Weekly China Trademark News Updates

March 1, 2023

1. CFA Institute successfully invalidated the “CVA” mark

Recently, the Beijing High Court concluded an administrative dispute concerning the invalidation of the “CVA” mark (“Disputed Mark”) owned by Huaping (Beijing) International Management Consulting Co., Ltd. (“Huaping”). The court upheld the first-instance judgment, that is, the application for registration of the Disputed Mark violated Article 30 and 31 of the 2014 Trademark Law and that the Disputed Mark shall be invalidated.

Disputed Mark	Cited Marks

Huaping applied for the Disputed Mark on December 25, 2017 and was approved for poster, book, printed publication, brochure, periodical, magazine (journal), printed matter, brochure, leaflet, and certificate in class 16.

CFA Institute filed invalidation based on its prior rights.

The second instance court found that the Disputed Mark consisted of “CVA” word marks. The Cited Marks consisted of either the “CFA” mark or other “CFA”-formative word mark or design mark. Consider “CFA” is not a fixed combination of words, it has no direct or certain connection with the approved goods. Thus, “CFA” is the distinctive part of the Cited Marks. There is only one letter difference between the Disputed Mark and the distinctive parts of the Cited Marks. Regardless of their overall comparison or comparison of the distinctive parts, the Disputed Mark and the Cited Marks were relatively similar in terms of composition, pronunciation, and overall appearance, which constitute similar marks. If the Disputed Mark and the Cited Marks were used on identical or similar goods, the relevant public may easily confuse and misidentify the source of the goods when paying general attention. Thus, the Disputed Mark and the Cited Marks constitute as similar marks on identical or similar goods. The evidence submitted by Huaping was not sufficient to prove that the Disputed Mark can be distinguished from the Cited Marks through use. In addition, the CNIPA review adopts the principle of case-by-case review, which can be affected by various conditions such as formation time, formation environment, and evidence on file. Application, examination, and approval of other marks were not necessarily related to this case, and cannot be used as the basis to decide the outcome of this case. This court affirmed the CNIPA and the first instance judgment that correctly decided the application of the Disputed Mark violated Article 30 and 31 of the 2014 China Trademark Law.

2. Awarded RMB1.1 million in damages! The Zhejiang High Court: Determine the amount of damages based on the compensation standard agreed in the settlement agreement

The Zhejiang High Court recently concluded  second instance anti-unfair competition dispute between Shenzhen Xiaoerduo Power Co., Ltd. (“Xiaoerduo”), Wenzhou Cricket Electronic Technology Co., Ltd. (“Cricket“), Quanyi Electric Co., Ltd. (“Quanyi”), Wenzhou Cricket Electronics Co., Ltd. Yueqing Branch of Science and Technology Co., Ltd. (“Wenzhou Cricket”), and Zhejiang Quanyi Electric Co., Ltd. Yueqing Branch (“Zhejiang Quanyi”). The court rejected the appeal petition and affirmed the first instance decision that ordered Cricket to immediately stop infringement and compensate Xiaoerduo for economic loss of RMB1.1 million (USD158,540).

The second instance found the following:

