CASE 11 : LIANJIA TRADEMARK INFRINGEMENT AND UNFAIR COMPETITION

Trial Docket: (2017) Jin 02 MinChu No. 26

City of Tianjin

[Headnotes]

The Supreme People's Court Interpretation on Certain Issues On Application of Law in Civil Cases of Unfair Competition provides, in Article 6, "Corporate names, and corporate names of foreign countries (regions) conducting business in China, when recorded with the competent authorities, shall be recognized as the ‘corporate names' as defined under Article 5(3) of the Anti- Unfair Competition Law." Business names used in corporate names, if well known in the market, or to the relevant public, may be recognized as the ‘corporate names' as defined under Article 5(3) of the Anti-Unfair Competition Law." Corporate names by law are protected. A corporate name comprises four parts, i.e., administrative region, business name, business character, and corporate style. Although corporate names have regional indications when recorded, their protection is not necessarily restricted the place of recordal. If they become known beyond their geographic locations, they may as well be protected under the Anti- Unfair Competition Law to the geographic extent they are known. If another, with a purpose to take off on their reputation, use a name identical with or similar to the corporate name (or business name) so as to cause confusion in the marketplace, it must be stopped.

[Synopsis]

Plaintiff: Beijing Home-Link Real Estate Agency Defendant: Tianjin New Seaboard Home-Link Real Estate Agency Plaintiff Beijing Home-Link Real Estate Agency ("Beijing Home-Link") was formed on September 30, 2001, originally under a corporate name of Beijing Home-Link Baoye Real Estate Agency, conducting business in Internet information services and real estate agency business, and being the owner of the trademarkswith words and design, and. In 2012, 2013 and 2014 it invested 14, 50, 74 millions respectively in promotional advertisement. Defendant Tianjin New Seaboard Home-Link Real Estate Agency ("Tianjin Home-Link") has a business of second-hand real estate transactions, leasing, and real estate information consultation. Defendant used its store sign identical with plaintiff's "LIANJIA." Plaintiff sued for injunction and damages.

The court found that corporate names, though having regional indications when recorded, their protection is not necessarily restricted the place of recordal. If they become known beyond their geographic locations, they may as well be protected under the Anti-Unfair Competition Law to the geographic extent they are known. If another, with a purpose to take off on their reputation, use a name identical with or similar to the corporate name (or business name) so as to cause confusion in the marketplace, it must be stopped. Therefore the court decided that Tianjin Home-Link be enjoined from using "LIANJIA" ("Home- Link" in Chinese) as business indicia and pay damages and reasonable litigation cost in the amount of 100 thousand yuan.

[Judge's Comment]

Through analyzing whether defendant has the right to use "LIANJIA" ("Home- Link in Chinese") as corporate name and business indicia, this case establishes a fundamental rule for corporate name protection beyond its original locale, i.e., its protection follows its reputation beyond the geographic place of recordal under the Anti-Unfair Competition Law of People's Republic of China. The court in this case, on the basis of clear facts of infringement and verification of plaintiff's corporate names and registered trademarks, found that plaintiff's business name "LIANJIA" ("Home-Link") protectible in this City, and defendant is liable for unfair competition and trademark infringement. The ruling in this case provides ample protection for well known Chinese real estate agency's lawful interest, and helps to clean up the real estate market.

CASE 12 : TMALL TRADEMARK INFRINGEMENT AND UNFAIR COMPETION

Trial Docket: (2017) Zhe 01 MinChu No. 1681

Zhejiang Province

[Headnotes]

An order o f a preliminary injunction is a harsh pretrial remedial measure significantly affecting the parties' interest. A court in granting such an order must exercise due care.

[Synopsis]

Plaintiff: Alibaba Group Holding Limited and Zhejiang Tmall Network Limited

Defendant: Guangdong Tianmao Investment Group, Guangdong Tianmao Company and Zhou Shaowen

