Docket No.: Nanjing Intermediate People's Court of Jiangsu Province (苏01)

SUMMARY OF THE ARGUMENT

For a trademark which is well known to the public but is not approved for registration due to others' squatting, the people's court may, upon the parties’ request in the trademark infringement case, consider a lot of factors such as the use duration, promotional investment, scope, degree and protection records about the trademark, and may legally identify it as an unregistered well-known trademark and protect it.

If anyone, in violation of the good faith principle, by using the principle of applying for trademark registration first, with the knowledge that a trademark is a well-known trademark not yet registered by others in China, applies for registration or receives by assignment a trademark identical or similar to the unregistered well-known trademark and uses it on the identical or similar goods to obtain improper benefits, causing damage to the right holder, the people's court may, upon the request of the right holder, rule the first person to stop the use and compensate for the losses.

STATEMENT OF THE CASE AND FACTS

SOUTHCORP BRANDS PTY LTD.,

Plaintiff-Appellant

v.

HUAIAN CITY HUAXIA MANOR BREWING CO., LTD.,

HANGZHOU ZHENGSHENG TRADING CO., LTD.,

Defendants-Appellees

The Plaintiff Southcorp Brands Pty Ltd. (“Southcorp Brands”) is the owner of “Penfolds” registered trademark, a well-known wine brand. Since “Penfolds” wine entered China in the 1990s, Southcorp Brands has used “奔富” as the Chinese name of “Penfolds” up to now. After long-term, wide-scope and continuous promotion, selling and advertising by Southcorp Brands, “奔富” wine has gained high awareness and influence, and has been known to and recognized by consumers. On wine goods, a unique corresponding relationship has been formed between “奔富” and “Penfolds”. China Food, China Business Times and other media used “奔富” as the Chinese translation of “Penfolds”. The Trademark Office under the State Administration for Industry and Commerce of the People’s Republic of China (hereinafter referred to as the “Trademark Office”), the Trademark Review and Adjudication Board of the State Administration for Industry and Commerce (hereinafter referred to as “TRAB”) and courts have repeatedly affirmed in relevant verdicts and judgments that “奔富” and “Penfolds” are corresponding.

The “奔富" trademark has accumulated a huge commercial value, which led to the malicious squatting by a party not involved in this case. In 2011, when Southcorp Brands applied for the registration of the trademark “奔富”, the Trademark Office rejected its application because the trademark applied by it was similar to a prior registered trademark. Southcorp Brands refused to accept the decision and instituted administrative proceedings. After the first instance, the second instance and the retrial, the Supreme People's Court entered the following judgment: the administrative decisions of the first instance and the second instance as well as the decision of TRAB shall be abrogated, and TRAB shall make a new decision on the trademark “奔富”. During the litigation of this case, the trademark “奔富” applied by Southcorp Brands had passed the preliminary examination and an announcement had been released.

The Defendant Huaian City Huaxia Manor Brewing Co., Ltd. (“Huaxia Manor”) repeatedly applied to the Trademark Office to register “PENFOILLS”, “PENFUNILS” and other English trademarks similar to “Penfolds”, and also received the Chinese registered trademark “奔富尼澳” transferred by a party not involved in this case, and used the logos “奔富”, “奔富尼澳” and “Penfunils” in large quantities of wine products produced by it, which were sold by the Defendant Hangzhou Zhengsheng Trading Co., Ltd. (“Hangzhou Zhengsheng”). According to the application filed by Southcorp Brands, the trademark “奔富尼澳” was declared invalid by TRAB and the trademark registration applications of “PENFOILLS” and “PENFUNILS” were also rejected by the Trademark Office. The plaintiff Southcorp Brands held that the above-mentioned acts of Huaxia Manor and Hangzhou Zhengsheng had infringed its trademark right, so it filed a lawsuit, requesting Huaxia Manor and Hangzhou Zhengsheng to immediately stop their infringement acts and compensate for its economic losses and reasonable expenses incurred for protecting its rights which amounted to RMB 1 million.

