Weekly China Trademark News Updates

December 7, 2021

1. Kluber Lubrication won over RMB 2 million in damages in a trademark infringement lawsuit

On November 29, 2021, the Shanghai Intellectual Property Court made a final judgment in the case of Kluber Lubricant (Shanghai) Co., Ltd. (“Kluber Shanghai”) against Shanghai Xinyu Lubrication Technology Co., Ltd. (“Xinyu”), Zou Ming and Yuan Jianguo for trademark infringement disputes, and affirmed the first instance judgment. Xinyu and Zou Ming should jointly and severally compensate Kluber for economic losses of RMB2 million (USD313,819) and reasonable expenses of RMB150,000 (USD23,536).

There are two types of alleged infringements in this case. One was filling other brands of lubricants as “Kluber in Chinese” brand lubricants. The other was filling large bottles of “Kluber in Chinese” brand lubricants into small bottles of “Kluber in Chinese” brand lubricants.

As Xinyu’s legal representative and actual controller, Zou Ming organized Xinyu’s employees, including Yuan Jianguo et al., to pack low-priced lubricants of other brands into customized containers, affix the self-printed Kluber trademark and sell the lubricant under the guise of Kluber. Under the Chinese Trademark Law, said action performed without Kluber’s authorization and used a mark identical to Kluber’s registered trademarks on identical goods, which violated Kluber’s trademark right.

The issue in this case was whether the sub-packaging acts of the accused genuine lubricant involved in this case constituted trademark infringement may be analyzed from the following aspects:

1. The alleged act of attaching a trademark to a small bottle for sub-packaging falls within the use as mentioned in the Chinese Trademark Law. In this case, Zou Ming instigated his employees to purchase 1kg of lubricant cans from the market, load the genuine large “Kluber” lubricant bottle into the aforesaid small bottle, and affix the forged registered trademark that were made. The attachment of such a trademark did not change the function of identifying the source of the trademark. Therefore, Zou Ming’s use of the trademark involved in this case was not within the reasonable scope of use, and thus he could not be deemed to have used the registered trademark of Kluber in good faith.
2. The accused sub-packaging damaged the quality assurance function of the trademark. The act of sub-packaging of goods will involve the change of the original packaging or product itself, so that the sub-packaged goods are different from the original goods, and the owner has lost control of the quality of goods, such change may directly affect or even damage the owner’s reputation of goods. Especially for lubricant, which is a product that has strict storage conditions and refined internal material requirements, which make the quality assurance function of the trademark more prone to damage.
3. The principle of exhaustion of trademark rights shall not apply to the accused act of sub-packaging. Xinyu, as a dealer of Kluber, purchased genuine Kluber lubricant, and its source of products was legal. However, when Xinyu resold the lubricant, it damaged the packaging of the lubricant for its own greater benefit, or labeled low-grade lubricant as high-grade ones, which damaged the quality of products and the fame of the trademark owners. Therefore, the sub-packaging involved in this case shall not be governed by the principle of exhaustion of trademark rights.

Accordingly, the sub-packaging involved in this case fall within the trademark infringement act of “causing other damage to the exclusive right of others to use a registered trademark” as prescribed in Article 57(7) of the Chinese Trademark Law.

2. Improper complaints filed with Apple’s App Store constituted as “wrong notifications”

Huya Live Streaming App is a live streaming platform application created by the applicant Huya Company (“Huya”), which provides interactive video live streaming services to users with game contents at its core. Since April 8, 2021, respondent Warner Inc. (“Warner”) has filed multiple complaints with the third-party Apple Inc., claiming that a total of 215 short videos on Huya live-streaming platform infringed upon its copyright in a musical work, and requested the Apple App Store to take down the app involved in the case. Warner Inc. failed to submit the ownership certificate of the music works involved in this case during the complaint process, and Huya deleted the video suspected of infringement after receiving the notification sent by Apple Inc.

