Weekly China Trademark News Updates

December 21, 2021

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Weekly China Trademark News Updates

December 14, 2021

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

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

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

2. Nippon Paint was awarded RMB180,000 in compensation as punitive damages to repeated infringements

On October 26, 2021, the Huainan Intermediate Court of Anhui Province concluded a trademark infringement case between Nippon Investment Co., Ltd. (“Nippon Corp.”) and Zhang Jingjing. Zhang Jingjing was sentenced to RMB180,000 (USD28,280) in compensation for repeated infringement.

In 2019, Nippon’s investigation found that Zhang Jingjing sold the alleged infringing products on its Taobao store, highlighting the use of words such as “Nippon in Chinese.” In November 2019, Nippon Corp. filed a lawsuit against Zhang Jingjing’s above-mentioned infringement. After the two parties reached a “Reconciliation Agreement,” Zhang Jingjing promised to stop the infringement of Nippon Corp’s trademark rights and clean up or destroy all remaining goods of the infringing products involved in the lawsuit. In October 2020, during an investigation by Nippon Corp., it was discovered that Zhang Jingjing was still infringing on the trademark rights of Nippon Corp. in its Taobao store by using the mark “Nippon in Chinese” and other marks on a variety of paint products.

The court found that: Zhang Jingjing used the “Nippon in Chinese ” trademark on some of the paint products sold in its Taobao shop, and used the word “Nippon in Chinese” as the product name and brand introduction, which was basically visually the same as Nippon Corp.’s trademark. The two marks constituted as the same trademark. Zhang Jingjing’s behavior was sufficient to cause people to be confused that the paint products Zhang sells were Nippon Corp.’s products, which violated Nippon Corp.’s exclusive trademark right. Zhang shall bore the infringement liability in accordance with the law. Therefore, Nippon Corp.’s request for relief that Zhang Jingjing to immediately stop selling the infringement goods should be supported.

Nippon Corp. requested for punitive damages because Zhang Jingjing sold counterfeit products labeled with Nippon Corp.’s trademark after previously signed a settlement agreement, which showed its subjective intent to infringe. This court found that in accordance with Article 1 of the Interpretation of the Supreme People’s Court on the Application of Punitive Damages to the Trial of Civil Cases of Infringement of Intellectual Property Rights, the plaintiff claimed that the defendant deliberately infringed on the intellectual property rights it enjoyed in accordance with the law and the circumstances were serious and requested the defendant to be punished. The people’s court shall review and deal with the liability for compensation in accordance with the law. In this case, Nippon Corp. sued Zhang Jingjing in 2020 for selling goods that infringed the exclusive rights of Nippon Corp.’s registered trademarks on its Taobao store. After that, the two parties signed a settlement agreement. Zhang Jingjing promised not to sell infringing products and compensated Nippon Corp. for RMB40,000 (“USD6,286”). But not long afterwards, Zhang Jingjing still sold goods that infringed the exclusive rights of Nippon Corp.’s registered trademarks on Taobao stores, and the sales volume reached more than 1,000 pieces, with sales reaching more than RMB200,000 (USD31,432). It can be determined that Zhang Jingjing was subjectively intentional and the circumstances were serious, and punitive damages could be applied. Based on Zhang Jingjing’s degree of subjective fault, the number and amount of sales in its stores, the popularity and influence of the trademark involved, and the reasonable expenses paid by Nippon Corp. for rights protection, the court determined Zhang Jingjing’s compensation for Nippon Corp.’s economic losses and reasonable expenses totaling RMB180,000 (“USD28,288”).

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

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

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

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

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

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

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CNIPA’s Amended Trademark Examination and Adjudication Guideline on Article 4 of the Chinese Trademark Law regarding bad faith filing without an intent to use the trademark 

by Yan Zhang & Austin Chang

Bad faith trademark filings have been one of the most notorious pains for rights holders in the PRC and worldwide. The amended Chinese Trademark Law 2019 (“Trademark Law 2019”) was adopted with provisions to tackle down on bad faith trademark filings and registrations. Article 4 states that “[a]ny natural person, legal person, or other organizations that needs to acquire the exclusive right to use a trademark in the production and operation activities shall file an application for trademark registration with the Trademark Office. Trademark applications that are filed in bad faith and not filed for the purpose of use shall be refused.” This is the first time the language “purpose of use” is seen in the Chinese Trademark Law.

The legislative intent of Article 4 of the Trademark Law 2019 is to refuse bad faith applications filed without an intent to use from registration, clear sleeping trademark registrations obtained without an intent to use, and to encourage trademark applicants to perform their obligation by using their trademarks. Bad faith applications and trademark hoarding can usually be found in applicants who file in excess of regular business needs and in large quantities, because such filings may indicate that the applications are “not filed for the purpose of use,” which means that the applicant filed the applications either without actual purpose to use the trademark, or without anticipation to use the trademark in the near future, or there is no actual possibility the applicant will use the trademark based on the facts, background information, and evidence submitted. Article 4 specifically target bad faith applications and trademark hoarding because these applications will damage the public interests by depleting public trademark resources and disturbing trademark registration order. Hence, Article 4 does not apply to 1) applicants who file for defensive purpose or 2) applicants who file for use in foreseeable future business. As for trademark filings that only damage a particular entity’s civil rights, other provisions, but Article 4, of the Trademark Law 2019 should be applied.

