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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Weekly China Trademark News Updates

March 1, 2024

1. The People’s Court case database is open to the public

On February 27, 2024, the Supreme People’s Court held a press conference to announce that the People’s Court case database is officially launched and open to the public (http://rmfyalk.court.gov.cn).

The People’s Court case database contains authoritative cases, including guiding cases and reference cases, that have been reviewed by the Supreme People’s Court and deemed to have reference and demonstrative value for similar cases. Currently, there are 3,711 cases in the database, including 1,453 criminal cases (39.15%), 1,643 civil cases (44.27%), 405 administrative cases (10.91%), 23 state compensation cases (0.62%), 187 execution cases (5.04%).

The Supreme People’s Court requires that when hearing a case, judges must search the case database and make decisions with reference to similar cases in the database. This is of great significance in promoting the unification of adjudication rules and standards and avoiding “different adjudication of the same facts.”

2. Repeatedly bad faith registering marks similar to prior marks and using them beyond the scope of registration was found to constitute unfair competition and trademark infringement

Santak Electronics (Shenzhen) Co., Ltd. (“Santak”) is the registrant of the “SANTAK” mark with reg. no. 619938 and the “San Te in Chinese” mark with reg. no. 512383 in Class 9 for “uninterruptible power supplies; precision power supplies; regulated power supplies” and other goods.

Guangdong Taiqifeng Electronics Co., Ltd. (“Taiqifeng”) operates www.vsasvntek.net, techfine.net. In these websites’ company profile, product inspection reports uploaded on the website, downloaded color pages and other locations used the “VSASVNTEK” mark, and the company’s brochure also used words such as “Produced by American International SUNTEK Power Supply Company” and “American International USASVNTEK Power Supply Co., Ltd.” At the same time, in the “Foshan Nanshan Taiqifeng Electronics Co., Ltd.” store on the Marco Polo website, the words “San Te in Chinese” and “American San Te in Chinese” were used in the company profile and product introduction. In the WeChat public account ” Taiqifeng Electronics” operated by Taiqifeng, the “VSASVNTEK” mark was used on the promotional image. In the manufacture factories of Taiqifeng, there were also many packaging boxes with the “VSASVNTEK” trademark stored, and its products labeled with the “VSASVNTEK” mark are also sold on the market. The UPS power supply products sold by Chengdu Aipeisi Electronics Co., Ltd. (“Aipeisi”) through its website were marked with the “VSASVNTEK” mark on the packaging and physical objects. In addition, Zhou is the operator of the Kemei Computer Accessories Business Department in Chancheng District, Foshan City. Zhou registered the “VSASVNTEK” mark with reg. no. 8059881 in 2010 for “inverters, batteries,” etc., and authorized Taiqifeng to use. Santak filed an application for trademark cancellation and invalidation against this mark. After trial, the mark was declared invalid in 2019. In 2018, Zhou applied again to register the “VSASVNTEK” mark with. reg. no. 2250837 for “inverters, batteries,” etc. Later, this later filed trademark was declared invalid through an invalidation action.

After trial, the People’s Court found that the accused infringing marks “VSASVNTEK” and “USASUNTEK” and Santak’s “SANTAK” were both composed of English letters, and the main part of the accused infringing mark “SVNTEK” and “SUNTEK” were similar to Santak’s “SANTAK” in visual effects, fonts, etc. Since Santak’s “SANTAK” mark has a high reputation on uninterruptible power supply products, using “VSASVNTEK” and “USASUNTEK” on uninterruptible power supplies will easily confuse the relevant public. Therefore, Taiqifeng’s and Aipeisi’s production and selling of the accused infringing product infringed on Santak’s trademark right.

Zhou registered a trademark on identical or similar goods with Santak’s registered trademark and licensed that trademark to other entities such as Taiqifeng for use on uninterruptible power supplies, batteries and other products.  There is a competing relationship between Zhou and Santak. In this case, Zhou successively registered several trademarks that were similar to Santak’s trademarks. Zhou’s trademarks were declared invalid by the CNIPA, and the CNIPA had determined that Zhou knew Santak’s registered trademarks, and his registration was “taking advantage of others, and his action has gone beyond normal production and operation needs, with obvious intentions to copy, plagiarize and imitate other people’s prior trademarks.” After long-term operation and extensive publicity, Santak and its registered trademarks gained a high reputation. As an operator of similar products in the same region as Santak, Zhou should be aware of this and reasonably avoid it. However, Zhou has repeatedly registered marks that were similar to Santak’s registered trademark on similar goods and failed to provide sufficient evidence to prove source of creation to design the trademark. To sum up, Zhou’s accused behavior violated the principle of good faith and generally accepted business ethics and was unfair. At the same time, Zhou’s behavior exceeded the needs of normal production and operation, causing Santak to file trademark oppositions, invalidations, administrative lawsuits, and this civil lawsuit many times to safeguard its rights and interests, which to a certain extent interfered with Santak’s normal production and operation, and caused actual damage to Santak. Therefore, Zhou’s behavior constituted unfair competition.

