China’s Supreme People’s Court on May 9 overturned a lower court ruling on appeal against Fila Sports Co., Ltd. (斐乐体育有限公司), a subsidiary of Chinese sports equipment multinational corporation Anta Sports Products Ltd., in a trademark lawsuit lodged by it against Fuzhou city, Jiangxi province-based Pengcheng Leather Shoe Shop (鹏程皮鞋店), ordering Pengcheng to pay 100,000 yuan ($15,000) in damages and costs.
Fila, currently owned by Seoul city, South Korea-headquartered Fila Holdings Corp., is a 111-year-old brand of sports shoes and apparel with its history traceable to Biella city of Piedmont region in northwestern Italy, where brothers Ettore and Giansevero Fila created it. The originally Italian brand was sold by its founders to U.S.-based company Sports Brand International Ltd. in 2003 and then again to Fila Korea in 2007. Fila Korea launched its initial public offering (IPO) on the Korea Exchange in 2010 and renamed itself as Fila Holdings Corp. in 2020. Chinese company Belle International Holdings Ltd. acquired the rights to the Fila brand in China, Hong Kong, and Macao in 2007 from Fila Luxembourg, S.a.r.l., a subsidiary of Fila Holdings Corp., and then incorporated Full Prospect (IP) Pte. Ltd. (满景（IP）有限公司) as a joint venture between it and Fila Luxembourg in Singapore to maintain and operate these rights, with Belle holding 85% and Fila Luxembourg holding 15% of its total issued share capital. Jinjiang city, Fujian province-headquartered Anta acquired Belle’s full stake in the joint venture in 2009 and became the exclusive licensee of these said rights to the Fila brand in Greater China. Anta incorporated Fila Sports in Xiamen city, Fujian province in 2007 even before closing the acquisition deal with Belle.
Full Prospect still holds the two registered Trademark No. 163333 on FILA and No. 163332 on F (as in “FILA”) for goods in Class 25 including mainly clothing, footwear and headwear for human beings registered in China in 1982, which will remain valid until 2032 through continued renewals. Full Prospect in 2016 produced a trademark licensing agreement to demonstrate Fila Sports’s status since 2008 as the exclusive licensee of the rights to the Fila brand in Greater China, including the rights to enforce the trademark rights by any available means not limited to litigation, arbitration, and administrative procedures.
Fila Sports sued Pengcheng in the Fuzhou Intermediate People’s Court of Jiangxi province in 2019 for marketing and distributing sneakers, which bore the “日泰 (pinyin: Ritai, English translation: Daily Peace)” and “Ritai” trademarks, infringing its Trademarks No. 163333 on FILA with an “EILA” mark as a rubber logo patch on the midsole at the back of the sneaker heel, seeking 100,000 yuan ($15,000) in damages and costs. Pengcheng argued that the accused trademark was merely meant as a trivial bit of decoration and embellishment, not as a formal trademark to assist consumers in identifying and recognizing products, and in addition, it started with the English letter “E” instead of “F” as in the “FILA” trademark asserted by Fila Sports.
Subsequent to the allegedly infringing Ritai-branded sneakers collected and preserved as evidence by Fila Sports in November 2018, the Trademark Office of the China National Intellectual Property Administration (CNIPA) in March 2019 granted the petition filed by the Fujian Administration for Market Regulation to recognize the two trademarks owned by Full Prospect No. 163333 No. 163332 as well-known trademarks to be eligible for enlarged protection. Thus Pengcheng also claimed its ignorance of the status of “Fila” as a well-known trademark by the time of the action brought by its owner.
The court agreed with Pengcheng’s arguments despite the CNIPA’s intervening grant, holding that the “EILA” trademark was so different from the “FILA” trademark in font, style, and color, let alone their distinct first letters, as to be not likely to cause consumer confusion. The court ruled for Pengcheng and ordered Fila Sports to pay litigation costs of 3,000 yuan ($450). Fila Sports in 2020 appealed the case to the Jiangxi High People’s Court.
Pengcheng on appeal submitted new evidence to prove the moderate fame Ritai-branded shoes had gained through their franchised outlets in Fuzhou city to serve as a defense of its lack of intent to infringe. Fila Sports contested the arguments. The appellate court upheld the lower court ruling in spite of rejecting Pengcheng’s defense. Fila Sports in 2021 appealed the case to the Supreme People’s Court (SPC), which in turn reversed the ruling and awarded Fila Sports 100,000 yuan ($15,000) in damages and costs on May 9.
The top court defined the four-letter combination of “EILA” as a trademark instead of a mere decorative tab claimed by Pengcheng, which, unlike the brand founders’ surname Fila, did not make sense in its right, but was largely intended in bad faith by Pengcheng to bear much resemblance to the allegedly infringed trademark to free-ride on its goodwill. The top court held that even in cases of use of decorative elements, their owners should employ reasonable care and actively avoid similar trademarks. The SPC held that the appellate court erred in applying Article 10 of the Judicial Interpretation (JI) of the SPC on the Trademark Law of the People’s Republic of China (《最高人民法院关于审理商标民事纠纷案件适用法律若干问题的解释》), which came into force in 2002. The appellate court wrongly held that by the standard of the general level of attention of the relevant public, consumers would not mistake Ritai-branded sneakers for Fila-branded sneakers despite the “EILA” mark on the heel.
The Fila acquisition has been deemed an engine to send Anta onto its journey of high-end evolution and global expansion. The Fila segment brought in $1.71 billion in the six months ending June 30, 2021, while Anta earned $1.67 billion in that period. Anta in March was reported to be leveraging the Fila brand to pursue hotels as a new line of business by collaborating with Hyatt Hotels to launch a Fila-branded hotel in Shanghai.
The case docket no. is （2021）最高法民再336号, whose English transliteration is 336, retrial (再), civil case (民), (2021) Supreme People’s Court (（2021）最高法).
