Weekly China Trademark News Updates

February 7, 2023

1. The CNIPA issued the Guidelines on the Prohibition of Using Signs as Trademarks and the Guidelines on Application for Registration and Use of Trademarks Containing Geographic Names

The Guidelines on the Prohibition of Using Signs as Trademarks further explains the various circumstances where signs cannot be used as trademarks as stipulated in Article 10 of the China Trademark Law. “Not to be used as a trademark” means that in addition to registration prohibition, the use of a relevant logo as a trademark is also prohibited. For example, any application for registration of an “absolutely prohibited” relevant signs mentioned in this guideline will be rejected for violating Article 10 of the China Trademark Law. Already registered trademarks will face the legal consequences of being invalidated. Meanwhile, those that constitute bad faith trademark applications will also face punishments such as warnings and fines, and the punishment information will be published on the National Enterprise Credit Information Publicity System. If market entities use any aforementioned unregistered signs as trademarks, they will be stopped and given a time limit to correct, still, they may face punishments such as notifications to relevant administrative departments and fines.

The Guidelines on Application for Registration and Use of Trademarks Containing Geographic Names provides guidance on standardized use of registered trademarks containing geographical names, reasonable protection of rights, and legitimate use by others. The owner of the exclusive right to use a trademark should use the approved registered trademark logo and the approved use of goods or services, and shall not change, highlight, simplify, add, deform, or split the geographical name part of the trademark on its own. Other market entities that only use the relevant geographical name in a non-trademark use to indicate geographical origin shall be regarded as legitimate good faith use. The owner of the registered trademark has no right to prohibit others on the grounds that such use is identical with the place name in its registered trademark. Other market entities should also fully register the right to exclusive use of the trademark when using a place name and must not exceed the scope of “justifiable and reasonable” use. In addition, the transfer of trademarks containing geographical names to transferees whose actual use will cause the public to misidentify the place of origin or source should be avoided. For transferring collective trademarks or certification trademarks containing geographical names, transferees should also meet the relevant subject qualification requirements and other requirements.

2. Highlighting use of “Huawei in Chinese” in the title of online sales link of one’s own products constituted infringement. The court ordered RMB 2 million in compensation

Plaintiff Huawei Technologies Co., Ltd. (“Huawei”) sued defendant Ji She Clothing (Shanghai) Co., Ltd. (“Ji She”) for trademark infringements and false publicity. The Shanghai Jing Shan District Court ruled against Ji She and ordered Ji She to stop infringement and unfair competition actions, and compensate Huawei for economic losses and reasonable expenses totaling RMB 2 million (USD295,000).

The first issue in dispute was: Whether the act of highlighting use of other’s registered trademark in the hyperlink title of an online sales of its own products by Ji She constitutes trademark use. The court found that using identical or similar words as other’s registered trademarks as the first words of an online sales hyperlink title of its own products would make Internet users to believe that the store’s goods or services have a specific connection with that other’s trademarks pointed to by the words used. Such use constituted trademark use. Ji She used words such as “Suitable for Huawei,” “Authentic Huawei,” and “For Huawei mobile phones” as the first part of the title of its own product online sales hyperlink, and highlighted these words in a prominent position of the title without displaying its own brand. The title was accompanied by the word “authentic product,” which was likely to confuse Internet users. The method of naming the titles of an online sales hyperlink of its own products by Ji she neither conformed to Tmall’s product title publishing specifications, nor did it conform to the industry’s general practices. The said actions violated Huawei’s trademark right to use “Huawei in Chinese,” Jishe should immediately stop the infringement and rectify its own products on its Tmall flagship store in accordance with the Tmall’s product title publishing regulations and industry-wide practices. The title of the online sales hyperlink should highlight its own brand name at the beginning of the title.

The second issue in dispute was: Whether Ji She’s actions constituted an unfair competition act of false publicity. Huawei and Ji She were both smart watches owners and competes with each other. The “Huawei in Chinese” trademark owned by Huawei is well-known in the market, and Ji She used the words “Authentic Huawei” in the first part of the title of an online sales hyperlink of its own products. Such use was a misleading commercial publicity that could easily mislead consumers. Therefore, Ji She’s actions constituted false publicity.

The third issue in dispute was: The amount of compensation and reasonable expenses for rights protection. According to the evidence on file, although it was difficult to determine the actual loss of Huawei and the benefits obtained by the Ji She from its infringement, it could be roughly determined that Ji She’s sales of the 16 infringing products were around RMB 23 million to 37 million. Ji She claimed that there were exaggerated sales data and return rate, etc., and that its profit were low. Therefore, Tmall’s sales data cannot be used as the calculation base. Ji She, however, did not provide any actual sales number or profits it had. Therefore, the court comprehensively considered factors such as the popularity of Huawei’s “Huawei in Chinese” trademark, Huawei’s influence in the smart watch industry, the degree of subjective fault of Ji She, the method of infringement, the duration of infringement, and the consequences of infringement damages, in supporting Huawei’s infringement claim and compensation claim for economic losses and reasonable expenses for RMB 2 million (USD295,000).

3. Squatted “SUPREME” trademark was invalidated

The Beijing High Court recently rendered a decision against Guangzhou Duo Lun Zi Watch Co., Ltd. (“Duo Lun Zi”) in an administrative trademark invalidation dispute that also involved a third party Chapter Four, and the CNIPA. The court rejected the appeal and affirmed the first instance decision.

Disputed Mark

Disputed Mark in Class 14 with Reg. No. 23437057 Approved goods: sports watch, watch, etc.

The court found that Duo Lun Zi filed for more than 100 trademarks across multiple classes of goods and services, including “Xia Mi in Chinese SHARME,” “Wan Bao Lu in Chinese MARLBORO,” “supreme,” etc., which were identical or similar to Chapter Four and other third parties’ famous trademarks that have high distinctiveness. Not only did Duo Lun Zi fail to provide reasonable explanations to the source of its trademark design, but it also failed to prove that its massive filings were due to regular business needs. Thus, Duo Lun Zi’s massive filings cannot be seen as to have filed in good faith. On the other hand, the “supreme” trademark that is owned by Chapter Four has certain distinctiveness and the evidence in this case can prove that through Chapter Four’s promotion and use, the “supreme” mark obtained certain fame before the Disputed Mark’s registration date. Duo Lun Zi’s failure to provide evidence proving its actual intent of use of the Disputed Mark and any actual commercial use of the mark despite it filed the Disputed Mark that is identical or similar to Chapter Four’s prior famous mark. Accordingly, Duo Lun Zi’s massive filing, including filing of the Disputed Mark, disrupted the order of trademark registration, harmed public interests, and improperly occupied public resources, which violated the provision of “obtaining registration by other improper means” as stipulated in Article 44 of the 2013 Trademark Law. The first instance judgment was correct and should be affirmed.

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

Major Points of the Draft China Trademark Law Amendments (2023)

by Yan Zhang, Miao Tian, & Austin Chang

China Trademark Law, enacted in 1982, has been amended four times (1993, 2001, 2013, and 2019). Yet there are still issues of bad faith trademark applications, redundant and repeated registrations, improper use and abuse of trademark rights, etc. in trademark practice. On 13 January 2023, less than four years after the 2019 amendment, the China National Intellectual Property Administration (CNIPA) released a new Draft Amendment to the Trademark Law (“Draft”) for public comment.

The Draft expands the current Trademark Law to 10 chapters and 101 articles, among which, there are 23 newly added articles, 6 new articles split from existing articles, 45 articles with substantive updates, and 27 articles basically remain unchanged.

In light of such drastic revisions, this newsletter is prepared with major points that we believe are most noteworthy.

I. Strengthen Measures to Crackdown on Bad Faith Trademarks

1. Clarify specific circumstances of bad faith trademarks

Article 22 of the Draft lists specific circumstances of bad faith marks, including: (1) applying for trademarks in bulk with no intent to use, which disrupts the order of trademark registration; (2) applying for trademarks using fraudulent or other improper means; (3) applying for trademarks that are detrimental to the interest of the country or of the public, or that have other significant unhealthy effects; (4) copying, imitating, or translating other’s well-known mark; (5) pre-emptively applying by the trademark owner’s agent, representative, or interested party; (6) pre-emptively applying for other’s trademarks by unfair means, which damages other’s existing prior rights or interests; and (7) other actions in bad faith.

The Draft clarifies that “applying with no intent to use, or filing applications in bulk,” and “applying using fraudulent or other improper means” could be used as absolute grounds for trademark refusals, oppositions, and invalidations. This has broadened the application scope of the Article 44 of Trademark Law 2019, which is mostly applicable only against registered trademarks in invalidation actions.

2. Add more restrictions on signs that can be used and registered as trademarks 

– those in violation of public order or morality (Article 14)
– those contrary to core socialist values, or detrimental to excellent Chinese traditional culture (Article 15)
– both domestic and foreign geographical names known to the public (Article 15)
– those consisting of only generic names, designs, model numbers or technical terms of the goods concerned can neither be registered as trademarks, nor acquired distinctiveness through use (Article 16)

The Trademark Law 2019 stipulates that “geographic names of administrative divisions above the county level or foreign geographic names known to the public shall not be used as trademarks.” On this basis, Draft further adds “domestic geographic names known to the public” into the scope of signs that are prohibited from using and registering as trademarks.