As for the legal source defense of Aipeisi, the court found that the trademark involved in this case was relatively well-known. As a market operator “specialized in UPS uninterruptible power supplies,” Aipeisi had to decide whether the goods it sold infringed on a registered trademark. Aipeisi failed to fulfill its reasonable duty of review, and there was some subjective fault. Therefore, Aipeisi’s defense was dismissed.

In the end, the court decided that Taiqifeng should compensate Santak for economic losses and reasonable expenses for RMB 5 million (USD694,753). Zhou was jointly and severally liable for RMB 1 million (USD138,950). Aipeisi should compensate RMB 1.005 million (USD139,645).

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Weekly China Trademark News Updates

February 22, 2024

1. Schneider Electric sued Schneider Elevator and won RMB 40 million in compensation

On February 7, 2024, the Jiangsu High Court issued a second-instance judgment in the case of Schneider Electric v. Schneider Elevator, upholding the first-instance judgment of the Suzhou Intermediate Court that found Schneider Elevator infringed Schneider Electric’s trademark and unfairly competed and awarded compensation of RMB 40 million (USD5.5 million).

The Suzhou Intermediate Court found that the “” and “Schneider in Chinese” trademarks registered by Schneider Electric for use on Class 9 circuit breakers, switches, contactors and other commodities constituted well-known marks. Schneider Elevator prominently used the “Schneider in Chinese” and “SCHNEiDER” logos constituted trademark infringement. Schneider Elevator used “Schneider in Chinese” in its corporate name and used “www.schneider-elevator.cn” and “www.schneider-elevator.com” domain names constituted unfair competition. Based on the operating income of Schneider Elevator, the profit margin of the elevator industry, taking into account the brand contribution, and applying punitive damages based on Schneider Elevator’s bad faith in taking advantage of Schneider Electric, the court decided that the amount of compensation that Schneider Elevator should pay was RMB 40 million.

Both parties appealed to the Jiangsu High Court.

The Jiangsu High Court found that considering the market share of Schneider Electric’s products, relevant publicity reports, companies established in China with the brand name “Schneider in Chinese,” operating income and tax payments, industry rankings, trademark protection records, etc., there were sound factual and legal basis in recognizing the “” and “Schneider in Chinese” marks as well-known marks.

Before the establishment of Schneider Elevator in 2010, Schneider Electric had invested in and established a number of companies with the name “Schneider in Chinese” across China. The audit reports, tax-related certificates, invoices and other evidence submitted by Schneider Electric can prove its large sales scale from its business and the high operating income. And the continuous and large-scale publicity of the company in newspapers and magazines were enough to show that its corporate name “Schneider in Chinese” has a high reputation. Although Schneider Electric does not directly produce elevator products, it produces components for elevator products which are all electromechanical products. The first instance judgment correctly found that Schneider Electric had a certain relationship and market competition with Schneider Elevator. Schneider Elevator should have known about the popularity and influence of Schneider Electric’s corporate name “Schneider in Chinese,” but instead of taking any steps to avoid the word, Schneider Elevator used “Schneider in Chinese” as its corporate name without authorization. Its subjectivity cannot be described as good faith, and the corresponding behavior constituted unfair competition.

Regarding the amount of compensation, Schneider Electric, when filing the lawsuit, clearly requested that the amount of compensation be determined based on the benefits obtained by the infringement, and it did not make a request for punitive damages before the conclusion of the debate before the first-instance court. Therefore, the first-instance court’s application of punitive damages was incorrect. However, given Schneider Elevator’s main business income, elevator industry gross profit margin, profit margin and other evidence, it can be proved that Schneider Elevator’s infringement profits exceed the maximum statutory compensation of RMB5 million. If statutory compensation is simply used to determine the amount of compensation in this case, it will undoubtedly be too low and the right holder will not be able to obtain sufficient compensation. This will not only be extremely unfair to the right holder, but will also objectively indulge the infringement. Therefore, the court found that the discretionary compensation method could be used to determine the amount of compensation in this case. Therefore, after comprehensively considering factors such as the popularity and market value of the rights and trademarks involved, the subjective bad faith of Schneider Elevator, the time and scale of the infringement, and brand contribution, the first instance judgment’s determination of RMB40 million in compensation not was correct.

