Weekly China Brand Protection News

April 10, 2024

1. The SPC held that the burden of proof for individual retailers’ legitimate source defense should be moderately reduced

Nature Republic Co., Ltd. (“Nature Republic”) is the exclusive licensee of the “NA YI QI ER in Chinese” mark with reg. no. 9481384 (license term: Jan. 1, 2018 to June 5, 2022, said mark was later assigned to Nature Republic in 2020). Nature Republic sued Jianglin Cosmetics Store (“Jianglin”) for trademark infringement. Jianglin argued that the evidence it submitted could prove that the alleged infringing goods came from legitimate sources, and that it had exercised reasonable care during the purchase of the alleged infringing goods and should not be liable for compensation. The first and second instance courts did not recognize Jianglin’s legitimate source defense and ruled that Jianglin should stop the infringement and compensate Nature Republic for reasonable legal costs and economic losses of RMB10,000 (USD1,383). The Supreme People’s Court held in retrial that the review of the objective elements of the legitimate source defense should proceed from the original legislative intention and comprehensively consider factors such as the market position of the seller, the rights holder’s legal costs, market transaction habits, and lay a reasonable burden of proof on retailers. Here, Jianglin, as an individual retailer, has a weak position in market activities and its trading methods are usually more flexible. Its burden of proof to prove legitimate sources should be appropriately reduced, and the completeness of the formal requirements for evidence should not be too stringent. The chain of transactions shown in the product distribution contracts, outbound orders, inbound orders and other documented evidence is complete and in line with general trading practices. Its source of supply has been proven legitimate. Therefore, the evidence can carefully prove that Jianglin obtained the accused infringing goods through legal channels. As an individual industrial and commercial owner, Jianglin has a small business scale and low professionalism. The bar to determine its ability as to understand whether the goods he sells is infringement should not be too high. Based on the evidence in the case, it can be inferred that it did not know and should not have known that the goods it sold were infringing goods, and there was no subjective fault. Therefore, Jianglin has completed its burden of proving that the accused infringing goods have a legitimate source and that it has exercised reasonable care. Its legitimate source defense is satisfied and it should not be liable for compensation.

2. The distinctiveness of a registered trademark is not a consideration in determining similar trademarks

Jinjia SU is the applicant of the “” mark with app. No. 32253377 (“Disputed Mark”). Beijing Xiaoguncha Co., Ltd. (“Xiaoguancha”) filed an opposition against the Disputed Mark based on its prior marks such as “” and “.” Jinjia SU argued that the word “Xiaoguancha in Chinese” in Xiaoguancha’s prior marks lacked distinctiveness, and the scope of protection should match its distinctiveness and should not hinder the legitimate use of other market entities. After trial, the Beijing High Court determined that the distinctiveness of the words “Xiaoguancha in Chinese” is not a factor to consider in determining whether a disputed mark and the cited marks constitute similar trademarks. If the distinctiveness of cited marks is overemphasized and later marks allowed to be registered by adding other elements to the cited marks that have been allowed, it will be seen as a direct denial of the validity of the cited marks when judging similarity. This practice not only indirectly invalidated the cited marks, damages the cited mark owner’s rights, and impacts the trademark registration order. The cited marks in this case have been approved for registration, and their validity should be respected. Therefore, Su’s lack of distinctiveness argument cannot be supported.

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Weekly China Brand Protection News

April 2, 2024

1. Unauthorized labeling of “Supervised by the Palace Museum” on alcohol products constitutes unfair competition

Recently, the Palace Museum discovered that a Sichuan liquor company and a Beijing trading company used the words “Supervised by the Palace Museum” in the process of promoting and selling alcohol products. The Palace Museum filed a lawsuit against them alleging unfair competition.

The first instance court found that the actions of the Sichuan liquor company and the Beijing trading company constituted unfair competition, and ordered them to compensate the Palace Museum for its economic losses and reasonable expenses. The defendants appealed to the Beijing IP Court. The Beijing IP Court affirmed the lower court’s finding that the defendants’ action constituted unfair competition but adjusted the compensation amount based on new evidence.

Regarding the issue of whether the use of the words “Supervised by the Palace Museum” on the alleged goods and the related publicity in the online store constituted unfair competition, the Beijing IP Court found that:

Article 6 of the Anti-Unfair Competition Law stipulates that operators shall not use without authorization the names of other enterprises, social organizations, or persons that have certain influence to cause people to mistakenly believe that the goods are from others or that they have a specific connection with others. Regarding the use of the words “Supervised by the Palace Museum” on the alleged infringing products, the evidence can prove that the production dates marked in the online store were after the expiration of the supervision agreement involved. After the expiration, the Sichuan liquor company continued to label its liquor products with the words “Supervised by Palace Museum,” which includes the full name of the Palace Museum, without the authorization or permission. Even though the Sichuan liquor company continued using the packaging design and product promotion style which were authorized during the supervision agreement period, but the words “Supervised by the Palace Museum” will not only make consumers believe that the Palace Museum supervises the packaging design and product promotion of the alleged infringing goods, it will inevitably make the public mistakenly believes that this product is closely related to the Palace Museum, or that the Sichuan liquor company still has a cooperative relationship with the Palace Museum on alcohol products, etc. This is obviously a case of obtaining unfair competitive advantages and commercial interests by taking advantage of the popularity of the Palace Museum. At the same time, it also caused damage to the reputation and business interests of the Palace Museum, constituting unfair competition as stipulated in Article 6 of the Anti-Unfair Competition Law. In addition, the Sichuan liquor company claimed that the words “Supervised by the Palace Museum” are not in a prominent position, however, combined with the relevant publicity of the allegedly infringing products, consumers will inevitably pay attention to the relationship between the allegedly infringing products and the Palace Museum. The allegedly products and its packaging will objectively cause confusion and misunderstanding. Whether they are in a prominent position does not affect the determination of unfair competition.

Article 8 of the Anti-Unfair Competition Law stipulates that operators shall not make false or misleading commercial publicity about the performance, functions, quality, sales status, user reviews, honors, etc. of their products to deceive or mislead consumers. The first instance court found that the online store involved in the case repeatedly mentioned the Palace Museum in the “Historical Events” in the product details, showed the authorization letter issued by the Palace Museum in January 2007, and highlighted the “designated liquor of the Palace Museum in the past five hundred years” along with other content, which constitutes false propaganda as stipulated in Article 8 of the Anti-Unfair Competition Law. Regarding such promotions, the mention of the history of the Palace Museum in the “Historical Events” and the content of the authorization letter issued by the Palace Museum to the Sichuan liquor company were facts. However, on this basis, when promoting the products involved, the Sichuan liquor company failed to disclose to consumers the fact that the authorization letter issued by the Palace Museum has expired, and its claim that the products sold in the online store were “the designated liquor of the Palace Museum.” Such publicity will cause confusion among consumers. Consumers are likely to misunderstand and falsely believe that the allegedly infringing goods still have valid authorization from the Palace Museum, which constitutes false or misleading commercial propaganda as stipulated in Article 8 of the Anti-Unfair Competition Law. At the same time, since the above-mentioned behavior has been determined as false propaganda, the use of the full name of the Palace Museum will no longer be separately determined as an act of unfair competition that uses a company name without authorization.