In addition, review of trademark distinctiveness is more stringent, that is, generic names, designs, model numbers or technical terms are prohibited from securing registration by obtaining distinctiveness through use.

3. Prohibit repeated registrations

Article 21 of the Draft clarifies that a trademark application shall not be identical to the applicant’s previous applications, registered trademarks, or trademarks that have been revoked, cancelled, or declared invalid within the prior year for the same kind of goods or services. The purpose is to regulate improper acts of trademark squatters such as repeated bad faith applications, and re-application for registration immediately after their squatted trademarks are invalidated or cancelled. And there are some exceptions for right holders who have legitimate need, such as: (1) due to production and operation needs, the trademark application bears minor modifications to the prior trademark which has been in actual use, and the applicant can illustrate the differences; (2) for reasons not attributable to the applicant, the prior registered trademark was not renewed; (3) due to the failure to timely submit trademark use statements, the prior registered trademark that has been in actual use was cancelled; (4) for reasons not attributable to the applicant, the prior registered trademark that has been in actual use was cancelled due to failure to provide evidence of use in response to a non-use cancellation; (5) the prior trademark was declared invalid due to conflicts with prior rights or interests of others, but the prior rights or interests in question no longer exist; (6) there are other legitimate reasons to justify repeated applications for trademark registration.

4. Establish transfer mechanism of bad faith trademarks in invalidation proceeding

Articles 45 to 47 of the Draft stipulate that not only may prior right holder request the CNIPA to declare a registered trademark invalid, but prior right holder may also request to transfer such registered bad faith trademark under his name. This amendment creates a new mechanism favorable to right holders whose marks were pre-emptively registered by squatters. It enables the right holder to obtain earlier registered trademarks while avoiding repeated applications and refusal reviews in line with its trademark enforcement actions. Meanwhile, the Draft sets limitations on transferring registered trademarks by the CNIPA, that is, if there are no other reasons to declare the registered trademark invalid, and the transfer is unlikely to lead to confusion or other adverse effects, the CNIPA shall approve the transfer of the registered trademark. Such limitations, however, lack necessary details for actual implementations. If these particular imitations are to be included in the final version of the amended Trademark Law, we expect the Trademark Implementation Regulations and relevant regulative documents would provide further details and clarifications.

5. Increase penalties against bad faith trademarks

– Increase fines against bad faith registrations (Article 67)
– Civil compensations shall be ordered against bad faith trademark registrations that caused damages to others (Article 83)
– Bad faith trademark registrations that damage national interests, or social public interests, or cause major adverse effects, the Procuratorate shall, in accordance with the law, file a lawsuit in the Court against the bad faith trademark registrations (Article 83)

Articles 67 and 83 of the Draft provide a trinity of administrative, civil, and criminal punishment mechanism to effectively protect the legitimate rights and interests of right holders and crack down on bad faith squatting. A bad faith trademark application can be fined up to RMB250, 000 and any illegal gains shall be confiscated. If losses are caused to a specific entity, such entity may sue in a Court and request monetary compensation for the loss. If a bad faith trademark application damages national interests, social public interests or causes other major adverse effects, the Procuratorate may file a lawsuit.

II. Improve Trademark Examination Proceedings

1. Shorten the timeline for opposition

Article 36 of the Draft shortens the opposition period from three months to two months, which in turn shortens the time needed to obtain a trademark registration.

2. Cancel review of disapproval of trademark registration

Article 39 of the Draft cancels the review of disapproval of trademark registration. Where a trademark is disapproved in opposition, the applicant no longer has the right to appeal such decision with the CNIPA, but it may appeal to the Court. This amendment avoids the same dispute going through three proceedings (substantive examination, opposition, review of disapproval) all before the CNIPA, while still providing remedy for the applicant before the Court.

The Draft does not, however, amend the proceeding where an opposed trademark is approved for registration and where the opponent can file an invalidation with the CNIPA, then still have the remedy to appeal an unfavorable decision to the Court.

How can the two proceedings be harmonized in practice or whether consistency of review is applicable deserves further discussions.

3. Restrict application of the change of circumstances rule in court proceedings

Article 42 of the Draft stipulates that for court proceedings on refusal reviews, registration disapproval reviews, and invalidation actions, “If the status of the relevant trademarks changes after a CNIPA decision is made, it shall not affect the trial of the decision by the Court, except when the principle of fairness is clearly violated.” According to the Draft, change of circumstances shall not be applicable to administrative trademark litigations, except “when the principle of fairness is clearly violated.” However, the circumstances of “when the principle of fairness is clearly violated” remains unclear. Such amendment would greatly impact rights holders’ current practices of obtaining their own trademark registrations by removing prior obstacles via invalidations or cancellations.

III. Strengthen Trademark Use Requirements

1. Strengthen trademark use obligations

– Add use or intent to use requirement when applying new trademarks (Article 5)
– Establish regulations to require trademark owners voluntarily explain trademark use 5 years after registration (Article 61)

Article 5 and 61 of the Draft adds use or intent to use requirement when applying trademarks, and establishes regulations to require trademark owners to voluntarily explain trademark use 5 years after registration. Additionally, a random inspection system for explaining use and provisions for cancelling registered trademarks after random inspections is also added. This amendment will impose higher requirements on the use and maintenance of trademarks by trademark owners. Accordingly, defensive filings may face problems for providing evidence of use 5 years after registration. However, the Draft does not provide for specific review standards and implementing rules. According to the CNIPA statement on the Draft, “a simple and easy-to-implement method such as a use undertaking letter or a use description form is likely to be adopted.”

2. Regulate trademark use

For “unauthorized alteration of registered trademarks, name or address or the registrant and other items,” the Trademark Law 2019 only imposes liabilities “to make corrections within a time limit,” otherwise “the registered trademark shall be cancelled.” Article 64 of the Draft adds “a fine up to RMB100, 000” on top of the said provisions and imposes corresponding administrative and criminal liabilities and compensations for those infringing others’ trademark rights.

3. Broaden the applicable circumstances for cancellation

– Cancellation due to causing confusion among relevant public as to quality, source, or origin or other features of the goods by the use of a registered trademark, or seriously harming public interests and cause significant adverse effects by the use and exercise of exclusive rights of a registered trademark (Article 49)
– Cancellation due to untruthful statement of trademark use during random inspections (Article 61)
– Cancellation due to unauthorized alteration in the process of using the registered trademark (Article 64)

The Draft improves the cancellation system by adding more applicable circumstances and specifies that the CNIPA may cancel ex officio a registered trademark that damages public interests. Meanwhile, Article 49 adds a provision that cancellation “shall not damage the legitimate rights and interests of the trademark registrant or disrupt the order of trademark registration” in order to further regulate repeated three-year non-use cancellations or bad faith three-year non-use cancellations.

In addition, the Draft also expands the scope of cancellation ex officio. The CNIPA may cancel a registered trademark ex officio if an improper use of trademark right seriously damages the public interest and causes major adverse effects. If a trademark registrant alters the registered trademark without authorization in the process of using such registered trademark and fails to make correction within a time limit, that registered trademark shall be cancelled. The CNIPA shall conduct random inspections on a trademark registrant’s statement of the use of the trademark, and if necessary, require the trademark registrant to supplement relevant evidence. Where such statement is found to be untrue, the registered trademark shall be cancelled.

4. Clarify the applicable circumstances and the beginning and end of trademark registration “isolation” period

Article 50 of the Draft stipulates that, within one year from the date when a registered trademark is published as canceled or expired, any application for a trademark that is identical or similar to the said mark shall not be approved.

Regarding this one-year “isolation” period, which aims to avoid market confusion, the Draft improves the applicable circumstances by deleting the current provision of applying the isolation after a registered trademark is invalidated, and only retains applicability after a registered trademark is cancelled or expired.

In practice, prior right holders usually file a trademark application while filing an invalidation against a squatted trademark. If the one-year isolation is applicable to such squatted registration, it will lead to prior right holders’ repeatedly filing new trademark applications or incur new trademark disputes. This amendment, in comparison, is closer to the legislative intent in assuring that prior right holder’s trademark application will be approved timely.

IV. Strengthen Trademark Protection

1. Strengthen well-known mark protection

Article 10 of the Draft amends the current expression of “recognition of a well-known mark” into “confirmation of well-known status of a trademark,” which helps to weaken the administrative tint in the well-known mark affirmation. The amendment further specifies that the protection shall follow the principle of case-to-case confirmation, passive protection, and need-basis confirmation, and provides that the scope of protection of a well-known trademark shall be appropriate to the trademark’s distinctive features and reputation.