In determining whether an application constitutes as a bad faith one filed not for the purpose of use, the Trademark Examination and Adjudication Guideline (“Guideline”) specified that in preliminary examination, examiners should pay attention to the facts discovered while examining the application. In oppositions and other adjudication proceedings, examiners should pay attention to the evidence submitted. The Guideline further provided the following six factors to be considered when examining or adjudicating whether an application constitutes as a bad faith application filed not for the purpose of use.

1. Basic information of the applicant that is an entity such as duration of existence, actual capital paid upon registering the entity with the local Administration for Market Regulation, whether there are any unusual signs of the entity’s status, for example, revoked, cancelled, or suspended business license, liquidation in process, etc.

2. Overall status of the applicant’s trademark applications including the accumulative numbers of applications filed and the classes of designated goods and services, the time span among the applications filed, and the trademark applications filed and the classes of designated goods and services in a short time.

3. The composition of the applied trademark, for example, whether the applied trademark is identical or similar to other famous or highly distinctive trademark, whether the applied trademark includes public resources such as administrative district names, names of mountains, rivers, scenic spots, industry terms, etc., whether it contains the names of well-known people, corporate names, business terms, etc., whether the applied trademark includes other famous individual’s name, trade name, e-commerce name, well-known advertising slogans, works of art, designs, etc.

4. The applicant’s behaviors during trademark registration proceedings and after issuance of trademark registration certificate, for example, selling or assigning the trademark to a third-party without evidence proving it had intent to use the trademark before selling or assigning the trademark, actively offering the trademark for sale to others or in public, threatening others to cooperate in business, or demanding high fees to assign the trademark, high license fee, high compensation fee for infringement, or high settlement for litigation.

5. Evidence submitted in opposition and other adjudication proceedings such as the applicant lacked actual intent to use the trademark upon filing, or the applicant did not actually use the trademark after issuance of the trademark certificate and no preparatory work was done towards using the trademark, and the applicant failed to prove its intent to use or explanations for not using the trademark, or the applicant had used the trademark in dispute in an infringement lawsuit to claim for unjustified gains.

6. Other factors to be considered in opposition and other adjudication proceedings include but not limited to 1) effective administrative rulings or judgements or judicial decisions that the applicant was found to have engaged in bad faith trademark filings or infringed upon other’s trademark right, 2) the applicant has been listed in the list of serious violations of law and dishonesty by the National Enterprise Credit Information Publicity System, 3) the cumulative number of trademark applications and the classes of designated goods and services owned by individuals, legal persons, or other organizations that have a specific relationship with the applicant, and 4) actual trademark transactions, offers, and invitations for offers of natural persons, legal persons, or other organizations that have a specific relationship with the applicant.

The Guideline also listed 10 circumstances that would constitute as trademark applications “filed in bad faith and not filed for the purpose of use” as stipulated in Article 4 of the Trademark Law 2019, unless the applicant or other interested party proves otherwise. Note, point 3 and 9 should be primarily applied in oppositions and other adjudications, while the rests can be both applied in examinations, oppositions, and other adjudications.

1. The number of trademark registration applications is large, which obviously exceeds the requirements of normal business activities, lacks real intention to use, and disrupts the order of trademark registration.

2. A large number of copies, imitations, or plagiarisms of multiple entity’s prior trademarks with a certain degree of fame or strong distinctiveness, disrupting the order of trademark registration.

3. Repeated applications for registration of a specific trademark with a certain degree of fame or strong distinctiveness owned by the same entity, disrupting the order of trademark registration. If such repeated applications for registration fall under the circumstances of bad faith registrations regulated by other provisions of the Chinese Trademark Law, these other provisions shall apply.

4. A large number of applications that are identical to others’ business names, abbreviations of business names, e-commerce names, domain names, product names, packaging, decorations that have a certain influence, and identical or similar marks to other well-known and identifying slogans, designs, and other commercial logos.

5. A large number of applications that are identical or similar to public cultural resources such as the name of a well-known person, a well-known work or character name, and a well-known artwork of others that have gained distinctiveness.

6. A large number of applications that are identical or similar to the names of administrative districts, mountains and rivers, scenic spots, and buildings.

7. A large number of applications that are generic names, industry terms, or indicators that directly indicate the quality, main raw materials, functions, uses, weight, and quantity of the goods or services, etc., which lack distinctiveness.

8. The applicant submits a large number of applications, and assigns a large number of trademarks, and the assignees are scattered, which disrupts the order of trademark registration.