2. Shenzhen Intermediate Court determined that sales of goods after scratching the codes did not constitute unfair competition

Opple, a well-known lighting manufacturer, purchased several products from Dingfeng through an agent. It was found that the barcodes on the outer packaging boxes of the products had been torn off, but the barcodes on the inner packaging boxes were not. The product packaging used “OPPLE, Opple Lighting in Chinese, OPPLE Opple Electric in Chinese,” and other words. On the bathroom heater product, the “Opple” product label was pasted on the side, but the QR code on the product label was scratched off. The QR code on the back of the ceiling lamp and the QR code on the flat lamp have all been scratched off, and the three codes on the packaging box were scratched off.

Opple filed an unfair competition lawsuit against Dingfeng for scrapping codes to sell goods. The first instance court found that:

As a seller, Dingfeng should know that any alteration or scratching on the product packaging will affect the integrity of the product outer packaging, even affect the traceability and quality assurance functions of the goods sold, and also destroy the order of fair competition among all dealers that sell the brand’s goods, increase the cost of communication between consumers and brands when they encounter quality problems, harm consumer’s rights and interests, and may also cause derogation of the brand value of the right holder. Dingfeng’s sales of code-scratch products undermined the rights holder’s product management system, disrupted the normal order of market competition, harmed the legitimate rights and interests of other operators and consumers, and constituted unfair competition.

Regarding the amount of compensation, since Opple did not provide evidence to prove the benefits gained by Dingfeng from the infringement or the losses it suffered due to the infringement, the first instance court comprehensively considered the popularity of Opple’s brand and trademark, Dingfeng’s subjective fault and the nature and consequences of its infringement behavior, as well as Opple’s reasonable expenses to stop the infringement, and determined that Dingfeng should compensate in the amount of RMB 60,000 (USD8,346).

Dingfeng Company appealed. After the trial, the court of second instance found:

Regarding the products sold by Dingfeng, the logistics outer packaging and the QR codes on the products were scratched, but the QR codes on the outer packaging of the products, as well as all packaging, instructions, trademarks and manufacturer information on the products were completely retained. And according to Opple’s statement, the products involved are indeed products manufactured and sold by Opple. Consumers can also verify the authenticity and apply for after-sales service through the QR code on the product packaging. Therefore, Dingfeng’s sales behavior will not cause consumers to confuse or misunderstand the origin of the products involved.

(1) Regarding consumer interests. What consumers buy are genuine products produced and sold by Opple. They can verify the authenticity and apply for after-sales service by scanning the QR code on the packaging box of the product involved. Although Dingfeng did not inform consumers in advance about the code scratching, consumers were able to determine the source of the products involved by relying on trademarks and authenticity verification, and could still enjoy the product quality and after-sales services provided by Opple, and their interests were not harmed. Moreover, ordinary consumers can freely choose and determine goods or services through information such as trademarks, manufacturers, and after-sales services. The distribution management system within the manufacturer will not have an impact on the free decision-making of ordinary consumers. The source of the goods is authentic, and the after-sales service is guaranteed. Under the circumstances, Dingfeng’s scratching will not affect consumers’ rational judgment on free decision-making.

(2) Regarding the interests of operators. Dingfeng sold genuine products produced and sold by Opple at normal market prices. This behavior had no adverse impact on Opple’s product market share, product sales profits, products and corporate reputation. Dingfeng’s code scratching behavior made it impossible for Opple to internally trace the information of authorized dealers, but it only damaged Opple’s internal management system to a certain extent. Opple’s external operations, external trading opportunities, and external market competitive advantages were all undamaged.

(3) Regarding social and public interests. In this case, the goods trading behavior was open and free, and the transaction price was fair. There was no behavior that restricted competition or harmed the interests of other competitors of Opple. It did not have a negative impact on the legitimate and orderly market competition order, and social and public interests were not harmed.