Meanwhile, Article 18 extends the scope of protection to circumstance that “is likely to cause the relevant public to believe that a trademark is closely connected with a well-known trademark, thus diminishing the distinctive features of that well-known trademark, or disparaging or improperly free-riding on the market reputation of the well-known trademark.”

2. Improve trademark infringement damage calculation method 

The order of calculating trademark infringement damages in the Trademark Law 2019 is actual loss of the right holder, infringer’s infringement profits, and reasonable multiples of royalties. In judicial practice, however, said damage calculation order is not the basis for calculating infringement profit when rights holder cannot prove its loss after exhausting his burden of proof. Therefore, Article 77 of the Draft lists right holder’s actual loss or infringer’s infringing profits as the first priority in damages calculation methods, which more streamlined with legal practice. Moreover, the Draft clarifies that damages should include right holder’s reasonable costs.

3. Introduce public interest trademark infringement lawsuit

Article 78 of the Draft introduces public interest trademark infringement lawsuit, where the infringement of trademark rights harms national interests or social public interests, and the trademark owner or interested parties does not file a lawsuit, and the department responsible for trademark enforcement does not deal with the infringement, the Procuratorial may file a lawsuit before the Court.

V. Clarify Administrative Power Boundaries 

1. Introduce a principled provision where trademark rights shall not be abused to damage national interests, social public interests, or the legitimate rights and interests of others

Article 9 of the Draft stipulates that the principle of good faith shall be upheld in the application for trademark registration and in the exercise of trademark rights. Trademark owners shall not abuse trademark rights to the detriment of national interests, public interests, or the legitimate rights and interests of others.

2. Improve descriptive use regulations and add fair use scenarios

Article 62 of the Draft introduces trademark fair use that includes (1) using one’s name and address in good faith; (2) for the purpose of indicating the kind, nature, quality, functions, purposes, weight, quantity, value, geographic origin or other features of the goods, using the geographical name, generic name, graphics, models, technical terms or other symbols relating to such indication of goods; (3) using its registered trademark for the sole purpose of indicating the purpose of use, target or scenario of use of goods, except where such use misleads the public.

3. Introduce malicious lawsuit compensation system

The Trademark Law 2019 sets a regulatory path for malicious lawsuit to be imposed of a sanction by the Court, which provides a legal basis against trademark right abuse. Article 84 of the Draft further stipulates a compensation system for malicious lawsuit. Where a malicious trademark lawsuit causes losses to others, compensation shall be ordered. The amount of compensation shall at least include the reasonable costs paid by the other party in responding to the malicious trademark lawsuit.

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

Weekly China Trademark News Updates

February 2, 2023

Major Points of the Draft China Trademark Law Amendments (2023)

China Trademark Law, enacted in 1982, has been amended four times (1993, 2001, 2013, and 2019). Yet there are still issues of bad faith trademark applications, redundant and repeated registrations, improper use and abuse of trademark rights, etc. in trademark practice. On 13 January 2023, less than four years after the 2019 amendment, the China National Intellectual Property Administration (CNIPA) released a new Draft Amendment to the Trademark Law (“Draft”) for public comment.

The Draft expands the current Trademark Law to 10 chapters and 101 articles, among which, there are 23 newly added articles, 6 new articles split from existing articles, 45 articles with substantive updates, and 27 articles basically remain unchanged.

In light of such drastic revisions, this newsletter is prepared with major points that we believe are most noteworthy.

I. Strengthen Measures to Crackdown on Bad Faith Trademarks

1. Clarify specific circumstances of bad faith trademarks

Article 22 of the Draft lists specific circumstances of bad faith marks, including: (1) applying for trademarks in bulk with no intent to use, which disrupts the order of trademark registration; (2) applying for trademarks using fraudulent or other improper means; (3) applying for trademarks that are detrimental to the interest of the country or of the public, or that have other significant unhealthy effects; (4) copying, imitating, or translating other’s well-known mark; (5) pre-emptively applying by the trademark owner’s agent, representative, or interested party; (6) pre-emptively applying for other’s trademarks by unfair means, which damages other’s existing prior rights or interests; and (7) other actions in bad faith.

The Draft clarifies that “applying with no intent to use, or filing applications in bulk,” and “applying using fraudulent or other improper means” could be used as absolute grounds for trademark refusals, oppositions, and invalidations. This has broadened the application scope of the Article 44 of Trademark Law 2019, which is mostly applicable only against registered trademarks in invalidation actions.

2. Add more restrictions on signs that can be used and registered as trademarks 

– those in violation of public order or morality (Article 14)
– those contrary to core socialist values, or detrimental to excellent Chinese traditional culture (Article 15)
– both domestic and foreign geographical names known to the public (Article 15)
– those consisting of only generic names, designs, model numbers or technical terms of the goods concerned can neither be registered as trademarks, nor acquired distinctiveness through use (Article 16)

The Trademark Law 2019 stipulates that “geographic names of administrative divisions above the county level or foreign geographic names known to the public shall not be used as trademarks.” On this basis, Draft further adds “domestic geographic names known to the public” into the scope of signs that are prohibited from using and registering as trademarks.

In addition, review of trademark distinctiveness is more stringent, that is, generic names, designs, model numbers or technical terms are prohibited from securing registration by obtaining distinctiveness through use.

3. Prohibit repeated registrations

Article 21 of the Draft clarifies that a trademark application shall not be identical to the applicant’s previous applications, registered trademarks, or trademarks that have been revoked, cancelled, or declared invalid within the prior year for the same kind of goods or services. The purpose is to regulate improper acts of trademark squatters such as repeated bad faith applications, and re-application for registration immediately after their squatted trademarks are invalidated or cancelled. And there are some exceptions for right holders who have legitimate need, such as: (1) due to production and operation needs, the trademark application bears minor modifications to the prior trademark which has been in actual use, and the applicant can illustrate the differences; (2) for reasons not attributable to the applicant, the prior registered trademark was not renewed; (3) due to the failure to timely submit trademark use statements, the prior registered trademark that has been in actual use was cancelled; (4) for reasons not attributable to the applicant, the prior registered trademark that has been in actual use was cancelled due to failure to provide evidence of use in response to a non-use cancellation; (5) the prior trademark was declared invalid due to conflicts with prior rights or interests of others, but the prior rights or interests in question no longer exist; (6) there are other legitimate reasons to justify repeated applications for trademark registration.

4. Establish transfer mechanism of bad faith trademarks in invalidation proceeding

Articles 45 to 47 of the Draft stipulate that not only may prior right holder request the CNIPA to declare a registered trademark invalid, but prior right holder may also request to transfer such registered bad faith trademark under his name. This amendment creates a new mechanism favorable to right holders whose marks were pre-emptively registered by squatters; it enables the right holder to obtain earlier registered trademarks while avoiding repeated applications and refusal reviews in line with its trademark enforcement actions.Meanwhile, the Draft sets limitations on transferring registered trademarks by the CNIPA, that is, if there are no other reasons to declare the registered trademark invalid, and the transfer is unlikely to lead to confusion or other adverse effects, the CNIPA shall approve the transfer of the registered trademark. Such limitations, however, lack necessary details for actual implementations. If these particular imitations are to be included in the final version of the amended Trademark Law, we expect the Trademark Implementation Regulations and relevant regulative documents would provide further details and clarifications.

5. Increase penalties against bad faith trademarks

– Increase fines against bad faith registrations (Article 67)
– Civil compensations shall be ordered against bad faith trademark registrations that caused damages to others (Article 83)
– Bad faith trademark registrations that damage national interests, or social public interests, or cause major adverse effects, the Procuratorate shall, in accordance with the law, file a lawsuit in the Court against the bad faith trademark registrations (Article 83)

Articles 67 and 83 of the Draft provide a trinity of administrative, civil, and criminal punishment mechanism to effectively protect the legitimate rights and interests of right holders and crack down on bad faith squatting. A bad faith trademark application can be fined up to RMB250, 000 and any illegal gains shall be confiscated. If losses are caused to a specific entity, such entity may sue in a Court and request monetary compensation for the loss. If a bad faith trademark application damages national interests, social public interests or causes other major adverse effects, the Procuratorate may file a lawsuit.

III. Improve Trademark Examination Proceedings

1. Shorten the timeline for opposition

Article 36 of the Draft shortens the opposition period from three months to two months, which in turn shortens the time needed to obtain a trademark registration.

2. Cancel review of disapproval of trademark registration

Article 39 of the Draft cancels the review of disapproval of trademark registration. Where a trademark is disapproved in opposition, the applicant no longer has the right to appeal such decision with the CNIPA, but it may appeal to the Court. This amendment avoids the same dispute going through three proceedings (substantive examination, opposition, review of disapproval) all before the CNIPA, while still providing remedy for the applicant before the Court.

The Draft does not, however, amend the proceeding where an opposed trademark is approved for registration and where the opponent can file an invalidation with the CNIPA, then still have the remedy to appeal an unfavorable decision to the Court.

How can the two proceedings be harmonized in practice or whether consistency of review is applicable deserves further discussions.