2. A color combination trademark application failed to be approved in the second instance appeal

A company applied for registration of the “” mark (“Disputed Mark”) on “agricultural machinery” on November 1, 2021, and was refused. During the review, the CNIPA determined that the representation of the Disputed Mark is simple, it will be difficult for the relevant public to recognize it as a trademark to distinguish the source of the goods if registered on the designated goods. The submitted evidence, including the product promotional videos and brochures, the market share of its product from the China Agricultural Machinery Industry Association, statements on sales, store photos, audit reports, tax payment certificates, honorary certificates, award certificates, exhibition and campaign pictures, articles on periodicals and magazines, CCTV news reports, etc., are insufficient to prove that the Disputed Mark has been used to obtain distinctive features and can easily be identified. Therefore, the Dispute Mark shall be rejected based on Article 11.1.3 of the Trademark Law.

The applicant appealed to the court, and supplemented additional evidence of domestic and foreign sales contracts and invoices, overseas trademark registration certificates, granted invention patent information, etc. to prove that after extensive use and publicity, the Disputed Mark has gained a high reputation and has established a unique corresponding relationship with the applicant, thereby bearing the distinctiveness to identify the source of goods.

The Beijing Intellectual Property Court found that:

First, the Disputed Mark is a color combination consisting of red and light gray. Its color and combination are relatively ordinary, and its expression is relatively common. If the color combination specified by the Disputed Mark is used on “agricultural machinery,” the relevant public tends to recognize it as an expression of the appearance and decoration of the goods rather than a mark that distinguishes the source of goods. Therefore, the Disputed Mark does not have the inherent distinctive features that a trademark should have.

Second, according to the evidence submitted, when the applicant uses a red and light gray color combination in designated locations on agricultural machinery such as harvesters and tractors, it usually also displays the “Wo De in Chinese” logo on a prominent position on the fuselage. When relevant public seeing agricultural machinery products, it is easier to recognize the word mark rather than the color as a mark to distinguish the source of the product.

Finally, regarding the applicant’s claim that the Disputed Mark has acquired distinctive features through use, this court found that although the evidence can prove that the agricultural machinery produced by the applicant in recent years has a relatively high sales share in the industry and has also achieved a certain degree of fame, the use and publicity reports and honorary materials mainly reflect the commercial use of “Wo De in Chinese” mark. In most cases, the Disputed Mark was only used as the background color of “Wo De in Chinese.” The said evidence was insufficient to prove that the Disputed Mark has obtained distinctive features and can act as an identification for ordinary consumers to distinguish the source of goods just by being used as the background color of a logo such as “Wo De in Chinese.”

In sum, the existing evidence is insufficient to prove that the Disputed Mark has gained a certain degree of fame in actual use and can play a role in distinguishing the source of goods, thereby obtaining distinctiveness that can be approved for registration.

The applicant appealed to the second instance court, however, the appeal was dismissed and the original judgment was affirmed.

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East IP is pleased to announce the expansion of its trademark and IP enforcement practices with the arrival of two new teams, including SIPS, a market-leading IP firm based in Hong Kong, founded by Joe Simone, and a team of six partners with 36 professionals led by Jimmy Huang Jingwen, from the Beijing office of a top Chinese law firm.

The SIPS team includes five partners and 90 professionals and staff based in Beijing, Shanghai, Guangzhou and Hong Kong. SIPS is known for its trademark prosecution, investigations, and enforcement work for multinational clients. Going forward, it will operate under the name East IP Limited.
The team led by Jimmy Huang, which arrives in stages from April 1, includes 36 professionals and staff. Jimmy’s team is particularly recognized for its capabilities in trademark prosecution and IP litigation.

The incoming teams include several senior professionals with extensive experience in international law firms, many of whom are qualified in the United States, the UK, Australia, Hong Kong and elsewhere.

Weekly China Brand Protection News

March 29, 2024

1. Filing an infringement lawsuit against others’ legitimate use of a trademark based on a trademark obtained through bad faith is an abuse of trademark rights, and its infringement claim should not be supported

The Suzhou Intermediate Court recently concluded a trademark infringement lawsuit between the appellant Hangzhou Lunfude Chassis Technology Co., Ltd. (“Lunfude”), the appellee Suzhou Deyu Auto Parts Co., Ltd. (“Deyu”), and the third party ZF Sales Service (China) Co., Ltd. (“ZF Sales”). The court found that in view of factors such as ZF Sales and its affiliates’ prior right status, the legitimacy of use and intent to use, and Lunfude’s registration was based on bad faith, Lunfude’s infringement claims shall not be supported.

The second instance court found that before Lunfude applied for the cited mark, ZF Sales and its affiliates had used the “” and “” marks extensively on their control arms and other auto parts products and had marked “LEMFORDER” in a reasonable manner and with other trademarks. ZF Sales’s use constituted as prior good faith use. ZF has a high reputation in the auto parts industry and its products are widely used in vehicles, ships, and construction machinery vehicles. Although it has not registered the said marks in China, after years of market operation and comprehensive consideration of other factors such as the continuous time of use, region, sales volume and publicity of the said marks, the first instance court determined that the said marks enjoyed a certain influence. Before Lunfude applied to register the cited mark, ZF Sales already had a high reputation in the industry. According to the evidence, ZF Sales has entered the Chinese market in 1988 and many news had reported that ZF Sales and its affiliates has occupied in the leading position in the automotive parts and chassis technology industries. Its goodwill covers a wide range of industries. The “” and “” marks in this case are all used for vehicle parts products, so ZF Sale’s use does not exceed the original scope of use. In summary, the first instance court found that ZF Sales had a legitimate basis for prior rights and was not inappropriate.

The authorization letter and purchase and sale list and other evidence submitted by Deyu were sufficient to prove that the allegedly infringing products it sold originate from ZF Sales, and ZF Sales has also confirmed it. Therefore, as a seller, Deyu has the right to use “” and “” marks on the products sold by ZF Sales on the premise that ZF Sales has legal prior rights in the accused infringing products. Thus, Deyu did not infringe Lunfude’s trademarks.

