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Trade mark hijackers ordered to pay damages in China

Ling Zhao of the MARQUES China Team discusses a recent precedent-setting decision from the Fujian Province High People’s Court.

The plaintiff's mark

In this case, Emerson Electric Co, the owner of the brand InSinkErator and 爱适易 (AI SHI YI) in Chinese for food waste processers, sued trade mark hijackers for unfair competition. The case was based on the fact that the accused infringers had tried to register its four trade marks as well as a number of marks that were copies or imitations of other famous brands.

This is the first case in which the Court found that the defendants (hijackers) had committed unfair competition, even though the trade mark hijackers did not put the trade marks into use, nor did they file a malicious complaint based upon the hijacked trade mark registration.

The court found that the hijackers violated Article 2 of the Anti-unfair Competition Law of PRC (see box), by filing trade marks that were copies or imitations of the plaintiff’s trade marks in bad faith.

Article 2 of the Anti-unfair Competition Law of PRC regulates that in production and business activities, business operators shall abide by the principles of voluntariness, equality, fairness and good faith, and abide by law and business ethics. The term "acts of unfair competition" as mentioned in this Law refers to the acts of business operators that violate the provisions of this Law, disrupt the order of market competition and damage the legitimate rights and interests of other business operators or consumers in their production and business activities. Business operators as mentioned in this Law refer to natural persons, legal persons and unincorporated organisations engaged in the production and operation of commodities or the provision of services

Before this precedent, a court has never ruled that such acts of trade mark hijacking constitute acts of unfair competition.

Final judgment

The second-instance judgment was made by Fujian Province High People’s Court on 27 September 2021, and it is final. According to the judgment, the plaintiff’s InSinkErator food waste processors have been known to the public, and this brand is also used on a water purification hot drink system.

The defendants have been involved in the production and sales of water purification devices, which are relevant to the products of the plaintiff, and it is right to state that the parties involved are competitors in the same industry of environment-friendly kitchen and bathroom equipment.

The defendants have registered in multiple classes for the identical or similar InSinkErator and 爱适易 (AI SHI YI) trade marks, including those pictured below.

Marks registered by defendants

Apart from the above hijacked trade marks, the defendants have also filed many trade marks that are copies or imitations of others’ marks, such as DOW in Chinese, Alikes in Chinese and English, Daimler in Chinese, Daimler Chrysler in Chinese, InFocus in English and Chinese, Grundfos in Chinese, iPhone, Unilever in Chinese, Electrolux in Chinese and Morgan Stanley in Chinese from 2011 until 2019.

The Court found that the defendants did not submit any evidence showing the use of the hijacked trade marks or explain their intention to register the marks in various classes, and how these trade marks were designed.

Such acts of trade mark filings have obviously exceeded the normal needs for commercial activities. The plaintiff had to take legal actions, including opposition, invalidation action and litigation to protect its legitimate rights.

To some extent, the normal business activities of the plaintiff have been disturbed by the acts of the defendants, which are against the good faith principle and also damage the market order of fair competition and harm the rightful interests of the plaintiff.

Violation of Anti-Unfair Competition Law

The Court found the acts of the defendant in violation of Anti-Unfair Competition Law of PRC, and the defendants were ordered to stop the infringement and pay damages totalling RMB1.6 million (€228,000).

It also found that the trade mark agency representing the trade mark hijackers in this case should bear legal responsibility for helping the trade mark hijackings.

This is an important landmark case for the following reasons:

  • It clarifies that the acts of trademark hijackings alone constitute unfair competition.
  • The defendant is prohibited from registering identical or similar trade marks. The damages are determined according to the lawyers’ fees incurred by the plaintiff for legal proceedings to fight against the trade mark hijackings.
  • It clarifies the legal liability of the actual controller of the infringing company and the trade mark agency for their contribution to the trade mark hijacking for the first time. It finds that the actual controller is a joint infringer, and the agency helped infringement, which is also a breakthrough in the assumption of responsibility.

Ling ZHAO of CCPIT Patent and Trademark Law Office is a member of the MARQUES China Team

Posted by: Blog Administrator @ 18.42
Tags: unfair competition, China, China Team,
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MARQUES does not guarantee the accuracy of the information in this blog. The views are those of the individual contributors and do not necessarily reflect those of MARQUES. Seek professional advice before action on any information included here.

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