3. Restrict the application of change of circumstances rule in court proceedings

Article 42 of the Draft stipulates that for court proceedings on refusal reviews, registration disapproval reviews, and invalidation actions, “If the status of the relevant trademarks change after a CNIPA decision is made, it shall not affect the trial of the decision by the Court, except when the principle of fairness is clearly violated.” According to the said amendment, change of circumstances shall not be applicable to administrative trademark litigations, except “when the principle of fairness is clearly violated.” However, the circumstances of “when the principle of fairness is clearly violated” remains unclear. Such amendment would greatly impact rights holders’ current practices of obtaining their own trademark registrations by removing prior obstacles via invalidations or cancellations.

III. Strengthen Trademark Use Requirements

1. Strengthen trademark use obligations

– Add use or intent to use requirement when applying new trademarks (Article 5)
– Establish regulations to require trademark owners voluntarily explain trademark use 5 years after registration (Article 61)

Article 5 and 61 of the Draft adds use or intent to use requirement when applying trademarks, and establishes regulations to require trademark owners to voluntarily explain trademark use 5 years after registration. Additionally, a random inspection system for explaining use and provisions for cancelling registered trademarks after random inspections is also added. This amendment will impose higher requirements on the use and maintenance of trademarks by trademark owners. Accordingly, defensive filings may face problems for providing evidence of use 5 years after registration. However, the Draft does not provide for specific review standards and implementing rules. According to the CNIPA statement on the Draft, “a simple and easy-to-implement method such as a use undertaking letter or a use description form is likely to be adopted.”

2. Regulate trademark use

For “unauthorized alteration of registered trademarks, name or address or the registrant and other items,” the Trademark Law 2019 only imposes liabilities “to make corrections within a time limit,” otherwise “the registered trademark shall be cancelled.” Article 64 of the Draft adds “a fine up to RMB100, 000” on top of the said provisions and imposes corresponding administrative and criminal liabilities and compensations for those infringing others’ trademark rights.

3. Broaden the applicable circumstances for cancellation

– Cancellation due to causing confusion among relevant public as to quality, source, or origin or other features of the goods by the use of a registered trademark, or seriously harming public interests and cause significant adverse effects by the use and exercise of exclusive rights of a registered trademark (Article 49)
– Cancellation due to untruthful statement of trademark use during random inspections (Article 61)
– Cancellation due to unauthorized alteration in the process of using the registered trademark (Article 64)

The Draft improves the cancellation system by adding more applicable circumstances and specifies that the CNIPA may cancel ex officio a registered trademark that damages public interests. Meanwhile, Article 49 adds a provision that cancellation “shall not damage the legitimate rights and interests of the trademark registrant or disrupt the order of trademark registration” in order to further regulate repeated three-year non-use cancellations or bad faith three-year non-use cancellations.

In addition, the Draft also expands the scope of cancellation ex officio. The CNIPA may cancel a registered trademark ex officio if an improper use of trademark right seriously damages the public interest and causes major adverse effects. If a trademark registrant alters the registered trademark without authorization in the process of using such registered trademark and fails to make correction within a time limit, that registered trademark shall be cancelled. The CNIPA shall conduct random inspections on a trademark registrant’s statement of the use of the trademark, and if necessary, require the trademark registrant to supplement relevant evidence. Where such statement is found to be untrue, the registered trademark shall be cancelled.

4. Clarify the applicable circumstances and the beginning and end of trademark registration “isolation” period

Article 50 of the Draft stipulates that, within one year from the date when a registered trademark is published as canceled or expired, any application for a trademark that is identical or similar to the said mark shall not be approved.

Regarding this one-year “isolation” period, which aims to avoid market confusion, the Draft improves the applicable circumstances by deleting the current provision of applying the isolation after a registered trademark is invalidated, and only retains applicability after a registered trademark is cancelled or expired.

In practice, prior right holders usually file a trademark application while filing an invalidation against a squatted trademark. If the one-year isolation is applicable to such squatted registration, it will lead to prior right holders’ repeatedly filing new trademark applications or incur new trademark disputes. This amendment, in comparison, is closer to the legislative intent in assuring that prior right holder’s trademark application will be approved timely.

IV. Strengthen Trademark Protection

1. Strengthen well-known mark protection

Article 10 of the Draft amends the current expression of “recognition of a well-known mark” into “confirmation of well-known status of a trademark,” which helps to weaken the administrative tint in the well-known mark affirmation. The amendment further specifies that the protection shall follow the principle of case-to-case confirmation, passive protection, and need-basis confirmation, and provides that the scope of protection of a well-known trademark shall be appropriate to the trademark’s distinctive features and reputation.

Meanwhile, Article 18 extends the scope of protection to circumstance that “is likely to cause the relevant public to believe that a trademark is closely connected with a well-known trademark, thus diminishing the distinctive features of that well-known trademark, or disparaging or improperly free-riding on the market reputation of the well-known trademark.”

2. Improve trademark infringement damage calculation method 

The order of calculating trademark infringement damages in the Trademark Law 2019 is actual loss of the right holder, infringer’s infringement profits, and reasonable multiples of royalties. In judicial practice, however, said damage calculation order is not the basis for calculating infringement profit when rights holder cannot prove its loss after exhausting his burden of proof. Therefore, Article 77 of the Draft lists right holder’s actual loss or infringer’s infringing profits as the first priority in damages calculation methods, which more streamlined with legal practice. Moreover, the Draft clarifies that damages should include right holder’s reasonable costs.

3. Introduce public interest trademark infringement lawsuit

Article 78 of the Draft introduces public interest trademark infringement lawsuit, where the infringement of trademark rights harms national interests or social public interests, and the trademark owner or interested parties does not file a lawsuit, and the department responsible for trademark enforcement does not deal with the infringement, the Procuratorial may file a lawsuit before the Court.

V. Clarify Administrative Power Boundaries 

1. Introduce a principled provision where trademark rights shall not be abused to damage national interests, social public interests, or the legitimate rights and interests of others

Article 9 of the Draft stipulates that the principle of good faith shall be upheld in the application for trademark registration and in the exercise of trademark rights. Trademark owners shall not abuse trademark rights to the detriment of national interests, public interests, or the legitimate rights and interests of others.

2. Improve descriptive use regulations and add fair use scenarios

Article 62 of the Draft introduces trademark fair use that includes (1) using one’s name and address in good faith; (2) for the purpose of indicating the kind, nature, quality, functions, purposes, weight, quantity, value, geographic origin or other features of the goods, using the geographical name, generic name, graphics, models, technical terms or other symbols relating to such indication of goods; (3) using its registered trademark for the sole purpose of indicating the purpose of use, target or scenario of use of goods, except where such use misleads the public.

3. Introduce malicious lawsuit compensation system

The Trademark Law 2019 sets a regulatory path for malicious lawsuit to be imposed of a sanction by the Court, which provides a legal basis against trademark right abuse. Article 84 of the Draft further stipulates a compensation system for malicious lawsuit. Where a malicious trademark lawsuit causes losses to others, compensation shall be ordered. The amount of compensation shall at least include the reasonable costs paid by the other party in responding to the malicious trademark lawsuit.

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

The first non-fungible token (NFT) was minted in May 2014, but they did not catch the world’s attention until recently. While the world is beginning to understand and invest in NFTs, China is not far behind global trends, but has its own characteristics. NFTs have gained increasing popularity in merchandise, finance and other areas, but legal systems around the world are still grappling with how to deal with NFT-related legal issues.

Weekly China Trademark News Updates

January 19, 2023

1. The CNIPA released a notice on public opinion consultation on the “Draft Amendment to the China Trademark Law (Draft for Comment)”

On January 13, 2023, the CNIPA released the “Draft Amendment to the China Trademark Law (Draft for Comment)” to solicit opinions. The amendments involved in the Draft Amendment mainly include prohibition of repeated registration, shortening of the publication period to two months, compulsory transfer of bad faith squatted trademarks, and increased penalties for bad faith registered trademarks, cancel non-registration appeal, added requirement of trademark use or commitment to use, and the system of voluntarily explanation of use of trademarks every 5 years after trademark registration, etc.

2. The State Council Information Office held a Press Conference on Intellectual Property Work in 2022

On January 16, 2023, the State Council Information Office held a press conference to introduce the work related to intellectual property in 2022. In 2022, there were 6.177 million registered trademarks. The CNIPA completed adjudicating 169,000 trademark opposition cases, completed 412,000 various trademark review and appeal cases, and received 5,827 Madrid trademark international registration applications submitted by domestic applicants. As of the end of 2022, the number of valid trademark registrations in China are 42.672 million.

3. “Shiseido in Chinese” was recognized as a well-known mark and granted cross-class protection

Jingmen Shiseido Gypsum Industry Co., Ltd. (“Jingmen Shiseido”) is the registrant of the trademark “Shiseido Gypsum in Chinese” with reg. no. 11485383 (“Disputed Mark”). Shiseido Co., Ltd. (“Shiseido”) filed an invalidation against the Disputed Mark. The CNIPA invalidated the Disputed Mark. Jingmen Shiseido appealed the CNIPA decision to the Beijing IP Court.

