Weekly China Trademark News Updates

February 1, 2024

1. “Château Lafite in Chinese” took a free ride on the “LAFITE” mark’s fame and the China Supreme Court applied punitive damages and sentenced RMB 79.17 million in damages

Recently, the China Supreme Court (“SPC”) concluded a trademark infringement and unfair competition dispute between the appellants Nanjing Golden Hope Wine Co., Ltd. (“Golden Hope”), Nanjing Manor Lafei Wine Co., Ltd. (“Manor Lafei”), Nanjing Huaxia Grape Winery Co., Ltd. (Huaxia), Shenzhen Junteng Wine Co., Ltd. (“Junteng”) and the respondent Chateau Lafite Rothschild (“Rothchild”). The SPC held that the appellants should stop their trademark infringement and unfair competition, and that Rothschild should receive a total of RMB 79.17 million (USD 17.97 million) in economic losses and reasonable expenses to stop the infringement.

Issue I – Whether the appellants’ use of the accused marks constitutes trademark infringements

1. The Disputed Mark is “Manor Lafei in Chinese,” in which “Manor in Chinese” indicates a location or an organizational format and lacks distinctive features when used on wine and other goods. Thus, “Lafei in Chinese” is the main identifying part of the mark. The Cited Marks in this case are “LAFITE” and “CHATEAU LAFITEROTHSCHILD,” with “LAFITE” being the distinctive identifying part. Regarding whether “Lafei in Chinese” can form a stable corresponding relationship with “LAFITE,” this court’s previous judgment on April 1, 2005, found that before the application date of the “Manor Lafei in Chinese” mark, Rothschild had already used the name “Lafei in Chinese” on relevant sales flyers in mainland China. “Lafei in Chinese” refers to “LAFITE,” and “Lafite in Chinese” also appears in publicity reports related to “LAFITE.” Rothschild has objectively established a solid connection between “Lafei in Chinese” and “LAFITE” through many years of business operations. Therefore, the distinctive part of the accused infringing mark “Manor Lafei in Chinese” is the same as the Chinese translation of the Cited marks or identical to the distinctive part of the Cited Marks. The two marks constitute similar marks.

Appellants used the “Manor Lafei in Chinese” logo that was similar to the Cited Marks in the allegedly infringing products and transaction documents produced or sold, which constituted trademark use. Manor Lafei and others also published articles on their websites to introduce Bordeaux wineries represented by “Lafite in Chinese.” In their advertisements, they introduced that their wines are produced in Bordeaux and have historical heritage in an attempt to increase the popularity of “LAFTTE” wines. Considering the fact that the Cited Marks have a high degree of popularity due to continuous use when the alleged infringement occurred, as well as the actual use by Manor Lafei and other appellants, it can be determined that the alleged infringement could easily cause confusion and misunderstanding among the relevant public.

2. The “MANOR” in the accused infringing mark “LAFEIMANOR” is a French word, and its Chinese meaning is “manor.” It lacks distinctive feature when used on wine and other goods. Therefore, “LAFEI” is the distinctive feature of the mark. Comparing the distinctive part of the Disputed Mark “LAFEI” with “LAFITE,” they have the same initial letters and are similar in letter composition, arrangement order, pronunciation, etc. Therefore, the Disputed Mark “LAFEIMANOR” and “LAFITE” constitute similar marks with the Cited Marks “LAFITE” and “CHATEAU LAFITE ROTHSCHILD.” Golden Hope and other appellants used “LAFEI MANOR” on wine goods, which constitute as a similar mark on identical or similar goods with the Cited Marks owned by Rothschild, which could easily cause confusion and misunderstanding among the relevant public.

Issue II – Whether Manor Lafei’s use of “Lafei Mano in Chinese” as its trade name constitutes trademark infringement

Manor Lafei was registered on August 11, 2006, using “Manor Lafei in Chinese” as its corporate name. Since then, Manor Lafei’s official website and its “Specialty Store Investment Manual” have separately used “Manor Lafei” to refer to Chateau Lafite. Manor Lafei prominently used its “Manor Lafei” brand name in its business activities. As mentioned, “Manor Lafei” is similar to “LAFITE,” and “LAFITE” wine had already entered China before the establishment of Manor Lafei and was known to the relevant public. Therefore, Manor Lafei’s registration of “Manor Lafei in Chinese” as a trade name and prominent use of it on goods that are identical or similar to the goods approved for use of the “LAFITE” mark could easily cause confusion and misunderstanding among the relevant public.

Issue III – Whether Manor Lafei’s promotional activities constituted unfair competition

Manor Lafei uses slogans such as “Manor Lafei – the focus of the world’s attention, God’s favorite wine has finally come to China” in its “Specialty Store Investment Manual” to promote and introduce its “Manor Lafei” wine. The semantics of the said advertising slogan are vague and exaggerate the historical heritage and popularity of the Chateau Lafite wine. Based on the popularity of Rothschild and “LAFITE” wines, as well as the corresponding relationship formed between the “Lafei in Chinese” and “LAFITE” marks, such advertising slogan may easily cause the relevant public to mistakenly believe that the wine of “Manor Lafei in Chinese” is the wine of a world-renowned winery, thereby misunderstanding the quality and reputation of the product, which constituted misleading false promotion, and damaging the interest of Rothschild.

Issu IV –The amount of damages

First, according to the evidence submitted by Golden Hope, there were a total of 757 dealers and agents of “Manor Lafei in Chinese” wine across the country, and “Manor Lafei in Chinese” wine has been stationed in nearly 2,000 supermarket systems. The cost ranges from RMB 4 – 5 to more than RMB 10, but the sales price ranges from more than RMB 60s to over 1000. The illegal profits are as high as ten times or even hundreds of times. This shows that the illegal profits obtained by the seven appellants including Golden Hope as a result of the infringement far exceeded RMB 100 million. Second, the court rechecked and counted the sales data and payment letters of each appellant to calculate the sales volume and single bottle sales price of the accused infringing goods. The cost price of a single bottle is calculated based on the purchase situation of each appellant. Finally, the court adopted the calculation method of (single bottle sales price – single bottle cost price)/single bottle sales price to calculate the profit margins of each appellant. According to the recalculated sales price and cost price data, the profit margin of Manor Lafei is 67%, the profit margin of Huaxia is 68%, and the profit margin of Junteng and Perun is both 31%.