Lunfude’s corporate name has a similar pronunciation to the “LEMFORDER” brand name of ZF Sales. It has applied for registration of more than a hundred trademarks that are highly similar to the trademarks of ZF Sales and its affiliated companies in multiple classes, which are beyond the needs of normal business operations. ZF Sales has repeatedly opposed Lunfude’s applications, and the CNIPA has repeatedly declared its registered trademark invalid because it “violates the principle of good faith and disrupts the order of trademark registration management.” In this case, the CNIPA has declared Lunfude’s trademark invalid on the grounds that it has “the subjective intention to take advantage of others’ market reputation and violates the principle of good faith.” Lunfude’s trademarks are similar to ZF Sale’s prior marks. Therefore, Lunfude has a subjective intention to take advantage of ZF Sale’s market reputation. Lunfude’s action violated the principle of good faith, and the first instance court was not inappropriate in not supporting its claim on the grounds that it constituted an abuse of rights.

2. The Guangdong High Court: Criteria for judging whether use of a registered trademark before cancellation constitutes infringement

The Guangdong High Court recently concluded a trademark infringement and unfair competition lawsuit between the appellants Guangdong Weipeng Electric Co., Ltd. (“Guangdong Weipen”), an individual Ji, an individual Li, and others for their disputes with the appellee Robert Bosch Co., Ltd. (“Bosch”) and Bosch (China) Investment Co., Ltd. (“Bosch China”). The court held that the defendants should immediately stop trademark infringement and cancel the domain name www.bocseh.cn, and compensate Bosch and Bosch China for RMB 1 million (USD138,000).

In this case, the accused infringing mark “BOCSEH” (“Disputed Mark”) when compared with Bosch’s “BOSCH” mark with reg. no G675705 (“Cited Mark”), the letter composition, pronunciation, and overall appearance are very similar, except for the addition of an English letter “E.” Guangdong Weipeng used the Disputed Mark on identical or similar goods as the goods approved for use of the Cited Mark may easily cause the relevant public to mistakenly believe that the two marks are from the same market entity’s series of trademarks or are somehow related, causing confusion and misidentification of the source of the goods, and constituting trademark infringement of Bosch and Bosch China. Guangdong Weipeng used the slogan “Bosch Technology Realizes Dreams in Chinese” on the certificates of products and on the special dealer plates issued. The “Bosch in Chinese” logo is identical with the “Bosch in Chinese” registration of Bosch and Bosch China. The marks are identical and the class of goods used are identical or similar, which can easily lead to confusion and misunderstanding. Therefore, Guangdong Weipeng’s use constitutes trademark infringement of the “Bosch” mark with reg. no. 546309.

Guangdong Weipeng uses a domain name whose main part is “bocseh” and uses it to promote products and conduct transactions. The main part of this domain name constituted similar to Bosch’s Cited Mark and infringed upon Bosch and Bosch China’s trademark rights.

Guangdong Weipeng appealed and claimed that its Disputed Mark was used after approval, so the accused behavior did not constitute an infringement of the trademark rights of Bosch and Bosch China. In this regard, this court believes that the evidence in this case shows that when Guangdong Bosch Company, the predecessor of Guangdong Weiping, obtained the “BOCSEH” mark with reg. no. 12140329 in 2016, Bosch and Bosch China Company’s registered trademarks “BOCSH” and “Bosch in Chinese” already has a high reputation in China. As a business entity in the household appliance industry, Guangdong Weipeng should be aware of the existence of Bosch and Bosch China’s said marks, but it still applied for the accused logo and uses it in its operations. Therefore, it can be inferred that when Guangdong Weipeng obtained the Disputed Mark, it had obvious subjective malice to take advantage of the goodwill of Bosch and Bosch China. Therefore, even if the Disputed Mark was approved and registered, Guangdong Weipeng’s use still constitutes trademark infringement of the Cited Mark.

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Weekly China Brand Protection News

March 21, 2024

1. The Guangdong High Court reversed a trademark infringement dispute in a retrial regarding the use of trademarks in foreign OEM

On February 22, the Guangdong High Court reversed a trademark infringement dispute in a retrial between Fila Sports Co., Ltd. (“Fila”) and Hunan Jiahui Technology Co., Ltd. (“Jiahui”). The court upheld the first-instance judgment that ordered Jiahui to immediately stop infringing on Fila’s following trademark rights “Fila Company in Chinese &   ,” “,” “,” and “,” and to stop producing and selling infringing products. Jiahui should compensate for economic losses (including reasonable expenses to stop the infringement) for RMB 200,000 (USD27,780).

In this case, courts at all levels confirmed that Jiahui’s processing and production activities were foreign-related OEM activities. Courts at all levels, however, have differed on whether Jiahui’s act of affixing the allegedly infringing logos on its goods is considered trademark use within the meaning of trademark law. On retrial, the Guangdong High Court found that: trademark use is an objective behavior, which usually includes many processes, such as physical affixing in the production process, marketing, and sales in the circulation, etc. When a trademark logo is physically affixed to a manufactured or processed product, if the logo has the likelihood of distinguishing the source of the goods and can play a role in distinguishing the source of the goods, such use should be deemed to be “trademark use” as stipulated in the Trademark Law. In this case, Jiahui, as an OEM, affixed the allegedly infringing logos on the garments it processed, which obviously had the purpose of identifying the source of goods. The logos can also have the actual effect of identifying the source of the goods and should be recognized as trademark use. Affixing a trademark is an objective act, and the identification function of the trademark is an objective result. Jiahui was fulfilling the obligations of the foreign-related OEM processing contract. This is only the reason for the act of affixing the trademark, and it will not affect the qualitative nature of such trademark use. In addition, with the development of e-commerce and the Internet, even if the allegedly infringing goods are exported goods, there is still the possibility of being returned to China. In summary, the second instance court found that Jiahui’s affixing a trademark did not constitute trademark use on the grounds that the allegedly infringing goods had not entered the mainland China market for circulation and sale, and the alleged infringing logo did not have the function of identifying the source of the goods in the mainland Chinese market was wrong and this court corrects it.