The Beijing IP Court found that the evidence submitted cannot prove that Shiseido’s Cited Mark (“Shiseido in Chinese” with reg. no. 135757) had reached the level of a well-known before the application date of the Disputed Mark. The Beijing IP Court vacated the CNIPA’s invalidation decision. The CNIPA and Shiseido appealed to the Beijing High Court. The Beijing High Court found that advertisements published in newspapers and magazines, ranking data of the world’s top 500 brands and other materials submitted by Shiseido can prove that the Cited Mark was approved and registered on cosmetics as early as 1980, and has a high reputation worldwide before the application date of the Disputed Mark. The Cited Mark has been used and publicized extensively in China for a long period of time and has won many honors. Its sales performance is relatively remarkable in the cosmetics industry. Moreover, before and after the filing date of the Disputed Mark, several effective judgments have determined that the Cited Mark is a well-known trademark used in class 3 for cosmetics. Combined with the evidence submitted, it was sufficient to determine that the Cited Mark has been widely known to the relevant public in China on “cosmetics” products and has reached the level of well-known. The Disputed Mark is composed of Chinese characters “Shiseido Gypsum in Chinese,” and the Cited Mark is composed of Chinese characters “Shiseido in Chinese.” The Disputed Mark completely includes the Cited Mark. The two marks were similar in terms of text composition, pronunciation, meaning, etc., which have constituted a copy and imitation of the Cited Mark. Although there were differences between the goods such as “alabaster; plaster of Paris; gypsum; gypsum board” used by the Disputed Mark and “cosmetics” for which the Cited Mark is well-known for, the Cited Mark has reached the level of well-known and the Disputed Mark’s distinctive part was identical with the Cited Mark. Under such circumstances, the relevant public would easily believe that the Disputed Mark has a considerable degree of connection with the Cited Mark when purchasing the goods approved to use under the Disputed Mark, thereby weakening the distinctiveness of the Cited Mark or improperly taking advantage of the market reputation of the Cited Mark. The market reputation of Shiseido’s well-known Cited Mark may be damaged. Accordingly, the Beijing High Court invalidated the Disputed Mark.

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

Weekly China Trademark News Updates

January 11, 2023

1. The CNIPA and all levels of courts held a seminar on authorization and confirmation of trademark rights

Recently, the Trademark Office of the CNIPA and three levels of courts held a seminar on authorization and confirmation of trademark rights. Around 40 participants from the Trademark Office of the CNIPA, the Department of Treaty and Law of the CNIPA, the Beijing Intellectual Property Court, the Beijing High Court, and the Supreme People’s Court attended this seminar.

Issues regarding the feasibility of closing the door of litigation evidence in the non-use cancellation review cases, avoiding improper expansion of the application of the change of circumstances, definition of the “legality” of trademark use, and acceptance of coexistence agreements from affiliated companies were extensively discussed through analysis from various angles and interest, and by incorporating cases and relevant legal regulations, and parts of the issues discussed reached consensus.

We will continue to pay close attention to the trends of the Trademark Office and the courts on issues related to the evidence of use, change of circumstances, and coexistence agreements.

2. The Beijing High Court invalidated the stylized Crocodile mark by overturning the first instance decision

Against the mark “ ” in class 25 applied in May 2006 by Cartelo Crocodile Pte Ltd (“Cartelo”) with the address of Samoa and registered in March 2017 through oppositions and opposition appeal, Lacoste of France and Crocodile Garment Limited of Hong Kong (“Crocodile Garment”) filed invalidation actions respectively in July 2017 and April 2018. The then TRAB found Lacoste’s “” caused no confusion whilst invalidated the “” mark for similarity with Crocodile Garment’s “”, “”, “” marks.

Cartelo was unsatisfied with the decision and appealed to the Beijing IP Court.

The Beijing IP Court found that: the Disputed Mark is a Design mark. The Cited Marks were combinations of Design with letters and/or numbers, where letters or numbers took a bigger portion of the mark, or were brighter than the Design. Therefore, among the Cited Marks, parts other than the Design also constituted distinctive parts that has strong distinctiveness. There were relatively large differences between compositions and overall visual effect of the Cited Marks and the Disputed Mark. What’s more, comparing Designs alone, although the Disputed Mark consisted of a crocodile design while all Cited Marks include a crocodile design, there are certain differences between the two in terms of body shape, tail shape, mouth features, and body image depiction. Thus, the Disputed Mark and the Cited Marks do not constitute similar marks.

Both the CNIPA and Crocodile Garment appealed the Beijing IP Court decision. The Beijing High Court found that both the Disputed Mark and the Cited Marks consisted of a left facing crocodile design. The Cited Marks consisted of a left facing crocodile design with letters, where the crocodile design and the letters “CORCODILE” were its distinctive parts. Regardless of overall comparison or comparison of the distinctive parts, the Disputed Mark and the Cited Marks were relatively similar in terms of design composition, design style, meaning, and overall visual effect, which constituted similar marks. The evidence on file submitted by Cartelo was not sufficient to prove that the Disputed Mark had been used to a certain degree of popularity before the filing date of each Cited Marks, and had formed a stable one-to-one correspondence relationship with Cartelo in the field of goods approved to be used by the Disputed Mark and can be sufficiently distinguished from each Cited Marks.

The Disputed Mark and the Cited Marks constituted similar marks on identical or similar marks. Thus, the CNIPA did not err in its decision and this court affirmed the CNIPA’s decision and vacated the first instance decision.

3. Louis Vuitton successfully invalidated the “Bei Er Wei Deng in Chinese” mark through litigation

A Hong Kong resident registered a word mark “Bei Er Wei Deng in Chinese” (“Disputed Mark) in traditional Chinese characters in class 23 in February 2009. Louis Vuitton Malletier (“Louis Vuitton”) filed an invalidation action against the Disputed Mark in June 2019, claiming its well-known marks “Lu Yi Wei Deng in Chinese” (Louis Vuitton in Chinese) in class 18 and class 25 (“Cited Marks).  The CNIPA found no violation of well-known mark or absolute grounds, and rendered a decision in December 2020 to sustain the Disputed Mark.

Louis Vuitton appealed to the Beijing IP Court.

The Beijing IP Court found that the evidence can prove that the Cited Mark 1 reached the degree of well-known in mainland China for “luggage” in class 18 prior to the filing date of the Disputed Mark, constituted as a well-known mark. The Disputed Mark and the Cited Marks constituted similar in terms of word composition and pronunciation. The Disputed Mark copied and imitated the Cited Mark. The Disputed Mark’s use on “yarn and worsted wool” overlapped with “luggage” in consumers. These goods have certain associations.

Meanwhile, the Cited Mark 1 have been registered for more than 30 years, Louis Vuitton has been selling luggage related goods labeling “Lu Yi Wei Deng in Chinese” for many years. The Disputed Mark’s registrant should have known Louis Vuitton and its more famous Cited Mark 1, and should reasonably avoid filing to register the Disputed Mark. Considering comprehensively the market reputation accumulated by the Cited Mark 1 before the filing date of the Disputed Mark and the continuous use of the Cited Mark 1 by Louis Vuitton, when the relevant public sees the Disputed Mark, it was easy to think of the well-known Cited Mark 1. Based on this association, the relevant public may mistakenly believe that the Disputed Mark was related to Louis Vuitton or the Cited Mark 1, thereby misidentifying the source of the goods. Even if there was no misidentification of the source of the goods, such association will destroy the close association between the Cited Mark 1 and the goods provided by Louis Vuitton, thereby weakening the distinctiveness of the Cited Mark 1and causing damage to the legitimate interests of Louis Vuitton , which violated the provisions of Article 13, Paragraph 2 of the 2001 China Trademark Law.

In view of the fact that the Cited Mark 1 has been recognized as a well-known mark and the rights and interests of Louis Vuitton have been protected, the court will no longer comment on whether the Cited Mark 2 in class 25 constituted as a well-known trademark according to the principle of determining well-known trademarks on demand.

The CNIPA appealed and the Beijing High Court found that: the Cited Mark 1 has become well-known prior to the filing date of the Disputed Mark, constituted as a well-known mark in luggage related goods. Both the Disputed Mark and the Cited Mark 1 included the fanciful words of “Wei Deng in Chinese.” The Disputed Mark and the Cited Mark 1 constituted similar in terms of word composition and pronunciation. The Disputed Mark copied and imitated the Cited Mark 1. The approved goods of worsted wool, etc. under the Disputed Mark overlapped with luggage related goods approved under the Cited Mark that Louis Vuitton was famous for in terms of sales channels and consumes. Considering the above, it can be deducted that the registrant of the Disputed Mark knew that the Cited Mark 1 was more famous on luggage related goods and should have reasonably avoid filing trademark applications similar to the Cited Mark 1. However, that the registrant of the Disputed Mark insisted on filing the Disputed Mark that was highly similar to the Cited Mark 1 on goods highly similar under the Cited Mark 1’s approved goods. The registrant of the Disputed Mark showed obvious intention to take advantage of the Cited Mark 1’s fame. The use of the Disputed Mark on “worsted wool” would easily cause confusion and misunderstanding among the relevant public and damage Louis Vuitton’s interests. The first instance decision was affirmed.