On this basis, the court comprehensively considered the nature of each appellant’s infringement, degree of subjective fault, duration of infringement, profits from infringement and other factors, and awarded Rothchild a damage of RMB 79.17 million (USD 17.97 million) for its economic losses and reasonable expenses paid to stop the infringement.

2. “Huawei” trademark infringement case – four times punitive damages – RMB 10 million

Recently, the Shanghai Jinshan District Court concluded a first-instance trademark infringement lawsuit between the plaintiff Huawei Technologies Co., Ltd. (“Huawei”) and an anonymous cosmetic company, Jishe Clothing (Shanghai) Co., Ltd. (“Jishe”), an individual Li. The court ordered the defendants to immediately stop the trademark infringement and jointly compensate Huawei for economic losses of RMB 10 million (USD 2.27 million).

The court found that Huawei legally obtained the right to register the “Huawei in Chinese” mark. The creative titles of 27 products in the Tmall store “Kubaluo Flagship Store” prominently use the words “Huawei in Chinese,” “Huawei Genuine Product in Chinese,” “Suitable for Huawei mobile phone in Chinese,” “Suitable for Huawei genuine mobile phone in Chinese” and other words in prominent positions. It did not display its own product brand and the operating entity of the Tmall store “Kubaluo Flagship Store” infringes Huawei’s trademark right. The operating entities of the Tmall store “Kubaluo Flagship Store” are the two defendants. Jishe and the anonymous cosmetic company have the same controlling shareholder or the same actual controller, and the control relationship lasts for 6 months or more. Therefore, Jishe and the anonymous cosmetic company jointly committed infringing acts.

Defendant Li’s personal bank account is mixed with defendant Jishe. Li’s personal Alipay account is related to Jishe and the anonymous cosmetic company, and the anonymous cosmetic company’s invoice is defendant Li. Taking the above circumstances into consideration, Li is the actual controller of Jishe and the anonymous cosmetic company. Although the infringement in this case was ostensibly carried out by the business entities of the Tmall store “Kubaluo Flagship Store,” namely the defendants Jishe and the anonymous cosmetic company. The defendant Li, as the actual controller, had complete control over Jishe and the anonymous cosmetic company. Li was aware of the infringements carried out by the two entities from the beginning and participated in it using personal bank accounts and personal Alipay accounts. Therefore, Li is a joint infringer and should bear joint and several liability.

Regarding the benefits gained by the Tmall store “Kubaluo Flagship Store” due to infringement, according to the identified facts, the sales volume of 27 infringing products was RMB 19.99 million. Regarding the profit rate, the Huawei claimed that the profit rate of the 27 infringing products can be calculated based on the facts found in the administrative penalty decision, which was 39.15%. This court believes that the data did not include warehousing, transportation, and other costs, but the data is verified by the market supervision and management department in accordance with the law. Therefore, this court refers to the said data and determines the profit rate to be 30%. In summary, the benefits obtained by the anonymous cosmetic company and Jishe due to infringement were RMB 5.99 million. The court held that the defendants, the two entities intentionally infringed upon Huawei’s trademark right with deep subjective malice, long infringement time, and large scale of infringement, which was a serious situation. The base number should be RMB 5.99 million and four times punitive damages should be applied to the defendants, which resulted in RMB 23.98 million. Huawei claims a total economic loss and punitive damages of RMB 10 million, which did not exceed the scope that the court can support according to law, therefore the court will fully support its claim.

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Weekly China Trademark News Updates

January 23, 2024

1. The Court Finds Geographical Indication Collective Mark “Champagne” Constitutes a Well-Known Mark

Recently, the Beijing High Court concluded a second instance trademark infringement dispute between the French Champagne Industry Commission (the “Champagne Commission”), Guangzhou Xuelei Cosmetics Co., Ltd. (“Guangzhou Xuelei”), and Beijing Yalishadi Cosmetics Co., Ltd. (“Beijing Yalishadi”). The court held that the “Champagne” mark with reg. no.  11127266 and the “Champagne in Chinese” mark with reg. no. 11127267 constituted well-known marks on wine and other goods. Guangzhou Xuelei and Beijing Yalishadi should immediately stop the infringement and compensate for economic losses and reasonable expenses of RMB 220,000 (USD 30,980).

Cited Marks

The court found that: First, based on the sales scope, sales volume and sales price of Champagne wine in the Chinese market, and the facts such as the advertising, honors and protected records of the registered “Champagne” and “Champagne in Chinese” marks in mainland China, it was sufficient to conclude that before the infringement occurred on July 5, 2019, the Champagne Commission’s “Champagne” and “Champagne in Chinese” marks have gained high visibility and influence on wine products, and were widely known to the relevant public and constituted well-known marks.

Second, although the packaging boxes and bottles of the accused infringing products were still marked with the words “MeiDun” and “Mei Dun in Chinese,” there are many cases in the market where two or more commercial logos are used on the same product at the same time. The existence of a commercial logo does not necessarily affect the role of other logos in distinguishing the source of goods. The allegedly infringing goods prominently use the “Champagne Life” and “Champagne Life in Chinese” logos on the bottle and packaging box in a more eye-catching manner. The said acts obviously have the purpose of indicating the source of the goods to enable the relevant public to distinguish different product providers, which constituted as trademark use under the Trademark Law.

Third, although the perfume product used by the accused logo and the wine product for which the “Champagne” mark is approved and famous for use are not classified as the same or similar goods according to the CNIPA Classification of Goods and Services, there are relatively large overlap among the relevant public. The “Champagne” and “Champagne in Chinese” marks have been widely known to the public, when the accused logos “Champagne Life” and “Champagne Life in Chinese” were used on the accused infringing goods, it was enough to cause the relevant public’s misunderstanding of the source of goods with the said well-known marks, which constituted an infringement of the Champagne Commission’s well-known trademark rights, and it should bear corresponding legal liability.