Jiahui claimed that it obtained the production authorization from Shengrui LIU, the owner of the “Feidisi in Chinese & FTSS” trademark, and directly exported products to the clients after OEM processing, so it did not infringe. According to the Trademark Law on the determination of trademark infringement, the principle of liability for trademark infringement shall be the principle of no-fault liability. Moreover, trademark rights are territorial. The trademark of the third-party in the case is only registered in the Taiwan region, and has no trademark rights in mainland China. Moreover, the trademark application of the third-party in the case was registered in 2019, which was later than the registration date of the Cited Marks of Fila. Fila has submitted evidence to prove that its series of trademarks involved in the case had a high reputation in the domestic market before the third-party trademark application was filed. As an operator in the same industry, Jiahui should have known about this fact. There is a clear difference between the “Feidisi in Chinese & FTSS” trademark and the accused infringing logos. The accused infringing logos have the upper and lower color distinction of the initial letters, which is completely consistent with the design of the initial letters of Fila’s trademark, making it more similar to Fila’s trademark. Under this premise, Jiahui still affixed the alleged infringing logo that is obviously different in appearance from its authorized logo on the clothing it processed. It was at least negligent and difficult to believe that it fulfilled its duty of reasonable review and care. In summary, Jiahui’s non-infringement defense cannot be established.

2. The defendants improperly took advantage of the market reputation of Liuzhou Hotel’s well-known trademark. Considered the infringing hotel was used as a quarantine hotel during the epidemic, the defendants were ordered to pay RMB 1 million.

On December 20, 2023, the Beijing Intellectual Property Court concluded a first-instance trademark infringement dispute between the plaintiff Liuzhou Hotel Group (“Liuzhou”) and the defendants Guiyang Yunlu Hotel Management Co., Ltd. (“Guiyang Yunlu”), Fujian Yunlu Hotel Management Co., Ltd. (“Fujian Yunlu”). The court ordered the defendant Guiyang Yunlu and Fujian Yunlu to immediately stop using the “Yulu Crowne Plaza Hotel” logo. The two defendants were ordered to compensate the Liuzhou for economic losses of RMB 1 million (USD138,900) and reasonable expenses of RMB250,000 (USD34,725).

Regarding whether the alleged infringement behavior of the Guiyang Yunlu infringed on Liuzhou’s trademark rights, in this case, comprehensive consideration was given to the multiple notarial certificates submitted by the Liuzhou proving that it promoted and used the cited trademarks, printouts of relevant online reports, court judgments and administrative agency rulings that Liuzhou’s trademark was deemed to be relatively well-known or had reached a well-known status. In this case, it can be determined that the “Crown Plaza Hotel” mark with reg. no. 2021114 approved for use in providing accommodation services has a high reputation in China and has reached well-known status.

The “Yulu Crowne Plaza Hotel” used by Guiyang Yunlu is similar in text composition and pronunciation to Liuzhou’s cited mark, which constituted an imitation and translation of Liuzhou’s well-known trademark. The defendant’s use of “Yulu Crowne Plaza Hotel” for the same services as Liuzhou’s well-known trademark was enough to make the relevant public associate that the trademark used by the defendants was closely related to Liuzhou’s well-known trademark, thus unfairly taking advantage of Liuzhou’s well-known mark market reputation and harmed its interests. Therefore, the defendant’s use of “Yulu Crowne Plaza Hotel” has constituted an infringement of Liuzhou’s well-known trademark.

Regarding compensation for losses. The court fully considered factors such as the alleged infringing hotel’s operating autonomy during the period when it was used as an quarantine hotel and the limited role of its logo as a trademark, as well as the overall situation of the hotel industry during COVID. The amount of compensation in this case should be limited to the statutory compensation amount in accordance with the law. Considering the close relationship between the first and second defendants such as shareholder relationship and trademark licensing, the two defendants in this case should bear joint and several liability.

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Weekly China Brand Protection News

March 13, 2024

1. The use of the right holder’s trademark on a mobile map is a trademark use

Recently, the Guang’an Intermediate Court concluded a trademark infringement dispute between Sichuan Jibang Trading Co., Ltd. (“Jibang”) and Yuechi County Yumin Gas Station (“Yumin Gas Station”). The court determined that Yumin Gas Station’s use of the “Zhongchuan Petroleum in Chinese” logo on the mobile map constituted a trademark infringement of “Zhongchuan Petroleum and Design” with reg. no. 21415831 of Jibang. The use should be stopped, and Yumin Gas Station should compensate Jibang for economic losses and reasonable expenses paid to stop the infringement totaled RMB50,000 (USD7,000).

Cited Mark

The court found that: First, Yumin Gas Station used the name “Zhongchuan Petroleum Yumin Agricultural Machinery Gas Station” in the mobile phone map to attract customers through the mobile phone map. Car owners often use mobile phone maps for navigation when driving, and passing vehicles can know where to refuel through the mobile phone map. At the same time, when refueling, car owners often want to have guaranteed oil quality and choose branded gas stations to refuel. The prominent use of the words “Zhongchuan Petroleum in Chinese” in the name plays a role in indicating the source of goods or services. Therefore, the use of “Yumin Gas Station” is a trademark use.

Second, the “Zhongchuan Petroleum in Chinese” used by Yumin Gas Station on the mobile map and the registered trademark of Jibang have the same composition and arrangement order, and can be regarded as the same trademark. Yumin Gas Station did not provide the time when it applied for trademark registration and the time when it used the registered trademark at the beginning of its establishment or earlier than Jibang. It used the “Zhongzhou Petroleum in Chinese” or “Zhongchuan Petroleum in Chinese” logo and had a certain impact, which was not in compliance with the requirements. It did not fulfill the elements of prior use defense. Yumin Gas Station used the same trademark as the registered trademark on the same goods without the permission of the trademark registrant, which infringed the trademark right of Jibang, and it should bear corresponding legal liability.

2. Bosch prevailed in a trademark infringement and unfair competition lawsuit

Recently, the Sichuan High Court concluded a second instance lawsuit for trademark infringement and unfair competition against Robert Bosch Co., Ltd. (“Bosch”), Bosch (China) Investment Co., Ltd. (“Bosch China”), Sichuan Bosch New Ventures Trading Co., Ltd. (“Sichuan Bosch”), Chengdu Yiluxing Petrochemical Co., Ltd. (“Yiluxing”), an individual Zheng, an individual Sun, Chengdu Maxto New Energy Lubricating Materials Co., Ltd. (“Maxto”). The court found that the defendants’ behaviors constituted an infringement of Bosch’s and Bosch China’s trademarks “BOSCH”, the design “”  and “Bosch in Chinese.” The court ordered that Sichuan Bosch, Yiluxing, and individuals Zheng and Suns should immediately stop infringement and jointly compensate the plaintiff for economic losses of RMB3 million (USD417,000). As a co-manufacturer of the accused infringing products, Maxto should be jointly and severally liable for RMB 150,000 (USD20, 870).

Cited Marks

The court found that: First, Sun and Zheng, as natural persons, implemented the use of “Bosch Xinchuang”, “” and “Bosch Zhenyu” by establishing Sichuan Bosch, Yiluxing, Yongxing Business Department, and Yuanji Business Department. The act of using the accused infringing marks and producing and selling the accused infringing products has combined to form an intrinsically linked joint infringement. Maxto, together with Sun and Zheng, Yiluxing, and Sichuan Boschs jointly produced and sold some of the accused infringing products. The above acts all have the function of identifying the source of goods and are trademark uses.

