Weekly China Trademark News Updates

December 14, 2021

1. Sale of Michael Kors parallel imports were found to infringed upon Michael Kors’ trademark rights

The Dongguan Intermediate Court of Guangdong Province recently concluded a trademark infringement case between Michael Kors (Switzerland) International Co., Ltd. (“Michael Kors”), Shanghai Yiteng Brand Management Co., Ltd. (“Shanghai Yiteng”), Dongguan International Trade City Branch, Shanghai Yiteng Brand Management Co., Ltd. (Shanghai Yiteng), etc. The court upheld the first instance court’s judgment that Shanghai Yiteng’s sale of parallel imported “MK” handbags constituted infringement.

In this case, the court found that the alleged infringing products were the same as the products approved for use in the registered trademark of Michael Kors Company. “MICHAELKORS” and “MICHAELMICHAELKORS” used on the alleged infringing products sold by Shanghai Yiteng were the same as the registered trademarks of Michael Kors. The use of “MKMICHAELKORS” on the packaging of the alleged infringing products sold by Shanghai Yiteng constituted trademark-related use in the meaning of the Chinese Trademark Law, which was similar to the registered trademark of Michael Kors, and was likely to cause confusion among the relevant public. As the owner of the exclusive right to use the registered trademark involved in this case, Michael Kors issued an appraisal report after appraising the alleged infringing handbag and confirmed in the first instance trial that the alleged infringing products were not authorized products produced by Michael Kors. Shanghai Yiteng claimed that the alleged infringing products were genuine products purchased from Yunnan Aishe Trading Co., Ltd. through parallel import, and the alleged infringing products sold by it had lawful sources. Since the registered trademark involved in this case has a relatively high popularity in China, Shanghai Yiteng, as a company specialized in selling the alleged infringing products, shall have a higher duty of care when purchasing from lawful sources. The scanned copies of its sales contracts, bank transfer records, the power of attorney issued by Shenzhen Huarui Ri-Sun Watch Co., Ltd., and the Import Goods Declaration Form and other evidence submitted by Shanghai Yiteng could not prove the corresponding relationship between the alleged infringing products it sold and the goods indicated in the Import Goods Declaration Form. Shanghai Yiteng failed to prove that the entire procurement channel for the alleged infringing products it sold and the products it obtained were genuine products obtained through parallel imports. Therefore, the evidence submitted by Shanghai Yiteng could not negate the arguments of Michael Kors regarding the non-genuine products, and its claim that the infringing products were parallel imports lacked sufficient evidence. Shanghai Yiteng’s claim that its products were parallel imports lacked evidence and this court won’t support such claim. In accordance with Article 57(3) of the Chinese Trademark Law, the sale of the alleged infringing products by Shanghai Yiteng infringed upon Michael Kors’ exclusive right to use its trademark.

2. Nippon Paint was awarded RMB180,000 in compensation as punitive damages to repeated infringements

On October 26, 2021, the Huainan Intermediate Court of Anhui Province concluded a trademark infringement case between Nippon Investment Co., Ltd. (“Nippon Corp.”) and Zhang Jingjing. Zhang Jingjing was sentenced to RMB180,000 (USD28,280) in compensation for repeated infringement.

In 2019, Nippon’s investigation found that Zhang Jingjing sold the alleged infringing products on its Taobao store, highlighting the use of words such as “Nippon in Chinese.” In November 2019, Nippon Corp. filed a lawsuit against Zhang Jingjing’s above-mentioned infringement. After the two parties reached a “Reconciliation Agreement,” Zhang Jingjing promised to stop the infringement of Nippon Corp’s trademark rights and clean up or destroy all remaining goods of the infringing products involved in the lawsuit. In October 2020, during an investigation by Nippon Corp., it was discovered that Zhang Jingjing was still infringing on the trademark rights of Nippon Corp. in its Taobao store by using the mark “Nippon in Chinese” and other marks on a variety of paint products.

The court found that: Zhang Jingjing used the “Nippon in Chinese ” trademark on some of the paint products sold in its Taobao shop, and used the word “Nippon in Chinese” as the product name and brand introduction, which was basically visually the same as Nippon Corp.’s trademark. The two marks constituted as the same trademark. Zhang Jingjing’s behavior was sufficient to cause people to be confused that the paint products Zhang sells were Nippon Corp.’s products, which violated Nippon Corp.’s exclusive trademark right. Zhang shall bore the infringement liability in accordance with the law. Therefore, Nippon Corp.’s request for relief that Zhang Jingjing to immediately stop selling the infringement goods should be supported.

