Weekly China Trademark News Updates

June 22, 2022

1. “Da Yue Cheng” won RMB 1.24 million in a trademark infringement retrial case against “Jianfa Da Yue Cheng”

The Beijing High Court recently handed down a trademark infringement retrial decision for China National Cereals, Oils and Foodstuffs Corporation (“COFCO”) and Joy City Commercial Management (Beijing) Co., Ltd. (“Joy City”) against the respondent Yinchuan Jianfa Group Co., Ltd. (“Jianfa”), Ningxia Yuecai Commercial Group Co., Ltd. (“Yuecai”) and Beijing Soufun Technology Development Co., Ltd. (“Soufang”).

Disputed Mark	Cited Mark
Reg. No. 18047215 Class 35 Reg. No. 30652633 Class 36	Reg. No. 7209417 Class 35 Reg. No. 6345086 Class 36

The first question in dispute was whether Jianfa and Yuecai should stop using the “Jianfa Da Yue Cheng” and “Da Yue Cheng” logos for “commercial house sales, real estate management, real estate leasing, and selling services for others. The court found that that COFCO and Joy City’s trademark rights were valid and had the necessary rights to sue the respondents. Yuecai’s trademarks “Jianfa Da Yue Cheng” in with reg. nos. 18047215 and 30652633 were invalidated and deemed as never existed on the trademark registry, which rendered the question of trademark right dispute moot. COFCO and Joy City’s evidence can prove that the Jianfa and Yuecai’s use of “Da Yue Cheng” and “Jianfa Da Yue Cheng” on its WeChat public account, shopping mall posters and other publicity materials constituted as an infringement of the trademark “Da Yue Cheng” with reg. no. 7209417 owned by COFCO and Joy City. COFCO and Joy City’s evidence can also prove that Jianfa and Yuecai used the logos of “Da Yue Cheng” and “Jianfa Da Yue Cheng” in the commercial activities such as the sales, operation and publicity of the real estate project involved, which constituted as an infringement against COFCO and Joy City’s trademark “Da Yue Cheng” with reg. no. 6345086. Jianfa and Yuecai shall bear the legal responsibility for stopping infringement, compensating for losses and eliminating the impact. The claims of Jianfa and Yuecai that the trademarks “Da Yue Cheng”, “Jianfa Da Yue Cheng” and “Da Yue Cheng” were obviously different and did not constitute similar trademarks, and the fact that the registered trademark of Yuecai was declared invalid was not tried in the second-instance litigation, so this court does not have the right to review such claims. Moreover, the claim that the order to stop using the logos of “Da Yue Cheng” and “Jianfa Da Yue Cheng” will cause harm to social and public interests lack factual and legal basis and cannot be supported. COFCO and Joy City requested for an order to stop only the commercial activities carried out by Jianfa and Yuecai for the purpose of obtaining profits. The claim that the use of “Da Yue Cheng” and “Jianfa Da Yue Cheng” by Jianfa and Yuecai for the purpose of the public and resident were not within the scope of this case.

The second question in dispute was whether Jianfa and Yuecai should compensate COFCO and Joy City for economic losses of RMB1.46 million (USD218,141). The court found that although the retrial determined that the use of the “Jianfa Da Yue Cheng” logo by Jianfa and Yuecai constituted infringement, COFCO and Joy City did not provide evidence to prove their actual losses from the infringement, and no evidence was provided to prove that the benefits obtained by Jianfa and Yuecai, and the use of the “Jianfa Da Yue Cheng” logo in the “selling for others” service caused more damages to COFCO and Joy City than the amount of compensation determined in the first-instance judgment. Considering the popularity of the “Da Yue Cheng” trademark, the location, scale and price of the real estate, the nature of infringement, circumstances, and subjective faults of Jianfa and Yuecai, as well as the use of “Jianfa Da Yue Cheng” and “Da Yue Cheng” had basically the same infringing activities, the court affirmed the compensation amount of RMB1.2 million (USD179,294) determined in the first-instance judgment, and the execution of the payment had been completed. The claims of COFCO and Joy City for compensation of RMB1.46 million (USD218,141) lacked factual and legal basis, and were not supported. At the same time, the claims of Jianfa and Yuecai that the amount of compensation determined in the first-instance judgment was too high also lacked basis and were not supported.