Second, compared the allegedly infringing mark “” with the cited mark “,” both are circular graphic with the same structure. Only the direction of the graphic within the circle is different. They constituted similar. “Bosch Xinchuang in Chinese” and “Bosch Zhenyu in Chinese” are similar to the trademark “Bosch.” The Cited marks has formed a corresponding relationship with “Bosch in Chinese” through its use and promotion in China. Therefore, the use of “Bosch Xinchuang in Chinese” and “Bosch Zhenyu in Chinese” will also cause confusion among the relevant public about the source of the goods.

Third, the goods approved for use by the plaintiff’s trademark and the accused infringing products are both in motor vehicles and are related in terms of consumer targets, sales channels, etc. The relevant public generally believes that they have a specific connection and could easily cause confusion. They constitute similar goods. The defendants’ behaviors constitute trademark infringement.

In addition, the word trademarks “Bosch in Chinese” and “BOSCH” have a high reputation in their fields through the long-term operation of Bosch and Bosch China. Bosch Xinchuang was registered in 2016. As a competitor in the same field, it registered “Bosch in Chinese” as part of its corporate name and used it in its business activities. Its registration was enough to confuse the relevant public and to lead the public to mistakenly believe that the allegedly infringing products it produced and sold originated from Bosch or Bosch China, or believe that there was a specific connection with Bosch or Bosch China. Their acts constitutes unfair competition.

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Weekly China Brand Protection News

March 7, 2024

1. Parallel imports that do not cause confusion or damage to goodwill do not constitute infringement

The Chongqing First Intermediate Court recently made a decision regarding a dispute over trademark infringement between the plaintiff Guangzhou Aotiwa Biotechnology Co., Ltd. (“Aotiwa”) and the defendant Chongqing Beigou Network Technology Co., Ltd. (“Beigou”). The court found that the Beigou did not infringe and dismissed Aotiwa’s lawsuit.

Aotiwa registered the “” mark with reg. no. 25792637 in Class 5, the “Niuruiyou in Chinese” mark with reg. no. 25797592 in Class 5, the “” mark with reg. no. 61116472 in Class 29, the “Niuruiyou in Chinese” mark with reg. no. 61114540 in Class 29. Aotiwa discovered that Beigou was selling lactoferrin products with the ” Niuruiyou in Chinese” and “NEURIO” through the Taobao store “Zhengyige Overseas Direct Mail Store” and believed that Beigou was importing and selling without authorization and sued based on its registered trademarks for RMB 10 million in compensation and RMB 500,000 in reasonable costs in stopping the infringement. Beigou challenged Aotiwa’s right to sue and argued that both the accused infringing goods and the goods of Aotiwa and its subsidiary “Niurui Trading Company” were imported from SUNNYA in Australia. Beigou claimed that its products did not cause confusion and its selling of these products did not constitute infringement.

The court found that Aotiwa and Niurui Trading Company signed a “Trademark Exclusive Use Agreement” in 2017, agreeing that Aotiwa would authorize Niurui Trading Company to exclusively use its NEURIO-related trademarks registered in China from August 1, 2017 to July 30, 2027. SUNNYA is the owner of the “Niuruiyou in Chinese” mark and the “NEURIO” series marks in Australia and New Zealand. SUNNYA and Niurui Trading Company signed the “Product Agency Agreement” and “Agency Supplementary Agreement” successively in 2019, stipulating that Niurui Trading Company will be the general agent and import company of SUNNYA’s Neurio products in China and be responsible for the sales in China. For sales and promotion in China, the cooperation period is from March 29, 2019 to March 28, 2024. It was also found that SUNNYA filed an application for invalidation of the above-mentioned marks on April 24, 2023.

Based on the pleadings of both parties, the court commented on the key issues in dispute in the case as follows:

1. Whether Aotiwa is a qualified plaintiff in this case. In this case, the registered marks with reg. nos. 25792637, 25797592, 61116472, and 61114540 are still valid. As the exclusive owner of the said marks, Aotiwa has obtained the right to sue for trademark infringement. Although Aotiwa authorized NEURIO-related trademarks registered in China to be used exclusively by Niurui Trading Company in China, Niurui Trading Company did not file a lawsuit against the infringement. Aotiwa as the owner of the registered trademark has the right to sue.

2. Whether Beigou infringes upon Aotiwa’s registered trademark. First, the accused infringing goods falls into the approved use scope of the Aotiwa’s registered trademarks. The accused infringing logo constituted identical marks with Aotiwa’s. However, according to the traceability results of scanning codes, the accused infringing products were genuine. Second, SUNNYA is the overseas trademark owner of the “NEURIO” trademarks. The accused infringing goods sold by Beigou were authorized by SUNNYA. The accused infringing goods were purchased through cross-border e-commerce by Beigou from SUNNYA. The source of its goods was the same as that of Aotiwa. The acquisition method was legal. The evidence on record was sufficient to prove that the source of Beigou’s goods was legal. Third, the evidence in the case proves that Beigou has reviewed the source and authorization status of the goods, which had fulfilled its reasonable duty of care and has no subjective intention to infringe. Therefore, the accused infringing products were genuine goods obtained through parallel imports. Beigou’s store also clearly stated that the products had an official authorization letter from SUNNYA. The manufacturer, traceability code, and other information on the goods were also clearly stated. These goods will not cause consumers to confuse the source of the goods, nor will it impair the identification function of the trademark. The existing evidence was not sufficient to prove that the alleged infringement has affected Aotiwa’s trademark’s function of ensuring product quality or has the consequences of abusing or diluting the goodwill of Aotiwa’s registered trademarks. Aotiwa’s evidence was insufficient to prove Beigou’s infringement. Accordingly, Aotiwa’s claims cannot be established.

2. An AI company generated Ultraman pictures were found liable of copyright infringement – the world’s first AIGC platform copyright infringement case

The Guangzhou Internet Court recently decided a first instance decision involving the plaintiff Shanghai Xinchuanghua Cultural Development Co., Ltd. (“Xinchuanghua”) and the defendant an AI Company regarding internet infringement (which has been changed to a copyright infringement dispute). The court ordered the AI company to compensate Xinchuanghua for economic losses of RMB 10,000 (USD1,400) (including reasonable expenses). This is the world’s first effective judgment recognizing an AIGC platform infringes the copyright of others.