2. The Court Recognized “AO Smith in Chinese” as a Well-known Mark

Recently, the Jiangsu High Court concluded a second instance trademark infringement and anti-unfair competition dispute between A.O. Smith Corporation (“A.O. Smith”), A.O. Smith (China) Water Heater Co., Ltd. (“A.O. Smith China”), and Guangdong Simaisi Electric Co., Ltd. (“Guangdong Simaisi”), Taizhou Qingfeng Decoration Co., Ltd. (“Taizhou Qingfeng”). The court held that the “AO Smith in Chinese” mark with reg. no. 1114992 and “AOSmith” mark with reg. no. 2017196 constitute well-known marks on water heaters and other goods. The defendants infringed upon A.O. Smith and A.O. Smith China’s trademark right and should immediately stop the infringement and compensate for economic losses of RMB 1.5 million (USD211,400).

Cited Marks

The court found that: First, despite the administrative rulings found that when a third party used the “AO Smith in Chinese” mark on laundry machine goods in June 2003, the Cited mark “AO Smith in Chinese” with reg. no. 1114992 has not yet constituted as a well-known mar. According to the case-by-case principle followed by courts in recognizing well-known marks, such finding may not necessarily affect this court’s rulings of this case based on the evidence at hand. Therefore, whether the Cited Marks can be recognized as well-known marks shall be determined based on the evidence and facts of this case.

Second, if there is a slight difference between the actually used trademark and the registered trademark, but its distinctive features does not change, it can be regarded as the use of a registered trademark. Before October 2003, the plaintiff used the words “A.O. Smith” and “A.O. Smith in Chinese” in commercial activities, and a stable corresponding relationship between the two marks had been established. The plaintiff’s actual use of the two marks did not change the distinctive features of the trademark involved and can be regarded as trademark use. In addition, for trademarks that have been actually used before registration is approved, such use can be considered as a continuation of use. Therefore, it can be concluded that the plaintiff continued to use its Cited Marks before October 2003.

Third, comprehensive consideration of the sales contracts, advertising, promotion activities, media reports, audit reports involved, market survey reports, search reports, etc. provided by the plaintiff was sufficient to determine that before October 2003, the Cited Marks had been widely known to the relevant public in China and reached a well-known level, and is still well-known today.

In addition, in this case, the Cited marks mainly contains elements such as “Smith in Chinese” and “SMITH.” Through the publicity and use of the right holder, “Smith in Chinese” and “SMITH” have become the core elements for identifying the source of goods. The accused infringing logo is similar to the Cited Marks in text, pronunciation, and overall appearance, which constituted similar marks. When the alleged infringing trademark was used, the Cited Marks had already gained a high reputation across the country. The use of the accused infringing mark on the same or similar goods can easily cause confusion to the relevant public, and the accused acts constituted trademark infringement.

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Weekly China Trademark News Updates

January 17, 2024

1. The “Freshfragrance” mark  was invalidated by the “fresh” mark

In an administrative trademark invalidation dispute between the plaintiff Fresh Company and the defendant CNIPA and the third party Qiong Luo, the Beijing Intellectual Property Court held that the Disputed Mark violated Article 30, Article 31 and Article 32 of the 2013 Trademark Law. The CNIPA’s decision shall be revoked and the CNIPA shall make a new ruling.

Disputed Mark

No.13450891 Subclass 4402

Cited Mark 1	Cited Mark 2	Cited Mark 3	Cited Mark 4	Cited Mark 5
No. 13450891 Subclass 0306	No. 10838741 Subclasses 0301, 0305-0306	No. 8690350 Subclasses 0301, 0305-0306	No. 25228002 Subclass 4405	No. 22753556A Subclasses 4401, 4403, 4405

The first issue is whether the Disputed Mark filed by the third party violates Articles 30 and 31 of the 2013 Trademark Law. The court found that the Disputed Mark consists of the English letters “Freshfragrance”. according to the general English cognition level of Chinese consumers, it is easy to read it as two parts: “Fresh” and “fragrance” of which the “Fresh” part is the same as the Cited Marks 1 and 4 in letter composition. It is also identical with the distinctive part of Cited Marks 2 and 3. It is similar in pronunciation to the Cited Mark 5. The Disputed Mark constitute as an identical mark with all five Cited Marks.  Although all approved services such as “beauty services, massages, and manicures” for use under the Disputed Mark and the approved goods and services for use under the Cited Marks 1 to 5 are in different classes, when considering the following factors, they constitute similar marks. First, the “beauty services, makeup artist services, waxing and hair removal” and other services approved for use by the Disputed Mark are identical to the Cited Marks 1 to 5. The consumer groups of the goods and services approved for use such as “cosmetics and sanitary equipment rental” basically overlap, and are often used in combination, so they are highly related. Second, the Disputed Mark completely contains the distinctive parts of the Cited Marks 1 to 4. They are highly similar. Third, the plaintiff’s “fresh/fuleishi in Chinese” series of trademarks have gained a certain reputation on “cosmetics” products through continuous publicity and use. The coexistence of the Disputed Mark and the Cited Marks may easily cause confusion and misunderstanding the relevant public. In summary, the Disputed Mark and the Cited Marks 1 to 5 constitute similar marks on similar goods and services which violated Articles 30 and 31 of the 2013 Trademark Law.

The second issue is whether the Disputed Mark violates Paragraph 3, Article 13 of the 2013 Trademark Law. The court found that the sales evidence, publicity news, comment articles, etc. submitted by the plaintiff could prove that the plaintiff’s “fresh” and “Fuleishi in Chinese” trademarks had a certain degree of popularity on “cosmetics” products through use and promotion. However, after considering the scope of influence and scale of the popularity, the Cited Marks have not yet reached the level of well-known. Therefore, the filing of the Disputed Mark does not violate Paragraph 3, Article 13 of the 2013 Trademark Law.

The third issue is whether the Disputed Mark violates Paragraph 1(vii), Article 10 and Paragraph 1(ii), Article 11 of the 2013 Trademark Law. The plaintiff claimed that the word “fragrance” in the Disputed Mark means “perfume, fragrance” and its use in services such as Class 44 “beauty services and makeup artist services” can easily lead to consumers misunderstanding the content of the services. It is also a direct expression of the designated service. After hearing, the court held that the use of the word “fragrance” in services such as “beauty services and makeup artist services” can easily cause consumers to associate and believe that the services related to the use of the Disputed Mark denotes wonderful enjoyment, but such associations have not yet reach the extent of being deceptive, it does not violate Paragraph 1(vii), Article 10  of the 2013 Trademark Law. In addition, although the Disputed Mark may cause consumers’ associations and imaginations, it is not a direct description of its service, so it does not violate Paragraph 1(ii), Article 11 of the 2013 Trademark Law.