Alibaba Group Holding Limited ("Alibaba Group") and Zhejiang Tmall Network Limited ("Zhejiang Tmall") contend that Guangdong Tianmao Investment Group and 16 affiliates in which Guangdong Tianmao was shareholders which all use "天猫" (Chinese equivalent of "Tmall") as business names (collectively "Guangdong Tianmao"), and ZHOU Shaowen (shareholder of Guangdong Tianmao), without permission, used and registered as their corporate name for their business activities, a word that was identical with their registered trademark "天猫" (Chinese equivalent of "Tmall"), misleading the relevant public into believing that Guangdong Tianmao had connection with them, constituting thereby trademark infringement and unfair competition. These acts already caused tremendous injuries to their reputation and images, and it was highly likely that Guangdong Tianmao and Zhou Shaowen would very likely continue with even worse acts, leading to irreparable harm. Alibaba Grou and Zhejiang Tmall therefore filed suit, requested attachment, and sought preliminary injunctions against: 1. Guangdong Tianmao and Zhou for trademark infringement and unfair competition activities; 2. Guangdong Tianmao for using "Tianmao" or similar words as corporate names; 3. Guangdong Tianmao and Zhou for using "Tianmao" or any other word identical with or similar to "Tianmao" mark in any company or entity they may set up.

The Hangzhou Intermediate Court, upon examination, determined: (1). Alibaba Group is registrant of "Tianmao" (in Chinese) under Reg. No.10,130,978 and other trademarks, and Zhejiang Tmall is a licensee. The accused infringing indicia is identical with or highly similar to the "Tianmao" trademarks, likely to cause relevant public to believe that there is a connection with Alibaba Group, thereby diluting the strength of its trademarks, causing damage to its trademark rights, and a finding of infringement is highly likely. (2) Guangdong Tianmao, knowing the "Tianmao" trademarks and corporate name, registered a series of "Tianmao" corporate names and used them in business activities, with the intention to take off on "Tianmao" trademark and corporate reputation, and a finding of unfair competition is highly likely. (3).

Based on its promotion and description on Guangdong Tianmao's website, it was planning full production and multiple business development. Were it to continue with its trademark infringement and unfair competition activities, it would not only become out of control, and would cause further confusion among the relevant public, resulting in irreparable harm for the reputation derived from the trademark. Moreover, once infringement is found, Guangdong Tianmao probably would be incapable of paying damages. (4). Guangdong Tianmao's current investment is restricted to office expenses and expenses for securing intellectual property rights. Since it has been formed only 1 or 2 years ago, has not created any value to its corporate names through business activities, the impact will be limited. 5. In ordinary cases, the injunction order will apply only to the relevant corporate names in business activities. But in this case, due to the obvious bad faith of Guangdong Tianmao, and due to the covert nature of the intellectual property infringement, and were it to continue using the accused name in business activities, it might be hard to detect accurately and timely. Therefore it is necessary for it to change its corporate name.

In sum, the court decreed on December 19 2017 that: (1). Guangdong Tianmao is hereby enjoined from using any word or indicia involving "Tianmao" in any business locales, or on the Internet, effective until a judgment is rendered; (2). Guangdong Tianmao is hereby enjoined from using any corporate name involving the word "Tianmao" in business activities, and is hereby ordered to record a change of corporate name to anything other than "Tianmao," effective until a judgment is rendered; and (3). Guangdong Tianmao is hereby enjoined from making any false advertisement, effective until a judgment is rendered.

[Judge's Comment]

This is the very first case of Hangzhou Intellectual Property Court since its establishment for an injunctive order. The court conducted an analysis based on distinctiveness and reputation of the proprietor's trademarks, the intention of the accused infringers, and the possibilities of irreparable harm the infringement may cause to the lawful rights of the proprietors. Eventually it decreed for injunctions against the infringing indicia. Moreover, the court, in consideration of the conspicuous bad faith of the accused infringers, and the covert nature of IP infringement, included in the injunctive relief an order for infringer to record a change of name, which is the first in the country. This order effectively eliminates the possibility for infringer to continue the infringing business, and to avoid further injuries to the proprietor, representing the timeliness and effectiveness of the judicial IP protection.

ADMINISTRATIVE CASE

CASE 13 : QIMEN RED TEA PETITION OF TRADEMARK INVALIDATION

Trial Docket: (2015) JingZhiXingChuZi No. 6629

Appellate Docket: (2017) JingXingZhong No. 3288

City of Beijing

[Headnotes]

Registration for a geographic appellation mark should not be proved, by law, if the geographic boundaries are not certain; The applicant for registration of geographic appellation mark carries a heavier duty of candor when submitting application documents than an applicant in an ordinary application for goods or services, the breach of which will remove the justification for the trademark registration, as "registration obtained through fraudulent means" or "registration obtained through other improper means."

