Guccio Gucci SPA vs. Jiaxing Panduofu Commerce Co., Ltd., et al. for Appeal of Dispute over Infringement of Trademark Ownership and Unfair Competition

Basic facts

Guccio Gucci SPA is the holder of the exclusive right to use the mark for commodities such as “GUCCI” bags and mark for services such as goods demonstration. Milano Company, as the management and operation company of the Milan Plaza, leased the store places to Jiaxing Panduofu Company and Xinggao Company, which engaged in sales of the “GUCCI” brand goods such as bag and applied prominent characters of “GUCCI” on the signboard and in the decorations of the stores. Milano Company also added “GUCCI” to the list of brands on its official website and Sina Weibo for propaganda and report. Given the above findings, Guccio Gucci SPA filed a lawsuit to complain that the three companies jointly infringed its trademark ownership and competed unfairly. It requested the court to rule that the three Defendants should stop the infringement and be jointly and severally liable to compensate RMB 1 million for Guccio Gucci SPA’s economic losses.

Results of judgment

The People’s Court of Yangpu District after the first trial viewed that since the goods sold by Panduofu Company and Xinggao Company were genuine goods by GUCCI, the two companies did not infringe the trademark of GUCCI bags of Guccio Gucci SPA. However, given that the two companies applied prominent characters of “GUCCI” on the signboard and in the decoration of the stores, the acts were sufficient to cause public misunderstanding of the relationship between the operator of the stores involved and Guccio Gucci SPA and helped the two companies obtain the underserved competitive edge. The court viewed these as infringement of exclusive right to use the mark for services such as demonstration of “GUCCI” goods of Guccio Gucci SPA and the unfair competition. Milano Company was fully aware that the stores involved were not operated by Guccio Gucci SPA, but not only did it not stop the aforesaid acts, but also provided help and convenience. In addition, as such acts also constituted the unfair competition of misleading propaganda, the court ruled that the defendants should stop the infringement act while the defendant Panduofu Company should compensate RMB 30,000 to Guccio Gucci SPA, Xingao Company should compensate RMB 190,000, and Milano Company should compensate RMB 20,000 apart from bearing joint and several liabilities for the aforesaid compensations. The three defendants refused to accept the original ruling and instituted an appeal. In the second trial, Shanghai Intellectual Property Court ruled that the appeal should be rejected and the original judgment should be sustained as the use of the trademark signs by the three companies were beyond the appropriate scope while the facts ascertained by the court of original trial were clear and the law was correctly applied.

 

Typical significance

In this case, on the basis of upholding the conclusions made in the original trial, the court of the second trial made it clear that even the seller who sells the genuine goods should also apply the relevant trademarks in a reasonable scope. The fair use of the trademark by the seller should meet three requirements. The first is that the signs of trademarks are used out of good intention. The second is that the signs of trademarks are not used as the trademarks of one’s own goods or services. The third is that the signs of others’ trademarks are only used in necessary areas for the explanation or description of one’s own business scope of goods. As for the application of others’ trademarks beyond the aforesaid scope, the seller may also infringe the right to use the trademark for services bearing the same signs as others’, or constitute the unfair competition for others. The ruling of this case has some significance of reference on the trial of similar cases.

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