The fourth issue is whether the Disputed Mark damages the plaintiff’s prior trade name rights. The court found that the plaintiff had been selling “fresh/fuleishi in Chinese” brand cosmetics in China since 2012 at the latest. Through continuous publicity and use, its English trade name “fresh” has gained a certain reputation in cosmetic products. The third-party should have known that the Disputed Mark “Freshfragrance” completely includes the plaintiff’s English trade name “fresh” and the two are similar in overall appearance and text composition. The approved services under the Disputed Mark such as “beauty service and make-up artist service” basically overlap with the consumer groups of the “cosmetics” goods for which the plaintiff’s trade name is famous. Thus, the two mark constitute similar goods and services. Therefore, the application for registration of the disputed trademark damaged the prior right of the plaintiff and violated Article 32 of the 2013 Trademark Law.

Finally, the court held that the evidence on record was insufficient to prove that the filing of the Disputed Mark violated Article 4 and Paragraph 1, Article 44 of the 2013 Trademark Law.

2. Infringement of Dyson’s trademarks and unfairly competed with Dyson  was ordered to pay RMB 800,000 in damages

The Sichuan High Court dismissed a trademark infringement and unfair competition dispute brough by the appellant Dyson Technology Chengdu Co., Ltd. (“Dyson Chengdu”) against the appellees Dyson Technology Co., Ltd. (“Dyson”) and Dyson Trading (Shanghai) Co., Ltd. (“Dyson Shanghai”) and upheld the lower court’s judgment.

The first instance court found that: 1. Dyson Chengdu has posted on its website www.hvlsfan.cn, www.daisencd.com, WeChat applet “Sichuan Industrial Ceiling Fan,” and the 1688 platform “Dyson Technology Chengdu Co., Ltd.” store , “Dyson Technology Chengdu Company” (TikTok account xc516) and “Dyson Technology Chengdu Co., Ltd.” (Tiktok account Daisenkejich) and third-party websites the accused infringement marks “Dyson in Chinese” and “Dyson Technology in Chinese” and “DAISEN” for the purpose of selling and promoting its industrial fans. The use of the said logos had played the role of identifying the source of the product and constituted trademark use. The specific products used by Dyson Chengdu were mainly large industrial ceiling fans, which is identical to the ceiling fans approved for use under the “Dyson in Chinese” and “DYSON” trademarks with reg. nos. 6369537 and 6334841 (“Cited Marks”) claimed by Dyson and Dyson Shanghai in Class 11. The “Dyson in Chinese” and “Dyson” logos used by Dyson Chengdu were identical or similar to the Cited Marks. The “DAISEN” mark used by Dyson Chengdu had identical pronunciation as the “DYSON” mark owned by Dyson with only some letters being different. Since the Cited Marks had a high reputation in the relevant industries in China, based on the general attention of the relevant public, the two marks were similar. To sum up, Dyson Chengdu used logos similar to the Cited Marks in identical or similar goods without the permission of Dyson and Dyson Shanghai, which could easily cause confusion among the relevant public and infringed upon the trademark rights of Dyson and Dyson Shanghai. In addition, the first instance court held that the “DS and Design” used by Dyson Chengdu were neither identical nor similar to the Cited Marks, so it did not support the trademark infringement claim based on it. 2. The main part of the www.daisencd.com domain name registered and used by Dyson Chengdu in March 2021 is similar in pronunciation and spelling to the Cited Marks, which was enough to cause misunderstanding among the relevant public, and Dyson Chengdu has the bad faith intent to deliberately mislead users into accessing its website. Therefore, its actions infringed upon the trademark rights of Dyson and Dyson Shanghai. 3. Dyson Chengdu was registered and established in 2017. As a company that also produces and sells fan products, it should be aware of the popularity of the Cited Marks and the names of Dyson and Dyson Shanghai. However, it still used “Dyson in Chinese” as its company name, which is the same as the Cited Marks. Such actions showed subjective intent to take advantage of the goodwill of others, which may easily cause the relevant public to mistakenly believe that it was related to Dyson and Dyson Shanghai, or there was a specific connection that creates confusion. Therefore, Dyson Chengdu’s use of “Dyson in Chinese” as a corporate name and used words including “Dyson Technology” and “DAISENTECHNOLOGY” in recruitment, bidding and other business activities constituted unfair competition. Accordingly, the first instance court held that Dyson Chengdu should immediately stop the infringing behavior (including stopping using the infringing logo, stopping using and canceling the www.daisencd.com domain name, stopping using the company name with the same or similar words as “Dyson”, and change its company name), post apologies on newspaper to eliminate the impact, and compensation for economic losses and reasonable expenses totaling RMB800,000 (USD112,000).

Dyson Chengdu appealed. The Sichuan High Court found that the key issues in the second instance were 1. Whether Dyson Shanghai has the right to initiate litigation in this case. 2. Whether the accused actions of Dyson Chengdu constitute trademark infringement and unfair competition. 3. Whether the amount of compensation determined by the first instance judgment is appropriate.

Regarding issue 1, the court found that Dyson Shanghai was authorized by Dyson, the trademark owner, to use the Cited Marks within China, and had the right to file lawsuits for infringement of trademark rights, corporate names, etc. According to relevant legal provisions, Dyson Shanghai has the right to initiate litigation in this case.

Regarding issue 2, the Sichuan High Court found that the approved goods for use under the Cited Marks in Class 11, including air conditioning devices, ceiling fans, self-operated fans, etc., are the same as the large industrial fan used by Dyson Chengdu with the infringing logo. They constituted the same goods. Combined with the fact that the Cited Marks enjoys a high reputation in China, Dyson Chengdu used a logo similar to the Cited Marks on the same product, which was enough to confuse the relevant public and constituted trademark infringement. Regarding Dyson Chengdu’s appeal that its use of a legally registered corporate name does not constitute unfair competition, the court found that the evidence on record could prove that Dyson Shanghai has a certain market reputation in its industry and that the “Dyson” brand name is a company name with certain influence. Dyson Chengdu, as a later registered commercial entity that sells fan products like Dyson Shanghai, should be aware of Dyson Shanghai’s well-known status and reasonably avoid it based on the principle of good faith and recognized business ethics. However, Dyson Chengdu did not make any reasonable circumvention when registering its company name, and still used “Dyson in Chinese” in its company name, which could easily cause people to mistakenly believe that it has a specific connection with Dyson Shanghai and has the ability to take advantage of Dyson Shanghai’s good will which constituted unfair competition.