[Synopsis]

Plaintiff (Appellee): Qimen Red Tea Association of Qimen County (The Association)

Defendant (Defendant at trial): State Administration for Industry & Commerce, Trademark Review & Adjudication Board (The Board)

Third Party (Appellant): Anhui GuoRun Tea Co., Ltd. (GuoRun)

On September 28, 2004, the Association filed a trademark application for registration under No. 4292071 for "Qimen Red Tea and Design" (in designated color) (the disputed mark) which, upon examination, was approved for "tea, tea substitute" etc., in class 30, effective from November 7, 2008 through November 6, 2018. On December 27, 2011, GuoRun filed a petition with the Trademark Review & Adjudication Board (the Board) for disputing the registration, noting that "Qimen Red Tea" is produced not only in Qimen County, but also in the vicinity such as Guichi, Dongzhi, Qimen, Shitai, Qianxian. For this reason it raised the dispute over the registration.

On October 19, 2015, the Board issued its decision of trademark invalidity for Registration No. 4292071 "Qimen Red Tea." ShangPingZi [2015] No. 84747 (the Decision at issue), holding that the Association in filing the application for registration of "Qimen Red Tea" as a geographic appellation, designated the geographic appellation as within the administrative region of merely the area of Qimen County, in contradiction to historical realities, and in breach of the duty of candor for filing application for trademark registration, thus triggering Article 41 of the Trademark Law of 2001 for obtaining registration through fraudulent means. In sum, the Board, in compliance with Article 41(1) of the Trademark Law of 2001, Article 44(1)(3), and Article 46 of Trademark Law of 2013, decided: the disputed trademark shall be declared invalid.

Dissatisfied with the decision, the Association instigated judicial review of the administrative proceedings with Beijing Intellectual Property Court. The court decided at trial: (1) The decision is reversed; (2) The case is remanded to the Board for a new decision. GuoRun was not satisfied with the trial decision, and appealed. The People's High Court found that the Association with full knowledge that the geographic scope for "Qimen Red Tea" is under dispute failed to inform the trademark registration authorities of the dispute, and by failing to take action when GuoRun withdrew its opposition per request of Anhui Second Bureau of Commerce, in attempted hope that the trademark application be approved for registration by competent authorities. Such activities are precisely the "other inappropriate means to obtain registration." Therefore, the appeals court decided: (1) The trial decision is reversed; (2) All complaints of the Association are dismissed.

[Judge's Comment]

Geographic appellation is an indicia of a product's geographic origin having certain quality, reputation or other unique features which are more or less derived from natural or cultural elements in the original location. This is a case of first impression for judicial review of the administrative process in approving trademark registrability for geographic appellation in terms of its geographic boundaries, a core issue for protection of geographic appellations. At the appellate level, the court clarified two issues: one, registration for a geographic appellation mark should not be proved, by law, if the geographic boundaries are not certain; two, the applicant for registration of geographic appellation mark carries a heavier duty of candor when submitting application documents than an applicant in an ordinary application for goods or services, the breach of which will remove the justification for the trademark registration, as "registration obtained through fraudulent means" or "registration obtained through other improper means."

CASE 14 : ROXTEC AB APPLICATION FOR COLOR COMBINATION TRADEMARK

Trial Docket: (2015) JingZhiXingChuZi No. 1638

Appellate Docket: (2016) JingXingZhong No. 55

City of Beijing

[Headnotes]

Color combination mark, as a type of trademark akin to design marks, although limited to a specific presentation in the examination process where the relevant color combination must be embodied objectively in certain graphic shape, it is inappropriate to confine the color combination to that shape, thence transforming the mark from one with a single limitation of color combination into another of both color combination and the shape.

[Synopsis]

Plaintiff (Appellant): Roxtec AB (Roxtec)

Defendant (Appellee): Trademark Review & Adjudication Board of State Administration for Industry & Commerce (the Board)

Plaintiff Roxtec on December 19, 2012 filed a trademark application with the Trademark Office of the State Administration for Industry & Commerce (the Trademark Office) under No. 11915217 for a color combination mark (the Mark under application) designating goods in class 6 for "metal pipes for cable, metal pipes (made of metal), metal penetration pipes, metal cotters." The Trademark Office issued a final office action rejecting the application for trademark registration on the grounds that the mark is similar to the mark under application No. 5106971 for "Positive Negative and Design" (Cited Mark I), and the mark under International Registration No. 1077840 (Cited Mark II). Roxtec was not satisfied with the office action, and sought review with the Trademark Review & Adjudication Board. The Board on November 28, 2014 issued its decision Review of Office Action Rejecting Application No. 11915217, ShangPingZi [2014] No.92141 (the Board Decision), holding the Mark under application to be not similar to Cited Mark II, similar to Cited Mark I for one or more designated goods therein. Based on Articles 30 and 34 of the Trademark Law, it upheld the final rejection.

