Quarterly China Trademark News Updates

April – June 2021

1. Notable trademark and anti-unfair competition cases

a. LEGO won RMB 30 million in a trademark infringement dispute

The Guangdong High Court rendered the final decision regarding the trademark infringement and unfair competition disputes between the “LEGO in Chinese (乐高)” mark owned by LEGO Juris A/S (“LEGO”) and the “Le Pin in Chinese (乐拼)” mark owned by Meizhi Zhijiao Technology Co., Ltd. (“Meizhi”). The court held that Meizhi and other defendants infringed upon LEGO’s trademark right and their acts amounted to unfair competition, and awarded LEGO economic loss and reasonable legal cost of RMB 30 million (USD 4.58 million).

The court acted as the second instance court found that Meizhi’s “Le Pin in Chinese (乐拼)” mark was highly similar to the “LEGO in Chinese (乐高)” mark in terms of color combination, presentation, and overall appearances, which was likely to cause confusion to the relevant public and weakened the distinctiveness of “LEGO in Chinese,” and damaged LEGO’s market reputation.

Meizhi had been copying LEGO’s products for more than four years, infringed upon eight of LEGO’s registered trademarks and one influential trade name. Between September 11, 2017, and April 23, 2019, Meizhi’s infringing products collected unjustifiable income of RMB 330 million (USD 50 million), and combining with the sales records provided by Taobao, it can be reasonably presumed that “Le Pin in Chinese (乐拼)” products collected over RMB 500 million (USD 76 million) unjustifiable income. Using the industrial profit as a scale, the overall profit of the infringing products was over RMB 160 million (USD 24.4 million).

The court ordered a high damage not only because Meizhi had obvious bad faith in copying and imitating LEGO’s trademarks, but also because Meizhi’s long-term, extensive, and highly-profitable infringements of LEGO’s trademarks.

b. Bulgari won against fake Serpenti jewelry trademark disputes

The Beijing Intellectual Property Court (“the Beijing IP Court”) recently held that the “snake head design” mark owned by an individual Liu with reg. no. 15911982 (“Disputed Mark”) infringed upon Bulgari S.P.A.’s (“Bulgari”) copyright and should be cancelled. The court found that Bulgari’s Serpenti design was a pictorial and unique design that can be protected under the Chinese Copyright Law as an artwork. Bulgari submitted sufficient evidence proving that it enjoyed copyright for the snake head design before the Disputed Mark’s application date. Moreover, Bulgari’s evidence showed that Liu once owned a business related to “purse,” which overlapped with Bulgari’s scope of business and suggested that Liu may or should’ve known about Bulgari’s Serpenti design. Considering both the Disputed Mark and Bulgari’s Serpenti design have drawn ideas from snake head, the overall appearance, composition, visual effect, and expression were all similar, the Disputed Mark constitutes as a similar mark to Bulgari’s Serpenti copyrighted design.

Infringing Mark	Bulgari’s Serpenti Jewelry

c. Alibaba was fined for RMB 18.22 billion for abuse of market dominance

On April 10, 2021, the State Administration of Market Regulation (“SAMR”) rendered a decision finding Alibaba Group Holding Limited (“Alibaba”) abused its market dominance, imposed a fine of RMB 18.22 billion (USD 2.79 billion), and requested Alibaba to conduct full rectification and operate in compliance with laws and regulations.

In its decision, the SAMR found that Alibaba’s operations have “occupied a relatively high market share for a long period of time, which enjoys a very high market recognition and consumer awareness, and there is a high cost for operators to move away from Alibaba’s platforms.” Alibaba had a dominant position in the online retail service market in China.

Since 2015, in order to restrict other competitions, maintain and strengthen its market position, Alibaba abused its market dominance by not allowing business operators on its platform to operate or participate in sales events on other competing platforms. Further, Alibaba imposed various awards and punishments in order to carry out its “choice between the two” (business operators can only choose either Alibaba or other competing platforms but not both) implementation.

Alibaba’s actions not only maintained and strengthened its market position, but also deviated from the development concept of economic openness, tolerance, and sharing. Such actions excluded and restricted relevant market competition, harmed the interests of business operators and consumers on the platform, and weakened innovation and development vitality. Alibaba’s actions also hindered the healthy development of platform economy in a standardized, orderly, and innovative manner.

