Docket No.: （2020）沪73民终223号

Docket No. transliteration: 223, second instance (终), civil case (民), (2020) Shanghai Intellectual Property Court (沪73)

Lower Court Doccket No.: （2018）沪0115民初62173号

Lower Court Docket No. transliteration: 62173, first instance (初), civil case (民), (2018) Pudong New Area People's Court of Shanghai city (沪0115)

STATEMENT OF THE CASE AND FACTS

SHANGHAI WEITONG TRADING CO., LTD. (上海微彤商贸有限公司),

Plaintiff-Appellee

v.

TAOKAENOI FOOD & MARKETING PUBLIC COMPANY LIMITED (特卡诺食品和销售公共有限公司),

Defendant-Appellant

WAL-MART EAST CHINA STORES CO., LTD. (沃尔玛华东百货有限公司) and GUANGDONG HENGYU FOOD TRADE CO., LTD. (广东恒俞食品贸易有限公司),

Defendants

The Xiao Lao Ban (literally, Little Boss in English) trademark was assigned to Chinese company Shanghai Weitong Trading Co., Ltd. (“Weitong”) by another Chinese company Haining Xieqiao Vegetable Industry Co., Ltd. (海宁市斜桥蔬菜实业有限公司) in 1997. The trademark was registered in relation to ‘salted and dried vegetables’ in Class 29.

Thai company Taokaenoi Food & Marketing Public Company Limited (“Taokaenoi”) registered the Tao Kae Noi (literally, Little Boss in English) trademark in relation to ‘crispy seaweed’ in Class 29 with the Thai Tradmark Office in 2006. Taokaenoi registered the Xiao Lao Ban (literarlly, Little Boss in English) trademark in relation to ‘dried vegatables, seaweed’ in Class 29 with the Chinese Trademark Office in 2006. The crispy seaweed snacks manufactured and distributed by Taokaenoi enjoyed great popularity in Thailand and China. Taokaenoi filed for the revocation of registration of Weitong’s Xiao Lao Ban trademark with the Chinese Trademark Office on the ground that Weitong didn’t use the trademark in commerce for three consecutive years and the application was rejected.

Weitong’s attorney sent two letters to Wal-Mart East China Stores Co., Ltd. ("Wal-Mart") and Guangdong Hengyu Food Trade Co., Ltd. ("Hengyu") respectively requesting that the two companies stop distributing the crispy seaweed snacks beaing the Xiao Lao Ban trademark, which allegedly infringed Weitong’s trademark in May 2018.

In response to the warning, Chinese importer Hengyu declared on its online store that the Xiao Lao Ban trademark was swapped for the Lao Ban Zai trademark. Thai manufacturer Taokaenoi also declared the adoption of the same practice as its Chinese importer’s despite its claim that its application for registration of the Xiao Lao Ban tradeamark was being examined by the Chinese Trademark Office.

In August 2018, a shipment of 21,920 boxes of crispy seaweed snacks bearing the Xiao Lao Ban trademark from Taokaenoi was seized and returned by the Chinese Customs at Weitong’s request. Weitong filed a lawsuit against Taokaenoi, Wal-Mart, and Hengyu with the Pudong New Area People's Court of Shanghai city accusing their trademark infringement and false advertising practices, seeking 25.17 million yuan ($3.9 million) in damages and reasonable expenses.

The trial court ruled for plaintiff Weitong and ordered defendants Taikaenoi and Hengyu to stop their infringement and Wal-Mart to stop selling the Xiao Lao Ban seaweed snacks on the ground that the class of Taikaenoi’s trademark was similar to that of Weitong’s trademark and Taikaenoi indeed used its trademark on the product similar to that in the class of Weitong’s trademark. The territoriality principle is basic to China’s trademark law. Ownership of a mark in one country does not automatically confer upon the owner the exclusive right to use that mark in another country. The court dimissed the plaintiff’s false advertising claim on the ground that defendants Taikaenoi and Hengyu changed the Xiao Lao Ban trademark to the Lao Ban Zai trademark.

The court awarded the plaintiff 195,680 yuan ($30,000) in reasonable expenses while rejecting its claim for damages, on the ground that Taikaenoi’s market share and consumer base didn’t derive from the use of the infringed mark and Taikaenoi’s infringement didn’t cause any economic loss to Weitong. Weitong’s main product lines were zha cai, a type of pickled mustard plant stem originating from Chongqing city, China and other preserved vegetables, standing little chance of being confused with Taikaenoi’s crispy seaweed snacks by consumers.

The defendants appealed the case to the Shanghai Intellectual Property Court. The appeals court upheld the lower court’s decision.

ANALYSIS

The trial court considered the rate of the profit the plaintiff gained from the use of the infringed mark, the defendant’s willingness in infringing the plaintiff’s mark, and the estimated economic loss the defendant’s infringement might incur on the plaintiff before ruling out the damages the plaintiff was seeking.