CASE 6 : LAND ROVER TRADEMARK INFRINGEMENT

Trial Docket: (2014) SuiZhongFaZhiMinChuZi No. 75

Appellate Docket: (2017) YueMinZhong No. 633

Guangdong Province

[Headnotes]

The Trademark Law of China, Article 13(2) provides, "A trademark application for registration for use in connection with unidentical or dissimilar goods which is a reproduction, imitation or translation of another's well known mark already registered in China and likely to mislead the public to the detriment of interests of the registrant of such well known marks shall be denied for registration and shall be enjoined from use."

[Synopsis]

Plaintiff: Jaguar Land Rover Limited

Defendant: Guangzhou Fenli Food Co., Ltd.

An affiliate of Land Rover registered in China in 1996, 2004 and 2005 "LAND ROVER" under No. 808,460, "路虎" ("Land Rover" in Chinese) under No. 3,514,202, and "LAND ROVER" under No. 4,309,460, all in class 12 for "land motor vehicles," which marks enjoy great reputation, and were subsequently assigned to Jaguar Land Rover Limited. Guangzhou Fenli Food Co., Ltd. ("Fenli") on its website and in its stores promotes and sells "Landrover (in Chinese) Vitamin Beverages" and used in connection with its products, packaging and websites the accused indicia including "Landrover (in Chinese)", "LANDROVER," "Landrover and Chinese Equivalent," as well as "(Chinese Equivalent) and LandRover in two lines." Fenli applied in 2010 for registration of trademark "(Chinese Equivalent) and LANDROVER" in class 30 for "nonmedical nutritional solutions" and in class 32 for "nonalcoholic beverages," but all were refused registration. Land Rover sued Fenli for infringement. The trial court ordered injunction and levied damages plus reasonable litigation cost for 1.2 million yuan. The appeals court found the evidence was ample to support Land Rover's claim that its trademark had become widely known in China to the extent of well known trademark. Defendant's infringing act had weakened the distinctiveness and good reputation of Land Rover's well known trademark, causing damages to Land Rover, and must be enjoined. The court dismissed the appeal, and affirmed.

[Judge's Comment]

This is an exemplary case of crossclass enhanced protection of well known trademarks. Apart from applying the basic principles of "Recognition by Need" and "Recognition by Case" in well known mark cases, another unique aspect of this case is that Fenli was found to have misappropriated large number of well known marks of well known entities or persons by forestalling trademark registrations. The appeals court affirmed the trial court's decision as appropriate, taking into account Land Rover's number of trademarks, well known status, Fenli's involvement in infringement suits, circumstances, time span, consequences and business activities, as well as Land Rover's reasonable expenses for the litigation, and awarding 1.2 million yuan. This amount of damages show the court's attitude toward curtailing bad faith trademark warehousing. This case has produced exemplary effect on enhancing protection of well known marks, on suppressing trademark squatting, educating public for respecting intellectual properties.

CASE 7 : 3M TRADEMARK INFRINGEMENT

Trial Docket: (2017) Yue 20 MinChu No. 2

Guangdong Province

[Headnotes]

The transformation, in actual use, of regular registered trademarks into infringing trademark is a trend that is becoming a real concern. There is no need to cancel the accused trademark before initiating a law suit. In this case, 3M paid special attention to searching and submitting the evidence proving the intentional action of the trademark owner and got a favorable decision from the court.

[Synopsis]

Plaintiff: 3M Company (3M)

Defendant: MAO Qingyu & Zhongshan San En Meng Electronic Appliance Co., Ltd. (San En Meng)

3M is a world-renowned innovative technology company. In 2013, 3M registered the trademark "" in Class 11, covering "water filter, water purification device". The 3M trademark had been used in China for a long time, and were already known to the relevant public.

On July 1, 2013, a natural person Mao Qingyu filed a trademark application for "" in Class 11, covering the same goods "water purification equipment and machines, etc." The trademark consists of the Chinese character "了" (which is pronounced "liao" or "le") and the letter "M". The trademark was registered on January 14, 2015. Mao set up a company called Zhongshan San En Meng Electronic Appliance Co., Ltd. (San En Meng) on April 2, 2015, and authorized the company to use the trademark "". In September 2016, Mao handed over the position of legal representative to his father. However, in practical use, the "了" part of San En Meng's trademark was subtly modified so that the trademark was transformed into "", a sign visually very similar to 3M. 3M filed a civil litigation against both Mao and San En Meng before the Zhongshan Intermediate Cour t , Guangdong Prov ince, seeking for cessation of trademark infringement and damages.