9. The applicant has sold in large quantities for the purpose of seeking unjustified interests, demanding commercial cooperation from the prior user of the trademark or others, high assignment fees, license fees, or infringement compensation, etc.

10. Other circumstances that can be deemed as bad faith in applying for trademark registration.

Although the Guideline listed the 10 circumstances for the examiners to consider when determining whether a trademark application “filed in bad faith and not filed for the purpose of use” as stipulated in Article 4 of the Trademark Law 2019, these factors are not limited to bad faith trademark applications filed by the applicant. It also applies to natural persons, legal persons, or other organizations that have a specific relationship or connections with the applicant or have colluded with the applicant to filing the applications. Finally, simply assigning a registered trademark to a third party does not affect the determination of whether an application was filed in violation of Article 4 of the Trademark Law 2019..

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Weekly China Trademark News Updates

December 7, 2021

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

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

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

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

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

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

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

2. Improper complaints filed with Apple’s App Store constituted as “wrong notifications”

Huya Live Streaming App is a live streaming platform application created by the applicant Huya Company (“Huya”), which provides interactive video live streaming services to users with game contents at its core. Since April 8, 2021, respondent Warner Inc. (“Warner”) has filed multiple complaints with the third-party Apple Inc., claiming that a total of 215 short videos on Huya live-streaming platform infringed upon its copyright in a musical work, and requested the Apple App Store to take down the app involved in the case. Warner Inc. failed to submit the ownership certificate of the music works involved in this case during the complaint process, and Huya deleted the video suspected of infringement after receiving the notification sent by Apple Inc.

On September 18, 2021, the Guangzhou Internet Court rendered a ruling that the respondent, Warner, should immediately stop filing complaints to AppStoreNotices@apple.com against the applicant Huya Live Broadcast – Game Interactive Live Broadcast Platform owned by Huya, to Apple’s App Store, and to Apple Company on the date of receipt of this ruling. On September 30, 2021, the Guangzhou Internet Court rendered a ruling to dismiss Warner’s petition for reconsideration. The reasons for the ruling were mainly based on the following:

1. Both Apple and Huya have taken necessary measures in response to the content of the complaint. Warner claimed in this case that it should protect the copyright of its music works. Its request that Apple should remove the application involved was an abuse of right.
2. Warner’s continuous complaint may cause the app involved in this case to be removed from the Apple App Store, and thus cause irreparable losses to Traffic on Huya’s live streaming platform, including legal contents uploaded onto the involved platform. To some extent, it will adversely affect Huya’s goodwill and status in the industry, impairing Huya’s existing market share.
3. If all the infringing content in Warner’s complaint has been deleted, the damage that may be attributed to Warner if failed to adopt the measure of property preservation is less than the damage that may be caused to Huya by adopting the measure of property preservation.

Warner’s request to Apple to remove the Huya app involved in this case from its App Store will likely result in the removal of the legal content uploaded by other live broadcasters and users on the platform, which will not only damage the legitimate rights and interests of others, but also be detrimental to the promotion of the development of live and short video broadcasting and the prosperity of socialist cultural undertakings.

3. “HÖrmann,” “Huoman in Chinese” and other trademarks were infringed and the court ordered more than RMB50,000 in damages

On November 15, 2021, the Beijing Intellectual Property Court made a final judgment on trademark infringement and unfair competition disputes between HÖrmann Sales Company (“HÖrmann”) and Hebei Huoman Door Industry Co., Ltd. (“Hebei Huoman”), Renqiu Braun Door Industry Co., Ltd. (“Renqiu Braun”), and Beijing Baidu Wangxun Technology Co., Ltd. (“Baidu”), and ordered Hebei Huoman immediately to stop infringing on the exclusive right of HÖrmann’s registered trademark; immediately stop using the domain name huomanmenye.cn; submit an application for change of the company name to the administrative department for industry and commerce, and the changed company name must not contain ” HÖrmann” or similar words; pay compensation for economic losses of RMB500,000 (USD78,415) and reasonable expenses of RMB 30,000 (USD4,704).

The court found that that HÖrmann had the exclusive right to use the registered trademarks “HÖrmann” in German with registration number G740261, and the registered trademarks “Huoman in Chinese” with registration numbers 1974731 and 2003175. Hebei Huoman used the “HUOMAN” mark on door related goods without HÖrmann’s authorization, registered and used the domain name huomanmenye.cn. Hebei Huoman used the “Huoman Door Industry in Chinese” mark and “HUOMAN” mark on the said domain, its product brochure, and on China Suppliers website, China Product website, etc. Heibei Huoman also used “Huoman in Chinese” and “Huoman Door Industry in Chinese” as keywords for advertisements on Baidu. The above behavior infringes upon HÖrmann’s trademark right.