Click here for SAMR’s official press release and its administrative decision and guidance in Chinese.

d. “PENFOLDS in Chinese” recognized as an unregistered well-known trademark

Southcorp Brands Pty Limited (“Southcorp”) sued Huaian City Huaxia Manor Brewing Co., Ltd. and Hangzhou Zhengsheng Trading Co., Ltd. (together as “the Defendant”) for trademark infringement. The court held that Southcorp’s “PENFOLDS in Chinese” mark constituted as an unregistered well-known mark, and the defendants’ use of “PENFOLDS in Chinese” mark infringed upon Southcorp’s right to the unregistered well-known mark. Meanwhile, the “Penfunils” mark used by the Defendants constituted as a similar mark to Southcorp’s “PENFOLDS” mark in terms of letter composition, order, and pronunciation, and such use infringed upon Southcorp’s registered trademark right for “PENFOLDS.” The court ordered the defendant to compensate Southcorp’s economic lost and reasonable enforcement costs of RMB 1 million (USD 154,100).

e. Michelin won in a trademark infringement retrial

Compagnie Generale Des Etablissements Michelin (“Michelin”) sued Ningbo Jaiqi Handicraft Co., Ltd. (“Jaiqi’) for trademark infringement. The Guangdong High Court found that the only differences between the two Micheline’s Cited Marks was its gestures, the rest of Michelin Man’s characteristics were identical, which suggested that the Michelin Man’s characteristics were the heart of its Cited Marks’ distinctiveness. Through long-term promotion and use, the Michelin Man’s characteristics grew more prominent and triggered the relevant public to associate Michelin upon seeing the Michelin Man.

Infringing Marks	Michelin’s Marks

When comparing the disputed cartoon character with the Cited Marks, although the disputed cartoon character only had a smiling face, the component and details of the smiling face were nearly identical with the Cited Marks’ characteristics. Considering Michelin Cited Marks’ distinctiveness and fame, such smiling face was likely to cause the relevant public to associate the Michelin Man image presented in the Cited Marks and cause confusion. Thus, the disputed cartoon character  shall be deemed as similar to the Cited Marks. Additionally, the disputed inflatable doll also closely reassembled the Michelin Man’s characteristics and shall be deemed as similar with the Cited Marks. The court concluded that Jaiqi infringed upon Michelin’s trademark rights and ordered compensation for economic loss and reasonable legal costs of RMB 100,000 (USD 15,416).

f. First criminal copyright infringement case involving an artwork came into effect with RMB 410,000 in penalty in Shenzhen

Recently, the Shenzhen Longgang District Court (the “First Instance Court”) concluded that the defendant WANG infringed upon the plaintiff’s copyright. The Shenzhen Intermediate Court rendered the final decision as the second instance court which rejected WANG’s petition to appeal and affirmed the First Instance Court’s decision. In the First Instance Court decision, WANG was sentenced to 3 years and 8 months in prison with penalty of RMB 410,000 (USD 63,675). The infringing toys used as evidence during the trial were confiscated and destroyed. This is the first criminal copyright infringement case involving an artwork in Shenzhen.

Between October 2016 and November 2018, without authorization from CCA and B, LLC. (“CCA”), Wang purchased the infringing Christmas genie dolls and reindeer dolls that he knew were infringing CCA’s copyright. WANG made unjustified profits from selling the dolls on its Alibaba and Amazon online stores.

On October 31, 2018, Longgang Branch of Shenzhen Municipal Administration for Market Regulation seized 8,340 “Christmas genie dolls” and 215 “reindeer dolls” for sale in WANG’s company. Identified by the Copyright Appraisal Committee of Copyright Protection Center of China, these dolls constated as copies of the “Christmas genie dolls” and “reindeer dolls” owned by CCA. They were infringing copies of “Christmas Genie dolls” and “reindeer dolls.” On July 15, 2019, the case was transferred to Longgang Public Security Bureau.

It was verified that from May 31, 2017, to October 30, 2018, WANG sold the infringing products through three online stores and earned a total amount of RMB 557,000 (USD 86,500). The value of the seized infringing products for sale was about RMB 213,000 (USD 33,000). The total unjustified profit was RMB 771, 000 (USD 119,700).

