Weekly China Brand Protection News

April 18, 2024

1. Lacoste sued Cartelo for trademark infringement and won with RMB 15.05 million in compensation

The Beijing High Court recently concluded a trademark infringement dispute between the appellants Xinjiang Ka E E-commerce Co., Ltd. (“Xinjiang Ka E”), Nanji E-commerce Co., Ltd. (“Nanji E-commerce”), Nanji E-commerce (Shanghai) Co., Ltd. (“Shanghai Nanji E-commerce”), Shanghai Xinhezhao Enterprise Development Co., Ltd. (“Shanghai Xinhezhao”) and the appellee Lacoste Company (“Lacoste”) and the defendant in the original trial, Beijing Surprise Outlet Mall Co., Ltd. (“Beijing Surprise”). The court has dismissed the appeal and affirmed the lower court’s decision.

The lower court found that Lacoste’s  mark with reg. no. 141103 (“Cited Mark”) reached well-known status before the filing date of the  mark with reg. no. 5358242 and the  mark with reg. no. 10499067 (“Disputed Marks”) owned by Nanji E-commerce. The appellants jointly infringed on Lacoste’s Cited Mark by using the Disputed Marks in commercial activities and should immediately stop infringing activities and are jointly and severally liable to compensate Lacoste for economic losses of RMB14.8 million (USD2.04 million) and reasonable expenses of 250,000 yuan, totaling RMB15.05 million (USD2.08 million).

The Beijing High Court tried on the following issues.

1. The application of law. When the lower court judgment was made, the Disputed Marks were valid. The lower court judgement is appropriate in clarifying whether Lacoste’s Cited Mark satisfied Article 11 of the Several Issues of the Supreme People’s Court on the Application of Law in the Trial of Civil Disputes Involving the Protection of Well-known Trademarks for protection. However, given that the Disputed Marks had been declared invalid during the second instance trial, the Disputed Marks’ right was deemed to have ceased to exist from the beginning, so said Article 11 no longer applies, and this court changed the application of relevant laws in accordance with the law.

2. Whether the use of the Disputed Marks on the accused infringing goods infringes upon Lacoste’s Cited Mark. The Disputed Marks were in Class 25 for clothing, hats, shoes and other goods, which constituted the same or similar goods as the goods “clothes” approved for the Cited Mark. The main difference between the marks is that the head of the crocodile is facing in a different direction. The overall comparison between the marks is not obvious, and they constitute similar trademarks. Therefore, without Lacoste’s permission, the use of the Disputed Marks that were similar to the Cited Mark in the same or similar goods such as Class 25 clothing, hats, and shoes may easily cause the relevant public to misunderstand or confusion regarding the source of the goods, or that there is an association between the source of the accused infringing goods. The lower court’s decision did not err in finding that the appellants infringed Lacoste’s rights. Regarding the infringing goods in Class 18 such as backpacks, handbags, wallets, suitcases and other goods, since they are in a different class than the clothing approved for the Cited Mark, this court must assess whether the Cited Mark constituted as a well-known mark. The evidence in this case can prove that the Cited Mark enjoys a high fame on clothing products and is well-known to the relevant public. Therefore, it can be recognized as a well-known trademark and protected. Given that the main difference between the Disputed Marks and the Cited Mark is the direction of the crocodile’s face, the Disputed Marks constituted a copy and imitation of the Cited Mark, and that the Disputed Marks use on Class 18 goods such as backpacks and handbags constituted as infringing. It was enough to cause the relevant public to mistakenly believe that the Disputed Marks have some connection with the well-known Cited Mark, thereby unfairly exploiting the market reputation of the well-known Cited Mark. The lower court’s decision that the appellants infringed upon Lacoste’s rights is affirmed.