HÖrmann’s “Homan in Chinese” trademark had obtained high fame through use. Hebei Homan, as an operator in the same industry, insisted on using and registering “Homan in Chinese” as its trade name in 2017 when knowing the “Homan in Chinese” mark has a high fame and influence in its industry, which showed that it had the subjective intention of taking advantage of the reputation of others’ trademarks in the market. Even if Hebei Horman used its full corporate name in a standardized manner, it was still easy to cause confusion and misunderstanding among the relevant public. In addition, Hebei Horman marked “Germany Horman Company” on its products and indicated “Hebei Horman belongs to Hörmann Germany” on its official website, which could mislead the relevant public into believing that the products produced and sold by Hebei Horman has specific connections with Hörmann and cause confusion. Therefore, the behavior of Hebei Horman constituted as an act of unfair competition.

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Weekly China Trademark News Updates

November 30, 2021

1. The CNIPA’s reply regarding procedural issues of an allegedly infringing trademark that passed the preliminary examination or is pending in opposition

Paragraph 3 of Article 62 of the Chinese Trademark Law provides that: “where, in the process of investigating a trademark infringement case, there is any dispute over the ownership of the trademark or the right holder files a trademark infringement lawsuit with the people’s court, the Administration for Market Regulation may suspend the investigation of the case. After the reason for the suspension is eliminated, the case investigation and handling procedures shall be resumed or terminated.” Article 81 of the Regulation on the Implementation of the Trademark Law provides that: “where the ownership of a registered trademark at issue is in an adjudication before the Trademark Office or the Trademark Review and Adjudication Board or in a trial by a people’s court, and the outcome of the case may affect the determination of the nature of the case, such a case falls into Paragraph 3 of Article 62 of the Chinese Trademark Law because there are disputes over trademark right ownership.”

Where an allegedly infringing trademark has been preliminarily examined and published or is pending in an opposition, as a general rule, the trial of a case involving such a mark shall not be suspended because the mark has not been registered. However, considering that the status of rights in an allegedly infringing mark may affect the determination of the nature of the case, law enforcement authorities may decide to suspend the investigation of the case in light of the actual use of the allegedly infringing mark, trademark opposition status, and other specific facts.

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

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

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

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

3. Starbucks was sued by an animation company after its popular bear-styled cake gone viral on the Internet

After Starbucks’ “Cub-styled Caramel Hazelnut Cake” became a popular hit food item, the Cub Animation Co., Ltd. (“Cub Animation”) filed a lawsuit in the Quanzhou Intermediate Court of Fujian Province on the grounds that the Quanzhou branch of Starbucks infringed upon its exclusive right to use the “Cub in Chinese and xiongzai” trademark in Class 30 and the “Cubs in Chinese” trademark for “Cookies; pastries; instant noodles; candies.” The Quanzhou Intermediate Court dismissed Cub Animation’s claims. Cub Animation appealed to the Fujian High Court. On September 29, 2021, the Fujian High Court rendered a second instance judgment rejecting Cub Animation’s appeal and affirmed the first instance judgment.

The Fujian High Court found that the trademark use in the Chinese Trademark Law meant using a trademark in commercial activities and can be used to identify the source of a product. Therefore, descriptive use to indicate the shape, quality, main raw materials, functions, means of use, weight, quantity or any other feature of a product shall not fall within the scope of trademark use in the Chinese Trademark Law. The disputed goods in this case was a cartoon cub-style cake containing hazelnuts. Therefore, the Quanzhou branch of Starbucks named it “Cub in Chinese Caramel Hazelnut Cake,” which was used to indicate the shape of the goods and was a descriptive use of the goods. This kind of behavior also complied with the people’s habit in their daily life to indicate food and other relevant goods by using the name of an animal. As long as such indication did not exceed the scope of proper and reasonable use, and did not cause the relevant public to confuse the source of the goods, it could be determined as a legitimate use. Therefore, the Fujian High Court dismissed Cub Animations’ claims.

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Weekly China Trademark News Updates

November 23, 2021

1. McDonald’s invalided the “Mai Ke Shi in Chinese & MKS” mark

The Beijing High Court recently issued a second instance judgment of the administrative dispute over the invalidation of the trademark with registration number 9631046 “Mai Ke Shi in Chinese & MKS” (“Disputed Mark”), rejecting the appeal of the CNIPA and upholding the first instance court’s finding that the Disputed Mark and the Cited Marks 1 to 4 constituted as similar trademarks on identical or similar goods. Therefore, the Disputed Mark should be declared invalid.