In addition, there is no clear evidence to prove that SouFun had a cooperative relationship with Jianfa and Yuecai, and directly engaged in and participated in the joint sale of the real estate projects involved, and COFCO and Joy City did not take down the relevant alleged infringement information notice on the website of SouFun prior to the first-instance, thus, COFCO and Joy City claimed that SouFun assisted Jianfa and Yuecai to carry out the infringement, which constituted the claim of assistance in infringement, lacked factual and legal basis and could not be supported according to the law. However, as of the first-instance trial date, SouFun had not performed its reasonable duty of care when it was known that the relevant information was suspected of infringement to promptly delete or temporarily remove the information that may put COFCO and Joy City in further risk. Soufun was at fault for this and should bear the legal responsibility to delete the relevant infringing information and eliminate the impact.

The first-instance judgment stated that SouFun should immediately delete the information about the real estate involved with the above-mentioned logos on the SouFun website it operated, and that JianFa, Yuecai, and SouFun should jointly perform a written statement in a prominent position on the homepage of SouFun.com and Sina Leju.com in order to eliminate the adverse impact on COFCO and Joy City, as well as the judgment that Jianfa and Yuecai should compensate COFCO and Joy City for a reasonable expenditure of RMB40,000 (USD6000) and the above judgment was not inappropriate. The said first-instance court orders have been executed and this court affirmed.

2. Penfold successfully invalidated a squatted mark

The Beijing High Court recently dismissed a trademark invalidation case involving the appellant Jinan Chuangqun Trading Co., Ltd. (“Chuangqu”), the appellee the CNIPA, and the third party in the original trial, Southcorp Brands Pty Limited. The appeal was dismissed, and the original judgment was affirmed.

Disputed Mark	Cited Marks
	CM 1  CM 6  CM 7  CM 8  CM 9  CM 10  CM 11

The dispute in this case was whether the Disputed Mark and the Cited Marks 1, 6 to 11 constitute similar trademarks used on the same or similar goods under Articles 30 and 31 of the 2013 Trademark Law. Since Chuangqun stated in the original trial that it had no objection that the Disputed Mark and the approved goods of the Cited Marks 1, 6 to 11 constituted as identical or similar goods, the key question of this case was whether the Disputed Mark constituted as a similar mark to the Cited Marks 1, 6 to 11. Here, the Disputed Mark is a word mark consisting of “Ben Fu Bin Zhi in Chinese”. The Cited Mark 1 composes of “Ben Fu in Chinese”; the Cited Mark 6 composes of “Ben Fu Ge Lan Qi in Chinese”; the Cited Mark 7 composes of “Ben Fu Kolan Shan in Chinese”; the Cited Mark 8 composes of “Penfolds Luo Shen Shan Zhuang in Chinese”; the Cited Mark 9 composes of “PENFOLDS”; Cited Mark 10 and 11 compose of artistically processed “penfolds.” The Disputed Mark “Ben Fu Bin Zhi in Chinese” completely included the Cited Mark 1 “Ben Fu in Chinese” The Cited Marks 6 to 8 all contains “Ben Fu in Chinese” The Disputed Mark sounded similar to “PENFOLDS” in the Cited Marks 9 to 11. The Disputed Mar was similar to the Cited Marks 1, 6 to 11 in terms of text composition, pronunciation, meaning, etc. If they were used together on the same or similar goods, the relevant public will easily believe that the source of goods came from one entity or that the two entities were associated when paying general attention. The evidence submitted by Chuangqun was also insufficient to prove that before the filing date of each Cited Mark, the Disputed Mark had been used to a certain degree and was sufficiently well-known to be distinguishable from the Cited Mark. Therefore, the Disputed Mark and the Cited Marks 1, 6 to 11 constituted as similar marks used on identical or similar goods. The registration of the Disputed Mark violated Articles 30 and 31 of the 2013 Trademark Law and shall be declared invalid. The original judgment was correct, and Chuangqun’s relevant grounds for appeal could not be established and should not be supported

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Weekly China Trademark News Updates