Roxtec, dissatisfied with the decision, instigated judicial review proceedings. The Beijing Intellectual Property Court at trial found it to be error to compare the color combination mark with Cited Mark I and conclude that they are similar marks. Therefore the court, in accordance with Article 70(1) and (2) of the Administrative Procedure Law of People's Republic of China decreed: 1. The Board decision is reversed; 2. The case is remanded to the Board for a new decision. Dissatisfied with this decree, the Board appealed. The Beijing High Court, upon examination, held it inappropriate that the Board treats the Mark under application as "comprising two squares of different colors" and on basis thereof found it to be similar to Cited Mark I. The Beijing High Court in its final decision dismissed the appeal and affirmed the decision below.

[Judge's Comment]

Color combination mark, as a type of trademark akin to design marks, although limited to a specific presentation in the examination process where the relevant color combination must be embodied objectively in certain graphic shape, it is inappropriate to confine the color combination to that shape, thence transforming the mark from one with a single limitation of color combination into another of both color combination and the shape. Meanwhile, the appeals court pointed out that the trademark authorities need to improve methods of publishing color combination marks to ensure that the relevant public would perceive the color combination mark embodied in a particular shape as presented in the Official Gazette or the Trademark Certificate, so as to avoid possible misunderstanding and confusion. The result of this case will be beneficial to future trademark examination and review work of color combination marks or other new types of trademarks.

CASE 15 : AKRIS AG TRADEMARK OPPOSITION REEXAMINATION

Trial Docket: (2016) Jing 73 XingChu No. 1020

City of Beijing

[Headnotes]

The Beijing IP Court well explained in its judgment that Article 44.1 was not only applied to invalidation cases against marks registered in bad faith also to opposition procedures against trademark applications. According to the Court, the legislative intent of Article 44.1 is that it should be flexibly applied whenever it is necessary to deter bad faith trademark filings.

[Synopsis]

1st Round:

Plaintiff (Appellee): GU BAI TOOLS (SHANGHAI) CO., LTD. (later assigned the disputed trademark to AKRIS (HONG KONG) LIMITED)

Defendant: Trademark Review and Adjudication Board

Third Party (Appellant): AKRIS PRET-APORTER AG

2nd Round:

Plaintiff: Huitong Trading Development Limited (previously known as AKRIS (HONG KONG) LIMITED)

Defendant: Trademark Review and Adjudication Board

Third Party: AKRIS PRET-A-PORTER AG

AKRIS PRET-A-PORTER AG (AKRIS AG), a famous Swiss fashion company, is the owner of a series of trademarks using the word AKRIS, including the International Registration No.637645 "PUNTO AKRIS" in Class 25 with territorial extension to China as early as 1995.

In 2003, a Hong Kong company called FRANCE BENNY INTERNATIONAL ENTERPRISE GROUP CO., LIMITED (FRANCE BENNY) filed a trademark application for "A-K-R-I-S-" No. 3499689 in Class 25 covering goods "clothing, shoes, hats etc.", which was preliminarily approved by the China Trademark Office (CTMO) in January 2005. In 2014, the mark was assigned to a Shanghai company, GU BAI TOOLS (SHANGHAI) CO., LTD. (GU BAI TOOLS) and then again, in 2015, to another Hong Kong company, AKRIS (HONG KONG) LIMITED (AKRIS HONG KONG).

