China’s Fujian High People’s Court on September 27, 2021 upheld a lower court ruling in favor of U.S. industrial conglomerate Emerson Electric Co. (艾默生电气公司) in a trademark infringement lawsuit filed by it against Chinese household water filter maker Xiamen Angel Portal Water System Co., Ltd. (厦门安吉尔水精灵饮水设备有限公司) and trademark agency Xiamen Xingjun Intellectual Property Affairs Co., Ltd. (厦门兴浚知识产权事务有限公司) representing it. The appellate court affirmed the award of 1.6 million yuan ($250,000) in damages and costs from Xiamen Angel and Xiamen Xingjun.

Ferguson city, Missouri-headquartered Emerson Electric Co. is a multinational corporation founded in 1890. The Fortune 500 company manufactures products and provides engineering services for industrial, commercial, and consumer markets. Emerson has approximately 83,500 employees and 200 manufacturing locations. Xiamen Angel Portal Water System Co., Ltd. was incorporated in Xiamen city, Fujian province in 2008, and has been renamed Xiamen Hemeiquan Portal Water Equipment Co., Ltd. (厦门和美泉饮水设备有限公司) doing business.

Emerson in March 2020 sued Xiamen Angel in the Xiamen Intermediate People’s Court of Fujian province for infringing its trademark “InSinkErator” and its Chinese transliteration “爱适易 (pinyin: Ai Shi Yi).” InSinkErator is Emerson’s subsidiary established in 1927 as well as a brand name known for producing instant hot water dispensers and food waste disposal systems, generally called “garbage disposals” or “garbage disposers.” In China, Emerson filed applications for registration of the English-language word mark “InSinkErator”, the Chinese-language word mark “爱适易”, and their figurative marks in 1994, 1998, and 2006 respectively. These marks were registered with goods and services in Class 7 machines and machine tools, motors and engines and Class 11 environmental control apparatus and installations, in particular, for the purposes of lighting, cooking, cooling and sanitizing. Enough evidence showed that “InSinkErator” and its Chinese counterpart had become well known to Chinese consumers by 2010.

The complaint said Xiamen Angel in 2010 began to in bad faith file applications for registration of the trademark “爱适易” with goods and services in classes related to the ones in which Emerson’s trademarks were. Xiamen Angel was found to have filed applications for a total of 48 trademarks same as or similar to Emerson’s trademarks with goods and services in 14 classes. Emerson had attempted to contain Xiamen Angel’s trademark squatting by filing oppositions to registration, petitions for review of oppositions, and an administrative lawsuit over the opposition decision. The Beijing High People’s Court heard the 2016 appeal of the ruling of the administrative lawsuit and invalidated Xiamen Angel’s trademarks on the basis of the provision of Article 41 of the second amendments to the Trademark Law of the People’s Republic of China. Xiamen Angel had a subsidiary incorporated to proceed with bad faith registration of trademarks infringing Emerson’s trademark rights in the face of the court decision.

The Xiamen Intermediate People’s Court in April, 2021 ruled for Emerson and ordered Xiamen Angel and Xiamen Xingjun to pay 1.6 million yuan ($250,000) in damages and costs. Xiamen Angel appealed the case to the Fujian High People’s Court and the appellate court let the ruling stay.

This case is precedential in that the defendant’s acts the lower court held to support the unfair competition finding are mere bad faith trademark filings in bulk without committing any of the trademarks to substantive commercial use. In this sense, trademark squatting has been identified to be an uncompetitive practice within the meaning of Article 2 of the Anti-Unfair Competition Law of the People’s Republic of China. And the case is exemplary in the sense that the actual controller of the infringing entity and the trademark agency as the actual trademark filing party were held liable for infringement in categorical terms.

The first case in China in which the defendant was found to have violated the provisions of Article 2 of the Anti-Unfair Competition Law and constituted unfair competition, based only on the defendant's malicious batch of pre-existing trademarks with a certain degree of popularity, when the perpetrator of the trademark infringement had not put the infringing trademark into substantive use or complained in bad faith based on the infringing trademark, which is another useful exploration of the People's Court in the field of civil litigation against malicious trademark infringement.

The case docket no. is （2021）闽民终1129号, whose English transliteration is 1129, second instance (终), civil case (民), (2022) Fujian High People’s Court (（2021）闽).

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