The defendants argued that they were using their own trademark "", which was registered. The Court ruled in favor of 3M, and held that: (1) The registered trademark "" consists of the Chinese character "了" and the uppercase letter "M", while the accused trademark "" is a combination of the Arabic numeral "3" with the letter "M". The pronunciation and meaning of the two marks are obviously different. It is not just a nuance, since "" changed the distinctive features of "". Thus, the court found that the act of using "" does not constitute "standard use" of the registered trademark "". (2) Given the strong distinctiveness of the mark "" and the reputation of the products among the relevant public, the accused trademark "" constitutes trademark infringement. (3) The "" trademark owner, Mao, and the company San En Meng, set up to conduct the industrial activity, were found jointly liable. 3M had submitted notarized websites and recordings to the Court, proving that Mao and San En Meng were both aware of the high reputation of the trademark "" in purifier industry, and that Mao was perfectly aware that his trademark "" was being t ransformed by San En Meng to become the infringing use of "".

The Court calculated the damages by referring to the full statutory amount provided by the law. As it was difficult to assess San En Meng's illegal profits or 3M's actual loss, the Court determined the amount of compensation by considering the following factors: (1) Large-scale production and sales of the infringing products (30-40 models o f infringing products offered to sale on various e-commerce platforms); (2) Long duration of infringement (since the setup of San En Meng, still lasting during the process of court hearing); (3) San En Meng refused to provide financial documents reflecting the production and sales quantity of the infringing products and the profit, therefore, it should bear unfavorable legal consequences. The Court hence determined that San En Meng has benefited enormously from the infringement; (4) San En Meng and Mao apparently acted in bad faith in free-riding the reputation of the "" trademark; (5) 3M paid for the reasonable cost in order to stop the infringement. On October 30, 2017, the Court ruled that Mao Qingyu and San En Meng shall bear joint and several liability for a compensation of RMB 3 million. Wanhuida Peksung represented 3M in the civil proceeding.

[Judge's Comment]

The transformation, in actual use, of regular registered trademarks into infringing trademark is a trend that is becoming a real concern. These subtle transformations cannot easily be anticipated, and even if they are, the CTMO will not necessarily refuse the registration of a trademark because it might be transformed and become infringing. Where this happens, the AIC will usually refuse to take any action, because the defendant will claim that it is simply using a variant of its registered trademark. Civil litigation is therefore necessary. It is possible by an SPC interpretation of 2009, which specifically mentioned the case where a registered trademark is transformed in actual use: in such case, there is no need to cancel the accused trademark before initiating a law suit.

The difficulty in such cases is to prove the liability of the trademark owner who can easily claim that the act of licensing its registered trademark is perfectly legal, and that it cannot be held responsible for what the licensee does with the trademark. In this case, 3M paid special attention to searching and submitting the evidence proving the intentional action of the trademark owner.

This case shows the determination of the courts to sanction such behavior. In particular, the reluctance of the defendant in disclosing its accounts had an obvious impact on the court 's decision.

CASE 8 : "HUARUN" BUILDING PROJECT TRADEMARK INFRINGEMENT AND UNFAIRCOMPETITION

Trial Docket: (2014) NingZhiMinChuZi No. 232

Appellate Docket: (2016) SuMinZhong No. 1326

Jiangsu Province

[Headnotes]

The development and sales of commercial housing projects, and the service of real estate management and construction are primarily similar in terms of consumers and distribution channels, with certain connection between the two, and should be considered as similar products and services. Although commercial housing project sales are restricted to certain geographic localities and consumers usually pay greater attention when making purchases, they might, in view of the rapid communication of information, particularly when relevant registered trademarks are well known, easily be influenced by the information obtained through the Internet, television, paper media, etc. If an infringer uses in business operations a trade indicia that is similar to a relevant registered trademark, it is likely to mislead the relevant public into believing that the two are associated to some extent. Therefore, a developer should be enjoined from its use when it is intentionally made.