Tsuburaya Production Co., Ltd., the copyright owner of the “Ultraman” series of works, signed a “Certificate of Licensing” with Xinchuanghua, and exclusively authorize the copyright of the Ultraman series images to Xinchuanghua and granting Xinchuanghua the right to defend its rights. The defendant operates the Tab (pseudonym) website, which has AI conversation and AI-generated drawing functions. Xinchuanghua found that when the Tab website was asked to generate Ultraman-related pictures (such as inputting “generate an Ultraman Dyna”), Tab could generate Ultraman pictures that were substantially similar to the plaintiff’s Ultraman image. Tab’s AI painting function needs to be recharged to use. Xinchuanghua believed that the defendant’s action had caused serious damage to it, so it sued the defendant to stop the infringement and claimed compensation of RMB 300,000.

The issues of the case are:

1. Whether the defendant infringed the Xinchuanghua’s right of reproduction, adaptation and information network dissemination

The court held that the Ultraman works involved in the case enjoy a high reputation and can be accessed, queried and downloaded on major video websites. In the absence of contrary evidence by the defendant, there is a possibility that the defendant has access to the Ultraman works involved in the case. The pictures involved in the case provided by Xinchuanghua and generated by the Tab website partially or completely reproduced the original expression of the artistic image of “Ultraman” Therefore, the defendant copied the Ultraman work involved in the case without authorization, infringing Xinchuanghua’s right to copy. In addition, some of the generated pictures involved in the case formed new features while retaining the original expression of the “Ultraman Tiga Composite” work. The defendant’s action constituted an adaptation of the Ultraman work involved in the case, which infringed Xinchuanghu’s right to adaptation of Ultraman.

Considering that this case is a new situation of infringement in the context of the development of generative artificial intelligence, and the court has supported Xinchuanghua’s claim of infringement of reproduction rights and adaptation rights, the same alleged infringement has been included in the control scope of reproduction rights and adaptation rights, Xinchuanghua’s claim that the defendant infringed the right to disseminate information through information networks will not be examined.

2. What civil liability should the defendant bear?

On the issue of stopping the infringement. The court held that the defendant, as a service provider, had infringed Xinchuanghua’s copyright in the Ultraman works, and should bear the responsibility to stop the infringement, that is, to stop generating infringing pictures. The defendant should take measures to prevent its service from continuing to generate pictures that are substantially similar to the Ultraman works involved in the case. The prevention measures should be such that users normally use prompt words related to Ultraman will not generate pictures that are substantially similar to the Ultraman works involved in the case. As for Xinchuanghua’s request that the defendant delete the Ultraman materials involved in the case from the training data, the defendant did not actually conduct model training, so the request is not supported.

On the issue of compensation for losses. The court held that the Tab website operated by the defendant did not establish a relevant complaint and reporting mechanism, lacked potential risk warnings to users, and did not clearly mark the products it provided. Therefore, the defendant, as an AIGC service provider, failed to fulfill its reasonable duty of care and has  subjective fault, should bear the corresponding liability for compensation. After comprehensive consideration of factors such as the high market popularity of the Ultraman works involved in the case, the defendant’s active adoption of technical preventive measures after responding to the lawsuit, which had a certain effect, the limited scope of the infringement, and the reasonable necessity of Xinchuanghua’s cost to protect its rights, the court used its discretion and ordered the defendant to compensate Xinchuanghua for economic losses of RMB 10,000 (including reasonable expenses).

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How to Assess Patent Eligibility of AI Inventions in China

by Xiuqin ZHAO, Qiang Lin and Xiaobin Zong

In summary

In China, patent eligibility of AI inventions is assessed by examining in sequence whether the AI inventions fall under the rules and methods for mental activities and whether they constitute a technical solution. An AI invention claim can pass the examination as to mental activities as long as it contains at least a technical feature. The ‘three elements of technology’ test is then applied to examine whether the claim constitutes a technical solution, requiring the claim to contain some technical means applying the laws of nature to solve a certain technical problem, with some technical effects achieved.

Discussion points

• AI invention
• Patent eligibility
• Algorithmic features
• Technical features
• Mental activities
• Technical solutions

Referenced in this article

• Article 2, paragraph 2 of the Patent Law of the People’s Republic of China
• Article 25, paragraph 1, item 2 of the Patent Law of the People’s Republic of China
• Part II, Chapter 9, section 6 of the revised ‘Guidelines for Patent Examination’ (2010)
• China National Intellectual Property Administration

Artificial intelligence (AI) technology is currently undergoing revolutionary development. Generally, ‘artificial intelligence’ can be defined as ‘theories, methods, technologies and application systems that utilize digital computers or machines controlled by digital computers to simulate, extend and expand human intelligence, perceive the environment, acquire knowledge, and use the knowledge to obtain optimal results’^[1]. Since AI technology is centred around the simulation of how humans perceive and process information, like hearing and vision, it has been innovatively applied to fields such as voiceprint recognition, facial recognition, driverless cars, intelligent customer service chatbots, machine translation and medical image processing.

The essence of AI technology is algorithms. As a result, most, if not all AI inventions are solutions involving algorithms, although algorithms per se are explicitly excluded, as rules and methods for mental activities, from patent-eligible subject matters under Chinese patent law.^[2] With patent applications relating to new AI technologies surging, the question of how to assess the patent eligibility of AI inventions has become an important issue of concern to the Chinese patent industry as well as to innovation subjects.

Rules for examining patent eligibility of AI inventions

In the revised ‘Guidelines for Patent Examination’, which were issued by the China National Intellectual Property Administration (CNIPA) on 31 December 2019 and entered into force on 1 February 2020, a new section titled ‘Provisions on the examination of patent applications for invention containing algorithmic features or features of business rules and methods’ was added for patent applications for inventions relating to AI, Internet Plus, big data and blockchain.^[3] This new section provides detailed rules for examining patent applications for inventions relating to these topics and aims to standardise the examination criteria of such applications.

According to this new section of the revised ‘Guidelines for Patent Examination’, the patentability examination of patent applications for AI inventions will be conducted in order as follows:

• examination of patent eligibility; and
• examination of novelty and inventiveness.

Specifically, for the examination of patent eligibility, whether a claim of a patent application falls under the rules and methods for mental activities as stipulated in article 25, paragraph 1, item 2 of the Chinese Patent Law (article 25.1 (2)) will first be examined. If the claim, considered as a whole, does not fall under the rules and methods for mental activities, then the examination will proceed to determine whether it constitutes a technical solution as referred to in article 2, paragraph 2 of the Chinese Patent Law (article 2.2).