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

Weekly China Trademark News Updates

January 4, 2023

1. HDMI was awarded of RMB 500,000 in punitive damages based on sales number

In December 2022, the Shenzhen Intermediate Court concluded a lawsuit in favor of HDMI LICENSING ADMINISTRATOR, INC. (“HDMI”) against Shenzhen Xindaying Technology Co., Ltd. (“Xindaying”) in a trademark dispute. The court ordered Xindaying to stop selling infringing goods, destroy the infringing goods in stock, and compensate HDMI for RMB500,000 (USD72,430).

The court found that: on January 18, 2021, Xindaying was punished by the administrative agency for trademark infringement. HDMI could still purchase infringing goods on March 23, 2021 from Xindaying’s 1688 webstore. That is, Xindaying repeated its infringing activities after being punished by the administrative agency. HDMI claimed that Xindaying deliberately infringed its legal right to exclusive use of a registered trademark and the circumstances were serious, which had factual basis. The request for punitive damages in this case complied with the law, and this court supported HDMI’s request.

According to 1688’s background data, 21,210 infringing goods were successfully traded, with a sales amount of RMB1.63 million. Xindaying argued that 1688 sales data contained a large number of fraudulent orders, which should be deducted when calculating the infringement profits. In practice, there are indeed some e-commerce sellers who use improper means to gain a favorable competitive position in seller’s ranking with false sales volume of related products, or to improve the reputation of sellers, or to give consumers the illusion of huge sales volume when browsing the product page. False transactions are carried out through means to attract consumers to buy and increase product sales. Such act of creating false sales violated the principle of good faith, and deceived consumers by improper means, damaged consumers’ right to know, and the competitive interests of other market operators, and violates the legal obligations as defined under the E-Commerce Law. That is, when Xindaying sold the infringing goods, it obtained praise and earned traffic based on false sales numbers, but requested those false sales numbers to be deducted when calculating infringing profits. This constituted as an attempt to make double profits from illegal activities. Accordingly, the court would not deduct the billing data when calculating the infringing profit, and Xindaying should bear the illegal consequences of its false transactions and should pay the corresponding price for its dishonest business behavior.

2. The “Ganten in Chinese” mark was recognized as a well-known mark and granted cross-class protection

The Beijing High Court concluded a trademark dispute between Jingtian (Shenzhen) Food and Beverage Group Co., Ltd. (“Jingtian“), Guangdong Bairun Tea Co., Ltd.  (“Bairun”), and Liankai Software (Beijing) Co. Ltd. (“Liankai”). The court ordered Bairun to stop the infringement and compensate Jingtian for the economic loss of RMB1.5 million (USD217,290) for Bairun’s trademark infringement. In addition, the court ordered Bairun to compensate RMB200,000 (USD28,972) for unfairly compete with Jingtian and Jingtian’s reasonable legal expenses of RMB80,000 (USD11,588). The court ordered Liankai to compensate Jingtian for the economic loss of RMB100,000 (USD14,486) based on trademark infringement and RMB20,000 (USD2,897) for reasonable legal costs.

The second instance court, upheld the first instance judgment, found that Jingtian provided sufficient evidence such as, special audit reports for sales and advertising fees, honorary certificates, award certificates, relevant judgments, requests for trademark invalidation, administrative judgments, newspapers and other evidence, in proving its “Gantian in Chinese” mark with reg. no. 3407468 was well-known in mineral water. Jingtian’s continuous and extensive use and publicity has been well known to the relevant public. It has been protected as a well-known trademark for many times. It was appropriate for the first instance judgment to find that the “Gantian in Chinese” mark with reg. no. 3407468 constituted a well-known mark. The “Bai Sui Shan in Chinese” mark used by Bairun and the “Nobel Tea in Bai Sui Shan in Chinese,” “Good Mountains and Good Water Produces Good Tea, Good Tea Originates from Bai Sui Shan” and other advertising slogan that used “Bai Sui Shan in Chinese” was identical to the “Gantian in Chinese” mark with reg. no. 3407468 in terms of word composition, pronunciation, and meanings. There were only slight differences in fonts. Bairun’s use constituted as a copy and imitation. Bairun used the “Bai Sui Shan in Chinese” mark with “Genuine Xiao Zhong Black Tea” and “Puer Dahongpao Dancong Black Tea,” which was not identical or similar to the goods that Jingtian’s “Gantian in Chinese” mark was famous for. However, the function, use, and target consumer extensively overlapped. The production and sales of the accused infringing products by Bairun and related advertising activities were enough to cause confusion among the relevant public and mistaken consumers into believing that the two were associated, which would damage the rights and interests of Jingtian. The first instance judgment did not err in recognized the “Gantian in Chinese” mark as a well-known mark.

Bairun used the promotional slogan of “the preferred brand of CCTV Online Mall” when displaying and selling “Bai Sui Shan in Chinese” tea products on its official website, WeChat public account and other platforms. Bairun’s use of “the preferred brand of CCTV online shopping mall” as a slogan was enough to cause misleading publicity effects and misled consumers. The first instance judgment did not err in finding that Bairun constituted false publicity and unfair competition.

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

Weekly China Trademark News Updates

December 27, 2022

1. Vans was awarded RMB 16.2 million in treble damages against repeated bad faith trademark infringers

In December 2022, the Ningbo Intermediate Court concluded a trademark infringement lawsuit in favor of the plaintiff Vans, Inc. against the defendants Gao Zhilong, Ruian Jiwo Shoes Co., Ltd. (“Jiwo”), Ruian Xise Wanmei Shoes (“Xise Wanmei”), and Zhang Feifei. The court ordered the four defendants to stop the infringement and ordered that the defendants Gao Zhilong and Zhang Feifei should be jointly liable for compensating Vans for economic losses of RMB16 million (USD2.3 million), and the defendant Jiwo and Xise Wanmei shall be jointly and severally liable for part of the compensation. The four defendants shall jointly and severally bear reasonable legal fees of RMB200,000 (USD28,715).

The court held that Vans’ Cited Marks and the accused infringing marks were all used on footwear products in the same class. The accused infringing marks in this case constitute identical or similar marks with Vans’ Cited Marks.

Accused Infringing Marks	Cited Marks

The court found that Gao Zhilong and Zhang Feifei, the actual controllers of Jiwo and Xise Wanmei, are family members. In 2020, Xise Wanmei was administratively punished for selling products that infringed Vans’ registered trademark, and continued to sell the accused infringing products. Gao Zhilong and Zhang Feifei, as the actual controllers of Jiwo and Xise Wanmei, obviously knew that the accused infringing products sold by Jiwo and Xise Wanmei had greatly infringed upon Vans’ rights to exclusive use of registered trademarks However, Gao Zhilong and Zhang Feifei still actively participated in and even led the sale of the accused infringing goods by Jiwo and Xise Wanmei, which was enough to determine that the four defendants had obvious joint infringement intentions.

Regarding the amount of compensation, Gao Zhilong and Zhang Feifei have been infringing on Vans’ exclusive right to use registered trademarks since at least 2018. After being investigated by the market supervision and management department and sentenced by the court, the defendants should have a certain awareness of infringing on others’ trademark rights, but they continued to carry out identical or similar infringements through online stores, and the sales scale was relatively large. In addition, Jiwo and Xise Wanmei were actually controlled by Gao Zhilong and Zhang Feifei respectively, and they have divided labor and cooperated in the implementation of infringement acts. Therefore, the existing evidence was sufficient to prove that the four defendants have formed a long-term and stable business mainly infringing intellectual property rights from 2018 to 2021 and formed long-term and stable scale returns based on this. In this case, since the four defendants did not submit corresponding evidence to prove that they have other businesses, nor did they submit evidence to prove their own sales profits, they can refer to the trademark licensee of Vans in China. The average profit rate of Vans’ licensee in China is 50%. According to the penalty decision issued by the Ruian City Market Supervision Administration to Xise Wanmei, the gross profit rate of the accused infringing goods is about 46%. Combined with the gross profit rate of Anta, a listed company in the same industry, it can be seen that in the past three years the average annual gross profit margin is about 52.33%. It can also be seen from the above calculation results that the gross profit rate of 50% is in line with the general level of the industry, and also in line with the actual profit of the four defendants in this case, and the four defendants, as the main body of intellectual property infringement, should have a higher profit rate than that of standardized operations. Therefore, in this case, 50% of the sales profit can be used to calculate the profit of the defendants.

The four defendants were bad faith infringers with a wide range and large scale of infringements and obtained a lot of profits from infringements. They based their business on intellectual property infringement. After the four defendants were given criminal administrative punishments, they continued to carry out the same or similar infringements. The infringements were serious, so the court comprehensively considered the nature of the alleged infringement, the sales scale, the popularity of Vans’ trademarks involved, etc., and determined the appropriate punitive damages in this case should be three times. The amount of compensation that the four defendants should bear exceeds the plaintiff’s request, thus, the court fully supported the compensation amount claimed by Vans.