On September 18, 2021, the Guangzhou Internet Court rendered a ruling that the respondent, Warner, should immediately stop filing complaints to AppStoreNotices@apple.com against the applicant Huya Live Broadcast – Game Interactive Live Broadcast Platform owned by Huya, to Apple’s App Store, and to Apple Company on the date of receipt of this ruling. On September 30, 2021, the Guangzhou Internet Court rendered a ruling to dismiss Warner’s petition for reconsideration. The reasons for the ruling were mainly based on the following:

1. Both Apple and Huya have taken necessary measures in response to the content of the complaint. Warner claimed in this case that it should protect the copyright of its music works. Its request that Apple should remove the application involved was an abuse of right.
2. Warner’s continuous complaint may cause the app involved in this case to be removed from the Apple App Store, and thus cause irreparable losses to Traffic on Huya’s live streaming platform, including legal contents uploaded onto the involved platform. To some extent, it will adversely affect Huya’s goodwill and status in the industry, impairing Huya’s existing market share.
3. If all the infringing content in Warner’s complaint has been deleted, the damage that may be attributed to Warner if failed to adopt the measure of property preservation is less than the damage that may be caused to Huya by adopting the measure of property preservation.

Warner’s request to Apple to remove the Huya app involved in this case from its App Store will likely result in the removal of the legal content uploaded by other live broadcasters and users on the platform, which will not only damage the legitimate rights and interests of others, but also be detrimental to the promotion of the development of live and short video broadcasting and the prosperity of socialist cultural undertakings.

3. “HÖrmann,” “Huoman in Chinese” and other trademarks were infringed and the court ordered more than RMB50,000 in damages

On November 15, 2021, the Beijing Intellectual Property Court made a final judgment on trademark infringement and unfair competition disputes between HÖrmann Sales Company (“HÖrmann”) and Hebei Huoman Door Industry Co., Ltd. (“Hebei Huoman”), Renqiu Braun Door Industry Co., Ltd. (“Renqiu Braun”), and Beijing Baidu Wangxun Technology Co., Ltd. (“Baidu”), and ordered Hebei Huoman immediately to stop infringing on the exclusive right of HÖrmann’s registered trademark; immediately stop using the domain name huomanmenye.cn; submit an application for change of the company name to the administrative department for industry and commerce, and the changed company name must not contain ” HÖrmann” or similar words; pay compensation for economic losses of RMB500,000 (USD78,415) and reasonable expenses of RMB 30,000 (USD4,704).

The court found that that HÖrmann had the exclusive right to use the registered trademarks “HÖrmann” in German with registration number G740261, and the registered trademarks “Huoman in Chinese” with registration numbers 1974731 and 2003175. Hebei Huoman used the “HUOMAN” mark on door related goods without HÖrmann’s authorization, registered and used the domain name huomanmenye.cn. Hebei Huoman used the “Huoman Door Industry in Chinese” mark and “HUOMAN” mark on the said domain, its product brochure, and on China Suppliers website, China Product website, etc. Heibei Huoman also used “Huoman in Chinese” and “Huoman Door Industry in Chinese” as keywords for advertisements on Baidu. The above behavior infringes upon HÖrmann’s trademark right.

HÖrmann’s “Homan in Chinese” trademark had obtained high fame through use. Hebei Homan, as an operator in the same industry, insisted on using and registering “Homan in Chinese” as its trade name in 2017 when knowing the “Homan in Chinese” mark has a high fame and influence in its industry, which showed that it had the subjective intention of taking advantage of the reputation of others’ trademarks in the market. Even if Hebei Horman used its full corporate name in a standardized manner, it was still easy to cause confusion and misunderstanding among the relevant public. In addition, Hebei Horman marked “Germany Horman Company” on its products and indicated “Hebei Horman belongs to Hörmann Germany” on its official website, which could mislead the relevant public into believing that the products produced and sold by Hebei Horman has specific connections with Hörmann and cause confusion. Therefore, the behavior of Hebei Horman constituted as an act of unfair competition.

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