Recent China Trademark Cases

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Recent important trademark cases dealt with in China, or touching on Chinese companies.

Victoria’s Secret Wins Trademark Case

On 26 June, 2015 in the Shanghai Higher People’s Court, Victoria’s Secret, a well-known lingerie brand, finally won its trademark dispute and anti-unfair competition case against Shanghai Maisi Investment Management Company. Maisi was consequently ordered to pay RMB 500,000 in compensation to Victoria’s Secret, which was determined by the Court
in consideration of Maisi’s intention, nature of violation and consequences due to Victoria’s Secret’s economic loss being insufficient, to publish an official statement to eliminate any ill effect in the media, and to cease trademark infringement and unfair competition.

In this case, Maisi had not been involved in the sale of any false Victoria’s Secret products, however it had been using the Victoria’s Secret’s trademark to create or indicate as to the the source of the goods it sold in their retail stores. According to the court, such conduct may mislead consumers to consequently believe the goods and services were provided by the trademark owner or was in association with the trademark owner; therefore constituting infringement of Victoria’s Secret exclusive right to the trademark.

In addition, Maisi had been proclaiming that their Meiluocheng branch was a Victoria’s Secret outlet as well as maintaining itself as Victoria’s Secret’s headquarters, sole distributor in Beijing, Shanghai, Shenzhen and Tianjin markets, and Victoria’s Secret brand operator in the Chinese market. At second instance, the Court noted in its judgment of Maisi’s violation of the Anti-unfair Competition Law through such conduct of false advertisement, as the relevant public may be confused that there may be an authorized relationship between Victoria’s Secret and Maisi.

Consequently, the Court held Maisi’s claims were a cause of public confusion, therefore its conduct amounted to trademark infringement, especially as Maisi intended to commercial exploit Victoria’s Secret’s trademark to further expand its business. Furthermore, the potential damage to Victoria’s Secret in the Chinese market and the misleading of the public led to a violation of China’s unfair competition laws.

Gucci America Inc. v. Alibaba Group Holding Ltd., 15-cv-03784, U.S. District Court, Southern District of New York (Manhatten)

Kering, the French luxury brands group holding company owner of Balenciaga, Gucci, Puma and others is suing Alibaba Group Holding Limited, a Chinese e-commerce company providing consumer-to-consumer, business-to-consumer, and business-to-business sales services via web portals, for the sale of counterfeit goods on its marketplace. In particular, the suit charges Alibaba with trademark infringement counterfeiting, false representation, trademark dilution and racketeering by marketing, processing payments for and shipping goods such as counterfeit Gucci watches, bags and shoes, and Yves Saint Laurent shirts.

Alibaba have experienced a persistent issue with the sale of counterfeit products, and have adopted a zero tolerance policy towards counterfeit goods and steps to fight against such products. Therefore, it has employed a ‘three strikes system’ to combat such practices, where the first strike results in the merchant receiving a warning; the second strike with the same rights holder involving the merchant being prohibited from further product listing for seven days, and storefront listings removed from search results for seven days; and the third strike with the same rights holder involving the merchant’s storefront being closed and the company banned from the site.

However, its system may be insufficient due to its lack of effectiveness in prohibiting the sale of counterfeit products, as evidenced by the latest suit filed by Kering in May, 2015 in the Southern District of New York. In this case, Kering alleges Alibaba Group knowingly encourages, assists, and profits from the sale of counterfeits on their online platform.

Specifically, Kering alleges Alibaba sites use algorithms or formulas to assist customers to locate counterfeits, as well as using data on usage pattern to encourage such purchases by estimating customer’s preferences, therefore facilitating the sale of counterfeit merchandise. For example, a customer may type ‘replica’ into the search bar on the Alibaba website, and an algorithm may display the term ‘wristwatches’ and direct the customer to a merchant selling counterfeits.

In response, Alibaba issued the following statement: “We continue to work in partnership with numerous brands to help them protect their intellectual property, and we have a strong track record of doing so. Unfortunately, Kering Group has chosen the path of wasteful litigation instead of the path of constructive cooperation. We believe this complaint has no basis and we will fight it vigorously.”

The decision of this case will be highly anticipated, due to the high standing of both Alibaba and Kering, and Alibaba’s constant issue of online counterfeiting.

Nexus trademark

Google Nexus is a line of consumer electronic devices that run the Android operating system, where the trademark Nexus is marked on their electronic devices. However, in China, the Nexus mobile phones are marked with the trademark Motorola due to Google’s failure to register the trademark Nexus in China, as the trademark Nexus was already registered under Beijing Ruifengtongda Trade Co., Ltd. on 28 November, 2007.

While Ruifengtongda applied the trademark Nexus on their electronic devices products and other similar goods in December 2004, their lack of use of the trademark Nexus in the following years caused Wang Qinghua, a natural person, to submit a non-use cancellation application against the trademark Nexus to the Trademark Office under the State Administration for Industry and Commerce in January 2011, where the Trademark Office subsequently revoked the trademark Nexus.

However, Ruifengtongda applied for review to the Trademark Review and Adjudication Board (TRAB), who held the evidence provided by Ruifengtongda proved its use of the trademark Nexus on their mobile phones and other similar goods between 14 January, 2008 and 13 January, 2011, therefore allowing Ruifengtongda to maintain its registration for the trademark Nexus.

Wang Qinghua consequently filed for administrative lawsuit in the Beijing Intellectual Property Court, which will be on trial soon.

Perrier-Jouet Loses Trademark Case in China

Perrier-Jouet, a French champagne producer, has received a decision from the Beijing Higher Peoples Court to reject its three-dimensional trademark with Application No. 6318971 in class 33 on 15 June, 2015 due to its lack of distinctiveness.

Perrier-Jouet first filed its trademark for registration under Class 33 for alcoholic drinks, but was rejected by the Trademark Office under the State Administration for Industry and Commerce; therefore Perrier-Jouet consequently sought review through the TRAB. However, the TRAB held the trademark in question, which was a package with graphical images for the designated products, lacked the element of distinctiveness and may consequently cause confusion among the public due to the possibility of the public identifying the product through its package and not its trademark, therefore the TRAB also rejected the trademark application.

The Beijing No.1 Intermediate People’s Court held the trademark had unique features and decided to revoke the TRAB’s decision and allow the trademark for registration, however, the TRAB appealed and had its decision reaffirmed at the Beijing High People’s Court.

ABOUT THE AUTHOR: Matthew Murphy
Matthew Murphy is a Partner in the MMLC Group.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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