2. The “LUNA” series of facial cleansers were counterfeited by “Dumbo” facial cleansers, the court awarded RMB 900,000 in compensation!

The Hangzhou Intermediate Court recently concluded a counterfeit case in favor of Foreo (Shanghai) Trading Co. Ltd. (“Foreo”), and against Dongguan Ruixinli Cosmetic Appliances Co., Ltd. (“Ruixinli”), Hunan Menghai Trading Co., Ltd. (“Menghai”), Changsha Oufeila Culture Communication Co., Ltd. (“Oufeila”), and Sun Shinan. The court ordered Ruixinli, Menghai, Oufeila to stop the infringement, and that should jointly compensate Foreo for economic losses (including reasonable expenses) of RMB800,000 (USD115,000), and Sun Shinan to compensate Foreo for economic losses (including reasonable expenses) of RMB100,000 (USD14,357).

The second instance court, which affirmed the first instance decision, found that Foreo had been operating the Luna facial cleansers since 2013 in China. Foreo sold its products through multiple channels such as “Sephora,” counters across the country, and online platforms. Through advertisements, online publicity, celebrity endorsements, etc., the Luna series facial cleansers have gained a high reputation among the relevant public in the Chinese market. The product decoration of the Luna series facial cleanser products was mainly composed of bristles that are approximately flat ellipsoid as a whole, with a flat bottom and fan-shaped annular distribution in the middle of the top. Cloth and other elements have maintained its unique product decoration style since entering the Chinese market. Although the entire series has undergone minor revisions successively, the overall style was unified, and the main design elements have not been changed. The revision of decoration has not separated the packaging and decoration from the product. The arrangement and combination of the overall shape, bottom style, bristle distribution shape, and bristle thickness distribution on the decoration was unique, forming a significant overall image, and has nothing to do with the functionality of the product. As part of its publicity, after a long period of use and a lot of publicity, it is enough for the relevant public to associate the overall image of the above-mentioned decoration with the Luna facial cleanser product of Foreo, which has the function of identifying the source of its product. Therefore, the decoration constitutes a unique decoration under the Anti-Unfair Competition Law.

A comprehensive comparison between the Dumbo facial cleanser produced or sold by the four defendants and the Lund series facial cleanser showed that although there were differences in the back pattern and the specific shape of the ellipse, the overall shape of the facial cleansers, the shape of the distribution of bristles, the shape of the bristles, the arrangement and combination of thickness distribution and other aspects were identical or similar, and the overall image of the two decorations were still visually similar. With the general attention of the relevant public, it was easy for the relevant public to mistakenly believe that there was a certain connection between the two sources. Therefore, the decoration of the allegedly infringing product is similar to that of the Luna series facial cleanser.

To sum up, Ruixinli, Menghai, and Oufeila unauthorizedly used the decoration similar to Foreo’s product decoration that has obtained a certain influence, and produced and sold the Dumbo facial cleaners, and Sun Shinan also sold the above-mentioned infringing products. The defendants infringed on the certain influencial product decoration rights enjoyed by Foreo, which constituted unfair competition.

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

Weekly China Trademark News Updates

December 20, 2022

1. The owner of the “Lincoln in Chinese” mark prevailed against the “Ling Ken in Chinese” mark for trademark, trade name, trade dress infringements

The Jiangsu High Court recently concluded a trademark infringement and unfair competition dispute in favor of the Lincoln Global Co., Ltd. (“Lincoln Global”), Lincoln Electric Company (“Lincoln Electric”), and Lincoln Electric Management (Shanghai) Co., Ltd. (“Shanghai Lincoln”) against Shanghai Ling Ken Electric Co., Ltd. (“Ling Ken”). The court affirmed that Ling Ken constituted trademark infringement and unfair competition, and ordered Ling Ken to compensate plaintiffs for economic losses and legal costs of RMB648,200 (USD92,821).

Founded in 1895, Lincoln Electric is a multinational enterprise engaged in the design, development and manufacture of arc welding products, headquartered in Ohio, USA. Lincoln Electric established a production base in China in 1997. After years of development, it has established many branches in China, including, but not limited to, Lincoln Electric Shanghai Company, Nanjing Lincoln Electric Co., Ltd., etc. Lincoln Global applied to register the “LINCOLN ELECTRIC” mark in Class 9 on May 14, 2002, which was approved for electric welding equipment, electric welding machines, transformers for electric welding equipment, etc. Lincoln Global applied for the “LINCOLN ELECTRIC and Design” mark in Class 9 on April 4, 2006, which was approved for rod-shaped welding electrodes, arc welding equipment, welding conveyors, wire machines, etc. Lincoln Global applied for the Design mark in Class 9 on June 23, 2008, which was approved for power supply for arc welding, transformer-rectifier welding equipment for arc discharge, etc. Said trademarks are all valid. Plaintiffs believed that the logos used by Ling Ken in the production and sales of electric welding machine products, website promotion, WeChat public account, and product manuals infringed upon trademark right of Lincoln Global. Ling Ken’ use of red shells with black front and rear panels on the electric welding machine products and use of words similar to the names of Lincoln Electric and Shanghai Lincoln that have certain influence constituted unfair competition.

Cited Marks

Regarding trademark infringement, Lincoln Global’s registered trademark is a fanciful trademark, through long-term use and publicity by Lincoln Global, etc., the said trademarks have obtained a high reputation. Lincoln Global has used the combination of “red machine shell with front and rear black panels” on their products. Consumers have established a fixed connection between this color combination and the products of Lincoln Global, which has strong distinctiveness. Ling Ken, as the enterprise engaged in the production and sales of welding equipment, should pay attention to the registered trademarks used by competitors in the same industry and avoid infringing on the exclusive right to use registered trademarks of others. The alleged infringing logo used in the official account and the product manual has the same overall composition as the Cited Marks, and the overall appearance was highly similar, and the pronunciation of the alleged infringing mark “Ling Ken in Chinese” was similar to the pronunciation of “Lincoln,” which may easily confuse and mistaken consumers, which constituted trademark infringement. Regarding unfair competition, first, Ling Ken’s act of registering “Ling Ken in Chinese” as it corporate name had the subjective intention of taking advantage of the popularity of Lincoln Electric and other corporate names. Objectively, the co-existence of Lincoln Electric, Lincoln Shanghai, and Ling Ken is easy to cause the relevant public to confuse the services provided by the two, or mistakenly believe that the two have a certain relationship, which will cause market confusion, damage to the interests of consumers, violate the legal provisions and recognized business ethics in market transactions, and constitute unfair competition. Second, welding machine products produced by plaintiff Lincoln Electric and others are well-known goods, and the packaging decoration of “red shell with black front and rear panels” has become recognizable and distinctive and can play a role in distinguishing the source of goods. The allegedly infringing product also adopted the design of “red shell with black front and rear panels,” which is similar to the decoration of the products claimed by Lincoln Electric and constituted unfair competition.

2. Carl Zeiss prevailed in a second instance trademark infringement and was awarded of RMB 4 million

Recently, the Zhejiang High Court concluded a trademark infringement and unfair competition dispute and ruled in favor of Carl Zeiss AG (“Zeiss”) and against Yiwu Hanke Outdoor Products Co., Ltd. (“Hanke”) and Wang Xiao. The court affirmed that Defendants constituted trademark infringement and unfair competition, and order Defendants to compensate plaintiff for economic losses of RMB 4 million (USD57, 280).

Zeiss established its factory in Germany in 1846 and is a world-renowned manufacturer and seller of optical lenses. Zeiss has been using registered trademarks on products such as microscopes, medical endoscopes, and glasses, as well as promotional materials such as packaging and product manuals, and in advertising. “Zeiss,” “Zeiss in Chinese,” “Carl Zeiss” and other trademarks of Zeiss have been widely publicized and used for a long time, and have gained a high reputation and fame in the field of optics, and are well known to the relevant public. At the same time, Carl Zeiss is the corporate name of Zeiss, and Carl Zeiss in Chinese and Carl Zeiss formed a stable corresponding relationship. As early as 1960, Zeiss applied for the trademarks such as “Zeiss,” “Zeiss in Chinese,” and “Carl Zeiss” in China, which were approved to be used in Class 9 for microscopes, telescopes, magnifying glasses, and other goods. Plaintiffs claimed that Hanke used identical or similar logos as the eight Cited Marks that were similar to the approved use of the Cited Marks without permission, which would easily lead to confusion among the relevant public and constituted trademark infringement. Hanke used “Zeiss” and “Zeiss in Chinese” as store names on its Yiwugo website, and uses them together with Zeiss’ slogan “We make it visible,” which was enough to make others mistakenly believe that there is some kind of relationship between it and Zeiss, which constituted as unfair competition. At the same time, Hanke used the “Made in Germany” mark as its products’ place of origin as false publicity on the accused infringing products, which constituted unfair competition.