Disputed Mark	Cited Mark 1	Cited Mark 2	Cited Mark 3	Cited Mark 4

The Beijing High Court found that the Disputed Mark consisted of the English letters “Mks” and the Chinese character “Mai Ke Shi in Chinese” of which the initial letter “M” was a double arch graphic and prominently displayed. The Disputed Mark was almost identical in appearance to the highly distinctive and well-known “double arches” graphics of Cited Marks 1 to 3. The Cited Mark 4 was only composed of the Chinese character “Mai Ke in Chinese” and the Chinese character part of the Disputed Mark contained the Cited Mark 4 in its entirety, both of which have no specific meaning. The evidence on file is sufficient to prove that McDonald’s Cited Marks have certain popularity in burgers and other goods, and the Disputed Mark and the Cited Marks were similar in word composition, pronunciation, appearance, etc. When simultaneously using the said marks on similar goods on the market was likely to cause and misunderstanding of the source of goods by the relevant public. Therefore, the Disputed Mark and the Cited Mark 1 to 4 constituted as similar marks use on identical or similar goods as stipulated in Article 28 of the Trademark Law. The first instance judgment was correct, and the CNIPA’s appeal’s claim lacked legal basis and was not supported.

2. The “STOKKE” trademark was invalidated in a second instance judgement

The Beijing High Court rendered a trademark invalidation dispute decision between STOKKE AS (“Stokke”), the CNIPA, and the original third party Situoke (Shanghai) Biotechnology Co., Ltd. (“Situoke”). The judgement vacated the first instance court’s decision and ordered the CNIPA to reissue its decision regarding the Disputed Mark.

Regarding the first issue of this case, whether the registration of trademark with registration number 11102646 “STOKKE” (“Disputed Mark”) constitutes a situation stipulated in Article 13(3) of the Trademark Law 2013, the Beijing High Court found that although the evidence submitted by Stokke could prove that its “STOKKE” trademark with registration number G891394H (“Cited Mark”) in Class 12 on baby stroller goods had a certain degree of fame, it was not sufficient to be recognized as a well-known mark. The Disputed Mark’s registration would not likely to mislead the public and possibly damage Stokke’s interests. The Disputed Mark’s application did not fall into the situation stipulated in Article 13(3) of the Trademark Law of 2013. The first instance court judgment regarding this issue was correct.

Regarding the second issue, whether the Disputed Mark’s registration constitutes the situation of “obtaining trademark registration by other improper means” under Article 44(1) of the Trademark Law of 2013, the Beijing High Court found that, according to the evidence submitted by Stokke, before the Disputed Mark’s application date, the Cited Mark “STOKKE” had obtained a high degree of fame. The original owner of the Disputed Mark had applied for more than 600 trademarks including the Disputed Mark, among which a number of trademarks were identical or similar to the trademark “STOKKE,” which has been made highly known by Stokke, in Classes 11, 15, and 29, as well as in other classes. Other trademarks such as “Guo Long in Chinese,” “Mickey Mouse in Chinese,” “Alpha Dog in Chinese,” “Magic Monkey in Chinese” etc. were identical or highly similar to other trademarks with strong distinctiveness or with high fame. Such behavior had the obvious intention of copying and imitating others’ trademarks, and had exceeded the normal production and operation needs. On this basis, the intention of Situoke to free-ride on the popularity of the trademark “STOKKE” by receiving the Disputed Mark for improper benefits was obvious, which was contrary to the legislative intent of the Trademark Law. Accordingly, the Court has reason to believe that the Disputed Mark’s registration had disturbed the order of trademark registration management and constituted the situation of “obtaining registration by other improper means” as stipulated in Article 44(1) of the Trademark Law of 2013. The first instance judgment erred in the second issue and shall be revoked. New Balance Athletics, Inc and New Balance Trading (China) Co., Ltd. (together as “New Balance”) sued Putian Shengfengsheng Shoes Co., Ltd. (“Shengfengsheng”), Putian Wobaili Trading Co., Ltd. (Wobaili”), Wang Jinbiao, Gusu District Meibailu Shoe Store (“Meibailu”) for infringing its registered trademark the “N” logo with registration number 5942394 on Class 25 for “sneakers” (“Cited Mark”) in Suzhou Intermediate Court. The defendants cited its registered trademark “N & design” with registration number 10214341 (“Disputed Mark”).

3. The “Dior” trademark was recognized as a well-known mark and “Dike Diao in Chinese & DikeDior” was not allowed to be registered as a trademark

The Beijing High Court rendered a second instance trademark invalidation decision between the appellant Putian Changli Industry and Trade Co., Ltd. (“Putian Changli”) and the appellee, the CNIPA, and the third party in the original case, Christian Dior Fragrance Company (“Dior”), which the court upheld the first instance court judgment.

Disputed Mark	Cited Mark 1	Cited Mark 2

The Beijing High Court held that when the Disputed Mark was filed for registration, the Cited Mark 1 had been approved for registration and the Cited Mark 2 had not yet been approved for registration. Therefore, Article 13(2) of the Trademark Law 2001 should be applied to the Cited Mark 1, Article 13 (1) of the Trademark Law of 2001 should be applied to the Cited Mark 2.

