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China’s new punitive damages system bolsters protection against trademark infringement
Recently, BEIJING EAST IP LTD assisted a Chinese sports equipment company to successfully solve the problem that its products sold on Amazon in Japan were complained by competitors for infringing Japanese design patent, and quickly lifted the delisting punishment.
Recently, Yongyu Zhang and Kaiyuan Song, agents of BEIJING EAST IP LTD., represented Daio Paper Corporation in the case of invalidation of “packaging bag” design patent, and successfully maintained the validity of the design patent.
Weekly China Brand Protection News
March 29, 2024
1. Filing an infringement lawsuit against others’ legitimate use of a trademark based on a trademark obtained through bad faith is an abuse of trademark rights, and its infringement claim should not be supported
The Suzhou Intermediate Court recently concluded a trademark infringement lawsuit between the appellant Hangzhou Lunfude Chassis Technology Co., Ltd. (“Lunfude”), the appellee Suzhou Deyu Auto Parts Co., Ltd. (“Deyu”), and the third party ZF Sales Service (China) Co., Ltd. (“ZF Sales”). The court found that in view of factors such as ZF Sales and its affiliates’ prior right status, the legitimacy of use and intent to use, and Lunfude’s registration was based on bad faith, Lunfude’s infringement claims shall not be supported.
The second instance court found that before Lunfude applied for the cited mark, ZF Sales and its affiliates had used the “” and “” marks extensively on their control arms and other auto parts products and had marked “LEMFORDER” in a reasonable manner and with other trademarks. ZF Sales’s use constituted as prior good faith use. ZF has a high reputation in the auto parts industry and its products are widely used in vehicles, ships, and construction machinery vehicles. Although it has not registered the said marks in China, after years of market operation and comprehensive consideration of other factors such as the continuous time of use, region, sales volume and publicity of the said marks, the first instance court determined that the said marks enjoyed a certain influence. Before Lunfude applied to register the cited mark, ZF Sales already had a high reputation in the industry. According to the evidence, ZF Sales has entered the Chinese market in 1988 and many news had reported that ZF Sales and its affiliates has occupied in the leading position in the automotive parts and chassis technology industries. Its goodwill covers a wide range of industries. The “” and “” marks in this case are all used for vehicle parts products, so ZF Sale’s use does not exceed the original scope of use. In summary, the first instance court found that ZF Sales had a legitimate basis for prior rights and was not inappropriate.
The authorization letter and purchase and sale list and other evidence submitted by Deyu were sufficient to prove that the allegedly infringing products it sold originate from ZF Sales, and ZF Sales has also confirmed it. Therefore, as a seller, Deyu has the right to use “” and “” marks on the products sold by ZF Sales on the premise that ZF Sales has legal prior rights in the accused infringing products. Thus, Deyu did not infringe Lunfude’s trademarks.
Lunfude’s corporate name has a similar pronunciation to the “LEMFORDER” brand name of ZF Sales. It has applied for registration of more than a hundred trademarks that are highly similar to the trademarks of ZF Sales and its affiliated companies in multiple classes, which are beyond the needs of normal business operations. ZF Sales has repeatedly opposed Lunfude’s applications, and the CNIPA has repeatedly declared its registered trademark invalid because it “violates the principle of good faith and disrupts the order of trademark registration management.” In this case, the CNIPA has declared Lunfude’s trademark invalid on the grounds that it has “the subjective intention to take advantage of others’ market reputation and violates the principle of good faith.” Lunfude’s trademarks are similar to ZF Sale’s prior marks. Therefore, Lunfude has a subjective intention to take advantage of ZF Sale’s market reputation. Lunfude’s action violated the principle of good faith, and the first instance court was not inappropriate in not supporting its claim on the grounds that it constituted an abuse of rights.
2. The Guangdong High Court: Criteria for judging whether use of a registered trademark before cancellation constitutes infringement
The Guangdong High Court recently concluded a trademark infringement and unfair competition lawsuit between the appellants Guangdong Weipeng Electric Co., Ltd. (“Guangdong Weipen”), an individual Ji, an individual Li, and others for their disputes with the appellee Robert Bosch Co., Ltd. (“Bosch”) and Bosch (China) Investment Co., Ltd. (“Bosch China”). The court held that the defendants should immediately stop trademark infringement and cancel the domain name www.bocseh.cn, and compensate Bosch and Bosch China for RMB 1 million (USD138,000).