In summary, this court believes that although Dingfeng’s code scratching hindered Opple’s internal management and caused certain damage its interests, according to the principle of proportionality and the principle of interest measurement, this behavior did not harm consumers. The interests have not reached the level of adversely affecting the competitive environment and order of competition, and there is no need to apply the Anti-Unfair Competition Law. The first instance court made an error in its determination, resulting in an erroneous judgment. This court corrected it and ruled that the original judgment should be revoked and all of Opple’s claims should be dismissed.

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Weekly China Trademark News Updates

February 6, 2024

1. RMB 22.14 million damages was ordered against the defendant taking advantage of “Belle in Chinese” and “BELLE” without authorization

Recently, the Zhejiang High Court concluded a trademark infringement and anti-unfair competition lawsuit against the appellant Baoyang Liu for his involvement with the appellees New Belle Shoes (Shenzhen) Co., Ltd. (“New Belle”), Lirong Shoes (Shenzhen) Co., Ltd. (“Lirong”), the defendant in the first instance, Wenzhou Guangyuan E-Commerce Co., Ltd. (“Guangyuan”).  The court held that Liu is liable for trademark infringement and should stop the infringement and compensation to Lirong for economic losses and reasonable rights protection expenses of RMB22.14 million (USD3.11 million).

The court found that the Cited Marks have accumulated high goodwill nationwide through its continuous use and publicity by the trademark owner and its authorized parties. The “Belle in Chinese” and “BELLE” marks were once recognized as well-known marks and have been widely used in footwear products. They enjoy a high level of fame and popularity. Liu used the Disputed Mark in his Chinese TikTok store name, account, product links, product labels, hangtags, video promotions, and product introductions, which could be used to identify the source of the goods and constituted trademark use. The Disputed Marks “Australia Belle in Chinese” and “Australia Belle in Chinese + AOZHOUBELLE” completely include the Cited Marks. Although “Australia in Chinese” and the pinyin “AOZHOU” are included, they are only used to refer to the location in the minds of the general public. The identifying part of the Disputed Mark is still “Belle in Chinese” and “BELLE.” The Disputed Mark and the Cited Marks are used in the same class of goods, which is enough to confuse the relevant public as to the source of the goods. The two marks constituted similar marks. Liu used trademarks similar to the Cited marks on similar goods, which could easily cause confusion and misunderstanding among the relevant public and constituted trademark infringement.

To apply punitive damages, the test is “intentional infringement” and “serious circumstances.” First, the Cited Marks should have high distinctiveness and fame through continuous use and publicity. Lirong has opened a number of “Belle in Chinese/BELLE” brand TikTok accounts and stores. As a footwear business operator, Liu should have known that and make reasonable avoidance. Liu, however, actively sought to acquire the “” trademark that was similar to the Cited Marks in order to use it illegally. His use highlighted “Australia Belle in Chinese,” and replaced “AOZHOUBAILI” with “AOZHOUBELLE,” which fully included the Cited Marks in seeking of confusion. Liu actively used the Disputed Marks in TikTok stores, accounts, product tags, product links, video promotions to confuse consumers. Its intention to take advantage of the Cited Marks was obvious. Liu registered and established “Wenzhou Lucheng District Huibu Shoes Store” and opened a TikTok store “Australia Belle Shoes in Chinese” store that corresponds with his TikTok account “Australia Belle Official Flagship Store in Chinese.” Subsequently, Liu registered four individual companies and opened four TikTok stores respectively. Liu began to use the Disputed Marks on infringing goods and selling them on a large scale. The series of infringements carried out by Liu showed his strong intention, planning and organization, which met the first test of “intentional infringements.”

Second, Liu mainly sold infringing products through TikTok live broadcasts and TikTok stores that was not limited by time and place and can quickly accumulate a large number of customer groups in a short period of time, thereby achieving sales conversion. According to the facts found, its TikTok store “Australia Belle Shoes in Chinese” was opened on February 25, 2021, and by May 7, 2022 the number of fans has reached 936,000, and 519,000+ products have been sold. As of June 10, 2022, the number of fans has increased to 1.02 million, and 550,000+ products have been sold. The number of followers of his other TikTok accounts and online stores “Abao Selected Women’s Shoes in Chinese” and “Oucai Women’s Shoes Store in Chinese” also reached 315,000 and 69,000 respectively. Judging from the sales volume, the total transaction volume of only the five TikTok stores involved in the case has reached RMB 44.08 million. It was also found on Pinduoduo and Taobao that Liu was selling shoes using the Disputed Mark during the same period. It can be seen that compared with the traditional sales model, infringement in this case was carried out through online live broadcasting and other methods. The scope of infringement was wider and the profits from infringement were higher. At the same time, it also caused greater losses of trademark goodwill and losses to New Belle and Lirong. Economic losses are considered “serious infringement.” Therefore, Liu’s infringement met the statutory requirements for punitive damages, and the first instance court did not err in applying punitive damages.