The evidence submitted by Dior during the trademark administration proceeding and the first instance court can prove that before the Disputed Mark’s filing date, the Cited Marks 1 and 2 had been widely and extensively used and publicized in the China market for a long time and were widely known among the relevant public with a high fame. Dior submitted a prior ruling, which found that the Cited Marks 1 and 2 constituted as well-known marks on cosmetics and perfume goods before January 9, 2012. Therefore, the evidence on file was sufficient to find that the Cited Marks 1 and 2 constituted as well-known marks used on “cosmetics and perfume” and other goods. In the original case, Putian Changli also expressly recognized that the Cited Marks 1 and 2 constituted as well-known marks on cosmetic goods before the Disputed Mark’s filing date that was confirmed by the first instance court.

The Disputed Mark was a word mark consisted of “Dike Diao in Chinese & DikeDior” the Cited Mark 1 was the word mark “DIOR” and the Cited Mark 2 was the word mark “Dior in Chinese” The Disputed Mark included the Cited Marks 1 and 2 in its entirety. The Disputed Mark’s approved foods for facial cleaners, etc. were similar to the approved goods of the Cited Marks 1 and 2 for cosmetic goods, which the Cited Marks 1 and 2 were famous for, in terms of target consumer, sales place, function, and use. The approved goods for the Disputed Mark and the Cited Marks were similar goods or closely related goods. The Disputed Mark was a copy and imitation of the Cited Marks. Putian Changli also applied for trademarks similar to other famous brands, and its application for registration of the Disputed Mark was in bad faith. The registration and use of the Disputed Mark was likely to cause the relevant public believe that there was a specific connection between the Disputed Mark and the provider of goods of the Cited Marks, which improperly use the market reputation of the Cited Marks, and take up the Cited Marks of Dior’s fame without compensation for its efforts and substantial investments, cut off the relevant public to the association between Dior’s Cited Marks and Dior’s cosmetics and perfume related goods, weakened the Cited Marks’ well-known status, and caused damage to Dior’s interests as a well-known mark owner. Therefore, the Disputed Mark’s registration constituted the circumstances stipulated in Article 13(1) and (2) of the Trademark Law 2001 and should not be registered according to law. The first instance court did not err in its judgment and Putian Changli’s claims cannot be supported.

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Weekly China Trademark News Updates

November 17, 2021

1. MUJI prevailed against Wuyinliangpin in a trademark infringement lawsuit

Based on its “Wuyinliangpin (MUJI in Chinese)” registered trademark with registration number 4471268 in Class 20 for “pillow” related goods (“Cited Mark”), MUJI sued Beijing Wuyinliangpin Investment Co. Ltd. (“Wuyinliangpin”) for using the Disputed Mark on its u-shaped pillow product without authorization and infringed upon MUJI’s trademark rights. Wuyinliangpin defended by citing its licensed trademark “Wuyinliangpin” with registration numbers 1561046 and 74942391 in Class 24 for “fabrics; pillowcase, duvet.”

Disputed Mark	Cited Mark

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

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

New Balance Athletics, Inc and New Balance Trading (China) Co., Ltd. (together as “New Balance”) sued Putian Shengfengsheng Shoes Co., Ltd. (“Shengfengsheng”), Putian Wobaili Trading Co., Ltd. (Wobaili”), Wang Jinbiao, Gusu District Meibailu Shoe Store (“Meibailu”) for infringing its registered trademark the “N” logo with registration number 5942394 on Class 25 for “sneakers” (“Cited Mark”) in Suzhou Intermediate Court. The defendants cited its registered trademark “N & design” with registration number 10214341 (“Disputed Mark”).

Disputed Mark	Cited Mark

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

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Weekly China Trademark News Updates

November 10, 2021

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

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

Zhi-Peng Corporation applied the mark “凯悦森HyattSen” (“Disputed Mark”) in 2014 on clothing, belts, gloves, swimming suits, tops, pants, shoes, hats, hosiery, and ties. Hyatt cited its registrations of “Hyatt in Chinese” and “HYATT” in class 43 in an opposition and later an invalidation against the Disputed Mark, but received unfavorable decision on both proceedings.  The mark matured to registration in 2015 after the opposition and was sustained in the invalidation in 2018.

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

The court found that: Hyatt submitted publicity reports on many newspapers, magazines, and websites from 2000 to 2013, award rankings, hotel introductions, protected records, and other evidence which can prove that through continuous use and extensive promotion, the cited mark “Hyatt in Chinese” has gained high reputation in hotel services and is widely known by the relevant public. Therefore, the evidence in the case can prove that the cited mark “Hyatt in Chinese” has constituted a well-known trademark on hotel services. The Disputed Mark contains the cited mark “Hyatt in Chinese” in its entirety, the two marks are similar in terms of composition, pronunciation, and overall appearance. So the disputed trademark has constituted a copy and imitation of the cited mark. Although clothing and other goods designated under the Disputed Mark fall into a different class from the hotels services under the cited mark “Hyatt in Chinese,” those goods and services all belong to the field of daily consumables and the target consumers are also related in a certain extent. In the case that the Disputed Mark has constituted a copy and imitation of the cited mark, the relevant public could easily deem the registrant of the Disputed Mark is closely related to the registrant of the cited mark, thereby weakening the distinctiveness of the cited mark or improperly taking free ride of the goodwill of the cited mark. Such misleading is likely to damage Hyatt’s rights based on its well-known mark. Accordingly, the application for registration of the Disputed has violated Article 13 of the Trademark Law and.