[Synopsis]

Plaintiff: China Resources Group ("China Resources")

Defendant: Jiangsu Runshi Real Estate Development Co., Ltd. ("Runshi")

China Resources obtained in December, 1994 a series of trademark Reg. Nos. 773,121 and 779,532 for "HUAREN" ("China Resources" in Chinese), and "Huaren and You, Hand in Hand, Will Change Life," designating "construction housing projects (apartments), constructions, real estate management, real estate leasing, and real estate agency. It has developed, among others, many real estate projects in Nanjing, Wuxi and other places in Jiangsu Province within China, investing tremendous financial resources, and sustaining continued promotion and use of the above marks. China Resources contends that Runshi Real Estate, by adopting a name "华润景城" (literally, "China Resources Buena Vista"), has infringe upon its exclusive right under the registered trademark, and therefore requests injunction against Runshi and change of name of its housing project, and seeks damages and reasonable expenses in the amount of 2,089,512 yuan.

Run shi denies trademark infringement by alleging that the housing projects it developed does not fall within the designated scope of usage of China Resources' registered trademarks at issue, and China Resources does not have any housing projects in Suqian and Yixing, its registered trademarks are not well known in these locales, and its real estate, being highly valuable assets for which a consumer would exercise greater care, and are therefore not likely to be confused.

At trial, the Nanjing Intermediate Court concluded that Runshi infringed the exclusive right under the registered trademark of China Resources. First, Runshi's development and sales of the "China Resources Buena Vista" housing projects and China Resources registered trademarks intended scope of use, judged from the perspective of relevant public, have substantially similar functions and uses, similar consumers and similar distribution channels, and are both real estate developers, sharing certain connection, and therefore should be considered as providing similar services. Second, China Resources has been committed to extensive and continued promotion of its registered trademarks, and the housing projects under the name of "China Resources" are relatively reputable. The name of "China Resources Buena Vista" used by Runshi, though with discernible disparity on visual with China Resources' registered trademarks, the core elements being "China Resources," is nonetheless similar, and when used by Runshi, likely to cause mistake among the public as to the source of the services, thereby mistakenly believing that Runshi's housing projects have some kind of relationship with China Resources. For these reasons, Runshi is found to have infringed upon the exclusive right under the registered trademark of China Resources, for which civil liabilities must be incurred. Based on this, the Nanjing Intermediate Court decreed: Runshi is hereby enjoined from further infringement, and is to pay damages of 2,089,512 yuan to China Resources.

The Jiangsu High Court on appeal held: Runshi's acts were infringement of the exclusive rights under the registered trademark of China Resources. First, the designated class of services for China Resources' mark are real estate management and construction, which, compared to Runshi's business of sale of commercial housing products, have certain connections as both have substantially similar functions, uses, consumers and distribution channels, and both are real estate developers. It should be recognized that real estate management and construction have connections with sale of commercial housing projects. Secondly, although four of the five China Resources' registered marks involved here use traditional Chinese characters, these characters, however, are commonplace traditional Chinese characters, easily recognized and pronounced by the ordinary consumers and not the hard ones suggested by Runshi, which otherwise would not have been used by Runshi in its Yixing housing projects. Therefore, "China Resources Buena Vista" used by Runshi and the "China Resources" series registered trademarks owned by China Resources are similar marks. Finally, the facts in this case show that China Resources since registration of its marks have developed a great number housing projects under the name of China Resources, and has been committed to sustained and extensive promotion in the media including the Internet, establishing relatively recognizable reputation on the domestic market. Although the sale of commercial housing projects are location specific to some extent, and consumers may exercise great notice, in this great time of rapid communication of information, particularly when China Resources have developed a great number of housing projects, even those consumers who have long been living in Suqian or Yixing may have received information of China Resources registered trademarks from the Internet, television or paper media. When Runshi in its business by selling housing projects using "China Resources Buena Vista," the consuming public would inevitably misled into believing that the projects have something to do with China Resouces.

The Jiangsu High Court on appeal decreed: the appeal is dismissed and judgment affirmed.

[Judge's Comment]

With the development of China's market economy, and competition in real estate business becomes more and more fierce, the naming of housing projects plays the key role in real estate promotion and sale. Many large real estate businesses use their own names or trademarks for their housing projects developed all over the country creating huge brand effects. Due to lack of regulation on approving housing project names, however, imitation of well known names, registered trademarks or trade indicia, and takeoff on others' reputable housing project names are all over the place. The solution of this case represents by example an unwaivering judicial will to protect intellectual properties in real estate business and to maintain fair competition to preserve an orderly market for the real estate business.

