Weekly China Brand Protection News

April 2, 2024

1. Unauthorized labeling of “Supervised by the Palace Museum” on alcohol products constitutes unfair competition

Recently, the Palace Museum discovered that a Sichuan liquor company and a Beijing trading company used the words “Supervised by the Palace Museum” in the process of promoting and selling alcohol products. The Palace Museum filed a lawsuit against them alleging unfair competition.

The first instance court found that the actions of the Sichuan liquor company and the Beijing trading company constituted unfair competition, and ordered them to compensate the Palace Museum for its economic losses and reasonable expenses. The defendants appealed to the Beijing IP Court. The Beijing IP Court affirmed the lower court’s finding that the defendants’ action constituted unfair competition but adjusted the compensation amount based on new evidence.

Regarding the issue of whether the use of the words “Supervised by the Palace Museum” on the alleged goods and the related publicity in the online store constituted unfair competition, the Beijing IP Court found that:

Article 6 of the Anti-Unfair Competition Law stipulates that operators shall not use without authorization the names of other enterprises, social organizations, or persons that have certain influence to cause people to mistakenly believe that the goods are from others or that they have a specific connection with others. Regarding the use of the words “Supervised by the Palace Museum” on the alleged infringing products, the evidence can prove that the production dates marked in the online store were after the expiration of the supervision agreement involved. After the expiration, the Sichuan liquor company continued to label its liquor products with the words “Supervised by Palace Museum,” which includes the full name of the Palace Museum, without the authorization or permission. Even though the Sichuan liquor company continued using the packaging design and product promotion style which were authorized during the supervision agreement period, but the words “Supervised by the Palace Museum” will not only make consumers believe that the Palace Museum supervises the packaging design and product promotion of the alleged infringing goods, it will inevitably make the public mistakenly believes that this product is closely related to the Palace Museum, or that the Sichuan liquor company still has a cooperative relationship with the Palace Museum on alcohol products, etc. This is obviously a case of obtaining unfair competitive advantages and commercial interests by taking advantage of the popularity of the Palace Museum. At the same time, it also caused damage to the reputation and business interests of the Palace Museum, constituting unfair competition as stipulated in Article 6 of the Anti-Unfair Competition Law. In addition, the Sichuan liquor company claimed that the words “Supervised by the Palace Museum” are not in a prominent position, however, combined with the relevant publicity of the allegedly infringing products, consumers will inevitably pay attention to the relationship between the allegedly infringing products and the Palace Museum. The allegedly products and its packaging will objectively cause confusion and misunderstanding. Whether they are in a prominent position does not affect the determination of unfair competition.

Article 8 of the Anti-Unfair Competition Law stipulates that operators shall not make false or misleading commercial publicity about the performance, functions, quality, sales status, user reviews, honors, etc. of their products to deceive or mislead consumers. The first instance court found that the online store involved in the case repeatedly mentioned the Palace Museum in the “Historical Events” in the product details, showed the authorization letter issued by the Palace Museum in January 2007, and highlighted the “designated liquor of the Palace Museum in the past five hundred years” along with other content, which constitutes false propaganda as stipulated in Article 8 of the Anti-Unfair Competition Law. Regarding such promotions, the mention of the history of the Palace Museum in the “Historical Events” and the content of the authorization letter issued by the Palace Museum to the Sichuan liquor company were facts. However, on this basis, when promoting the products involved, the Sichuan liquor company failed to disclose to consumers the fact that the authorization letter issued by the Palace Museum has expired, and its claim that the products sold in the online store were “the designated liquor of the Palace Museum.” Such publicity will cause confusion among consumers. Consumers are likely to misunderstand and falsely believe that the allegedly infringing goods still have valid authorization from the Palace Museum, which constitutes false or misleading commercial propaganda as stipulated in Article 8 of the Anti-Unfair Competition Law. At the same time, since the above-mentioned behavior has been determined as false propaganda, the use of the full name of the Palace Museum will no longer be separately determined as an act of unfair competition that uses a company name without authorization.

2. A color combination trademark application failed to be approved in the second instance appeal

A company applied for registration of the “” mark (“Disputed Mark”) on “agricultural machinery” on November 1, 2021, and was refused. During the review, the CNIPA determined that the representation of the Disputed Mark is simple, it will be difficult for the relevant public to recognize it as a trademark to distinguish the source of the goods if registered on the designated goods. The submitted evidence, including the product promotional videos and brochures, the market share of its product from the China Agricultural Machinery Industry Association, statements on sales, store photos, audit reports, tax payment certificates, honorary certificates, award certificates, exhibition and campaign pictures, articles on periodicals and magazines, CCTV news reports, etc., are insufficient to prove that the Disputed Mark has been used to obtain distinctive features and can easily be identified. Therefore, the Dispute Mark shall be rejected based on Article 11.1.3 of the Trademark Law.

The applicant appealed to the court, and supplemented additional evidence of domestic and foreign sales contracts and invoices, overseas trademark registration certificates, granted invention patent information, etc. to prove that after extensive use and publicity, the Disputed Mark has gained a high reputation and has established a unique corresponding relationship with the applicant, thereby bearing the distinctiveness to identify the source of goods.

The Beijing Intellectual Property Court found that:

First, the Disputed Mark is a color combination consisting of red and light gray. Its color and combination are relatively ordinary, and its expression is relatively common. If the color combination specified by the Disputed Mark is used on “agricultural machinery,” the relevant public tends to recognize it as an expression of the appearance and decoration of the goods rather than a mark that distinguishes the source of goods. Therefore, the Disputed Mark does not have the inherent distinctive features that a trademark should have.

Second, according to the evidence submitted, when the applicant uses a red and light gray color combination in designated locations on agricultural machinery such as harvesters and tractors, it usually also displays the “Wo De in Chinese” logo on a prominent position on the fuselage. When relevant public seeing agricultural machinery products, it is easier to recognize the word mark rather than the color as a mark to distinguish the source of the product.

Finally, regarding the applicant’s claim that the Disputed Mark has acquired distinctive features through use, this court found that although the evidence can prove that the agricultural machinery produced by the applicant in recent years has a relatively high sales share in the industry and has also achieved a certain degree of fame, the use and publicity reports and honorary materials mainly reflect the commercial use of “Wo De in Chinese” mark. In most cases, the Disputed Mark was only used as the background color of “Wo De in Chinese.” The said evidence was insufficient to prove that the Disputed Mark has obtained distinctive features and can act as an identification for ordinary consumers to distinguish the source of goods just by being used as the background color of a logo such as “Wo De in Chinese.”

In sum, the existing evidence is insufficient to prove that the Disputed Mark has gained a certain degree of fame in actual use and can play a role in distinguishing the source of goods, thereby obtaining distinctiveness that can be approved for registration.

The applicant appealed to the second instance court, however, the appeal was dismissed and the original judgment 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