Judicial Determination of Unfair Competition Infringing the Prior Enterprise (Shop) Name Right by the Use of Post Registered Trademark or Enterprise (Shop) Name

— The Trademark and Unfair Competition Case of Shenzhen Ellassay Fashion Co., Ltd. v. Liu Yang and Wang Suiyong

By Huang Yuyu, the Presiding Judge of Speedy Trial Tribunal, Shenzhen Intermediate People's Court (former judge of the IPR Tribunal, and the Presiding Judge of the case of the court of first instance)

The people's court should accept the lawsuit brought by the obligee on the grounds that the text or graph included in others' registered trademark infringes upon his prior rights such as the right of enterprise name. A determination that the use of post registered trademark or shop name infringes upon the prior right of name or shop name which constitutes unfair competition must be in line with the statutory constitutional elements of "fault and damage" provided for in China's Tort Liability Law. In determination of whether there is "fault" or not, the people's court should take into account the following factors: the degree of similarity between them, the similarities of goods in which they are used, the distinctiveness and notability of the shop name being claimed for protection, the degree of attention of the relevant public, etc. in addition to the interaction between these factors.

The people's court should accept the lawsuit brought by the obligee on the grounds that the text or graph included in others' registered trademark infringes upon his prior rights such as the right of enterprise name. A determination that the use of post registered trademark or shop name infringes upon the prior right of name or shop name which constitutes unfair competition must be in line with the statutory constitutional elements of "fault and damage" provided for in China's Tort Liability Law. In determination of whether there is "fault" or not, the people's court should take into account the following factors: the degree of similarity between them, the similarities of goods in which they are used, the distinctiveness and notability of the shop name being claimed for protection, the degree of attention of the relevant public, etc. in addition to the interaction between these factors.

Related legal provisions

Article 2 of Law of the People's Republic of China Against Unfair Competition

Article 1 of Interpretation of theSupreme People's Court on SomeMatters about the Application of Lawin the Trial of Civil Cases InvolvingUnfair Competition

Article 1 of the Provisions of the Supreme People's Court on Issues Concerning the Trial of Cases of Civil Disputes over Conflicts between Registered Trademark or Enterprise Name and Prior Right

Case index

Court of first instance: Guangdong Province Shenzhen City Intermediate People's Court (2012) Shen Zhong Fa Zhi Min Chu Zi Di NO. 976

Court of second instance: Guangdong Provincial Higher People's Court (2014) Yue Gao Fa Min San Zhong Zi Di NO. 1099

Court of retrial: China’s SupremePeople's Court (2016) Zui Gao Fa MinShen NO. 1617

Brief

Plaintiff (appellee of second instance, respondent of retrial): Shenzhen Ellassay Fashion Co., Ltd.

Defendant (appellant of second instance, complainant of retrial): Wang Suiyong

Defendant: Liu Yang

(1) the right base as the plaintiff's claim for protection 

a. "Gelisi" (Ellassay) as shop name. Shenzhen Ellassay Fashion Co., Ltd.was incorporated on November 18,1996, and its name was changed to Shenzhen Ellassay Investment Management Co., Ltd. on May 9, 2011. Shenzhen Ellassay Garment Industry Co., Ltd. was incorporated on June 8,1999, with Shenzhen Ellassay Fashion Design Co., Ltd. and Shenzhen Ellassay International Development Co., Ltd. as the promoters in addition to two other shareholders. On November 4, 2011, the name of Shenzhen Ellassay Garment Industry Co., Ltd. was changed to Shenzhen Ellassay Fashion Co., Ltd.

b. "Gelisi" (Ellassay) as registered trademark (No. 1348583). Its owner is Shenzhen Ellassay Fashion Design Co., Ltd. and the goods (category 25)verified and approved to use such trademark are shirts, clothing, leather(clothing), trousers, skirt, underwear, children's clothing, overcoat, pajamas and outer coat during the valid period from December 28,1999 to December 27, 2009. Such trademark was assigned to Shenzhen Ellassay Garment Industry Co., Ltd.on December 18, 2008, and its valid period was verified and approved on November 19, 2009 to be extended tothe period from December 28, 2009 to December 27, 2019. Its registrant was verified and approved on March1, 2012 to be changed to Shenzhen Ellassay Fashion Co., Ltd.

c. The claim that "Gelisi" (Ellassay)(No. 1348583) is a well-known trademark and that "Ellassay Fashion" is the special name for well-known commodity.

(2) the right base for the Defendant's defense

 a. The registered trademark (No.4157840) with He Chengjin as registrant. It was applied on July7, 2004, with the valid period from June 28, 2008 to June 27 2018. It was verified and approved to be used on the following (category 18)goods: handbag, wallet, briefcase,document box, leather hat box, card box, (animal) skin, music score box and backpack. On July 2, 2007, the trademark was verified and approved to be transferred to Wang Suiyong, who authorized Guangzhou HuaduShiling Dongshan Leather Factory to use such trademark and Guangzhou City Baiyun District Sanyuanli Xiuge Leather Goods Trading Company toconduct the wholesale and retail of such goods from February 25, 2009 to February 25, 2010.

b. The registered trademark "Gelisi"(No. 7925873) with Wang Suiyongas the registrant. It was applied on December 18, 2009, with the valid period from June 21, 2011 to June20, 2021, and verified and approved to be used on the following (category18) goods: faux leather, wallet,handbag, travel bag (box), passport holder (leather), beast skins (animal skin), belt (horse gear), backpack and briefcase. 