In the first instance, Nanjing Intermediate People’s Court of Jiangsu Province held that:

The Plaintiff's “奔富” trademark was necessary and could be recognized as an unregistered well-known trademark. First, a trademark is a sign that identifies the source of goods or services, whose value is based on its business reputation gained during the process of use. Like registered trademarks, unregistered trademarks can accumulate business reputation, distinctiveness and popularity due to long-term use and the relevant public can distinguish specific goods from other goods by virtue of unregistered trademarks. Therefore, when an unregistered trademark gains a certain level of awareness, it can objectively generate market value and commercial interests, so the legitimate rights and interests of unregistered well-known trademarks should be protected by law. Secondly, Southcorp Brands used logos “奔富(Penfolds)”, “奔富/Penfolds” and “Penfolds(奔富)” in the packaging, distribution contracts and advertisements of goods, and the media, distributors and event organizers also used the combination of “奔富” and “Penfolds” in their reports or commercial activities, and the English trademark “Penfolds” and the Chinese trademark “奔富” have formed a corresponding relationship with each other, and among domestic wine consumers, “奔富” has played a role in distinguishing the origin of goods. Meanwhile, the trademark “奔富” used by Southcorp Brands has not been approved for a long time due to trademark squatting by the party not involved in this case. Whether the infringement act is established should be determined based on whether “奔富” is an unregistered well-known trademark. Therefore, according to the requests of the party and the specific situation of this case, it is necessary to determine whether “奔富” is an unregistered well-known trademark. Finally, according to the provisions of Article 14 of the Trademark Law, taking into account the degree of public awareness of the trademark “奔富”, the duration of use of the trademark “奔富", the sales volume of “奔富” wines, the duration, extent and geographical scope of the relevant advertising and publicity by Southcorp Brands, and the protection record of the trademark “奔富” as well as other related factors, the “奔富” trademark should be recognized as an unregistered well-known trademark.

The conducts of the two Defendants constituted trademark infringement. In this case, in terms of subjective malice, Huaxia Manor violated the basic principle of good faith, and applied for registration of a number of trademarks identical to or similar with the trademark of Southcorp Brands with strong distinctiveness, and it did not make any reasonable explanation. Therefore, it can be confirmed that Huaxia Manor subjectively and intentionally took advantage of the goodwill of other trademark. In terms of its objective conducts, the logo “奔富” used by Huaxia Manor and Hangzhou Zhengsheng on the wine goods produced and sold by them and related promotional materials was identical with the unregistered well-known trademark “奔富”, and the “Penfunils” logo used by them was similar with the registered trademark “Penfolds” of Southcorp Brands, which constituted a trademark infringement.

The two Defendants shall bear the legal responsibility of stopping their infringement acts and compensating the economic loss of Southcorp Brands. The unregistered well-known trademark belongs to the legitimate civil rights of the trademark right holder, and anyone who infringes any unregistered well-known trademark and causes damage to the right holder shall bear the liability of compensation according to law. In this case, the alleged infringing goods produced and sold by Huaxia Manor and sold by Hangzhou Zhengsheng infringed the exclusive right of Southcorp Brands to use the registered trademark “Penfolds" and the right of unregistered well-known trademark “奔富” held by Southcorp Brands, and should bear the civil legal liabilities of stopping the infringement and compensating for the damages according to law.

In summary, the court ruled as follows in the first instance: the two Defendants shall immediately stop infringing the Plaintiff’s exclusive right to use the registered trademarks “PENFOLDS” “Penfolds” and the unregistered well-known trademark “奔富”, Huaxia Manor shall compensate for the Plaintiff’s economic losses and its reasonable costs incurred for the purpose of safeguarding its rights which amounted to RMB 1 million, and  Hangzhou Zhengsheng shall bear the joint and several liability for RMB 200,000.

ANALYSIS

This case involves the protection of unregistered well-known trademark and is the first case in Jiangsu Province concerning the protection of unregistered well-known trademark, which is of reference value for the handling of similar cases and has been selected by the Quality Brand Protection Committee of China Association of Enterprises with Foreign Investment as one of the “Top Ten Cases of Intellectual Property Protection in 2019-2020”, “Top Ten Typical Cases of Nanjing Courts in 2020” and “Top Ten Typical Cases of Judicial Protection of Intellectual Property in Jiangsu Courts in 2020”.

The judgment in this case timely and effectively stopped the squatting and embezzlement of unregistered well-known trademarks, and affected the trademark administrative authorization procedure to some extent. Within six months after the judgment came into effect, the Plaintiff’s trademark was successfully registered, laying a good foundation for rights protection in the future. Meanwhile, in this case, after affirming that the infringement was established, the court also took into account that the infringing goods involved food related to the people’s livelihood and that the Defendant was the source of the infringing goods. Therefore, the court increased the infringement compensation in accordance with the law, reflecting the strictest concept for judicial protection of intellectual property rights and the value orientation of stopping squatting and maintaining integrity, improving the sense of gain of the right holder, and achieving good legal and social effects.