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

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

2. Angel Dear secured favorable court judgments and invalidated a copycat on toys

Angel Dear, a US brand for baby clothing and blankies (comfort towels), newly received a favorable judgment from the Beijing High Court, which upheld the first instance court judgment to invalidate the trademark “ANGELDEAR” in class 28.

The disputed trademark survived an opposition and matured into registration in respect of toys, fishing tackle, exercise equipment, roller skates, chess, game consoles, etc. and was later sustained in the invalidation action.

Angel Dear further pursued the case to the Beijing IP Court, arguing based on well-known mark, prior trade name, good faith principle, agency relationship, etc. The Beijing IP Court did not support the claims based on absolute grounds and prior right in trade name, but the court upheld the argument based on Article 15 the clause for agency relationship that:

The prior use evidence submitted by Angel Dear is in relation to baby clothes and blankie, which have high relevance with toys and other goods under the disputed trademark in terms of function and use, sales channels, and consumer groups. Taking into consideration of the email correspondence between the legal representative of the disputed trademark registrant and Angel Dear regarding the brand “ANGEL DEAR,” the fact that the disputed trademark registrant registered multiple trademarks similar to “ANGELDEAR” in various classes, and that the legal representative of the disputed trademark registrant required transaction counterparties, in the business email correspondence, to annotate the goods in the invoices as toys when the goods actually sold were blankies, the Court can affirm that the goods under the disputed trademark are similar to the goods provided by Angel Deer bearing the mark “ANGELDEAR,” so the registration of disputed trademark has constituted the situation stipulated in Article 15 of the Trademark Law 2013. Accordingly, the invalidation decision should be revoked.

Both the CNIPA and the disputed trademark registrant were unsatisfied with the judgment and appealed to the Beijing High Court. The Beijing High Court supported the ruling on Article 15, stating that:

Angel Dear submitted e-mails with manufacturers and sellers, e-mails with relevant people in the company of the disputed trademark registrant, materials of e-stores on JD and Taobao, company files, etc. These materials could prove the registrant of the disputed trademark had awareness of the brand “ANGELDEAR.” The trademark registration certificates and other relevant evidence submitted by Angel Dear could prove that, prior to the application date of the disputed trademark, Angel Dear had registered trademarks in the United States on stuffed plush toys. At the same time, the prior use evidence submitted by Angel Dear covered baby clothing, comfort towels and other products, which are closely related to the toys and other goods under the disputed trademark in terms of function and use, sales channels, and consumer groups. Combined the said evidence with the factfinding in the first instance court, it can be concluded that the first instance court has not erred to determine the registration of the disputed trademark constituted the situation stipulated in Article 15 of the Trademark Law 2013.

According to the Trademark Office online database, a parallel non-use action has also been taken against this disputed trademark. Before the second instance judgment was rendered, a trademark gazette officially cancelling the disputed trademark on all designated goods except for toys had been published.

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Weekly China Trademark News Updates

November 3, 2021

1. KFC’s “KFC Zhaijisong in Chinese” mark application was rejected

On October 18, 2021, the Beijing High Court made a second-instance judgment that rejected KFC’s trademark application for the “KFC Zhaijisong in Chinese (fast home delivery)” mark with application number 22264630 in Class 39 (“Disputed Mark”).

Disputed Mark	Cited Mark 1	Cited Mark 2	Cited Mark 3	Cited Mark 4

The court found that the Disputed Mark consisted of the distinctive parts of the Cited Mark 1 and 2, and Cited mark 4, namely “Zhaijisong in Chinese.” The Disputed Mark also shares the identical first three Chinese characters of the Cited Mark 3. The Disputed Mark was similar in letter composition, pronunciation, meanings, and overall appearances with the Cited Marks 1 to 4. If the Disputed Mark was allowed to be used on identical or similar services with the Cited Marks 1 to 4, it would easily cause the relevant public when paying general attention to be confused and believe that the Disputed Mark and the Cited Marks 1 to 4 were owned by the same party or had particular associations.

Whether “Zhaijisong in Chinese” indicates a delivery method and its level of distinctiveness is not a factor in determining whether the Disputed Mark constituted as a similar mark to each of the Cited Marks. If the issue of the distinctiveness of a cited trademark is overemphasized, subsequent trademark applicants are allowed to register a new trademark by adding other elements to a trademark that has been approved for registration by others is actually a direct denial of the validity of that registered trademark. This practice of not protecting a prior trademark and making it indirectly invalid not only directly damages a prior trademark owner’s rights but also affects the order of trademark registration and obscures the functional positioning between various legal provisions.

