Weekly China Trademark News Updates

February 7, 2023

1. The CNIPA issued the Guidelines on the Prohibition of Using Signs as Trademarks and the Guidelines on Application for Registration and Use of Trademarks Containing Geographic Names

The Guidelines on the Prohibition of Using Signs as Trademarks further explains the various circumstances where signs cannot be used as trademarks as stipulated in Article 10 of the China Trademark Law. “Not to be used as a trademark” means that in addition to registration prohibition, the use of a relevant logo as a trademark is also prohibited. For example, any application for registration of an “absolutely prohibited” relevant signs mentioned in this guideline will be rejected for violating Article 10 of the China Trademark Law. Already registered trademarks will face the legal consequences of being invalidated. Meanwhile, those that constitute bad faith trademark applications will also face punishments such as warnings and fines, and the punishment information will be published on the National Enterprise Credit Information Publicity System. If market entities use any aforementioned unregistered signs as trademarks, they will be stopped and given a time limit to correct, still, they may face punishments such as notifications to relevant administrative departments and fines.

The Guidelines on Application for Registration and Use of Trademarks Containing Geographic Names provides guidance on standardized use of registered trademarks containing geographical names, reasonable protection of rights, and legitimate use by others. The owner of the exclusive right to use a trademark should use the approved registered trademark logo and the approved use of goods or services, and shall not change, highlight, simplify, add, deform, or split the geographical name part of the trademark on its own. Other market entities that only use the relevant geographical name in a non-trademark use to indicate geographical origin shall be regarded as legitimate good faith use. The owner of the registered trademark has no right to prohibit others on the grounds that such use is identical with the place name in its registered trademark. Other market entities should also fully register the right to exclusive use of the trademark when using a place name and must not exceed the scope of “justifiable and reasonable” use. In addition, the transfer of trademarks containing geographical names to transferees whose actual use will cause the public to misidentify the place of origin or source should be avoided. For transferring collective trademarks or certification trademarks containing geographical names, transferees should also meet the relevant subject qualification requirements and other requirements.

2. Highlighting use of “Huawei in Chinese” in the title of online sales link of one’s own products constituted infringement. The court ordered RMB 2 million in compensation

Plaintiff Huawei Technologies Co., Ltd. (“Huawei”) sued defendant Ji She Clothing (Shanghai) Co., Ltd. (“Ji She”) for trademark infringements and false publicity. The Shanghai Jing Shan District Court ruled against Ji She and ordered Ji She to stop infringement and unfair competition actions, and compensate Huawei for economic losses and reasonable expenses totaling RMB 2 million (USD295,000).

The first issue in dispute was: Whether the act of highlighting use of other’s registered trademark in the hyperlink title of an online sales of its own products by Ji She constitutes trademark use. The court found that using identical or similar words as other’s registered trademarks as the first words of an online sales hyperlink title of its own products would make Internet users to believe that the store’s goods or services have a specific connection with that other’s trademarks pointed to by the words used. Such use constituted trademark use. Ji She used words such as “Suitable for Huawei,” “Authentic Huawei,” and “For Huawei mobile phones” as the first part of the title of its own product online sales hyperlink, and highlighted these words in a prominent position of the title without displaying its own brand. The title was accompanied by the word “authentic product,” which was likely to confuse Internet users. The method of naming the titles of an online sales hyperlink of its own products by Ji she neither conformed to Tmall’s product title publishing specifications, nor did it conform to the industry’s general practices. The said actions violated Huawei’s trademark right to use “Huawei in Chinese,” Jishe should immediately stop the infringement and rectify its own products on its Tmall flagship store in accordance with the Tmall’s product title publishing regulations and industry-wide practices. The title of the online sales hyperlink should highlight its own brand name at the beginning of the title.

The second issue in dispute was: Whether Ji She’s actions constituted an unfair competition act of false publicity. Huawei and Ji She were both smart watches owners and competes with each other. The “Huawei in Chinese” trademark owned by Huawei is well-known in the market, and Ji She used the words “Authentic Huawei” in the first part of the title of an online sales hyperlink of its own products. Such use was a misleading commercial publicity that could easily mislead consumers. Therefore, Ji She’s actions constituted false publicity.

The third issue in dispute was: The amount of compensation and reasonable expenses for rights protection. According to the evidence on file, although it was difficult to determine the actual loss of Huawei and the benefits obtained by the Ji She from its infringement, it could be roughly determined that Ji She’s sales of the 16 infringing products were around RMB 23 million to 37 million. Ji She claimed that there were exaggerated sales data and return rate, etc., and that its profit were low. Therefore, Tmall’s sales data cannot be used as the calculation base. Ji She, however, did not provide any actual sales number or profits it had. Therefore, the court comprehensively considered factors such as the popularity of Huawei’s “Huawei in Chinese” trademark, Huawei’s influence in the smart watch industry, the degree of subjective fault of Ji She, the method of infringement, the duration of infringement, and the consequences of infringement damages, in supporting Huawei’s infringement claim and compensation claim for economic losses and reasonable expenses for RMB 2 million (USD295,000).

3. Squatted “SUPREME” trademark was invalidated

The Beijing High Court recently rendered a decision against Guangzhou Duo Lun Zi Watch Co., Ltd. (“Duo Lun Zi”) in an administrative trademark invalidation dispute that also involved a third party Chapter Four, and the CNIPA. The court rejected the appeal and affirmed the first instance decision.

Disputed Mark

Disputed Mark in Class 14 with Reg. No. 23437057 Approved goods: sports watch, watch, etc.

The court found that Duo Lun Zi filed for more than 100 trademarks across multiple classes of goods and services, including “Xia Mi in Chinese SHARME,” “Wan Bao Lu in Chinese MARLBORO,” “supreme,” etc., which were identical or similar to Chapter Four and other third parties’ famous trademarks that have high distinctiveness. Not only did Duo Lun Zi fail to provide reasonable explanations to the source of its trademark design, but it also failed to prove that its massive filings were due to regular business needs. Thus, Duo Lun Zi’s massive filings cannot be seen as to have filed in good faith. On the other hand, the “supreme” trademark that is owned by Chapter Four has certain distinctiveness and the evidence in this case can prove that through Chapter Four’s promotion and use, the “supreme” mark obtained certain fame before the Disputed Mark’s registration date. Duo Lun Zi’s failure to provide evidence proving its actual intent of use of the Disputed Mark and any actual commercial use of the mark despite it filed the Disputed Mark that is identical or similar to Chapter Four’s prior famous mark. Accordingly, Duo Lun Zi’s massive filing, including filing of the Disputed Mark, disrupted the order of trademark registration, harmed public interests, and improperly occupied public resources, which violated the provision of “obtaining registration by other improper means” as stipulated in Article 44 of the 2013 Trademark Law. The first instance judgment was correct and should be affirmed.

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