After hearing, the First Instance Court concluded that WANG’s operation purpose was to obtain unjustified profits by copying and selling copyrighted artworks without authorization, which amounted to RMB 771, 000 (USD 119,700). Such circumstance was particularly serious and constituted as a crime of copyright infringement.

 g. Weibo sued Toutiao for unfair competition and won a RMB 20 million verdict in compensation

Beijing Weimeng Chuangke Network Technology Co., Ltd. (“Weibo” a.k.the Chinese Twitter) sued Beijing ByteDance Technology Co., Ltd. (“Toutiao”) based on the grounds that Toutiao’s relevant content constituted unfair competition before the Haidian District Court of Beijing. The court found that displayed content and disseminated information of the Weibo content involved in this case was not purely user-generated, the information involved were added with Weibo’s resources and services, which constituted as the “legal interests” of Weibo according to Article 2 of the Chinese Anti-Unfair Competition Law. Toutiao targeted Weibo’s contents and transferred the said contents without authorization, particularly with those Weibo accounts that had large number of fans, more market impact, celebrities’ accounts, and major VIP accounts. Toutiao’s actions substantially substituted Weibo and damaged its business interests. The court ruled in favor of Weibo for economic loss of RMB 20 million (USD 3.14 million) and reasonable legal costs of RMB 1.15 million (USD 180,000).

h. Land Rover prevailed against Landwind X7

On May 27, 2021, the Beijing IP Court concluded the final decision of an unfair competition lawsuit between Jaguar Land Rover Limited (“JLR”) and Jiangling Holdings Co., Ltd. (“JLH”) and Beijing Dachang Landwind Motor Sales Co., Ltd. (“Landwind”). The court ordered JLH and Landwind to immediately stop all unfair competition acts, publish a statement to eliminate negative impacts, and compensate for losses and reasonable expenses of RMB 1.5 million (USD232,200).

In this case, JLR claimed five design features of its “Range Rover Evoque” had the characteristics that were different from the common exterior design of ordinary cars, and these designs were distinctive as product decorations. JLR’s evidence were also sufficient to prove that its “Range Rover Evoque” car enjoyed certain fame and influence in China’s car industry. Accordingly, Range Rover Evoque’s exterior decoration when used as product shape decoration satisfied the “decoration with certain influence” as stated in the Chinese Anti-Unfair Competition Law. The shape and decoration used by JLH on the “Landwind X7” car was enough to confuse and mislead the relevant public with JLR’s “Range Rover Evoque,” which constituted as unfair competition.

The first instance court calculated the damages based on the sales volume and unit profit of the infringing product, while referring to the 2015 domestic vehicle industry sales profit of domestically funded vehicle companies published by “National Passenger Car Information Exchange Association,” the sales data and the lowest unit price published on the official website of JLH. Also considering the duration of the unfair competition in the case, the role of the car product shape and decoration played during sales of “Landwind X7,” the range of sales, and the popularity of the “Range Rover Evoque” car shape, the second instance court affirmed the first instance court’s calculation methods.

i. Unauthorized use of New Balance’s “N” logo amounted to unfair competition

The Beijing IP Court affirmed the first instance court judgment regarding an unfair competition lawsuit between New Balance Trade (China) Co., Ltd. (“NB”) and Jiangxi Xinbailun Sports Goods Co., Ltd. (“Jiangxi Xinbailun”), Guangzhou Xinbailun Leading Footwear Co., Ltd., Guangzhou Xinbailun Enterprise Management Co., Ltd. (together as “Guangzhou Xinbailun”) and its executive director and general manager Lelun Zhou.

In the first instance judgment, the Beijing Dongcheng District People’s Court found that NB lacked evidence to support its claims that the “New Balance in Chinese” was an influential trade name or was a special name for the “New Balance” sneakers products. However, the uppercase bold “N” letters in the upper side of the shoes constituted as unique decoration. Thus, the use of the “N” logo on its sneakers products by Jiangxi Xinbailun and Guangzhou Xinbailun amounted to unfair competition for using other’s unique decoration without authorization.

Regarding the amount of compensation, the first instance court considered the fame of NB’s sneakers, uniqueness of decoration, subjective bad faith of Guangzhou Xinbailun and Jiangxi Xinbailun, the nature, method, duration, influence area involving the unfair competition behavior, related products sales prices and other factors, and ordered Guangzhou Xinbailun and Jiangxi Xinbailun compensate NB for economic loss of RMB 1 million (USD 154,700) and reasonable costs of RMB 100,000 (USD 15,470).

Guangzhou Xinbailun and Jiangxi Xinbailun were unsatisfied with the judgment, and NB was unsatisfied with the court’s findings of “New Balance in Chinese” and the compensation amount ordered. All parties appealed the first instance judgment to the second instance court, the Beijing IP Court. The Beijing IP Court affirmed the first instance court’s judgment.

2. Notable trademark laws, regulations, and news updates

a. The CNIPA: Enlist bad faith applicants into blacklist

From the beginning of 2021, the China National Intellectual Property Administration (“CNIPA”) has rejected more than 10,000 bad faith trademark applications citing the 2019 Chinese Trademark Law. The CNIPA has also created a blacklist system to include applicants who filed more bad faith applications and registrations. This is to closely supervise new trademark applications. So far, there are about 1,000 bad faith trademark applicants added into the blacklist.

