Weekly China Trademark News Updates

September 14, 2022

1. The “Compliance Evaluation Guidelines for Digital Collections” – Digital collections can only be circulated for the purpose of use

On September 4th, at the 2022 World Frontier Technology Conference – Metaverse in the Digital Economy Forum of the Service Trade Fair, the ” Compliance Evaluation Guidelines for Digital Collections ” (Group Standards) (“Guidelines”) were officially released. The “Guidelines” regulates the definition, compliant issuance, and circulation of digital collections for the first time, and clearly states that digital collections are limited to the purpose of use, and cannot be listed or privately illegally traded for speculation, money laundering, tokenization, financialization, securitization, or other circulations.

The “Guidelines” pointed out that digital collections issued in China generally refer to a limited-release virtual cultural goods, including digital pictures, music, videos, 3D models, etc., which are recorded through blockchain technology of their distribution, purchase, and use histories. Such record on blockchain make it unique, non-copyable, tamperproof, and permanent proof. These goods are also known as “digital artworks” and “virtual digital goods.” As digital publications, digital collections can be distributed and circulated compliantly according to two product types: digital copyright and digital publication.

The relevant provisions stipulate that China implements a licensing system for publishing activities of electronic publications; without permission, no entity or individual may engage in publishing activities of electronic publications. This also means that no entity or individual may publish digital collections without permission.

2. 5 million RMB in damages! The Beijing IP Court found that the “red-soled shoes” constituted a goods name, packaging, and decoration with certain influence

Recently, the Beijing Intellectual Property Court rendered a decision for the plaintiff Christian Louboutin Co., Ltd. (“Louboutin”), Lanbuting Shanghai Trading Co., Ltd. (“Lanbuting”) and against the defendant Guangdong Wanlima Industrial Co., Ltd. (“Wanlima”) in a first-instance judgment of an unfair competition dispute involving “red-soled shoes.” Wanlima was ordered to stop infringement, compensate economic losses of RMB 5 million (USD718,000) and reasonable expenses of RMB 445,000 (USD63,900), and ruled that the retailer would not be liable for indemnify the damages but is responsible for RMB 5,000 (USD718) in reasonable expenses.

The Beijing IP Court found that: First, the name of the goods that the plaintiffs Louboutin and Lanbuting requested for protection in accordance with Article 6(1) of the Anti-Unfair Competition Law was the name “red-soled shoes.” A decoration that has a certain influence is the red decoration used on the outer sole of women’s high-heeled shoes. The key to judging whether the parties have a direct interest in this case is to determine whether the interests contained in the trade name of the “red-soled shoes” involved in the case and the decoration of the red soles have the basis for substantive law protection for the parties. The evidence submitted by the two plaintiffs in this case can prove that the decoration and product name involved have established a stable correspondence with Louboutin among consumers, and it can be determined that the rights and interests of the decoration and product name involved belong to Louboutin. However, the evidence in the case can only prove that Lanbuting is an authorized agent of Louboutin, and cannot prove that the decoration and product names involved have established a stable corresponding relationship with Louboutin, and thus it cannot be proved that Lanbuting has a direct interest in this case.

Second, Louboutin submitted relevant evidence to show that it has actually sold footwear products in mainland China since 2011, with sales more than RMB900 million (USD129 million). Louboutin has been promoting “red-soled shoes” products since 2003 in mainland China. Many well-known media have reported Louboutin’s products nation-wide. Based on the above evidence, it was sufficient to prove that its “red-soled shoes” product and red sole decoration have a high market reputation and have established stable relationship with the relevant public and have the distinctive feature of distinguishing the source of the goods. Therefore, Louboutin’s “red-soled shoes” product name and the red sole decoration are product name and decoration with “certain influence” as referred to in Article 6(1) of the Anti-Unfair Competition Law. Wanlima used the same or similar logos with the brand name and red sole decoration of the “red-sole shoes,” which had certain influence with Louboutin, without authorization. Such use was enough to cause misunderstanding that Wanlima had some specific connection with Louboutin, and its behavior violated the provisions of Article 6(1) of the Anti-Unfair Competition Law and constituted unfair competition.

