Recognition of famous Trademark and Accountability in Conflict between Enterprise Name Right and Trademark Right

Recognition of famous Trademark and Accountability in Conflict between Enterprise Name Right and Trademark Right - Shanghai High People's Court Made a Judgment to the Dispute over Trademark Infringement and Unfair Competition - Concord Investment (China) Co., Ltd v. RT-Mart Investment Co., Ltd

 

January 12, 2017  People's Court Daily Version 6: Case Study

 

Judgment Summary

If, in an unfair competition dispute involving conflict between enterprise name right and trademark right, the defendant's goods or services are identical or similar to the goods or services for which the plaintiff's registered trademark is approved, whether the defendant's act constitutes unfair competition can be determined directly based on the popularity of the trademark and other factors without recognizing whether it's a famous trademark. If punitive damages are not applicable when determining the amount of compensation, statutory compensation should be increased properly with due consideration to the defendant's subjective bad faith. 

Case Review

The plaintiff Concord Investment (China) Co., Ltdis thetrademark (registration No.: 5091186) holder of famous chain supermarket "RT-Mart". Since it opened the first supermarket in Shanghai in 1998, Concord has set up 318 large-scale comprehensive supermarkets in Mainland China successfully and "RT-Mart"trademark has become its famous trademark. The defendant's act of naming itself as RT-Mart Investment Co., Ltd without Concord's authorization and using the above name during its business activities constituted unfair competition as it used the plaintiff's famous trademark in its enterprise name. In addition, its act of highlighting "RT-Mart" trademark on/in its website and brochures and using "RT-Mart" in combination with "DRF", which attempted to confuse the consumers, infringed upon the plaintiff's trademark right. Given the above, Concordfiled a lawsuit and requested the court to rule that RT-Mart Company stop the infringement, eliminate the impact and compensate for its economic losses amounting to 5,000,000 yuan.

Judgment

After the trial, Shanghai Intellectual Property Court held that having known that the plaintiff had registered the trademark, the Defendant still used words identical to such trademark in its enterprise name, which, even though used in a standardized way, was still likely to mislead the relevant public that the enterprise using "RT-Mart" mark is associated with the Plaintiff. Therefore, the defendant's usage of "RT-Mart" in its enterprise name constituted unfair competition. The court ruled that RT-Mart Company should stop using "RT-Mart" in its enterprise name, eliminate the impact and compensate for the plaintiff's economic losses totaling 3,000,000 yuan.

The defendant instituted an appeal against the first-instance judgment. After the trial, Shanghai High People's Court dismissed the appeal and affirmed the original judgment. Case Study

This case is a typical case concerning infringement of enterprise name upon trademark right, in which the analysis and judgment of whether it's necessary to recognize the trademark as famous trademark and civil liability for infringement provide reference for the trial of similar cases in the future.

1. Necessity of recognition of famous trademarks

According to Article 2(2) of Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law to the Trial of Cases of Civil Disputes over the Protection of Famous Trademarks, "with regard to a trademark right infringement or unfair competition lawsuit initiated by a party on the ground that an enterprise's name is identical with or similar to its famous trademark, in which the party concerned believes that its trademark is famous and takes this as the factual basis, the people's court shall determine whether the trademark involved therein is famous or not in light of the concrete circumstances if it deems it really necessary". In this case, the plaintiff filed a lawsuit against the defendant for using its famous trademark "RT-Mart" as enterprise name, which constituted unfair competition, and requested the court to recognize its trademark as famous according to the above provisions.

According to the above provisions, not all cases involving the conflict between enterprise name right and trademark right require recognition of famous trademark. Only when it's really necessary should such recognition be performed. "Really necessary" refers to a circumstance in which the business engaged by the alleged infringing enterprise is not identical or similar to the scope of goods for which the registered trademark is licensed. In this case, the plaintiff's trademark "RT-Mart" is licensed for the supermarket business engaged by Concord. As the business engaged by the defendant falls within the same service scope for which "RT-Mart" is licensed, there's no need to recognize that "RT-Mart" trademark is famous.

2. Application ofcivil liability"stopping infringement"

In this case, the court recognized that "RT-Mart" trademark had been well known in the industry when the defendant was established in view of the registration time of the trademark and the plaintiff's business scale, sales volume and market ranking, etc. Despite this, the defendant, as a competitor engaged in similar business, still used words identical to the plaintiff's trademark in its enterprise name, indicating that it had the subjective intention to associate its enterprise name with the Plaintiff's trademark. In view of the high popularity of the infringed trademark, defendant's standardized use of its enterprise name is still likely to mislead the relevant public that the enterprise using "RT-Mart" mark is associated with the plaintiff. Therefore, the defendant's usage of "RT-Mart" in its enterprise name constituted unfair competition.

In such case concerning unfair competition, the defendant should bear the civil liability of stopping the infringement. However, there's no uniform practice as to how to stop the infringement. Given that the defendant must provide an alternative name if it changes its enterprise name, refusing to do so the plaintiff will have trouble in applying for compulsory execution, and stop using the enterprise name containing the trademark doesn't necessarily mean to change the enterprise name, in which case the defendant may cancel its registration directly, we consider it easier for implementationto stop using the plaintiff's trademark as the enterprise name rather than change the enterprise name.

3. Application of statutory compensation as a supplementary to punitive damages

According to Article 63.1 of the Trademark Law, the defendant's act could be deemed as "malicious trademark infringement and circumstances are serious". Though punitive compensation couldn't be determined based on the plaintiff's losses, defendant's profits and royalty of infringed trademark in this case, the court deemed that since infringement compensation system was established for the purposes of making up losses and punishing infringers according to the trademark law, statutory compensation system, as miscellaneous provision on calculating the damage, should also take account of compensation and punishment. When determining the amount of statutory compensation, defendant's subjective malice could be taken into account. Therefore, the court ordered the defendant to make a compensation of 3,000,000 yuan with due consideration to thedefendant's subjective malice and the popularity of the plaintiff's trademark.

 

Case No.: No. 731 [2015], First Instance, Civil Division, SIPC; No.409[2016], Last Instance, Civil Division

Author:Ling Zongliang, Shanghai Intellectual Property Court

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