First-instance case number: (2018) Zhejiang 0502 Preliminary Civil Judgement No. 1585

Second instance case number: (2018) Zhejiang 05 Final Civil Judgement No. 1429

Whether the transferor of a trademark right transfer contract has an obligation to notify the completion of the transfer and whether the obligation constitutes a reason for refusal to pay the consideration shall be determined comprehensively based on the contractual agreement, entrusted circumstances, transaction habits and other factors.

If the debt reminder letter sent by mail is signed by an employee of the company whose legal representative is the debtor, it belongs to the fiction arrival and can also have the effect of interrupting the statute of limitations.

If a party to a contract sues the counter-party first to request performance of the contract obligations, and after the counter-party defends, then another suit for the same reason to request the termination of the relevant contract clauses, the previous case does not need to suspend the litigation.  

Case introduction

Appellant (defendant in the original trial): Wu Weiping

Appellees (plaintiff in the original trial): Nonnon Co., Ltd., Yanase Isao

Yanase Isao is the president of the Japanese company Nonnon Co., Ltd., and Wu Weiping is the legal representative of Huzhou Nongnong Clothing Co., Ltd. (referred to as Nongnong Clothing Company). On July 17, 2013, Nonnon Co., Ltd. and Wu Weiping signed a "Supplementary Agreement", stipulating that Wu Weiping would subsidize Nonnon Co., Ltd. and Yanase Isao RMB 1.12 million, of which RMB 300,000 will be paid within one week after Yanase Isao transferring his trademark "IMPEL" (registration number 5024034) to Wu Weiping or a company designated by him. After that, Wu Weiping and Yanase Isao respectively signed a power of attorney to entrust Japan's Takashima International Patent Office to handle the transfer registration procedures. On March 18, 2014, the Japan Patent Office issued a notice stating that the registration procedures for the transfer of trademark rights have been completed. Wu Weiping paid other payments, but the aforementioned RMB 300,000 was never paid.

In addition, it was found in the second instance of this case that Yanase Isao had sent a letter to Wu Weiping through DHL International Express on March 14, 2016, to remind him of the RMB 300,000 payment, and the express was signed by an employee, Wang Yuqiong, of Nongnong Clothing Company on March 16, 2016. Wu Weiping argued that Nonnon Co., Ltd. and Yanase Isao had failed to fulfill their obligation to complete the notice of assignment and the payment terms, and that he had never received this reminder of the RMB 300,000, and that the case had exceeded the statute of limitations period. The second instance also found out that during the first instance of this case, Wu Weiping filed a new lawsuit for the same reason as the defense of this case, requesting the cancellation of the RMB 300,000 payment clause in the Supplementary Agreement. This later case has not yet made an effective judgment. Wu Weiping argued that the case should be suspended and trial after the subsequent judgment.

The People’s Court of Wuxing District, Huzhou City, Zhejiang Province held in the first instance that the Supplementary Agreement of both parties was legal and valid, and Wu Weiping should pay the corresponding amount of RMB 300,000 and interest in accordance with the agreement. His defense that the payment conditions, in this case, were not fulfilled and the statute of limitations has exceeded the statute of limitations could not be established. In summary, the court's judgment of first instance: Wu Weiping should pay RMB 300,000 and interest for the transfer of trademark rights to Nonnon Co., Ltd. and Yanase Isao.

Wu Weiping refused to accept the judgment of the first instance and appealed to the Intermediate People's Court of Huzhou City, Zhejiang Province. The court held that in the second instance, first, both Wu Weiping and Yanase Isao entrusted Takashima International Patent Office to handle transfer registration procedures, and Wu Weiping, who knew Japanese and engaged in import and export trade, could understand the progress of the transfer through Takashima Office. The Supplementary Agreement between the two parties did not make any special agreement, nor can it be determined that the notification obligation is a trading practice, so it is difficult to determine the existence of the notification obligation, and it cannot be determined that the payment of the transfer price must be based on the notification. Secondly, the act of receiving the express by the employee belongs to the "should arrive" or fictitious arrival, and the effect of its interruption of time limit should be recognized. The time limit system is designed to prevent the right to sleep and should not be used to evade responsibility. Third, Wu Weiping adopted the method of filing a new lawsuit later, and could not delay or suspend the trial of this case.

In summary, the court's second-instance judgment: rejected the appeal and upheld the original judgment. After the judgment of the second instance was served, Wu Weiping fulfilled his payment obligation.

Typical meaning

This case is a dispute over a foreign-related trademark transfer contract. During the trial, the court sorted out and determined the notification obligation for the completion of the transfer of trademark rights, and determined the rules for comprehensive determination based on contractual agreements, entrusted conditions, transaction habits and other factors, which has certain guiding reference significance for similar cases. This case also involved the issue of defining the nature of the behavior of " employee receiving mail on behalf of the company". Through the interpretation of the fiction delivery regulations, a detailed analysis was made on whether the behavior interrupted the statute of limitations. During the second trial, the court regulated the parties' attempts to delay the trial by filing a new lawsuit and guided the parties to litigate in good faith. The judgment in this case equally protects the legitimate rights and interests of Chinese and foreign market entities, establishes a good image of Chinese courts in protecting the intellectual property rights of foreign enterprises and citizens in accordance with the law, and is a vivid practice of creating a legalized business environment.