Since the determination of whether Lanbuting has an interest in this case is inseparable from the determination of the rights and interests of the “red-soled shoes” trade name and red sole decoration involved, and considering the principles of litigation economy and efficiency, the Beijing IP Court dismissed Lanbuting’s lawsuit, ordered Wanlima to stop the infringement, and compensated Louboutin for economic losses of RMB 5 million (USD718,000)  and reasonable expenses of RMB 445,000 (USD63,900), and held that the retailer to be responsible for reasonable expenses of RMB 5,000 (USD718).

3. Cisco successfully invalidated the “CSCO” mark

The appellant Beijing Heathco Clinical Oncology Research Foundation (“Heathco Foundation”) and the appellee, the CNIPA, and the third party in the original trial, Cisco Technology Corporation (“Cisco”) were involved in an administrative dispute over a trademark invalidation request. The Beijing High Court recently rejected the appeal and affirmed the first instance decision.

Disputed Mark	Cited Mark 1	Cited Mark 2	Cited Mark 3	Cited Mark 4	Cited Mark 5

Regarding the first issue in this case, whether the CNIPA deprived the co-owners of the Disputed Mark the opportunity to make a statement and reply during the administrative review of the invalidation, which damaged the procedural rights and interests of the co-owners of the Disputed Mark and constituted a procedural violation. The Beijing High Court found that the Heathco Foundation did not raise any objection to the procedure made by the accused ruling in the original litigation, so this court tried it on the basis of the principle of comprehensive review. The Disputed Mark was jointly owned by the Heathco Foundation, the China Society of Clinical Oncology Co., Ltd., and the Clinical Oncology Collaborative Professional Committee of the China Anti-Cancer Association. According to the “Reply to the Invalidation of the “CSCO and Design” mark with reg. no. No. 12359367 submitted by the Heathco Foundation to the CNIPA at the administrative stage, it can be seen that the co-owners of the Disputed Mark designated the Heathco Foundation as the representative, so it was legal for the CNIPA to deliver the relevant documents regarding the notification of invalidation of the Disputed Mark to the Heathco Foundation, which did not deprive the co-owners of the Disputed Mark the opportunity to make a statement and reply, and was not a procedural violation.

Regarding the second issue in this case, whether the Disputed Mark and the Cited Marks constitute similar trademarks of identical or similar services. The court found that “education” and other services approved and used by the Disputed Mark and the “educational information” and other services approved and used by the Cited Marks 1 to 5 fall into the same class according to the “Classification of Similar Goods and Services issued by the CNIPA.” There were many overlaps in terms of content, methods, and target consumers. The Disputed Mark consisted of the letters “CSCO” and a design, and its distinctive identification part was the letters “CSCO.” The Cited Mark 1 to 3 consist of the letters “CISCO.” The Cited Mark 4 consists of the letters “CISCO” and a design, and its distinctive identification part is the letters “CISCO.” The Cited Mark 5 consists of the letters “CISCOSYSTEMS” and a design, and its distinctive identification part is the letters “CISCOSYSTEMS.” There was only one word difference between the distinctive parts of the Disputed Mark and the Cited Marks 1 to 3 and the Cited Marks 4 and 5. The Disputed Mark and the Cited Marks 1 to 5 were similar in terms of text composition, pronunciation, and overall visual effect. When the Disputed Mark and the Cited Marks 1 to 5 were used in the same service in “education” or other similar services, it would be easy for the relevant public to believe that the service originates from the same subject or that there is a specific connection between the origin entities, which would result in confusion and misidentification. Although the Heathco Foundation has submitted some evidence of its use of the Disputed Mark, it was not enough to prove that the Disputed Mark can be distinguished from the Cited Marks 1 to 5 through use. Therefore, the Disputed Mark and the Cited Marks 1 to 5 constituted similar trademarks used on identical or similar services under Article 30 of the 2013 Trademark Law. The original judgment was correct and affirmed.

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