June 14, 2022

1. Haier was awarded RMB 3 million: the applicable limitations of trademark rights exhaustion system

Haier Group is a well-known Chinese home appliance corporation. Since 1984, its “Haier in Chinese” and “Haier” brands have gained a high reputation worldwide. Qingdao Haishang Intellectual Property Management Consulting Co., Ltd. (“Haier Group”), as the intellectual property management company of “Haier in Chinese” and “Haier” brands, sued Wuxi Smile IOT Technology Co. Ltd. (“Smile”) on the grounds of trademark infringement and unfair competition. Haier Group claimed that Smile refitted “Haier” products without authorization, and affixed its “Si Mai Er in Chinese,” “smile and design” logos for sales. At the same time, Smile used large and bold fonts in prominent positions to promote its products as a “Smile-Haier cooperative product” on its official website, Taobao, and other sales channels claiming to have reached a strategic cooperation with Haier Group and other false statements. In addition, Smile also defamed the functionality of Haier’s Beaver App for its commercial washing machines.

The court found that 1) regarding whether there is a competitive relationship between the two parties: the legislative purpose of the Anti-Unfair Competition Law is to encourage and protect fair competition, maintain market competition order, and protect the legitimate rights and interests of operators and consumers. Competitive relationships were not only limited to substitute relationship between identical or similar goods and services, but also existed as a relationship between damaging and being damaged to the interests of market competition. In this case, although Haier Group was not a manufacturer of shared washing machines and other products, as a trademark owner, it had the right to authorize others to mark its trademarks on products and enjoy legal rights and interests in the products marked with its trademarks. Smile was a retailer and service provider of shared washing machine. Although the business activities of the two parties are neither identical nor similar and there was no substitute relationship, Smile’s modification, sale, and publicity of the shared washing machines and other products marked with Haier Group’s trademark without authorization would impact Haier Group’s trading opportunities, competitive advantages, and other market competition interests, so there was a competitive relationship between the two parties.

2) Regarding trademark infringement and unfair competition: First, Smile modified the washing machines, dryers, and shoe washing machines marked with the trademark of Haier Group, and posted “Si Mai Er in Chinese,” “smile and design” logos and QR codes, and subsequently put these modified products for retail or for operation purposes, which had affected Haier Group’s trademark recognition function, quality assurance, and reputation-bearing functions, resulting in damages to the Haier Group’s trademark rights. Regarding the exhaustion of rights claimed by Smile, the court found that the premise of the application of the principle of exhaustion of trademark rights was that the re-sale or use is a marketing behavior that conforms to market laws and consensus and will not damage the legitimate trademark rights of the trademark owner. Smile’s behavior of selling and operating modified products had damaged the relationship between trademark owners, its goods, and trademarks, damaged the source identification and quality assurance functions of Haier Group’s trademarks, which may damage the reputation of the Haier Group’s trademarks. Thus, principle of exhaustion of trademark rights should not be applied.

Second, Smile promoted that it had “reached a strategic cooperation with Haier” and had “joint cooperation with Haier” on its website, Taobao, TikTok , and WeChat public accounts, and published the Haier Group’s trademark products on its website marked “Simile-Haier cooperation products.” Although Smile rebutted by showing it was the Haier Group’s retailer, it did not prove its modifications were approved by the Haier Group. Thus, Smile’s promotions were not true and would likely to cause confusion to the relevant public to believe that the two parties had special connections. Smile’s acts constituted as false advertisements. Meanwhile, Smile has repeatedly emphasized “Haier washing machine” in its publicity, which would easily make the relevant public into believing that its modifications were approved by the Haier Group or has a specific connection with the Haier Group, causing confusion and misunderstanding to the relevant public. Smile’s acts constituted as confusion actions as stipulated in Article 6(4) of the Anti-Unfair Competition Law. Finally, Smile’s description of the “Mr. Beaver APP” was false and inconsistent with the facts, and had the subjective intention of slandering and derogating the Haier Group’s business reputation and product reputation, which was enough to cause relevant consumers to have a wrong understanding of the “Mr. Beaver APP,” and damaged the business reputation and goods reputation of the Haier Group, which constituted as commercial slander.

​​Accordingly, the court ordered Smile to immediately stop its trademark infringement and unfair competition and compensate Haier Group for a total of RMB3 million (USD445,000).

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