The CNIPA emphasises that the eligibility examination of patent applications for AI inventions shall follow such criteria that the examination shall be carried out on the solution for which the patent protection is sought, meaning the solution defined by the claim. The examination of such solution shall be conducted in a way that ensures all of the contents recorded in the claim are taken as a whole to analyse the technical means involved, the technical problems solved and the technical effects obtained, instead of simply breaking the claim down into technical features and algorithmic features or features of business rules and method (BM features), which are then evaluated separately.

In particular, in the examination under article 25.1(2), if a claim contains one or more technical features in addition to algorithmic features or BM features, the claim, viewed as a whole, is deemed not to fall under the rules and methods for mental activities as stipulated in article 25.1(2), and should not be excluded from patent-eligible subject matters. The claim is considered to fall under the rules or methods for mental activities only if it is drawn to just an abstract algorithm, or simply BM features, and does not contain any technical features. For example, a mathematical modelling method based on an abstract algorithm that does not contain any technical features falls into the rules and methods for mental activities, and is thus ineligible for patent protection.

In the examination under article 2.2, it is necessary to consider all the features recited in the claim as a whole and apply the ‘three elements of technology’ test. According to this test, if the claim contains some technical means that apply the laws of nature to solve a technical problem and thereby achieves some technical effects in compliance with the laws of nature, then the claimed solution constitutes a technical solution as referred to in article 2.2. In practice, a claim on an AI invention can pass the examination under article 2.2, provided that the AI algorithm recited in the claim is applied in a specific technical field to solve a technical problem with some technical effects obtained. Illustratively, the AI invention will be deemed as a technical solution if the steps concerning the algorithm recited in the claim are each closely related to the technical problem to be solved (eg, the data processed by the algorithm is data with a concrete technical meaning in the technical field), if the execution of the algorithm can directly reflect the process of applying the laws of nature to solve a certain technical problem and if some technical effects can be achieved.

Examples of patent eligibility examination of AI inventions

Example 1

A claim drawn to a model training method reads as follows.

A method for training a model comprising a first sub-model, a second sub-model and a third sub-model, the method comprising:

• obtaining training samples comprising a labelled sample set and an unlabelled sample set; and
• training the first sub-model, the second sub-model and the third sub-model using the training samples to obtain the trained model.

For the examination of the patent eligibility of the claim, firstly it will be examined to check whether the claimed subject matter falls under the rules and methods for mental activities as stipulated in article 25.1(2), and if it does not, then it will be examined to check if it constitutes a technical solution as referred to in article 2.2.

In this example, the claim contains only algorithmic features, so it would be rejected as falling under the rules and methods for mental activities as stipulated in article 25.1(2).

Example 2

The claim of Example 1 is redrafted to read as follows.

A method applied to a computer for training a model comprising a first sub-model, a second sub-model and a third sub-model, the method comprising:

• obtaining training samples from a labelled sample set and an unlabelled sample set stored in a storage space; and
• training the first sub-model, the second sub-model and the third sub-model using the training samples to obtain the trained model.

In this example, the claim contains some technical features like ‘a computer’ and ‘a storage space’ in addition to the algorithmic features, so it shall not be rejected as falling under rules and methods for mental activities as stipulated in article 25.1(2).

However, the claim of Example 2 fails to be applied in a specific technical field to solve a technical problem. In particular, the objects processed by the algorithmic steps – ‘a labelled sample set’, ‘an unlabelled sample set’, ‘training samples’ and ‘model’ – are all abstract mathematical concepts rather than data with a concrete technical meaning in the technical field, and the execution of the algorithm fails to directly reflect the process of applying the laws of nature to solve a certain technical problem with any technical effects obtained. Therefore, it would fail to meet the ‘three elements of technology’ test, so the claimed method in Example 2 is not a technical solution as referred to in article 2.2.

Example 3

The claim of Example 1 is then redrafted to read as follows.

A method applied to a computer for training a model adapted for detecting internet abnormal access behaviour and comprising a first sub-model, a second sub-model and a third sub-model, the method comprising:

• obtaining training samples from a sample set labelled as abnormal access data or as normal access data and an unlabelled sample set that are stored in a storage space; and
• training the first sub-model, the second sub-model and the third sub-model using the training samples to obtain the model for detecting internet abnormal access behaviour.

The claimed method of Example 3 is directed to solve a technical problem of how to detect internet abnormal access behaviour in the technical field of the internet. The objects processed by the algorithmic steps, such as ‘a sample set labelled as abnormal access data or as normal access data’ and ‘the model for detecting Internet abnormal access behaviour’, are data with a concrete technical meaning in the relevant technical field, and the execution of the algorithm directly reflects the process of applying mathematics that belongs to the laws of nature to solve the technical problem of how to detect internet abnormal access behaviour with certain technical effects obtained. Therefore, the claimed method of Example 3 passes the ‘three elements of technology’ test as it constitutes a patent-eligible technical solution, as referred to in article 2.2.

Conclusion

From the above examples, it can be understood that according to the current practice of examining the patent eligibility of AI inventions in China, a relatively low-threshold criterion is used in the examination of whether a claim falls under the rules and methods for mental activities as stipulated in article 25.1(2). As long as the claim contains a technical feature or technical features, it can usually pass the examination. However, the “three elements of technology” test, which is a relatively high-threshold criterion, is also applied to examine whether a claim constitutes a technical solution as referred to in article 2.2. This test requires the claim to contain some technical means applying the laws of nature to solve a certain technical problem, with some technical effects in compliance with the laws of nature achieved thereby.

Footnotes

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The Beijing Intellectual Property Court issued the “Guidelines for Handling Supporting Documents Certifying the Subject Qualification in Foreign-related Cases”

On December 19, the Beijing Intellectual Property Court released the statist for cases in 2023 and the “Guidelines for Handling Supporting Documents Certifying the Subject Qualification in Foreign-related Cases.”

From January to November, a total of 24,324 intellectual property cases of various types were accepted, a year-on-year decrease of approximately 7%. Among them, first-instance administrative cases such as trademark and patent authorization and confirmation cases were the most accepted types of cases, with a total of 18,867 cases accepted, accounting for 77.6%. Among the first-instance cases filed, 16,436 cases were accepted online, accounting for 81.3%. In addition, with the acceleration of economic globalization, intellectual property disputes have also become cross-regional and more international. From January to November this year, the Beijing Intellectual Property Court accepted 4,292 first-instance cases involving foreign countries, Hong Kong, Macao, and Taiwan, accounting for 21.2% of the total first-instance cases, involving more than 100 countries and regions on six continents around the world.

In order to facilitate the parties involved in foreign-related cases to exercise their litigation rights, the Beijing Intellectual Property Court compiled and released the ” Guidelines for Handling Supporting Documents Certifying the Subject Qualification in Foreign-related Cases,” which covers 6 countries including the United States, France, and Germany. Based on the previous experience in reviewing notarized and certified documents for foreign-related cases, it introduces the names, styles, processing steps of certification documents, etc., and samples that demonstrates the actual template for each jurisdiction are provided.