Regarding focus issue 3, Dyson and Dyson Shanghai did not provide evidence to prove the actual losses they suffered due to the infringement, nor the benefits gained by Dyson Chengdu from the infringement. There is no trademark license fee, etc. for reference in this case. The first instance court comprehensively considered the popularity and influence of the Cited Marks, the nature, duration, scope of influence and subjective state of the infringement committed by Dyson Chengdu, as well as the fact that a lawyer appeared in court in this case and the difficulty of the case. The court also considered the evidence collection process, lawyer’s work attitude and workload and other factors. The court finally determined that Dyson Chengdu should compensate Dyson and Dyson Shanghai for a total of RMB800,000 (USD112,000) in economic losses and reasonable expenses, which was not inappropriate.

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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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Weekly China Trademark News Updates

January 10, 2024

1. Damages of RMB 5 million was ordered against the counterfeit “Skechers” mark

SKECHERS U.S.A., INC. II (“Skechers”) sued individuals Xiong, Mao, Xiao and others for trademark infringement. The court found that Skechers is the owner of “,” “,” and “Skechers in Chinese” marks on sneakers related goods. All marks are valid. Xiong, Mao, and Xiao have been producing and selling shoes counterfeiting the registered trademarks of Sketchers since 2017. Xiong, as the main person in charge, opened the factory, was responsible for material procurement, and contacted potential customers. Mao and Xiao were in charge of the daily production matters of the factory and were responsible for the production and packaging of the counterfeited products. On May 20, 2021, the public security authorities arrested Mao, Xiao, and another individual Cai at the scene, and seized a total of 14,052 pairs of counterfeit Skechers sneakers, valued at up to RMB 8 million (USD1.12 million). On May 21 of the same year, the public security authorities again seized a total of 10,470 pairs of counterfeit Skechers sneakers by the four defendants, valued at nearly RMB 6 million (USD841,000). The Defendants Xiong, Mao, Xiao, and Cai produced and sold sneakers with counterfeit “SKECHERS” mark, which constituted the crime of counterfeiting a registered trademark, and also infringed the Skechers’ trademark right, and should be held liable for civil damages in accordance with the law. In this case, it has been ascertained that from 2017 to 2021, the Defendants produced and shipped a total of 321,211 pairs of counterfeit Skechers sneakers, which were valued between RMB 19 million to 305 million (USD 2.6 million to 42 million) according to the shipping price of RMB 60-95 per pair, and the total infringing profits of the four Defendants were calculated at a total amount of not less than RMB 2 million (USD279,000) based on the level of the actual profit margin of approximately 10% as confessed by the four Defendants. Due to the defendants’ infringement lasted for a long time, production, and sales scale, with subjective infringement of intent and infringement of the seriousness of the circumstances, Skechers claimed that Xiong’s damage should be tripled as punitive damages, the court supported Skechers’ claim and ordered Xiong to pay for economic loss of RMB 5 million (USD699,291) and reasonable costs of RMB 162,504 (USD22,727). Mao and Xiao should be jointly responsible for RMB 3662,504 of Xiong’s liability.

2. Davidoff wins another administrative trademark enforcement action

Hong Kong Wanli International Limited is the registrant of the “Davidowen Daweiouwen in Chinese” mark with reg. no. 12873589 (“Disputed Mark”). ZINO DAVIDOFF SA (“Davidoff”) filed an invalidation request based on its prior trademarks. After hearing, the court found that the goods designated for use by Davidoff’s “DAVIDOFF” mark with reg. nos. 1790412, G467510 and G876874 and the Disputed Mark fall into spices and cosmetics related classes. In terms of function, use, manufacturing department, place of sale, consumer, etc., they are identical or are highly related, and constitute identical or similar goods. Given that the Disputed Mark consisted a combination of “Davidowen” and “Daweiouwen in Chinese,” which is highly similar to the corresponding Chinese mark of Davidoff’s “DAVIDOFF” mark in China based on the evidence submitted by Davidoff. Davidoff’s evidence can prove that “Davidoff in Chinese” has formed a one-to-one corresponding relationship with the “DAVIDOFF” mark through long term use and promotion. Comparing the two marks, they are similar in terms of composition and pronunciation. Considering such high relevance, the Disputed Mark is highly likely to cause relevant public to be mistaken as a series of Davidoff’s “DAVIDOFF” mark and cause confusion. Therefore, the registration of the Disputed Mark violated Article 30 of the 2013 Trademark Law and should be invalidated.

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Weekly China Trademark News Updates

January 3, 2024

1. Trademark and Brand Development Index 2023

Since 2020, the Intellectual Property Utilization Promotion Department of the CNIPA has guided the China Trademark Association to compile and publish the “Trademark and Brand Development Index (TBDI),” which evaluates the trademark brands of all provinces (autonomous regions and municipalities included) across the country to conduct index evaluation on the comprehensive level of development.

The newly released TBDI-2023 also encloses the 2023 List of Global Brand Value Top 100 – PRC brand list, which is compiled by China Trademark Association and the Information Resource Management Colleague of Renmin University using the PRC algorithm and data from Brand Finance, Brand Z, Interbrand and Forbes. The top ten brands are Apple, Google, Amazon, Microsoft, Samsung, McDonald’s, Facebook, Tesla, Coca-Cola and Nike. The top ten Chinese brands are Tencent, Moutai, Alibaba, Douyin (TikTok), Industrial and Commercial Bank of China, Huawei, China Construction Bank, Ping An, State Grid, and Agricultural Bank of China.

2. Revoking the first-instance judgment, the Beijing High Court determined that the registration of “Yiqi Hongqi” on tires should be invalidated

The Disputed Mark “Yiqi Hongqi” (FAW Red Flag in Chinese) with reg. no. 29148123 was filed on February 6, 2018 and approved on March 7, 2019 for use on automobiles; automobile wheels; automobile tires and other goods in Class 12. The current trademark owner is China FAW Corporation.

Hualin Jiatong Company cited its ”  ” “” “” marks to invalidate the Disputed Mark. The CNIPA found the marks were similar and held that the Disputed Mark should be invalidated on the similar goods of “tires for vehicles; automotive tires.”

