website after it had previously undertook not to use “Shinaide” in its tradename in a lawsuit. Dongheng’s actions showed subjective intention to free ride other’s fame, and objectively caused confusion to the relevant public. Dongheng’s actions amounted to unfair competition. The court comprehensively considered the reputation of the “Schneider” brand name, the size of Dongheng, the duration of the infringement, the circumstances of the infringement, the bad faith of Dongheng, and the reasonable expenses Schneider China spent to stop the infringement and determined that Dongheng should compensate Schneider China for economic losses of RMB1 million (USD156,961) (including reasonable expenditure of RMB 120,000).

2. The Beijing High Court cited claim preclusion in affirming the “Rejoice in Chinese” trademark invalidation case

The “Rejoice in Chinese” trademark (“Disputed Mark”) with registration number 3313331 was filed by an individual He Dun on September 19, 2002. Proctor & Gamble (“P&G”) filed an opposition against the Disputed Mark when the Chinese Trademark Law 2001 was still in force. The Disputed Mark was later approved for registration after an opposition appeal, first instance, and second instance appeals.

While the Chinese Trademark Law 2013 was in force, P&G filed an invalidation against the Disputed Mark. After adjudication, the CNIPA invalidated the Disputed Mark because the Disputed Mark violated Article 13(2) of the Chinese Trademark Law 2013. He Dun was unsatisfied with the CNIPA’s decision and appealed to the Beijing Intellectual Property Court.

The Beijing IP Court found that the opposition filed by P&G in 2001 has clearly stated cited P&G’s own prior registered trademark “Rejoice in Chinese” with registration number 543381 and claimed that the Disputed Mark violated Article 13(2) of the Chinese Trademark Law 2001, which was an identical claim to this case. Evidence submitted for this case were identical to those submitted for the opposition filed based on the Chinese Trademark Law 2001, the evidence cannot reflect whether the time of its formation was after the opposition decision was made, there were no evidence showing that there were circumstances that could not be previously obtained due to objective reasons, or the evidence would have substantially affected the application of Article 13(2) of the Chinese Trademark Law 2001 in the opposition. Thus, P&G’s invalidation constituted as claiming identical facts and reasons to a prior case, which violated the principle of claim preclusion. P&G’s new citation of its registered trademark “Rejoice & Rejoice in Chinese & Design” with registration no. 3008024 did not violate the principle of claim preclusion, but the registration date was later than the application date of the Disputed Mark. Even if such mark was recognized with well-known mark status, P&G would not be able to prove that such mark had obtained well-known status prior to the Disputed Mark’s application date, because well-known mark protection for non-similar or non-identical goods can only extend to the registration date of the well-known mark. Accordingly, the Beijing IP Court concluded that the P&G’s invalidation was claim precluded because the same issue was previously decided on merit citing Article 13(2) of the Chinese Trademark Law, and revoked the CNIPA’s invalidation decision. The Beijing IP Court’s decision was then appealed to the Beijing High Court.

The Beijing High Court in its decision affirming the Beijing IP Court’s decision reasoned that “the scope of the administrative power of the people’s court for trademark granting and verification shall generally be determined based on the plaintiff’s litigation claims and reasons. If the plaintiff did not raise a claim in its complaint but the relevant findings of the Trademark Review and Adjudication Board were obviously improper, the people’s court may review the relevant matters and make judgments after the parties have stated their opinions.” The evidence in the case can prove that He Dun filed and obtained hundreds of trademarks identical or similar to other famous trademarks in Classes 3, 5, 16, 20, 24, 30, and 32, and failed to provide reasonable explanations on his intention and creative sources of the designs of his massive filings for distinctive and famous trademarks, which can be seen as He Dun has the subjective malice of plagiarizing and imitating other people’s trademarks, and constituted as bad faith registrations that should not be limited by the five-year limitation for filing invalidation under the Chinese Trademark Law. Considered that the CNIPA’s invalidation decision was revoked and the CNIPA was ordered to issue a new decision for the Disputed Mark, the Beijing High Court ordered the CNIPA to reexam the case based on Article 45(1) of the Chinese Trademark Law for He Dun’s bad faith.

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Weekly China Trademark News Updates

December 21, 2021

1. The CNIPA and Courts at Three Levels Held Symposium on Trademark Right Granting and Verification

Recently, the Trademark Office of the CNIPA held a symposium on certain matters relating to the granting and verification of trademark rights with the Supreme People’s Court, the Beijing Higher Court, the Beijing Intellectual Property Court, with the participation of the persons in charge of the Department of Treaty and Law of the CNIPA, the courts at three levels and the relevant departments at the Trademark Office. The participants at the symposium fully exchanged and discussed issues concerning the application of Article 10(1)vii of the Chinese Trademark Law on the differentiation of deceptiveness and distinctiveness, the application of the adverse effect clauses involving the name of a martyr in trademarks, the application of laws under change of circumstances in administrative litigation, the coexistence of trademarks, the trial of non-use cancellation cases, and workflow issues.

The data show that from January to November 2021, the Trademark Office received a significant year-on-year increase of 26,513 case docketing notices from courts at all three levels, and 16,398 judgments and rulings in the first, second and re-trial instances. However, as for the rate of losing cases, excluding the cases of losing cases due to the change of circumstances, the rate of losing cases in the first instance and the second instance of trademark review cases was 8.3% and 14%, which were obviously decreased from the previous year. These data with the increase or decrease thereof could reflect the further improvement of the administrative review and judicial connection mechanism.