Should you need any additional information related to the Guidelines, please contact us!

Click HERE to download the “Guidelines for Handling Supporting Documents Certifying the Subject Qualification in Foreign-related Cases.”
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Weekly China Trademark News Updates

November 30, 2023

1. Michelin won a RMB 10 million verdict against “Mizhilian in Chinese” for trademark infringement and unfair competition

Compagnie Generale Des Etablissements Michelin (“Michelin”) sued Shanghai Mizhilian Catering Management Co. (“Mizhilian”) for trademark infringement and unfair competition. The court found that Michelin’s trademark “MICHELIN” with reg. no. 136402 and trademark “Michelin in Chinese ” with reg. no. 519749 in Class 12 did not constitute identical or similar goods with the catering services used by the disputed mark. Therefore, it is necessary to determine whether Michelin’s cited marks constitute well-known marks. Michelin submitted evidence such as trademark registration certificates, business revenue and profit, enterprise ranking, promotion and advertisement expenses, honors received, news reports and previous protection of well-known mark in support of its well-known status. These can prove that the cited marks have been widely known among the relevant public in mainland China for tires in Class 12 and were also well-known to the public. The cited marks are well-known marks on the goods of tires. Regarding the relationship between “MICHELIN” and “Mizhilian in Chinese,” “Mizhilian in Chinese” is the Cantonese equivalent of “MICHELIN.” Although one of the Chinese translations of “MICHELIN” is “Miqilin in Chinese,” it can be ascertained from online media and reports submitted by Michelin that Michelin’s use of the “Mizhilian in Chinese” logo has been promoted for a long time and has been broadly distributed, and its influence and power was not limited to Hong Kong and Macau but also mainland China. There is an inseparable correspondence between “Mizhilian in Chinese,” “Michelin in Chinese,” and “MICHELIN.” The products used by Michelin’s two marks are tires, inner tubes, etc. Considering that Michelin has always been committed to providing travelers with comprehensive information, including travel, restaurants, etc., Michelin’s “Michelin Restaurant and Hotel Guide” evaluates restaurants. The rating is gradually accepted and respected by the public, and its influence is growing. Although Michelin did not directly provide catering services, Mizhilian’s use of “Mizhilian in Chinese” on drinks and snacks, which fell into to the same catering class as Michelin’s catering rating service. The two were closely related. Consumers could easily associate “Mizhilian in Chinese” logo on drinks and snacks incorrectly with the catering rating services provided under the said Michelin’s well-known marks. Mizhilian has damaged the reputation of Michelin’s well-known marks and diluted its distinctiveness, constituting trademark infringement. At the same time, Mizhilian’s registration and use of the “shmizhilian.com” domain name and promotion of the “Mizhilian in Chinese” brand on the domain name constituted an infringement of Michelin’s “MICHELIN” mark with reg. no. 13640, and such use should be stopped. Mizhilian’s use of “Mizhilian in Chinese” as its corporate name constituted unfair competition. Regarding damages, the court calculated the profit from infringement based on the amount of franchise fees collected by Mizhilian and ultimately supported Michelin’s claim for damages of RMB10 million (USD1.4 million).

2. RMB50 million in damages awarded to the owner of the “CHILDLIFE” mark

Clarke, Murray Collin, BIOZEAL, LLC and Weimi E-Commerce (Shanghai) Co. Ltd. sued Qidong Lu, Nanjing Childhood Time Bio-Technology Co. Ltd. (“Nanjing Childhood Time”), and Zhejiang Jixiang E-Commerce Co. Ltd. for trademark infringement and unfair competition. The court found that Clarke registered the “CHILDLIFE” mark in the United States on January 30, 1996, and then applied for a territorial extension to China on February 6, 2006 (International Registration No. G880154). After this mark expired, Clarke reapplied for the same mark on December 2, 2016 in Class 5, which was approved for registration on January 21, 2018 and remains valid. Clarke had a license agreement with BIOZEAL that allowed BIOZEAL to use the said mark exclusively. According to the facts found in the evidence, the use of “CHILDLIFE” as the trade name of the inne products sold by the overseas flagship store of Nanjing Childhood Time, and the sale of the CHILDLIFE products and the use of the word inne in the promotional images constituted trademark use. The infringing store used the trademark “CHILDLIFE” on its inne products without BIOZEAL’s permission, and the infringing goods and the “CHILDLIFE” products were both children’s nutritional solution products, which constituted the same goods. Considering the distinctiveness and popularity of the trademark “CHILDLIFE,” the use of the trademark “CHILDLIFE” in the key position of the sales picture of the inne products was likely to cause confusion and misrecognition among the relevant public. Therefore, the use of the trademark “CHILDLIFE” by the infringing stores in the sale of inne products constituted trademark infringement. At the same time, although the infringing store’s use of the “CHILDLIFE” trademark during the sale of inne products did not constitute as removing other’s trademarks in the physical sense, in essence, it has the same function and effect of removing other’s trademarks. It also infringed on the “CHILDLIFE” trademark identification function and caused public confusion and misunderstanding. Therefore, the infringing stores constituted trademark infringement and its act constituted reverse counterfeiting. With regard to unfair competition, according to the evidence in the case, Childlife products entered China in 2006, and have gained a certain degree of popularity and many honors and awards in the market of children’s nutritional solution, with a long sales time, wide area and large sales, and their packaging and decoration had a certain degree of influence in the market of children’s nutritional supplements and so on. Although there is a difference between the inne products and Childlife products, but because Childlife products’ packaging and decoration have a high reputation, inne products packaging and decorations could easily cause confusion and misrecognition to the relevant public, the two constituted substantially similar. Therefore, the infringing store sales of inne products with the aforementioned decoration constituted unfair competition. In addition, “Childhood Time in Chinese” is BIOZEAL’s influential trade name, and the unauthorized use of the trade name “Childhood Time in Chinese” by Nanjing Childhood Time after the termination of the distribution relationship between the two parties constituted unfair competition. At the same time, Nanjing Childhood Time’s false publicity behavior/malicious complaints/use of the ”Childlife” keywords also constituted unfair competition. With regard to damages, the court held that the infringing behavior of Nanjing Childhood Time constituted aggravated circumstances, and the punitive damages shall be applied. According to the statistics, the sales of the infringing goods amounted to RMB300 million (USD42.24 million), and the punitive damages in this case amounted to RMB120 million (USD16.9 million) based on a profit margin of 20%. Accordingly, the court supported the plaintiffs’ claim of RMB50 million (USD7 million) in damages.

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