Nippon Corp. requested for punitive damages because Zhang Jingjing sold counterfeit products labeled with Nippon Corp.’s trademark after previously signed a settlement agreement, which showed its subjective intent to infringe. This court found that in accordance with Article 1 of the Interpretation of the Supreme People’s Court on the Application of Punitive Damages to the Trial of Civil Cases of Infringement of Intellectual Property Rights, the plaintiff claimed that the defendant deliberately infringed on the intellectual property rights it enjoyed in accordance with the law and the circumstances were serious and requested the defendant to be punished. The people’s court shall review and deal with the liability for compensation in accordance with the law. In this case, Nippon Corp. sued Zhang Jingjing in 2020 for selling goods that infringed the exclusive rights of Nippon Corp.’s registered trademarks on its Taobao store. After that, the two parties signed a settlement agreement. Zhang Jingjing promised not to sell infringing products and compensated Nippon Corp. for RMB40,000 (“USD6,286”). But not long afterwards, Zhang Jingjing still sold goods that infringed the exclusive rights of Nippon Corp.’s registered trademarks on Taobao stores, and the sales volume reached more than 1,000 pieces, with sales reaching more than RMB200,000 (USD31,432). It can be determined that Zhang Jingjing was subjectively intentional and the circumstances were serious, and punitive damages could be applied. Based on Zhang Jingjing’s degree of subjective fault, the number and amount of sales in its stores, the popularity and influence of the trademark involved, and the reasonable expenses paid by Nippon Corp. for rights protection, the court determined Zhang Jingjing’s compensation for Nippon Corp.’s economic losses and reasonable expenses totaling RMB180,000 (“USD28,288”).

3. The CNIPA has cracked down on 376,000 malicious trademark registration applications in 2021

Since this year, the CNIPA has launched a special campaign to severely crack down on abnormal patent applications and malicious trademark registration. The CNIPA has focused on high quality development of intellectual property rights, launched a crackdown on malicious trademarks, and cumulatively cracked down on 376,000 applications for malicious trademark registration.

4. The CNIPA: Stop handling the trademark agency business of these two companies for 12 months/forever!

On December 10, 2021, the CNIPA issued two administrative penalty decision: Permanently stop accepting the trademark agency business of Jiangsu Bainian Trademark Agency Co., Ltd. (“Bainian”), and stop accepting the trademark agency business of Guangzhou Zhongchuang International Brand Management Co., Ltd. (“Zhongchuang”) for 12 months.

In the process of engaging in trademark agency business, Bainian, in order to avoid the requirement that trademark agency companies cannot apply for registration of trademarks other than trademark agency services, it preemptively registered trademarks that were previously used by others and have certain influence in the names of three affiliated companies. A malicious trademark registration application for the purpose of use violates the principle of good faith and constitutes Article 19(3) of the Chinese Trademark Law, which states that trademark agency knows or should know that the trademark applied for by the client belongs to Article 4, Article 15, and Article 32 of this law shall not accept their entrustment.” Article 19(4) states that “trademark agencies shall not apply for the registration of other trademarks except for the registration of trademarks for their agency services.” Bainian implemented the above-mentioned illegal acts, which showed its subjective bad faith, and the duration of its operation was long, and there were a large number of malicious trademark applications, which seriously disrupted the order of trademark registration management, which should be considered as serious circumstances. In accordance with the provisions of Article 68(1)iii of the Chinese Trademark Law, Article 68(2) and Article 90 of the “Regulations for the Implementation of the Trademark Law,” the CNIPA decided to permanently stop accepting trademark agency business from Bainian, and announced this news on the CNIPA’s website.

Entrusted by 58 overseas companies, Zhongchuang filed 224 trademark applications with the CNIPA that were identical or similar to the trademarks registered and used by others, which interfered with the normal trademark examination, and at the same time, its behavior had server impact against some of the other companies, which belonged to the situation of “disrupting the order of the trademark agency market by other improper means” and “serious circumstances” as stipulated in Article 68(1)ii of the Chinese Trademark law. According to Article 68(1)ii, Article 68(2), and Article 90(1) and (2) “Regulations for the Implementation of the Trademark Law,” the CNIPA decided to stop accepting the trademark agency business of Zhongchuang for twelve months and announce this news on the CNIPA’s website.

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