II. The alleged infringing facts

(1) The act of registering trademark "Gelisi". The trademark applied by Wang Suiyong for registration is identical with or similar to the right trademark.

(2) The act of using trademark "Gelisi"

a. On the hangtag of the handbagsof the allegedly infringing goods sold by Liu Yang, the trademark “Gelisi” was labeled with Wang Suiyong as the holder of the exclusive right to use such trademark and French Ellassay(Hong Kong) International Group Co., Ltd. (with Wang Suiyong as a shareholder) as the manufacturer. All the above information point to Wang Suiyong. Therefore, the allegedly infringing trademark "Gelisi" was used by Wang Suiyong.

b. The trademark "Gelisi" was used by Wang Suiyong in www.gleas.taobao.com, his online store with ”Gelisi Leather Goods Shop” as the name, for popularization of goods.

c. The trademark "Gelisi" was used by Guangzhou City Baiyun District Sanyuanli Xiuge Leather Goods Trading Company (with Wang Suiyong as the operator) on its goods such as handbag.

In summary, Wang Suiyongused the trademark "Gelisi" in hisproduction and operation.

(3) The act of using "Gelisi" as a shop name. Since May 27, 2004, Wang Suiyong has begun to use"Gelisi" as a shop name in the enterprise name of French Ellassay(Hong Kong) International Group Co., Ltd. incorporated by him, and continued to use such enterprise name in operations such as shop popularization and goods selling on the Internet after the company was dissolved on November 7,2008. Furthermore, Wang Suiyong registered the "Gelisi Leather Goods Shop" on www.taobao.com and such shop is still in operation up top resent.

Grounds for judgment

The court of first instance rules that: (a) the disputes between Wang Suiyong's application for the registration of "Gelisi" as a trademark and use of such trademark and the right trademark "Gelisi" was a dispute between the registered trademark that the people's court shall not accept and the parties shall resolve such dispute according to administrative procedures; (b)Wang Suiyong's acts such as using "Gelisi" as trademark and shop name constituted unfair competition because of his infringement upon the prior enterprise (shop) name right owned by Shenzhen Ellassay Fashion Co., Ltd. and (c) Liu Yang's selling of handbags with "Gelisi" as trademark and shop name constituted unfair competition.

The court of second instance rules that the facts were clearly ascertained and the law was correctly applied by the court of first instance and the original judgment shall be affirmed according to the law.

The judgment

The court of first instance rules that (a) Wang Suiyong shall, from the date the judgment takes effect,immediately stop using "Gelisi"as trademark and shop name; (b)Liu Yang shall, from the date the judgment takes effect, immediately stop selling the goods with "Gelisi"as trademark and shop name; (c)Wang Suiyong shall, within ten days from the date the judgment takes effect, make a compensation of150,000 Yuan as economic losses and 30,000 Yuan as reasonable costs for safeguarding rights, a total of180,000 Yuan, to Shenzhen Ellassay Fashion Co., Ltd.; (d) Liu Yang shall, within ten days from the date the judgment takes effect, make a compensation of 20,000 Yuan as reasonable costs for safeguarding rights to Shenzhen Ellassay Fashion Co., Ltd.; (e) Wang Suiyong shall,within thirty days from the date the judgment takes effect, eliminate ill effects by publishing announcement(the contents of such announcements hall be examined and approved by the court) on China Enterprise News and bear the costs for such publishing and (f) the other claims submitted by Shenzhen Ellassay Fashion Co., Ltd shall be rejected.

The court of second instance rules that the appeal shall be rejected and the original judgment shall be affirmed.

China's Supreme Court makes a written judgement that Wang Suiyong's application for retrial shall be rejected.

Annotation for the case

It is common for the obligee to be vigilant on the "malicious cybersquatting" of his prior registered trademark, enterprise name and shop name by using the post registered trademark and shop name in actual commercial operations. If so, the obligee will make every effort to prevent the post right by raising objections and asserting trademark infringement and civil actions with unfair competition,resulting in conflicts between the two kinds of rights. The plaintiffs' claims may include everything in order to obtain comprehensive protection for his rights and interest such as registered trademark, enterprise(shop) name and the special name of his well-known goods in addition to making a clean sweep of the whole allegedly infringement committed by the defendant. For clarification of the intricate legal relationships, the author suggests that the court should(a) exclude the disputes outside the scope of acceptance by the court and claims without right (interest) base,(b) make meticulous clarification of the allegedly infringing facts and (c) determine whether there is unfair competition according the constitutional elements of infringing acts.