In addition, the issue of trademark coexistence has recently become heated discussions in the industry. In rejection review cases, the CNIPA has basically failed to adopt the trademark coexistence agreement since September 2021, holding that the coexistence agreement cannot replace the examination of the possibility of confusion, and “the legislative purpose of the Chinese Trademark Law is to protect the interests of consumers in addition to protecting the interests of trademark right holders, and the waiver or assignment of trademark right holders’ rights does not necessarily protect consumers from confusion.”  We will also continue to focus on whether the symposium will have some impact on the CNIPA’s future attitude towards coexistence.

2. The Standards for Judging General Trademark Violations was recently issued by the CNIPA with a view to further tightening trademark administration

The CNIPA recently issued the Standards for Judging General Trademark Violations (“Standards”), which unify the standards for judging violations of the trademark administration order, with a view to strengthening trademark administration, unifying law enforcement standards, and improving law enforcement.

The Standards include 35 articles and detail nine types of violations against the administrative order of trademarks, including the failure to use of a registered trademark as prescribed by the existing Trademark Law, regulations and departmental rules, the use of a mark that shall not be used as a trademark, the use of the word “well-known trademark in Chinese” in commercial activities, the failure of a trademark licensee to indicate its name and the place of origin of goods, the change of a registered trademark, the name, and address of a registrant by itself, falsely using of an unregistered trademark as a registered trademark, failure to perform the obligation of managing collective trademark and managing certification trademark, filing bad faith trademark application. The Standards shall come into force on January 1, 2022.

3. Yet another trademark fights between Beijing Daoxiangcun and Suzhou Daoxiangcun

On December 3, the Beijing Higher Court made a second-instance judgment on the dispute over the invalidation of the “Daoxiangcun Cake Shop” trademark, and revoked the first-instance judgment of the Beijing Intellectual Property Court (“Beijing IP Court”) which revoked the invalidation ruling of the CNIPA.

Cited Mark of Beijing Daoxiangcun	Disputed Mark of Suzhou Daoxiangcun	Prior Mark of Suzhou Daoxiangcun

Suzhou Daoxiangcun Company (“Suzhou DXC”) applied the disputed trademark “Daoxiangcun Cake Shop” (“Disputed Mark”) on October 29, 2008 which was approved for registration on September 28, 2010 for use on biscuits, pastries, bread, and moon cakes in subclass 3006.

On January 26, 2017, Beijing Daoxiangcun Company (“Beijing DXC”) cited the trademark “Daoxiangcun” in subclass 3007 for goods of zongzi, sticky rice ball, pies, dumplings, and other goods, and filed an invalidation against the Disputed Mark.

The CNIPA originally found that Beijing DXC has been using its Cited Mark, which is presented in calligraphy font, extensively and for a long time. Suzhou DXC has been using its Prior Mark, which is comprised of “Daoxiangcun” in Chinese characters, DXC in English letters within a circled design, extensively and for a long time. The presentations, visual effects, and other aspects of the two marks were different. One party located in the north of China and the other south, both parties have co-existed in a long period of time, and have formed a stable market division and market order. Therefore, both parties’ new trademark applications for “Daoxiangcun” should not exceed its original presentations, and should follow its long-term used and relatively famous trademark presentation, or add additional elements to its original mark so that the relevant public can better distinguish the two marks.

The CNIPA further reasoned that the “Daoxiangcun Cake Shop” mark in this case was in pure print font, and the main distinctive part of the mark read as “Daoxiangcun” which was identical with Beijing DXC’s Cited Mark and the two mark should be deemed as similar marks. The Disputed Mark was approved to use on cookies, bread, pastry goods which were closely related to the Cited Mark’s approved goods for pies, rice balls in terms of function, use, sales channel, and target consumers. Both marks’ goods were similar. Allowing the Disputed Mark to be registered would break the existing market order, increase the likelihood of confusion in the market and among the relevant public. The Disputed Mark should be invalidated.

Suzohu DXC was not satisfied with the CNIPA’s decision and appealed to the Beijing IP Court. The Court determined that the goods used by the trademarks of the two parties belonged to different similar groups and did not constitute the same or similar goods. Regarding the issue on whether both parties can co-exist, the Beijing IP Court found that the Disputed Mark has been approved for registration and has been used extensively, which acquired different target consumers compared to the Cited Mark. Relevant public can subjectively distinguish the two marks. Beijing DXC and Suzhou DXC should use its approved trademarks on approved goods, and serve its target consumers. Neither party should be filing invalidation actions against another. Accordingly, both parties’ marks shall and can coexist because only such coexistence can better serve different target consumers. Accordingly, the Beijing IP Court held that the Disputed Mark shall not be invalidated.

Both the CNIPA and Beijing DXC were unsatisfied and appealed to the Beijing High Court. The Beijing High Court found that, the Disputed Mark’s approved goods and the Cited Mark’s approved goods were not in the same subclasses, but the manufacturing department, sales channel, and target consumers were closely related. Meanwhile, the distinctive part of the Disputed Mark was “Daoxiangcun” because “cake shop” lacked distinctiveness when used on the approved goods. Both the Disputed Mark and the Cited Mark included “Daoxiangcun,” which shared similar composition, pronunciation, and overall appearances and constituted as similar marks. The coexistence of the Disputed Mark and the Cited Mark on its approved goods would cause confusion and misidentification to the source of goods when relevant public exerts average level of attention. Considering that Suzhou DXC did not provide evidence of use of the Disputed Mark, and that there were large differences between the Disputed Mark and the Prior Mark Suzhou DXC has been using, the court held that the Disputed Mark cannot be distinguished from the Cited Mark without use and cannot coexist with the Cited Mark based on Suzhou DXC’s Prior Mark. Additionally, both parties have its historical developments and use of its respective trademarks, so they should respect the existing market order and divide clearly its use of trademark. Accordingly, the Disputed Mark constituted a similar mark on similar goods with the Cited Mark. The Beijing High Court affirmed the CNIPA”s decision.

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China