Regarding the appellant’s grounds for appeal that this case is inconsistent with the Civil Judgment No. 3 of the Supreme People’s Court (2009) Min San Zhong Zi (“Previous Lawsuit”), the court held that the alleged infringement involved in this case and the Previous Lawsuit had different time of occurrence, location, and specific circumstances. Compared with the Previous Lawsuit, the alleged infringement in this case has significantly changed in the environment and state of use of the Disputed Mark. The distinguishing factors have been greatly reduced and the convergence factors have been greatly increased, such as the product itself, its packaging, and product hangtags no longer use the highly distinguishable “CARTELO and design” mark. Some products only use the word “CARTELO” on the left or below the crocodile design, which lost the distinctiveness that could be used to identify the two marks. The use of the Disputed Marks will inevitably cause confusion and misunderstanding with the Cited Mark, so it has met the requirements for trademark infringement. The user of the Disputed Marks failed to abide by the obligation to refrain from using Lacoste’s trademark in a similar manner and was at fault for changing the original market perception and breaking the original market order. Therefore, it is reasonable for the appellants to bear the corresponding adverse consequences. The grounds of appeal of the appellant cannot be found.

As for the settlement agreement signed overseas between Lacoste and Lee Sheng Min Company (the former name of Crocodile International, the original registrant of the Disputed Mark with No. 5358242), due to the territorial nature of trademark rights, the settlement agreement only applies to expressly agreed terms. In the five countries or regions of Taiwan, Singapore, Indonesia, Malaysia and Brunei, the coexistence of foreign trademarks stipulated in the agreement cannot be the basis for determining infringement in this case.

Regarding infringement liability and the amount of compensation. In this case, the hangtag of the allegedly infringing product showed that the manufacturer was Shanghai Xinhezhao, and the trademark licensor was shown as Xinjiang Ka E or Nanji E-commerce. These companies recognized themselves as the trademark licensees.  Nanji E-commerce’s wholly-owned subsidiary Shanghai Nanji E-commerce is the registered operator of the official website of the relevant brand and is responsible for publicity and investment promotion on the official website. The four companies had division of labor and cooperation in the process of carrying out the alleged infringement, which constituted joint infringement. It was not inappropriate for the lower court to decide that the four companies jointly bore the infringement liability to stop the infringement and compensate for the losses. In addition, the lower court found the number and time range of the accused infringing stores for calculating the amount of compensation based on Lacoste’s claims and the evidence provided. It calculated sales according to the different situations of the accused infringing stores and determined the product based on the circumstances of the case. Based on the profit margin and trademark contribution rate, the lower court correctly found the final amount of damages to be RMB 14.8 million, and the court affirmed.

2. Modelo Group successfully used its “Corona in Chinese” registrations fend off the “Yincheng Corona in Chinese” mark

The Beijing High Court recently concluded a trademark invalidation dispute between the appellant, Fujian Dehua County Lifei Food Co., Ltd. (“Lifei Food”), and the appellee, CNIPA, and the third party in the original trial, Trademarks Grupo Modelo, S. De R.L. De C.V. (“Modelo”). The court affirmed the lower court’s judgement.

Disputed Mark	Cited Mark 1	Cited Mark 2	Cited Mark 3
Reg. No. 4210240	Reg. No. 1059038	Reg. No. 3943293	Reg. No. 3628871

The issue in this case is whether the Disputed Mark and the Cited Marks constitute similar trademarks used on the same or similar goods, thus violating Article 30 of the 2013 Trademark Law. The court found that the goods approved for use in the Disputed Mark were Class 32 with subclasses 3201-3203. The goods approved for use by each of the Cited Marks were also in the same class and subclasses. The Disputed Mark and the goods approved for use by each of the Cited Marks are either the same kind of goods, or are identical or highly related goods in terms of functions, uses, production departments, sales channels, consumer groups, etc., which constitute as the same or similar goods as stipulated in Article 30 of the 2013 Trademark Law. Lifei Food claimed that the Disputed Mark and the goods approved for use by the Cited Marks do not constitute similar goods, which has no factual or legal basis. In addition, the Disputed Mark is composed of the words “Yincheng Corona in Chinese,” and each of the Cited Marks is composed of “Corona in Chinese.” The Disputed Mark and the Cited Marks are similar in terms of text composition, calling, and overall recognition effect, etc., and they constitute similar marks. When the Disputed Mark and the Cited Marks are used on the same or similar goods, and when the relevant public pays general attention, it is easy for them to believe that the goods of the two are from the same entity or have a specific connection, which will lead to confusion and misunderstanding. The Disputed Mark and the Cited Marks constitute similar trademarks used on the same or similar goods. The lower court correctly apply Article 30 of the 2013 Trademark Law.

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