Weekly China Trademark News Updates

January 4, 2023

1. HDMI was awarded of RMB 500,000 in punitive damages based on sales number

In December 2022, the Shenzhen Intermediate Court concluded a lawsuit in favor of HDMI LICENSING ADMINISTRATOR, INC. (“HDMI”) against Shenzhen Xindaying Technology Co., Ltd. (“Xindaying”) in a trademark dispute. The court ordered Xindaying to stop selling infringing goods, destroy the infringing goods in stock, and compensate HDMI for RMB500,000 (USD72,430).

The court found that: on January 18, 2021, Xindaying was punished by the administrative agency for trademark infringement. HDMI could still purchase infringing goods on March 23, 2021 from Xindaying’s 1688 webstore. That is, Xindaying repeated its infringing activities after being punished by the administrative agency. HDMI claimed that Xindaying deliberately infringed its legal right to exclusive use of a registered trademark and the circumstances were serious, which had factual basis. The request for punitive damages in this case complied with the law, and this court supported HDMI’s request.

According to 1688’s background data, 21,210 infringing goods were successfully traded, with a sales amount of RMB1.63 million. Xindaying argued that 1688 sales data contained a large number of fraudulent orders, which should be deducted when calculating the infringement profits. In practice, there are indeed some e-commerce sellers who use improper means to gain a favorable competitive position in seller’s ranking with false sales volume of related products, or to improve the reputation of sellers, or to give consumers the illusion of huge sales volume when browsing the product page. False transactions are carried out through means to attract consumers to buy and increase product sales. Such act of creating false sales violated the principle of good faith, and deceived consumers by improper means, damaged consumers’ right to know, and the competitive interests of other market operators, and violates the legal obligations as defined under the E-Commerce Law. That is, when Xindaying sold the infringing goods, it obtained praise and earned traffic based on false sales numbers, but requested those false sales numbers to be deducted when calculating infringing profits. This constituted as an attempt to make double profits from illegal activities. Accordingly, the court would not deduct the billing data when calculating the infringing profit, and Xindaying should bear the illegal consequences of its false transactions and should pay the corresponding price for its dishonest business behavior.

2. The “Ganten in Chinese” mark was recognized as a well-known mark and granted cross-class protection

The Beijing High Court concluded a trademark dispute between Jingtian (Shenzhen) Food and Beverage Group Co., Ltd. (“Jingtian“), Guangdong Bairun Tea Co., Ltd.  (“Bairun”), and Liankai Software (Beijing) Co. Ltd. (“Liankai”). The court ordered Bairun to stop the infringement and compensate Jingtian for the economic loss of RMB1.5 million (USD217,290) for Bairun’s trademark infringement. In addition, the court ordered Bairun to compensate RMB200,000 (USD28,972) for unfairly compete with Jingtian and Jingtian’s reasonable legal expenses of RMB80,000 (USD11,588). The court ordered Liankai to compensate Jingtian for the economic loss of RMB100,000 (USD14,486) based on trademark infringement and RMB20,000 (USD2,897) for reasonable legal costs.

The second instance court, upheld the first instance judgment, found that Jingtian provided sufficient evidence such as, special audit reports for sales and advertising fees, honorary certificates, award certificates, relevant judgments, requests for trademark invalidation, administrative judgments, newspapers and other evidence, in proving its “Gantian in Chinese” mark with reg. no. 3407468 was well-known in mineral water. Jingtian’s continuous and extensive use and publicity has been well known to the relevant public. It has been protected as a well-known trademark for many times. It was appropriate for the first instance judgment to find that the “Gantian in Chinese” mark with reg. no. 3407468 constituted a well-known mark. The “Bai Sui Shan in Chinese” mark used by Bairun and the “Nobel Tea in Bai Sui Shan in Chinese,” “Good Mountains and Good Water Produces Good Tea, Good Tea Originates from Bai Sui Shan” and other advertising slogan that used “Bai Sui Shan in Chinese” was identical to the “Gantian in Chinese” mark with reg. no. 3407468 in terms of word composition, pronunciation, and meanings. There were only slight differences in fonts. Bairun’s use constituted as a copy and imitation. Bairun used the “Bai Sui Shan in Chinese” mark with “Genuine Xiao Zhong Black Tea” and “Puer Dahongpao Dancong Black Tea,” which was not identical or similar to the goods that Jingtian’s “Gantian in Chinese” mark was famous for. However, the function, use, and target consumer extensively overlapped. The production and sales of the accused infringing products by Bairun and related advertising activities were enough to cause confusion among the relevant public and mistaken consumers into believing that the two were associated, which would damage the rights and interests of Jingtian. The first instance judgment did not err in recognized the “Gantian in Chinese” mark as a well-known mark.

Bairun used the promotional slogan of “the preferred brand of CCTV Online Mall” when displaying and selling “Bai Sui Shan in Chinese” tea products on its official website, WeChat public account and other platforms. Bairun’s use of “the preferred brand of CCTV online shopping mall” as a slogan was enough to cause misleading publicity effects and misled consumers. The first instance judgment did not err in finding that Bairun constituted false publicity and unfair competition.

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