China FAW Corporation appealed the unfavorable decision.

After hearing, the Beijing IP Court found that: the Disputed Mark consists of the Chinese characters for “FAW Red Flag” in ordinary font, the Cited Marks contain the stylized Chinese characters of “Red Flag,” and the Cited Marks 1 and 3 also contain related design. Looking at the development history of the “Red Flag” trademarks owned by China FAW Corporation and Hualin Jiatong Corporation on automobile products and tire products respectively, it can be concluded that the “Red Flag” trademarks owned by both companies were adopted by their predecessors under special historical backgrounds and economic systems. The legitimate rights obtained from their own operations should be protected in accordance with the law. It should be pointed out that although the three Cited Marks are currently valid trademarks, Hualin Jiatong Company recognized that it stopped using the “Red Flag in Chinese” trademark after introducing foreign investment in 2003. In 2004, China FAW Corporation successively applied for marks incorporating “Red Flag in Chinese” on vehicle tire products, which were subsequently approved. Until Hualin Jiatong Company resumed use of the “Red Flag” trademark in 2020, there were many “Red Flag” marks on the market on tires related goods. On this basis,  China FAW Company applied for the Disputed Mark in 2018 and added its well-known word “FAW in Chinese” before the word “Red Flag,” which in fact helped the relevant public to distinguish on tire products produced between China FAW Company and Hualin Jiatong Company. In addition, the tire goods in this case have a special relationship with the well-known automobile products of China FAW Corporation, which are complete products and major parts. The two products are highly related. The popularity of China FAW Corporation’s “Red Flag” trademark on automobile products can be extended to tire goods. Taking the above factors into consideration, the coexistence of the Disputed Mark with the three Cited Marks on the product “tires for vehicles; automobile tires” will not easily lead to confusion and misunderstanding by the relevant public.

Hualin Jiatong Company was dissatisfied with the original judgment and appealed to the Beijing High Court. In the second-instance, the court held an inquiry and China FAW Corporation admitted that after securing registration of trademarks containing the word “Red Flag” on tire products in 2004, there was no relevant evidence of use.

The Beijing High Court found that the Disputed Mark and the Cited Marks 1-3 were similar in terms of text composition, pronunciation, meaning, and overall appearance, and thereby constituted similar marks. The evidence on file submitted by China FAW Corporation was insufficient to prove that the Disputed Mark can be distinguished from the Cited Marks through use. In addition, although the “Red Flag in Chinese” and “FAW in Chinese” trademarks owned China FAW Company were relatively famous on automobile products, the evidence in the case was not enough to prove that its popularity on automobile products has extended to the ” tires for vehicles; automobile tires” goods used under the Disputed Mark. Therefore, the registration of the Disputed Mark on the goods “tires for vehicles; automobile tires” and the three Cited Marks constitute similar trademarks used on the same or similar goods and should be declared invalid.

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Weekly China Trademark News Updates

December 27, 2023

1. Reversal of the second instance judgment! Invalidation of the “Puma” design similarity trademark case

Recently, the Beijing High Court made a final judgment on a trademark invalidation case between the appellant Puma Europe Co., Ltd.  (“Puma”) and the respondent the CNIPA, and the third party in the original trial, Rujun Zuo.

Disputed Mark

Cited Marks

The Beijing High Court found that the Disputed Mark and the Cited Marks are both design marks, and they are similar in design style, composition elements, visual effects, etc. At the same time, according to the advertisements, media reports, sales data, annual income statement, profit and loss statement and other documents submitted by Puma, it can be proved that before the application of the Disputed Mark, each Cited Mark has a certain degree of popularity on “shoes” and other goods. Rujun Zuo, as a competitor in the same industry, should have known about the said information, but failed to fulfill his obligation to reasonably avoid it and still filed for many marks, including the Disputed Mark on identical or similar goods. Such filings could not be regarded as a coincidence. If the Disputed Mark and the Cited Marks are used on identical or similar goods at the same time, it would easily cause the relevant public to mistakenly think that the two were series of trademarks of the same market entity, or that there was some kind of relationship between the two trademark holders, which may lead to misidentification of the source of goods. The difference between the Disputed Mark and the Cited Marks was not enough to eliminate confusion and misunderstanding among the relevant public, and the evidence on record was not sufficient to prove that the Disputed Mark can be distinguished from the Cited Marks after use.

2. The 3D trademark of Panerai is legal and valid, and the unauthorized manufacture and sale of similar wristwatch products constitute an infringement

The Tianhe District Court of Guangzhou rendered a trademark infringement and unfair competition case between the plaintiff, Officine Panerai AG (“Panerai”), and the defendant, holding that the defendant should immediately stop the production and sale of the infringing products and compensate Panerai for the economic loss and the reasonable costs for a total of RMB650,000 (USD90,930).

Allegedly infringing goods

Cited Marks and Panerai’s products

The court found that the defendant operated an online store to sell watches, including the allegedly infringing products. The allegedly infringing goods were identical to the goods authorized for use of Panerai’s 3D trademark. Upon comparison, the shapes and sizes and proportions of the cases, crowns and lugs of the allegedly infringing goods were similar to the relevant elements of the Cited Marks as a whole, and the hands and numerals displayed in the dials of the allegedly infringing goods were similar to those of the said trademarks, which had a close resemblance. The said goods infringed the Panerai’s trademark right by using the product shape similar to its 3D marks without the Panerai’s authorization. The defendant as the production and sale of infringing goods should be held liable for infringement and damages.

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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.”
Password: A#1234

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Weekly China Trademark News Updates

December 19, 2023

1. Top 10 Typical Bad Faith Trademark Registration Cases from the Beijing Intellectual Property Court

On December 14, 2023, the Beijing Intellectual Property Court released its top 10 typical cases regulating bad faith trademark registrations. Among them, administrative cases cover the application of absolute grounds and relative grounds of the Trademark Law, and the regulatory targets include trademark registrants and trademark agencies. These cases further clarify the judgment dimensions and identification standards of bad faith trademark registrations. Civil cases include both abuse of rights by trademark owners and cases in which punitive damages are applied in accordance with the law to infringers with obvious bad faith intent and those that cause serious infringement consequences.