In 2005, AKRIS AG filed an opposition against the "A-K-R-I-S-" trademark based on its prior "PUNTO AKRIS" mark. In 2009, a natural person surnamed LIANG filed a non-use cancellation action against the PUNTO AKRIS mark, before the Trademark Office. AKRIS AG's opposition was dismissed by the Trademark Office on July 1, 2009, but the situation was later reversed by the Trademark Review and Adjudication Board (TRAB) in the opposition review procedure concluded on November 11, 2013. However, on March 3, 2014, AKRIS AG's PUNTO AKRIS mark was cancelled by the TRAB based on non-use. Therefore, when GU BAI TOOLS, the then owner of the opposed trademark, appealed before the Beijing First Intermediate Court against the TRAB's opposition review decision disapproving the trademark application, it was inevitable that AKRIS AG would lose: it had no more prior right to support its opposition.

In the second instance before the Beijing High Court, AKRIS AG had to change its litigation strategy by shifting the focus from its prior registration (Article 28 under the 2001 Trademark Law), which had ceased to exist, to the bad faith of GU BAI TOOLS (Article 44.1 under the 2013 Trademark Law). It was found that the three successive owners of the opposed mark, FRANCE BENNY, GU BAI TOOL and AKRIS HONG KONG, had intertwined shareholder relations and that besides the opposed mark, the original owner FRANCE BENNY had also filed a startling number of trademark applications for world famous brands including "EDEN PARK", "TODS", "LLADRO", "C.P.Company" and "MAPPIN & WEBB" etc.

On April 20, 2015, the Beijing High Court rendered a decision upholding the judgment of first instance rejecting AKRIS AG's opposition and referred the case back to the TRAB, for a new decision to be made. However, the Beijing High Court specifically instructed the TRAB to examine, in its new decision, the above mentioned bad-faith facts.

On October 28, 2015, the TRAB made a re-examination decision affirming that FRANCE BENNY's filing of many other reputed trademarks, without the intention of use, caused damage to the trademark registration order and was in contradiction with the bona fide principle. Therefore, the TRAB maintained its initial decision to refuse the registration of the "A-K-R-I-S-" trademark, but this time on the basis of Article 44.1 ("trademark registration acquired by fraud or any other unfair means") of the 2013 Trademark Law.

In 2016, AKRIS HONG KONG appealed against the TRAB's new decision before the Beijing IP Court claiming that the evidence was insufficient to prove FRANCE BENNY's unfair filing of those trademarks and that the application of Article 44.1 was erroneous because that article only deals with registered trademarks, and not with trademark applications.

During the appeal before the Beijing IP Court, AKRIS AG initiated another legal action in Hong Kong, successfully forcing, on February 13, 2017, AKRIS HONG KONG to change its misleading trade name from AKRIS (HONG KONG) LIMITED to HUITONG TRADING DEVELOPMENT LIMITED. On April 19, 2017, the Beijing IP Court maintained the TRAB's opposition decision of disapproval. The "A-K-RI- S-" case was selected as one of the 18 exemplary cases concerning bad faith trademark filing, released by the Beijing IP Court, two days before the World IP Day, on April 24, 2017.

Wanhuida Peksung represented AKRIS AG before the Beijing High Court and Beijing IP Court.

[Judge's Comment]

In recent years, the Chinese authorities and courts have been ramping up efforts in fighting preemptive trademark filings.

In the above case, the TRAB made two decisions in succession to refuse the registration of the Opposed Mark, one based on the relative ground of AKRIS AG's prior registration of "PUNTO AKRIS" and one on the absolute ground of bad faith when the prior registration has ceased to exist.

The Beijing High Court took full account of AKRIS AG's new evidence and new arguments concerning the bad faith. However, since these facts and arguments had not been raised and discussed before the TRAB in the opposition procedure, the Court was not at liberty to make any adjudication on them, in its decision. However, the Court found a way to by-pass this procedural obstacle by "neutrally" directing the TRAB to pay attention to these points in its new decision.

In the new appeal against the TRAB decision, the Beijing IP Court well explained in its judgment that Article 44.1 not only applied to invalidation cases against marks registered in bad faith also to opposition procedures against trademark applications. According to the Court, the legislative intent of Article 44.1 is that it should be flexibly applied whenever it is necessary to deter bad faith trademark filings.

This 12-year battle, which lasted since 2005, resulted in a victory for AKRIS AG, but the battle does not seem to be over yet. Another company named AKRIS (SHANGHAI) APPAREL CO., LTD (AKRIS SHANGHAI), which was established in June 2016, filed in February 2017, some new A-K-RI-S- trademarks that are still pending for examination before the China Trademark Office. The bright side is that AKRIS AG's trademark applications predate most of them.