2. Ferrero’s 3D trademark application for Kinder Surprise egg is finally approved for registration on chocolate goods

Ferrero & Co., Ltd. (“Ferrero”) filed a trademark application for 3D packaging of the Kinder Surprise egg with designated color with application number 32315366 (“Disputed Mark”) was rejected by the CNIPA for lack of distinctiveness. Upon rejection appeal, the CNIPA allowed the Disputed Mark to be registered on chocolate goods.

In the rejection appeal, the CNIPA reasoned that the Disputed Mark consisted of an eggshell-shaped 3D logo in designated colors red, blue, and white with the word “Kinder.” The eggshell-shaped 3D logo with designated colors had distinctiveness when used on chocolate goods. The word “Kinder” also had distinctiveness when used on chocolate goods. Meanwhile, the applicant submitted sufficient evidence to prove that since the Disputed Mark entered the China market, the applicant had extensively promoted the Disputed Mark and allowed it to obtain certain fame on chocolate goods and formed a one-to-one corresponding relationship. Accordingly, the Disputed Mark had distinctiveness on chocolate goods and had increased its identification through actual use in order to be used to distinguish the source of the goods.

The “dessert” goods designated for the Disputed Mark covered wider range of goods and was not specific, which could be seen as a food container when used on “dessert” goods and lacked distinctiveness. Meanwhile, the applicant failed to submit sufficient evidence to prove that the Disputed Mark has become distinctive through use on dessert goods. Accordingly, the Disputed Mark’s application on dessert goods constituted the situation referred to in Article 11(3), Paragraph 1 of the Chinese Trademark Law.

3. 48 Defendants were sentenced for counterfeiting name brand products

Recently, in order to crack down on infringement and counterfeiting, the Intellectual Property Tribunal of Shanghai Pudong Court has convicted several intellectual property criminal cases involving well-known brands such as Chanel, Cartier, Gucci and etc.

In a series of cases, the defendants processed and produced counterfeit clothing of brands such as Chanel, Gucci, Balenciaga, Dior, Fendi, Loewe, and LV, with sales amounting to more than RMB 42.4 million (USD 6.63 million). After the trial, the Shanghai Pudong Court held that the defendant Liu employed a large number of people to produce and sell counterfeit clothing of a number of internationally renowned brands in order to obtain illegal benefits. His actions constituted the crime of counterfeiting registered trademarks and had subjective bad faith and had serious negative impacts to the society. Therefore, Liu was sentenced to five years and nine months’ imprisonment and a fine of RMB 11.7 million (USD 1.83 million). The three other defendants, Zhang, Wang, and Li were also sentenced and fined.

4. The CNIPA rejected 20,700 bad faith trademark applications in the first half of 2021

In the first half of 2021 alone, the CNIPA rejected 20,700 bad faith trademark applications. Last year, the intellectual property departments within the Chinese government concentrated on meeting and rectifying large-scale trademark trading platforms and removed more than 1.6 million trademark applications that were suspected of trading with bad faith intent.

At the same time, the overall trademark registration cycle has been further reduced. The average examination cycle of trademark registration has been reduced from 9 months to less than 4 months. By the end of 2021, the average examination time for trademark assignment, opposition, rejection, and invalidation will be reduced to 1.5 months, 12 months, 5.5 months, and 9 months, respectively. The examination cycle for trademark changes and renewals for electronically filed applications will be further reduced to 4/5 of the current examination time.

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Weekly China Trademark News Updates

October 26, 2021

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

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

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

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

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

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

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

3. Report of the Supreme People’s Court on the People’s Courts’ Intellectual Property Trial Work

On October 21, Zhou Qiang, President of the Supreme People’s Court, represented the Supreme People’s Court at the 31st meeting of the Standing Committee of the Thirteenth National People’s Congress to deliver the “Report of the Supreme People’s Court on the People’s Courts’ Intellectual Property Trial Work.”

The report pointed out that the current intellectual property cases presented the following traits: First, the number of cases is rising rapidly. The number of first-instance IP cases accepted by courts across the country increased from 101,000 in 2013 to 467,000 in 2020, an average annual increase of 24.5%, which is 12.8 % higher than the average annual increase in the total number of cases accepted by courts across the country. The second is the emergence of a large number of new disputes. The number of new cases involving core Internet technologies, genetic technologies, information and communications, integrated circuits, artificial intelligence, and platform economy is increasing, making it more difficult to determine complex technical facts and to apply laws. Third, online infringements are prone to occur frequently. The Internet has become one of the most important places where intellectual property infringements and illegal activities occur. Compared with offline infringements, online infringements are easier to implement, more concealed, and more complex, with a wider range of impacts, more difficult to collect fixed evidence, and more difficult for rights holders to defend their rights.

In 2020, 16,000 first-instance administrative cases of trademark authorization and confirmation were concluded, which effectively promoted the standardization of trademark registration order.

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