Case 1 – File numerous trademark applications in a short period of time without proving the true intention of use or provide other genuine reasons, which constitutes “bad faith registration without purpose of use” as referred to Paragraph 1 of Article 4 of the Trademark Law.

Summary of the decision:
To review and determine whether the applied trademark falls under the said circumstances, courts must consider the number of registered trademarks applied for by the applicant, including natural person, legal person, or other organization related to it, the classes designated for use, and trademark transactions. Factors such as the applicant’s industry, business conditions, and whether the trademark filed for registration is the same as or similar to someone else’s famous trademark. If a large number of trademarks are filed in multiple classes of goods or services in a short period of time, which obviously exceeds the normal production and operation needs, and the applicant cannot prove the true intention of use or other legitimate reasons, it should be deemed as a registration in bad faith without the purpose of use.

Case 2 – If the current or former legal representative, senior managers, and other staff of the trademark applicant worked for others, and they knew that others had previously used the trademark, but preemptively registered a similar trademark on similar goods, it is deemed as a violation of Paragraph 2 of Article 15 of the Trademark Law.

Summary of the decision:
“Other relationships” stipulated in Paragraph 2 of Article 15 of the Trademark Law refers to situations where there are specific relationships other than those stipulated in Paragraph 1 of Article 15, and the existence of unregistered trademarks of others can be known and should be actively avoided. The applicant and the prior user have kinship, employee relationships, business address proximity, etc. The current or former legal representative, senior managers and other staff of the trademark applicant worked for others, which constitutes “other relationships” stipulated in this Paragraph. Anyone who knows that others have previously used a trademark through the above relationship but preemptively register a similar trademark on similar goods violates Paragraph 2 of Article 15 of the Trademark Law.

Case 3 – If a trademark applicant files a trademark containing a geographical indication but cannot prove that the designated goods come from the scope of protection of the protected products from that geographical indication, it should be determined that the use of the disputed trademark is likely to mislead the public.

Summary of the decision:
The protection of geographical indications is intended to prevent goods that do not originate from the geographical indications from misleading the public by using such trademarks. Thereby, ensuring the specific quality, reputation or other characteristics of goods using trademarks containing geographical indications are mainly determined by the natural or human factors of the geographical indication. If there is no evidence to prove that the goods come from the scope of protection of the protected goods of that geographical indication, and the trademark filing contains such geographical indications, it should be determined that the use of the trademark is likely to mislead the public.

Case 4 – The names of TV columns and programs with certain influence constitute prior rights stipulated in Article 32 of the Trademark Law. If a trademark applicant squatted an identical or similar trademark on the same or similar goods, he shall be subject to the regulations under Article 32.

Summary of the decision:
TV columns and programs have the attributes of goods, and the names of TV columns and programs that have certain influence are “goods names that have certain influence” as stipulated in Article 6 of the Anti-Unfair Competition Law and constitute “priority rights” as stipulated in Article 32 of the Trademark Law. Therefore, if a trademark applicant squatted a trademark with identical or similar title to someone else’s TV column or program that has a certain influence on identical or similar goods, it is easy to confuse the relevant public to mistakenly believe that the trademark applicant has a specific connection with the owner of the prior right, which constitute “damage to the prior rights of others” stipulated in Article 32 of the Trademark Law.

Case 5 – If a trademark applicant applies for the registration of a large number of trademarks based on public event terms and names of public cultural resources for the purpose of improperly occupying public resources, this constitutes “obtaining registration by other unfair means” as specified in Paragraph 1 of Article 44 of the Trademark Law.

Summary of the decision:
“Obtaining registration by other improper means” as mentioned in Paragraph 1 of Article 44 of the Trademark Law refers to disrupting the order of trademark registration, harming public interests, improperly occupying public resources, or seeking improper benefits by means other than deception. A trademark applicant who applies to register a large number of trademarks for public event terms and public cultural resource names has the subjective intention to improperly occupy public resources and should be deemed as “obtaining registration by other improper means” as stipulated in Paragraph 1 of Article 44 of the Trademark Law.

Case 6 – A trademark agency files a trademark in the name of its former executive in order to bypass the regulation, such filing can be regarded as filing by a trademark agency as regulated by Paragraph 4 of Article 19 of the Trademark Law.

Summary of the decision:
Paragraph 4 of Article 19 of the Trademark Law clarifies the circumstances under which trademark agencies are prohibited from registering trademarks. The legislative intent is to protect public interests and prevent trademark agencies from taking advantage of the convenience or advantage of being familiar with the trademark registration process to squat others’ trademarks for profit, disrupting the order of trademark registration. The act of a trademark agency applying to register a trademark in the name of its former executive can be regarded as an act of the trademark agency and shall be subject to Paragraph 4 of Article 19 of the Trademark Law.

Case 7 – Regarding the applicant’s malicious cross-class squatting of a well-known mark of others on the Internet, factors such as the applicant’s subjective bad faith on the Internet and whether the relevant public for goods or services are highly overlapping should be fully considered to reasonably determine the scope of cross-class protection of the well-known mark.

Summary of the decision:
When determining whether a trademark on the Internet constitutes a well-known mark, the characteristics and speed of information dissemination on the Internet, the establishment of brand influence, and the regions of influence, etc. should be fully considered. Various factors for the identification of a well-known mark should be comprehensively considered. For actors who squatted other’s well-known mark on the Internet in other classes, factors such as the squatter’s degree of subjective bad faith and whether the relevant public for goods or services are highly overlapping should be fully considered to reasonably determine the scope of cross-class protection for well-known marks. This will intensity regulation of the scope of protection of well-known marks.

Case 8 – The applicant knew that the registered trademark had major rights defects but still used it as the main purpose to obtain unfair commercial interests and harm the legitimate rights and interests of others, and sent demand letters to others and filed administrative complaints. Such acts seriously violated the principle of good faith and constituted abuse of trademark rights.

Summary of the decision:
A trademark registrant knew that the registered trademark has major rights defects, but still sent demand letters to others, filed administrative complaints, etc. with the main purpose of seizing unfair commercial interests and harming the legitimate rights and interests of others. Such acts seriously violate the principle of good faith and constitute abuse of trademark rights. The trademark registrant shall be liable for compensation in accordance with the law for the necessary expenses incurred by the allegedly infringed party to safeguard their legitimate rights and interests and respond to the trademark registrant’s abuse of trademark rights.