The average trademark examination time had been shortened to 4 months.

b. The CNIPA issued the Notice of Deepening “Deregulation, Innovation, and Service” in the Intellectual Property Industry on Optimizing and Improving Innovation Environment and Business Operation Environment

On May 11, 2021, the CNIPA issued the Notice of Deepening “Deregulation, Innovation, and Service” in the Intellectual Property Industry on Optimizing and Improving Innovation Environment and Business Operation Environment. The notice includes the following news.

1. Continue to reduce trademark examination period. Aim to regulate trademark examination time within four months. The entire trademark application proceeding will be reduced from eight months to seven months. At the end of 2021, examination time for trademark assignments, oppositions, rejection appeals, and invalidations will be reduced to one and half months, twelve months, five and half months, and nine months, respectively. Examination time for trademark applications and renewals filed electronically will be reduced by one fifth.
2. Strengthen trademark examination supervision. Rigorously crack down on bad faith trademark registration and refuse to accept or fast-reject trademark applications with significant adverse effects according to the law. Promptly disclose typical bad faith trademark registration cases in time. Include bad faith trademark registration without intent to use into credit supervision according to the law.
3. Fully implement electronic trademark registration certificate, accelerate the use of the electronic trademark registration certificate on e-commerce platform, enforcement, proffer evidence and other fields.
4. Establish and improve the green channel acceleration model of trademark examination. Priority examination for qualified trademark rejection appeals and oppositions in order to assist applicant in obtaining trademark certificate and safeguard legal rights and interests.
5. Strengthen the crack down on illegal agency. Rigorously crack down on the forgery of legal documents and seals and disrupt the order of the agency market by fraud and false publicity. Strengthen the credit supervision and punishment of illegal agency in accordance with the laws and regulations.

Fully exploit the value of intellectual property information. On the basis of data security, fully release basic data of intellectual property right, and fully employ the strategic resource value of intellectual property information.

c. The Supreme People’s Court issued the Official Reply of Defendant’s Request for Compensation for Reasonable Expenses due to Abuse of Rights by the Plaintiff in IP Infringement Litigation

On June 3, 2021, the Supreme People’s Court (“SPC”) has issued the Official Reply of Defendant’s Request for Compensation for Reasonable Expenses due to Abuse of Rights by the Plaintiff in IP Infringement Litigation (the “Reply”) to be implemented immediately.

The Reply confirmed that, in an intellectual property infringement litigation, if the defendant can provide evidence to prove that the lawsuit brought by the plaintiff constitutes the abuse of rights according to the law, the people’s court should uphold the defendant’s request that the plaintiff should compensate for the reasonable attorney fee, transportation fee, accommodation fee, and other expenses. The defendant may also file another separate lawsuit to require the plaintiff to compensate the said reasonable expenses and fees.

d. The CNIPA: Trademark Examination and Adjudication Standards (Draft for Comments)

The CNIPA launched the revision of the current Trademark Examination and Adjudication Standards in July 2020 and published the draft for comments from the public. The revised content mainly includes two aspects: the first is to add new standards on trademark formality examination and trademark affairs examination; the second is to revise and improve the substantive standards of trademark examination and adjudication. The first aspect includes the standard for applying Article 4 of the Chinese Trademark Law, clarifying the applicable factors, considerations, and applicable circumstances for malicious trademark applications filed without the intent to use. The second aspect includes revision and improvement of applicable standards of other provisions in the Chinese Trademark Law, including the applicability of prohibited filings and prohibited use, standards and considerations for determining identical or similar trademarks, standards for determining distinctiveness for 3D marks, color combination marks, sound marks, etc.

3. Trademark Practices Series – Bad Faith Application in China

Bad faith trademark applications, a constant headache for foreign brand owners due to China’s first-to-file system. In this new series, we will provide our experiences to decipher the laws, regulations, and actual practices on how to tackle the bad faith trademark applications. We will begin with the relevant stipulations in the Chinese Trademark Law of China (2019 Version), the required factors when applying the laws, the current trend in tackling bad faith trademark applications or registrations, and finally demonstrate how to tackle the bad faith trademark applications or registrations with our successful cases.

1. Tackling Bad Faith Trademark Applications or Registrations In China – Part I
2. Tackling Bad Faith Trademark Applications or Registrations In China – Part II

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