Jan. 23, 2018 KNEWS

Reporter Wu Haiping

Recently, Shanghai Intellectual Property Court closed a case concerning dispute over trademark right and unfair competition between appellants Nanjing Wuliangcai Glasses Co., Ltd. (Hereinafter “Nanjing Wuliangcai”) and Shanghai Hantao Information Consulting Co., Ltd. (hereinafter “Hantao”) and respondents Shanghai Sanlian Group Co., Ltd. (hereinafter “Sanlian Group”) and Wuliangcai Glasses Company of Shanghai Sanlian Group Co., Ltd. (hereinafter “Shanghai Wuliangcai”), rejecting the appeal and affirmed the original judgment.

Sanlian Group and Shanghai Wuliangcai share the exclusive right to use the registered trademark “Wuliangcai”. Through many years’efforts, the trade name and trademark “Wuliangcai” has gained wide popularity across the country. In 2015, Sanlian Group and Shanghai Wuliangcai found dianping.com published massive information about product group-buy coupons offered by Nanjing Wuliangcai and its franchisees. Investigation revealed that Nanjing Wuliangcai had opened a number of registered shops using the trade name “Wuliangcai” inside and outside Nanjing, and that Nanjing Wuliangcai as well as its branches and franchisees used the words “Wuliangcai” in registration and operation and claimed “Nanjing Wuliangcai is a century-old store developed based on the Nanjing Branch of Shanghai Wuliangcai”. Sanlian Group and Shanghai Wuliangcai held that theirbehavior constituted infringement upon exclusive right to use registered trademark and unfair competition, and hence brought an action to the court, requesting to stop the infringement and compensate RMB three million for theirlosses and reasonable expenses.

Through trial, the first-instance court held that due to historical reasons Nanjing Wuliangcai’s registration and use of enterprise name containing words “Wuliangcai” didn’t constitute unfair competition, but its establishment of branches named with words “Wuliangcai” outside Nanjing to expand the use of the most identifiable trade name “Wuliangcai”, despite the fact that they perfectly knew the popularity of the trade name and trademark of Shanghai Wuliangcai,went beyond the use scope of enterprise name right and conflicted with the radiation scope of Shanghai Wuliangcai’s trademark right. This can easily make the public falsely believe that the two have a certain relation and confuse the sources of the products and services provided by the two. Its bad faith to attach itself to Shanghai Wuliangcai’s business reputation and seize market share was obvious. Thus this violated the principle of good faith and constituted unfair competition against Shanghai Wuliangcai’s enterprise name.

Nanjing Wuliangcai’s authorization of franchisees’ registration and use of enterprise name and sign containing words “Wuliangcai” constituted infringement upon and unfair competition against Sanlian Group and Shanghai Wuliangcai. Nanjing Wuliangcai and its branches’ and franchisees’ use of words “Wuliangcai” and relevant publicity in physical and online stores constituted infringement upon Shanghai Wuliangcai’s trademark, false publicity and unfair competition.

Furthermore, Wuxi Qingqing Shijie Glasses Co., Ltd.’s (hereinafter “Qingqing Shijie”) use of words “Wuliangcai” and relevant publicity activities in physical store and dianping.com constituted trademark infringement and unfair competition. Group-buy merchants including Hantao and Qingqing Shijie committed contributory infringement .

Accordingly, the first-instance court ruled Nanjing Wuliangcai should immediately cease infringement upon Sanlian Group and Shanghai Wuliangcai’s exclusive right to use registered trademark and unfair competition, immediately stop its branches from registering or using enterprise name containing words “Wuliangcai” outside Nanjing, Jiangsu, publish a statement for 30 consecutive days on its official website to eliminate the negative effects of the infringement, and compensate Sanlian Group and Shanghai Wuliangcai RMB2.6 million for economic loss including reasonable investigation fee; Qingqing Shijie and Hantao should immediately stop the infringement upon Sanlian Group and Shanghai Wuliangcai’s exclusive right to the registered trademark and unfair competition; Qingqing Shijie should compensate Sanlian Group and Shanghai Wuliangcai RMB 100,000 for economic loss including reasonable investigation fee; Hantao should publish a statement for 30 consecutive days on the group-buy website of dianping.com to eliminate the negative effects of the infringement.

Nanjing Wuliangcai was not satisfied with first-instance judgment. It held that the first-instance court had no right to designate the territorial scope of the registration and use of Nanjing Wuliangcai’s enterprise name, and that its lawful prior use of its name and trade name didn’t infringe upon Shanghai Wuliangcai’s trademark right or constitute unfair competition, thus bringing an appeal.

Shanghai Intellectual Property Court held in the second instance that Nanjing Wuliangcai and Shanghai Wuliangcai had ties in history, but they are not associated with each other. In the context that the trademark “Wuliangcai” enjoys high popularity and is identified as a well-known brand, Nanjing Wuliangcai highlights the trade name “Wuliangcai” and authorizes its franchisees to contain the words “Wuliangcai” in their enterprise names, and claims it’s a “century-old store”. This shows its intention to attach itself to the business reputation of Shanghai Wuliangcai and may confuse the public in the market. Hence it’s necessary to limit the use scope and method. Its use beyond the scope and inappropriate use constitute trademark infringement and unfair competition. Accordingly, Shanghai Intellectual Property Court rejected the appeal and affirmed the original judgment.

The judgement of the case is of referential significance for determining the registration and use scope of enterprise names.