Case 9 – A party who violates the principle of good faith by filing a trademark infringement lawsuit against others’ fair use of trademark rights based on trademarks obtained with bad faith constitute abuse of rights.

Summary of the decision:
The granting and exercise of trademark rights shall abide by the principle of good faith. If a party violates the principle of good faith and files an infringement lawsuit against others’ fair use of trademark rights based on trademark obtained with bad faith, it not only harms the legitimate rights and interests of others, but also disrupts the order of fair competition in the market, constituting abuse of rights, and its claims should be dismissed in accordance with the law.

Case 10 – Where the infringer carried out “all-round” imitation of the right holder’s well-known brand in all aspects, including trademarks, product packaging, slogans, sales methods, etc., and there was mixing genuine and counterfeit goods, the infringer is said to have taken advantage of the right holder’s goodwill in obvious bad faith and such consequences of infringement are serious, and punitive damages should be applied.

Summary of the decision:
Unlike infringement that only targets a single trademark, “all-round” brand imitation has a greater impact on brand image and rights. The specific patterns may include registering and using trademarks that are similar to the rights holder’s trademark, imitating packaging and decoration, mixing and matching genuine and counterfeit products for sale, using misleading slogans, etc. For such serious infringements of “all-round” imitation of previously well-known brands, punitive damages should be applied.

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Weekly China Trademark News Updates

December 12, 2023

1. The Jiangsu High Court recognized “BURBERRY” as a well-known mark in a decision against a squatted mark registered for over 5 years and awarded RMB 6 million in damages

Recently, the Jiangsu High Court concluded a trademark infringement and anti-unfair competition lawsuit between Burberry Limited (“Burberry”), Shentu Clothing (Shanghai) Co., Ltd. (“Shentu”), Xinboli Trading (Shanghai) Co., Ltd. (“Xinboli”). The court recognized the “BURBERRY” trademark with reg. no. G733385 and the “Burberry Equestrian Knight Design” trademark with reg. no. 781602 (together as “Cited Marks”) constituted well-known marks on clothing and other goods. The defendant had infringed upon Burberry’s trademark and its acts constituted unfair competition. The defendant shall compensate Burberry for economic losses of RMB 6 million (USD 836,120).

Cited Marks

The court found that, first, based on the sales regions and circumstances, the duration of continuous use, the publicity method, duration, extent, geographical scope, and the market reputation of the Cited Marks, it was sufficient to conclude that, before the application date of the allegedly infringing trademark “BANEBERRY” (“Disputed Mark”), Burberry’s Cited Marks were widely known to the relevant public in China and were well-known marks.

Second, although the Disputed Mark and the Cited Marks were approved in the same class, for registered well-known trademarks, the scope of protection extends to marks filed on unidentical or dissimilar goods. For unregistered well-known marks, the scope of protection extends to marks filed on identical or similar goods. Article 45 of the Trademark Law stipulates that if a registered trademark violates the provisions of Article 13 of this Law, within five years from the date of registration of the trademark, the owner of the prior right or the interested party may request the Trademark Review and Adjudication Board to decide to revoke the registered trademark. For registration in bad faith, the owner of a well-known trademark is not subject to the five-year time limit. In this case, based on the fact findings, Burberry’s Cited Marks were not limited by the said five-year time limit.

Third, given that the Cited Marks are well-known marks registered in Class 25 for clothing and other goods, and the Disputed Mark was widely used in the signage of stores selling clothing and related goods, which constituted as bad faith copy and imitation of Burberry’s well-known Cited Marks and misled the relevant public, constituted trademark infringement, and should bear civil liability to stop the infringement and compensate for losses.

2. The second instance court decreased the damages for the “Zhou Liu Fu in Chinese” mark trademark infringement from RMB 30 million to RMB 5 million

Recently, the Hubei High Court issued a second instance judgment for a trademark infringement dispute between Zhou Liu Fu Jewelry Company Limited (“Zhou Liu Fu”), Hong Kong Zhou Liu Fu Jewelry & Gold Company International Group Limited (“Hong Kong Zhou Liu Fu”), Guangdong Fenglong Jewelry Co., Ltd. (“Fenglong”), and Wuhan City Jiang Han District Hongyi Jewelry Co., Ltd. (“Hongyi). The court upheld the trademark infringement finding from the first instance court but decreased the compensation from RMB 30 million (USD 4.18 million) to RMB 5 million (USD 696,650).

Cited Mark

Zhou Liu Fu was established in 2004 in Shenzhen and owns “Zhou Liu Fu” and “Zhou Liu Fu in Chinese ZHOU LIU FU” marks in jewelry related classes. Zhou Liu Fu had been affirmed by the China Jewelry and Jade Jewelry Industry Association as a well-known mark in China in 2015 and 2018.

Hong Kong Zhou Liu Fu was established in 2008 in Hong Kong under the legal name of “Hong Kong Zhou Liu Fu Jewelry Gold International Co., Ltd.” and it had filed trademarks using the said name in Classes 14 and 35. All of its marks filed in Class 14 had been invalidated by the CNIPA. However, trademarks in Class 35 for secretarial related, accounting, medical equipment, and human resource consultation were allowed. The WeChat account of Hong Kong Zhou Liu Fu showed that it has over 572 stores nationwide in accessories and jewelry related business.

The first instance court found that the “Zhou Liu Fu” trademark owned by Zhou Liu Fu is distinctive. Fenglong and Hongyi (acting as Hong Kong Zhou Liu Fu’s agent in mainland China) knowingly used such mark in soliciting franchisees, which exceeded the approved use of the trademarks owned by Hong Kong Zhou Liu Fu and was suspected as taking advantage of the fame of Zhou Liu Fu. The first instance court awarded Zhou Liu Fu RMB 30 million in compensation.

The second instance court found that Zhou Liu Fu had won a compensation of RMB 40 million through a series of rights protection lawsuits. The first instance court calculated the profit from infringement as approximately RMB 30 million based on 572 franchise stores and a franchise fee of RMB 60,000 per store. However, it did not consider that 322 out of the 572 stores had been ordered to pay compensation. Therefore, the liability for the infringement of Hong Kong Zhou Liu Fu should be reduced to RMB 5 million in order to avoid repeated compensation for the same infringement.

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