Xiaoerduo accused Cricket and Quanyi of using the accused infringing logo on the switching power supply, remote controller products and product promotions involved in the case, infringing the exclusive trademark right of its “XED” mark with reg. no. 13561563 and the “XED” mark with reg. no. 15067930. Cricket and Quanyi appealed and claimed their use did not constitute trademark use. In this regard, this court found that the tear-proof sticker marked “ZJXED” is located on the body of the switching power supply, and whether the tear-proof sticker is functional does not affect the function of the label to be used to identify the source of the product. As for whether “XEDYK-32II 3-phase” is a typical low-voltage electrical product model, Cricket and Quanyi did not provide evidence to prove it. Even if it was true, the letter combination of “XEDYK” is obviously not a common model number, even if the suffix “-32III3 phase” was added, it can also be used to identify the source of the marked goods, which constituted trademark use. The allegedly infringing goods were switching power supplies and remote controllers, which were identical or similar to the approved goods under the Cited Marks. Both the Disputed Mark and the Cited Marks consisted of a combination of “XED.” The primary function of the “XED” letter is a combination of the initials of the Chinese pinyin of the “Xiao Er Duo” brand name. The marks were identical in terms of composition, order, and pronunciation. At the same time, considering that the evidence submitted has a certain reputation in the industry, it should be determined that the Disputed Mark was similar to the Cited Marks, which may easily led to confusion among relevant consumers. With regard to the claims of Cricket and Quanyi that the use of the Disputed Mark was an omission in rectification, and there was no subjective intentional and necessary infringement, and, objectively, there was no possibility of confusion. Consider there was already a first-instance lawsuit in previous case between the companies and a settlement agreement was reached in second instance trial, and the time for cessation of infringement and the amount of compensation for further infringement were clearly stipulated, Cricket should have a higher duty of care to avoid subsequent trademark infringement. After the rectification period promised in the settlement agreement, the continued use of the Disputed Mark could hardly be called as good faith, and it was easy to confuse consumers. Therefore, the appeal grounds of Cricket and Quanyi could not be supported. The first instance court did not err in finding that Cricket infringed upon Xiaoerduo’s trademark rights.

The evidence submitted showed that Xiaoerduo has been using “Xiaoerduo in Chinese” as its trade name since February 19, 2008. Through long term and extensive publicity and use, its enterprise name (trade name) has formed a certain fame in the industry and obtained certain market influence. In particular, before Cricket was founded, Xiaoerduo and its related products have already been sold in Zhejiang province, including Wenzhou, where Cricket was located. Cricket and Quanyi claimed that Xiaoerduo has trade name dispute with other third parties which would affect the recognition of its fame. Xiaoerduo, however, provided evidence during the first instance that its trade name was legal and has certain fame. Cricket and Quanyi failed to prove in the contrary. Thus, Cricket and Quanyi’s claim cannot be supported. Cricket also defended by claiming that it has been changing its trade name prior to this case and it was normal to have omissions, and it has no intention to infringe Xiaoerduo. This court found that Cricket knew about the enterprise name and trade name of Xiaoerduo during previous lawsuits and settlements and undertook to change. However, Cricket still used trade names that include “Xiaoerduo” such as “Xiaoerduo Electronic Technology Co. Ltd.,” “Xiaoerduo Electronic Technology Co. Ltd., Leqingfen Company” in its marketing activities. Such use would objectively cause consumer to believe it was Xiaoerduo’s marketing activities. Cricket did not fulfill its duty of care. In particular, Cricket issued invoiced with “Xiaoerduo Electronic Technology Co. Ltd., Leqingfen Company” as its invoice title showed that it was not an omission but an unfair competition aimed at Xiaoerduo.

Regarding whether punitive damages was applicable in this case, the court found that since this case involves trademark infringement and anti-unfair competition disputes, so the nature of the liability involved is infringement damages rather than breach of contract damages. However, the relevant parties’ agreement on the amount of compensation for continued infringement in the settlement agreement of the previous case can be an important consideration for the amount of damages awarded in this case. Xiaoerduo did not require separate calculation of the amount of damages for trademark infringement and unfair competition in its complaint, and the actual losses suffered by Xiaoerduo due to the infringement and the specific benefits obtained by Cricket and Quanyi due to infringement were difficult to determine. According to the relevant provisions of China Trademark Law and China Anti-Unfair Competition Law, it was not inappropriate for the first instance court to apply statutory damages that included trademark infringement and unfair competition to Xiaoerduo. Xiaoerduo’s claim that the damages ordered did not reflect damages of unfair competition in the first instance judgement could not be supported. Comprehensively considering the company name of Xiaoerduo and the popularity of the Cited Marks, Cricket has infringed in both JD.com and Tmall online stores. The behavior of Quanyi in Tmall Store constituted joint infringement with Cricket. The sales volume of the accused infringing goods, unit price, were especially stipulated in the main body and agreed content of the previous lawsuits and the settlement agreement. Xiaoerduo paid reasonable expenses for the rights protection of this case, the first-instance judgment did not err in determining that Cricket should compensate Xiaoerduo RMB1.1 million (USD158,540)., and Quanyi should compensate the joint and several liability of RMB250,000 (USD36,039).

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