CASE 9 : DHC CORPORATION TRADEMARK INFRINGEMENT AND UNFAIR COMPETITION

Trial Docket: (2014) HuYiZhongMinWu(Zhi)ChuZi No. 98

Appellate Docket: (2016)HuMinZhong No. 339

City of Shanghai

[Headnotes]

When goods sold or services provided by an Internet store holding out as "self-run" on the e-commerce platform constitute infringement, the operator of the e-commerce platform, whether or not the actual business operator of the store, shall carry a heightened duty of care, as well as legal responsibilities for such infringing activities commensurate with the store operator that sold the goods or provided the services.

[Synopsis]

Plaintiff: DHC Corporation Defendant: New Height E-Commerce (Shanghai) Co., Ltd. (New Height E-Commerce); Elov (France) International Group Limited (Elov); New Height Information Technology (Shanghai) Co., Ltd. (New Height IT); and Beijing Wanhao Tiancheng Trading Co., Ltd. (WanHao Trading)

Plaintiff, holder of exclusive rights under trademark registration Nos. 1395239 for DHC, 8718597 for DHC, and 8284725 for , etc., discovered information relating to Vitamin E facial masks and other mask products showing DHCFOCUS from the yhd.com website operated by New Height E-Commerce. The website carries the words: "Self-Run by yhd.com." A product photo revealed a mark  on in- and outside packaging where the "DHC" portion was enlarged and boldfaced. The website used the indicia of "DHCFOCUS/DHC焦点" and , as well as DHCFOCUS before the product names. The word DHC on the product info page was also enlarged and boldfaced. In its "Brand Story," the trademark and DHC Corporation's background information were used. The ensuing purchase made from the said Internet store revealed that these products carried the mark and with sales invoice indicating the issuer to be New Height IT, manufacturer to be Elov, and the distributor to be Wanhao Trading Co. DHC therefore sued the aforementioned four defendants for trademark infringement and unfair competition, seeking corresponding infringement liabilities.

The trial court found infringement of registered trademarks of DHC in the four companies activities, and unfair competition against New Height E-Commerce, and New Height IT of false advertisement by using on their websites, without permission, introductory materials about DHC and their products. The court ordered injunction against the four defendants and levied liabilities accordingly.

New Height E-Commerce and Elov were not satisfied, and appealed to the High Court of Shanghai. New Height E-Commerce contended that it is merely e-trading platform service provider, and not a seller of the products at issue, for which the sales invoice was issued by New Height IT which operated a self-run store at yhd.com which was an independent business, responsible for its own business activities, totally unrelated to New Height E-Commerce. The appeals court was of the opinion that New Height E-Commerce, being the operator of yhd.com in this case should be equally liable for infringement activities for the store that labeled itself as "self-run" at its website, and therefore denied its contention.

[Judge's Comment]

This case relates to liabilities at law for e-commerce platform operators, and relevant duty of care, in particular, for "self-run" stores' infringing activities. Finding of infringement ought to be made from two perspectives of both intentions and circumstantial surroundings. Emphasis should be placed on whether there exists a duty of care, and whether the duty has been breached as a subject fault.

It is actually a business model in a case like this where trading information is advertised and business conducted in the name of platform operator by using the indicia of "self-run." In this way, the ordinary consumer mainly relies on the self-run information disclosed by the store to evaluate the store operator. On the other hand, in light of usually greater reliability of the e-commerce itself than a third party product or service provider, the consumer is prone to take the business model as e-commerce platform selfrun business, which inevitably creates more trading opportunities and actual benefits for the platform and such store. Based on the principles of equal rights and obligations, and of fairness, greater responsibilities should be imposed on e-commerce platform operators.

As for platform operators, when Internet stores use the indicia of "selfrun," it would mean that business activities of relevant products or services are conducted in the name of the e-commerce platforms or their operators. Such activities should encompass not only specific deals, but also trading information. An e-commerce platform operator, as the manager of e-commerce platform, though perhaps unable to keep track of prior examination on the massive trading information within its platform, but must be more sensitive of and exercise greater control over the business activities that are labeled "self-run" under its name. In other words, there exists a greater duty of care to manage and control such activities.

In view of streamlining e-commerce development, the imposition of greater duty of care is necessary for the proper development where the products or services infringe upon interests of others when labeled under "self-run."