In this case, the accused infringing mark “BOCSEH” (“Disputed Mark”) when compared with Bosch’s “BOSCH” mark with reg. no G675705 (“Cited Mark”), the letter composition, pronunciation, and overall appearance are very similar, except for the addition of an English letter “E.” Guangdong Weipeng used the Disputed Mark on identical or similar goods as the goods approved for use of the Cited Mark may easily cause the relevant public to mistakenly believe that the two marks are from the same market entity’s series of trademarks or are somehow related, causing confusion and misidentification of the source of the goods, and constituting trademark infringement of Bosch and Bosch China. Guangdong Weipeng used the slogan “Bosch Technology Realizes Dreams in Chinese” on the certificates of products and on the special dealer plates issued. The “Bosch in Chinese” logo is identical with the “Bosch in Chinese” registration of Bosch and Bosch China. The marks are identical and the class of goods used are identical or similar, which can easily lead to confusion and misunderstanding. Therefore, Guangdong Weipeng’s use constitutes trademark infringement of the “Bosch” mark with reg. no. 546309.
Guangdong Weipeng uses a domain name whose main part is “bocseh” and uses it to promote products and conduct transactions. The main part of this domain name constituted similar to Bosch’s Cited Mark and infringed upon Bosch and Bosch China’s trademark rights.
Guangdong Weipeng appealed and claimed that its Disputed Mark was used after approval, so the accused behavior did not constitute an infringement of the trademark rights of Bosch and Bosch China. In this regard, this court believes that the evidence in this case shows that when Guangdong Bosch Company, the predecessor of Guangdong Weiping, obtained the “BOCSEH” mark with reg. no. 12140329 in 2016, Bosch and Bosch China Company’s registered trademarks “BOCSH” and “Bosch in Chinese” already has a high reputation in China. As a business entity in the household appliance industry, Guangdong Weipeng should be aware of the existence of Bosch and Bosch China’s said marks, but it still applied for the accused logo and uses it in its operations. Therefore, it can be inferred that when Guangdong Weipeng obtained the Disputed Mark, it had obvious subjective malice to take advantage of the goodwill of Bosch and Bosch China. Therefore, even if the Disputed Mark was approved and registered, Guangdong Weipeng’s use still constitutes trademark infringement of the Cited Mark.
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Weekly China Brand Protection News
March 21, 2024
1. The Guangdong High Court reversed a trademark infringement dispute in a retrial regarding the use of trademarks in foreign OEM
On February 22, the Guangdong High Court reversed a trademark infringement dispute in a retrial between Fila Sports Co., Ltd. (“Fila”) and Hunan Jiahui Technology Co., Ltd. (“Jiahui”). The court upheld the first-instance judgment that ordered Jiahui to immediately stop infringing on Fila’s following trademark rights “Fila Company in Chinese & ,” “,” “,” and “,” and to stop producing and selling infringing products. Jiahui should compensate for economic losses (including reasonable expenses to stop the infringement) for RMB 200,000 (USD27,780).
In this case, courts at all levels confirmed that Jiahui’s processing and production activities were foreign-related OEM activities. Courts at all levels, however, have differed on whether Jiahui’s act of affixing the allegedly infringing logos on its goods is considered trademark use within the meaning of trademark law. On retrial, the Guangdong High Court found that: trademark use is an objective behavior, which usually includes many processes, such as physical affixing in the production process, marketing, and sales in the circulation, etc. When a trademark logo is physically affixed to a manufactured or processed product, if the logo has the likelihood of distinguishing the source of the goods and can play a role in distinguishing the source of the goods, such use should be deemed to be “trademark use” as stipulated in the Trademark Law. In this case, Jiahui, as an OEM, affixed the allegedly infringing logos on the garments it processed, which obviously had the purpose of identifying the source of goods. The logos can also have the actual effect of identifying the source of the goods and should be recognized as trademark use. Affixing a trademark is an objective act, and the identification function of the trademark is an objective result. Jiahui was fulfilling the obligations of the foreign-related OEM processing contract. This is only the reason for the act of affixing the trademark, and it will not affect the qualitative nature of such trademark use. In addition, with the development of e-commerce and the Internet, even if the allegedly infringing goods are exported goods, there is still the possibility of being returned to China. In summary, the second instance court found that Jiahui’s affixing a trademark did not constitute trademark use on the grounds that the allegedly infringing goods had not entered the mainland China market for circulation and sale, and the alleged infringing logo did not have the function of identifying the source of the goods in the mainland Chinese market was wrong and this court corrects it.