Cited Mark

Regarding trademark infringement, the court found that after extensive publicity and use by plaintiff, Zeiss, the trademarks “Carl Zeiss” and “Carl Zeiss in Chinese,” “Zeiss,” and “Zeiss in Chinese” have formed a corresponding relationship to the relevant public and have established a relatively high reputation in the field of optical instruments. The allegedly infringing marks were used on gun scopes, rifle scopes, and other goods, which were optical products that were similar to Zeiss’s approved goods of microscopes, additional lenses, sight glasses, telescopes, etc. The functions and uses of the goods were similar, which may easily cause confusion and mistaken the relevant public. Hanke’s uses constituted use of identical or similar marks on similar goods. Reagrding unfair contention, because Zeiss commercially uses its trade names “Carl Zeiss” and “Zeiss” with “Carl Zeiss in Chinese” and “Zeiss in Chinese,” they have formed a corresponding relationship and have a relatively high reputation. Defendant, Hanke, opened the Yiwu Xiaguang Optical Instrument Factory store and used Zeiss’s “Zeiss” and “Zeiss in Chinese” brand name and Zeiss’s slogan “We make it visible” on its webpage, which misled others into believing that Hanke has a specific connection with Zeiss. At the same time, Hanke used the words “Made in Germany” as false publicity of the origin of its goods, which misled the relevant public into believing that Hanke has a competitive advantage over other operators with competitive relationships with Zeiss. Such acts violated the good faith principles and recognized business ethics, damaged the interests of competitors and constituted false publicity and unfair competition.

Hanke not only registered a large number of marks identical or similar to Zeiss’ trademarks, but also continued to carry out infringement activities after being investigated by Zeiss and punished by the administrative law enforcement. Hanke based its business on selling infringing products which shown obvious bad faith. Hanke has carried out the infringing activities for more than six years. The alleged infringing products bore multiple infringing marks. The infringement scope covers across online and offline activities, which satisfied the “serious circumstances” infringement element. However, the sales volume of the accused infringing products based on the salable quantity of the accused infringing goods in the infringer’s online store cannot be ascertained and the actual sales numbers may not be authentic. The court then applied statutory damages.

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

Weekly China Trademark News Updates

December 13, 2022

1. The CNIPA issued the “Guidelines on Application for Registration and Use of Class 35 Trademarks” and “Guidelines on How to Avoid Conflicts with Prior Rights in Application for Registration and Use of Trademarks“

“Guidelines on Application for Registration and Use of Class 35 Trademarks” states that services in class 35 mainly include business management, operations, organization, and administration of commercial or industrial companies, as well as advertising, marketing, and promotional services. Sales of goods is not considered as a service. The main purpose of services in class 35 is to assist others in their business operations or management, in the management of others’ business activities or business functions, and to provide others with advertising services to the public through various means of communication. The most important feature of services in class 35 is that the relevant services are provided for others, rather than for the registrant’s own business needs. For example, advertising related services means providing advertisement, production and dissemination for other’s products or services, not including those for the trademark registrant itself.

“Guidelines on How to Avoid Conflicts with Prior Rights in Application for Registration and Use of Trademarks” points out that “prior rights” refer to the rights or interests that have been enjoyed and legally existed before the date of application for registration of a trademark, including rights to trademarks, copyrights, design patent rights, name rights, portrait rights, geographical indications, influential goods or service names, packaging, decoration, and other legal prior rights and interests that should be protected. The protection of prior trademark rights has been reflected in other provisions of the Trademark Law, so “prior rights” in this guideline do not include prior trademark rights.

2. Unauthorized use of the “Michelin in Chinese” Guide reputation for publicity constitutes unfair competition, Michelin was awarded RMB 1.02 million in compensation

In a recent trademark infringement and unfair competition dispute case between the appellant Zhejiang Shisanwei Catering Management Co., Ltd., (“Shisanwei”), Sanbu Beef Brisket Restaurant (“Sanbu Beef Brisket”), second defendant in the original case, and the appellee Michelin Group Corporation (“Michelin”), the Jiangsu High Court rejected Shisanwei’s appeal.

Regarding whether Shisanwei and Sanbu Beef Brisket infringed on Michelin’s right to exclusive use of the registered trademark involved in the case, the first instance court determined that Shisanwei and Sanbu Beef Brisket used the “an affordable Michelin beef brisket”, “a small brand insists on big ideals, aspires to be Michelin beef brisket” in the process of operation and publicity and other promotional terms, which is descriptive rather than identification of source of goods or services. Therefore, this method of use does not fall within the scope of protection of Michelin’s right to exclusive use of the “Michelin” trademark involved in the case, and Michelin’s allegation of trademark infringement was not supported. Michelin appealed. The focus of the second instance disputes are: 1. Whether the actions of Shisanwei constituted unfair competition; 2. Whether the amount of compensation determined in the first instance judgment was appropriate.

Regarding the first disputed issue: The Jiangsu High Court found that, first, the Anti-Unfair Competition Law’s maintenance of market competition order includes not only prohibiting operators with direct competitive relationships from gaining competitive advantages in improper ways or destroying the competitive advantages of others, but also prohibiting operators from obtaining competitive advantages through unfair means. Unfair means such as fighting for consumers and strive for more trading opportunities than other legitimate operators. Therefore, when determining whether the plaintiff has the right to sue, whether it constitutes a competitive relationship, and whether there is unfair competition, it should not be limited to whether the business scope is the same. Although the businesses are different among the parties in this case, their behaviors violated the Anti-Unfair Competition Law. Competitive rules can also be determined to have a competitive relationship. In this case, Michelin claimed that Shisanwei used improper means to gain a competitive advantage for itself by publicizing “an affordable Michelin beef brisket” in its business operations, and harmed the legitimate rights and interests of other operators. It affects consumers’ consumption decisions, and ultimately affects the evaluation criteria of “Michelin” stars, making Michelin face the danger of being belittled and causing damage to the rights and interests of Michelin. Therefore, Michelin can sue Shisanwei under unfair competition claim, which is not improper, and the first instance court supported it.

Second, when using advertisements or other methods to promote their products or services, business operators shall follow the principle of good faith and conform to generally recognized business ethics, and shall not use false or misleading publicity methods to gain unfair competitive advantages, damage the legitimate rights and interests of other operators and consumers, and disrupt social and economic order. For this reason, Article 8, Paragraph 1 of the Anti-Unfair Competition Law stipulates that operators shall not make false or misleading commercial publicity, defraud, and mislead consumers. In this case, the evidence provided by Michelin can prove that the “Michelin Guide” published and issued by it and the recommendations and ratings of “Michelin” star restaurants have a very high market popularity and influence in the catering industry. Industry operators are well aware of its authority and reputation represented by the “Michelin Guide” and Michelin food ratings. Shisanwei, however, still improperly borrow the reputation of the “Michelin Guide” and use “an affordable Michelin beef brisket” and “a small brand insists on big ideals, aspires to be Michelin beef brisket” on their official website and store signs, which can easily led consumers to have an inaccurate or incomplete misunderstanding of the beef brisket products they provide, and misunderstand that the product has the “Michelin” star quality that it did not have, or mistakenly believe that Shisanwei has been recognized by Michelin or has a cooperative relationship with Michelin. Shisanwei had also obtained corresponding benefits or competitive advantages. This behavior damages other operators and consumers, the lawful rights and interests of the public, disrupting the social and economic order of fair competition, which constitue misleading promotions, and should be determined as an act of unfair competition.

Regarding the second disputed issue: The Jiangsu High Court found that since Michelin did not provide evidence to prove the actual losses it suffered due to the infringement and the benefits that Shisanwei obtained from the infringement, the following factors should comprehensively considered: the number of franchise stores and the geographical distribution Shisanwei’s self-promotion, operating duration, nature of infringement, technology transfer fee, ancillary equipment fee of RMB78,800 (USD11,287) and annual management fee of RMB6,800 (USD975) as agreed between Shisanwei and Sanbu Beef Brisket in the “Single Store Cooperative Operation Contract” fee standards. Shisanwei did not stop the infringement after receiving the warning letter from Michelin and considered that Michelin hired lawyers to provide notarial preservation, court appearance and other legal services in order to stop the infringement in this case. It also provided relevant evidence such as lawyer service bills and notarization fee invoices that recorded the lawyer’s work content, time and expenses in detail. The first instance court did not err in ruling that Shisanwei should compensate Michelin for economic losses and reasonable rights protection expenses of RMB 1 million (USD143,239). This court affirmed. Although Shisanwei claimed that it had sent letters to all franchisees during the first instance requesting them to stop using the promotional terms with the word “Michelin”, as of March 2020, franchisees across the country have completed rectification, but Michelin provided evidence shown that some franchisees of Shisanwei were still using promotional slogans such as “a small brand insists on big ideals, aspires to be Michelin beef brisket” in their stores, so the above proposition of Shisanwei Company is not supported.

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