CASE 10 : BURBERRY TRADEMARK INFRINGEMENT

Trial Docket: (2016) Hu 0115 MinChu No. 13990

Appellate Docket: (2017) Hu 73 MinZhong No. 21

City of Shanghai

[Headnotes]

Determination of whether use of a mark identical with or similar to a registered trademark in OEM processing will constitute trademark infringement should be made in conjunction with justifiability of plaintiff's trademark registration, whether defendant has carried necessary and reasonable duty of care of examination, whether the OEM product will be sold domestically, and whether defendant has obtained trademark registration in the export destination country.

[Synopsis]

Plaintiff: BURBERRY LIMITED

Defendant: Ningbo China Light Imp.& Exp. Corp.

Third parties unrelated to the Case: Li & Fung (Trading) Co., Ltd., and HuiQian Suitcase & Bags Co., Ltd. of Pinghu City

Plaintiff Burberry Limited (Burberry) has obtained for grid pattern design trademark registration under No.G732879 (grid in color) and registration No. G987322 (black and white) for luggage, travel bags, handbags, purses in class 18. These registered marks, upon use and promotion by plaintiff have acquired considerable reputation and distinctiveness on the market. A third party unrelated to the case, Li & Fung (Trading) Co., Ltd., and defendant Ningbo China Light Imp. & Exp. Corp. (China Light) agreed that Li & Fung shall be a buyer's agent for Productos Avon of Ecuador, to purchase 7000 Set de Maletas Cuadros (the infringing product) from China Light. Thereafter, China Light placed an order for production with HuiQian Suitcase & Bags Co., Ltd. of Pinghu City, (HuiQian, not a party to this case), with clear indication of style, specification, design and verification standard. When China Light declared these products at issue with Shanghai Customs for export to Ecuador, the products were seized by the Customs. Burberry claimed that China Light's aforementioned activities infringed Burberry's exclusive trademark rights under registration, and sued for injunction, seeking damages of 3 million yuan. Defendant China Light countered that the appearance of the product at issue was not similar plaintiff's trademark; and defendant, being merely an agent for foreign trading, and not a manufacturer or seller, had exercised reasonable care, and was free of any fault, and therefore quested dismissal of plaintiff's complaint.

The trial court of Pudong, Shanghai found at trial that where a party for purposes of sale, asks another to process products at issue by designating style, specification, and design, and did sell the products at issue by exporting, such a party should be considered as the manufacturer and seller for purposes of the infringing products at issue. In the present case, the style, specification and design are all provided by defendant, which production completely reflects the intention of the defendant, and the OEM production involves materials printed with designs identical with or similar to a registered trademark constitutes trademark use. Meanwhile, defendant conducted business transaction with Li & Fung in the name of a seller, supplying its name as China Light in export declaration at the Customs as operator and sender of goods, for which defendant and its legal representative have affixed their seals, showing more than sufficiently that defendant was the manufacturer and seller of the infringing products at issue. Besides, defendant was not free of fault for the manufacture and sales of the infringing products at issue.

The trademark at issue, upon use and promotion by plaintiff, has established considerable market identity and relative distinctiveness. Defendant, being an import/export trading agent for self-run and other goods or technologies for a long time, failed to exercise reasonable and necessary care of examination of the trademark at issue, and is therefore negligent. For these reasons, defendant entrusting of the OEM production constitutes trademark infringement. The court thereby order injunction, and levied damages and awarded reasonable expenses, all in the amount of 630 thousand yuan. Defendant China Light was not satisfied with the trial court decision, and appealed. On appeal, it was affirmed.

[Judge's Comment]

Whether the use of a mark identical with or similar to a registered trademark in the OEM process constitutes trademark infringement should be determined in conjunction with the justification of plaintiff's trademark registration, whether defendant exercised necessary and reasonable care for examination, whether the OEM product are sold domestically, and whether defendant has obtained trademark registration in the export destination country, etc. The defendant in this case, by entrusting another to process the infringing products at issue for purposes of sales, is a coterminous manufacturer of the infringing product, whose entrusting of the OEM processing involving use in the material a design identical with or similar to the registered trademark constitutes trademark use. Meanwhile, being a trading agent for self-run products in import and export transactions, a long term importer and exporter, should carry greater responsibility for notice of what plaintiff claims than the ordinary relevant sectors of the general public. Besides, since plaintiff's registered trademark enjoys considerable market identity, defendant obviously failed its duty of necessary and reasonable care for examination. Therefore, defendant's entrusting of OEM process has constituted trademark infringement.