Docket No.: 204, second instance (终), civil case (民), (2021) Shanghai Intellectual Property Court (沪73)

Lower Court Docket No.: 26614, first instance (初), civil case (民), (2017) Minhang District People's Court (沪0112)

SUMMARY OF THE ARGUMENT

Trademark owners should follow the principle of good faith and business ethics, and exercise their rights within the scope stipulated by the law. In the case of infringement acts done by abusing the trademark system and administrative procedures, damaging the legal rights and interests of others, and disrupting the order of market competition, such acts constitute unfair competition. In trademark infringement cases, the application of Article 2 of the Anti-Unfair Competition Law of the People's Republic of China in evaluating and judging the abuse of procedural rights can provide the best relief scheme for trademark owners. The necessary expenses incurred by the Plaintiff for the abused trademark administrative procedure are the economic losses directly caused by the unfair competition and should be compensated.

STATEMENT OF THE CASE AND FACTS

BRITA GMBG,

BRITA WATER FILTRATION SYSTEMS (SHANGHAI) CO., LTD.,

Plaintiffs-Appellees

v.

SHANGHAI KANGDIAN INDUSTRIAL CO., LTD.,

Defendant-Appellant

BRITA GMBG (“BRITA”) was incorporated in Germany in 1966. Since 1993, BRITA has registered many trademarks including “BRITA” and “碧然德” in China, and has marketed and operated brands through wholly-owned subsidiaries and agents. Shanghai Kangdian Industrial Co., Ltd. ("Kangdian") was registered and established in 2010. It has advertised and sold its “碧然德” filter kettle, filter elements and other products on a number of network platforms. On the web page of Taobao, it has described itself as the “wholesale merchant of original German BRITA filter kettle” and other text introduction, and on the WeChat platform, it has operated online store with the WeChat name of “碧然德”. The above official accounts were cancelled after complaints from BRITA, but later, Kangdian changed its name and re-registered for sale. Moreover, Kangdian applied for registration of up to 21 trademarks such as “碧然德”, “德碧然德” and “BRITA” under various categories of goods and services, and used the trademark “德碧然德” as reference mark (which was under registration application for its kettles, kitchen containers and other goods) for the purpose of requesting the invalidation of the registered trademark “碧然德” of BRITA. It also instituted opposition to six other “碧然德” trademarks that BRITA was applying for registration, but it failed to obtain support after examination. Since then, BRITA had filed a request for invalidation of Kangdian’s “德碧然德” trademark application, and it had finally obtained support through administrative and judicial procedures. BRITA then filed a lawsuit with the Minhang District People’s Court of Shanghai, requesting confirmation that Kangdian had infringed on the Plaintiff's exclusive right to use registered trademark, made false publicity and other acts of unfair competition, and claiming that the Defendant to eliminate the ill effects and compensate RMB 3 million for its economic losses.

In the first instance, Minhang District People’s Court held that Kangdian’s acts in the case constituted trademark infringement, false publicity, malicious registration of trademarks and abuse of trademark opposition procedures and other acts of unfair competition, and ordered Kangdian to compensate RMB 2.8 million to BRITA for its economic losses.

Kangdian refused to accept the first instance judgment and appealed to the Shanghai High People’s Court. During the court of second instance, the Appellant failed to pay the appeal fee in advance within the time limit specified by the court, which was treated by the court as the appeal withdrawn by the Appellant Kangdian. At present, the judgment of first instance has come into effect.

The lawyers from Beijing Lusheng Law Firm represented the Plaintiffs of two cases (BRITA and Shanghai BRITA) and appeared before the courts in the first instance and second instance of this case.

ANALYSIS

This case is the first judgment applying Article 2 of the Anti-Unfair Competition Law in China to provide civil remedy for the loss of the trademark owner due to the abuse of trademark administrative procedures by malicious registration. In general, the behavior of malicious preemptive registration of trademarks should be remedied through administrative procedures. But in this case, the Defendant in the process of infringement, on the one hand, disguised its infringement acts by long-term preemptive registration of a number of trademarks on an ongoing basis and in a batch manner, which were identical with or very similar to those of Plaintiff, on the other hand, with the preemptive registered trademarks, it had maliciously filed for the court for invalidation and opposition to the trademark applied and registered by the Plaintiff, which disturbed the normal business behavior of the Plaintiff. As pointed out in the judgment of the first instance, the Defendant's acts of preemptive registration of trademarks and instituting opposition proceedings were not simply the abuse of rights. In fact, it was a supporting method used by the Defendant, and the intention was to execute the trademark infringement act and interfere with the normal exercise of trademark rights by the Plaintiff, which was a part of the long-term and comprehensive infringement acts by Defendant. Furthermore, in terms of the Plaintiff, it not only suffered from the damaged competitive advantage, and also incurred the cost of legal service resulted from the above administrative procedures, which formed a part of the actual loss suffered by the Plaintiff. On the basis of expounding the essence of the Defendant's acts, the judgment judged that the case had constituted an unfair competition regulated by Article 2 of the Anti-Unfair Competition Law. The judgment has a strong deterrent effect on malicious preemptive registration by abusing administrative procedures, and effectively maintained the fair market competition order. It has actively played the role both in optimal relief for the trademark owner and the protection of public and private laws.

In the long run, the implementation of the administrative procedures for trademark registration application, trademark opposition and invalidation in China takes time to correct inherent issues, so there are preemptive registrants taking advantage of time difference and using the registered trademark to disguise infringement acts, even maliciously complaining and interfering with the normal operation of the trademark owner. This case has a strong response to such acts from the perspective of civil law, which has a far-reaching impact on purifying the act of trademark registration, reducing administrative costs caused by a large number of malicious preemptive registrations, encouraging honest business principle and maintaining fair competition order.