Jiahui claimed that it obtained the production authorization from Shengrui LIU, the owner of the “Feidisi in Chinese & FTSS” trademark, and directly exported products to the clients after OEM processing, so it did not infringe. According to the Trademark Law on the determination of trademark infringement, the principle of liability for trademark infringement shall be the principle of no-fault liability. Moreover, trademark rights are territorial. The trademark of the third-party in the case is only registered in the Taiwan region, and has no trademark rights in mainland China. Moreover, the trademark application of the third-party in the case was registered in 2019, which was later than the registration date of the Cited Marks of Fila. Fila has submitted evidence to prove that its series of trademarks involved in the case had a high reputation in the domestic market before the third-party trademark application was filed. As an operator in the same industry, Jiahui should have known about this fact. There is a clear difference between the “Feidisi in Chinese & FTSS” trademark and the accused infringing logos. The accused infringing logos have the upper and lower color distinction of the initial letters, which is completely consistent with the design of the initial letters of Fila’s trademark, making it more similar to Fila’s trademark. Under this premise, Jiahui still affixed the alleged infringing logo that is obviously different in appearance from its authorized logo on the clothing it processed. It was at least negligent and difficult to believe that it fulfilled its duty of reasonable review and care. In summary, Jiahui’s non-infringement defense cannot be established.
2. The defendants improperly took advantage of the market reputation of Liuzhou Hotel’s well-known trademark. Considered the infringing hotel was used as a quarantine hotel during the epidemic, the defendants were ordered to pay RMB 1 million.
On December 20, 2023, the Beijing Intellectual Property Court concluded a first-instance trademark infringement dispute between the plaintiff Liuzhou Hotel Group (“Liuzhou”) and the defendants Guiyang Yunlu Hotel Management Co., Ltd. (“Guiyang Yunlu”), Fujian Yunlu Hotel Management Co., Ltd. (“Fujian Yunlu”). The court ordered the defendant Guiyang Yunlu and Fujian Yunlu to immediately stop using the “Yulu Crowne Plaza Hotel” logo. The two defendants were ordered to compensate the Liuzhou for economic losses of RMB 1 million (USD138,900) and reasonable expenses of RMB250,000 (USD34,725).
Regarding whether the alleged infringement behavior of the Guiyang Yunlu infringed on Liuzhou’s trademark rights, in this case, comprehensive consideration was given to the multiple notarial certificates submitted by the Liuzhou proving that it promoted and used the cited trademarks, printouts of relevant online reports, court judgments and administrative agency rulings that Liuzhou’s trademark was deemed to be relatively well-known or had reached a well-known status. In this case, it can be determined that the “Crown Plaza Hotel” mark with reg. no. 2021114 approved for use in providing accommodation services has a high reputation in China and has reached well-known status.
The “Yulu Crowne Plaza Hotel” used by Guiyang Yunlu is similar in text composition and pronunciation to Liuzhou’s cited mark, which constituted an imitation and translation of Liuzhou’s well-known trademark. The defendant’s use of “Yulu Crowne Plaza Hotel” for the same services as Liuzhou’s well-known trademark was enough to make the relevant public associate that the trademark used by the defendants was closely related to Liuzhou’s well-known trademark, thus unfairly taking advantage of Liuzhou’s well-known mark market reputation and harmed its interests. Therefore, the defendant’s use of “Yulu Crowne Plaza Hotel” has constituted an infringement of Liuzhou’s well-known trademark.
Regarding compensation for losses. The court fully considered factors such as the alleged infringing hotel’s operating autonomy during the period when it was used as an quarantine hotel and the limited role of its logo as a trademark, as well as the overall situation of the hotel industry during COVID. The amount of compensation in this case should be limited to the statutory compensation amount in accordance with the law. Considering the close relationship between the first and second defendants such as shareholder relationship and trademark licensing, the two defendants in this case should bear joint and several liability.
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 |
Appointed Translators: Jason WANG / Austin CHANG, Beijing East IP Law Firm Author: Baoqing ZANG, Trademark Review and Adjudication Board (TRAB) Original Chinese text: China Industry and Commerce Newspaper June 21, 2016
Securing well-known mark (WKM) recognitions in China can give a broader protection to brand owners in both administrative and judicial disputes.
China has three types of patents, i.e., invention, utility model, and design. The utility model patent does not have the counterpart in some other jurisdictions such as the USA, so some essential aspects of the utility model patent will be introduced below for better understanding of it.
On December 20, 2017, in the Patent Reexamination Board of SIPO (PRB) v. Beijing Winsunny Harmony Science & Technology Co., Ltd. ((2016)最高法行再41号), the Supreme Court held that a Markush claim, when drawn to a class of chemical compounds, should be interpreted as a set of Markush elements rather than a set of independent specific compounds. The present case is a petition for retrial filed by the PRB, requesting the Supreme Court to review the second-instance decision made by the Beijing High People’s Court (“High Court”). In reversing the PRB’s decision in the invalidation proceedings instituted by Beijing Winsunny Harmony Science & Technology Co., Ltd. (“Winsunny”), the High Court recognized a Markush claim as claiming a set of parallel technical solutions.