Regarding the calculation of punitive damages, New Belle and Lirong agreed to calculate Liu’s infringement profits based on the total transaction volume of RMB 44.08 million of the five TikTok stores involved in the case obtained by the first instance court. Lirong issued the “Special Audit Report on Belle Brand Sales and Operations” stating that the net profit margin of Belle brand sales was 30.73%, of which the net profit margin of offline physical stores was 28.97% and the net profit margin of online e-commerce stores was 35.42%. This court found that the first instance court referred to the profit rate data provided by Lirong, combined with the time when Liu’s online stores stopped infringing, the damage caused, the possible existence of some non-infringing product sales links, the commission of live broadcast sales on TikTok, and Taobao, Pinduoduo and other platforms that infringing shoes were being sold. It was reasonable to determine that the profit margin of the online store involved in selling infringing goods was 25%. Based on this, this court determined that Liu’s infringement profits were RMB 11.02 million and applied one-time punitive damages based on this calculation base. It also determined that the reasonable expenses of New Belle and Lirong were RMB 100,000. The final amount of compensation is RMB 22. 14 million.

2. The decoration of “Crocs” has lost its distinctive features and cannot protected under the Anti-Unfair Competition Law

The Fujian High Court concluded a trademark infringement lawsuit between the appellant Crocs Trading (Shanghai) Co., Ltd. (“Crocs Company”) and the appellants Pan Zhiming, Quanzhou Fengze District Zhongkuo Trading Co., Ltd. (“Zhongkuo”), Quanzhou Fengze Chaoyi E-Commerce Co., Ltd. (“Chaoyi”), Quanzhou Jixuan Trading Co., Ltd. (“Jixuan”), and an individual Huang. The defendants were ordered to immediately stop the trademark infringement and compensate Crocs Company for economic losses and reasonable expenses of RMB 1 million (USD140,480).

Here, Crocs Company is the owner of the “CROCS” mark (“Cited Mark”). Through Crocs Company and its affiliated companies’ continuous use and publicity, the Cited Mark has obtained relatively high fame in its approved class. The Disputed Mark is “CROSS,” which was used on the same class of goods as the Cited Mark. The Disputed Mark was used on the shoe product itself, product packaging boxes, and the sales page of the e-commerce platform. Such uses were clearly trademark uses. Using the general attention of the relevant public as the standard, when comparing the Disputed Mark and the Cited Mark in isolation, the distinctive part of the two marks constituted similar. Under the circumstances that the Cited Mark is relatively famous, the Disputed Mark is likely to cause confusion. The first instance court did not err in finding that the Disputed Mark constituted an infringement of the Cited Mark.

In this case, Crocs Company claimed that the product decoration of its CROCS brand “Classic Crocs in Chinese,” “Crocband Kaluoban in Chinese,” and “Bayaband Clog Beiyakaluobankelulu in Chinese” series of shoes falls within the scope of the Anti-Unfair Competition Law because of its decoration has a certain influence. Judging from the evidence provided by Crocs Company, although the “CROCS” brand series of shoes have gained a certain degree of popularity through continued use and publicity, there is no sufficient evidence to prove that the relevant public has regarded the construction upholstery of this series of shoes to be associated with Crocs Company. Although there was a previous judgment that protected the decoration claimed by Crocs Company, that judgment was in 2015, which was a long time before the litigation in this case occurred. The uniqueness of a mark’s decoration should be combined with the public perception at the time of the dispute. Knowledge and whether the decorative mark also have distinctive features that distinguish the source of the goods shall be used as the criterion for judgment. Whether the decorative log has been protected is only one of the factors to be considered. Judging from the supplementary evidence submitted by the defendants, “crocs design shoes” products are relatively common in the market and have different functions. Third parties outside of this case have successfully registered for design patents based on improvements to such features. Even if the decoration claimed by Crocs Company had certain uniqueness in the early stage, there is no evidence to prove that Crocs Company actively defended its rights when a large number of footwear products with the same or similar features appeared on the market, which made such decoration more general and losing its inherent distinctiveness. Based on the above analysis, the decoration claimed by Crocs Company does not meet the requirements for decoration with certain influence stipulated in the Anti-Unfair Competition Law and should not be protected.

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