[Shanghai Law Journal] Shanghai Intellectual Property Court Releases Typical Cases on the Protection of Business Environment April 17, 2018 Shanghai Law Journal A08/B08: Special Page for Law Compensation of RMB 3 Million for Unauthorized Use of “Darunfa” for Market Operation [Key Words] Unauthorized Use; Trademark Infringement; Unfair Competition [Abstract] Concord is the owner of the trademark of the well-known supermarket brand “RT-Mart” (Chinese characters “大润发”). Darunfa, which used the above name for operation without authorization, committed an act of unfair competition. Darunfa attempted to confuse consumers through the highlighted use of the trademark “大润发” as well as the combined use of “大润发” and “DFR” on its website and in actual operation, infringing Concord’s trademark right. Therefore, Concord brought an action before the court, requesting the court to order Darunfa immediately stop infringement, make economic compensation and eliminate effects. Through trial, Shanghai Intellectual Property Court held that Darunfa, who knew Concord had registered the trademark involved, registered “大润发” as its company name, is sufficient to make the public confused and falsely believe there is a correlation between the company using the trade name “大润发” and Concord. As such behavior constitutes unfair competition and willful infringement of trademark right in addition to severe circumstance, the court ordered Darunfa stop infringing upon Concord’s trademark right and using “大润发” in its company name, eliminate effects and compensate RMB 3 million for economic loss. Unsatisfied, Darunfa brought an appeal. Shanghai High People’s Court rejected the appeal and affirmed the original judgment. [Typical Significance] The compensation system established by the Trademark Law can make up for the loss and meanwhile punish infringement. In this case, by giving full consideration to the subjective malice of the tortfeasor, the visibility of the trademark involved and its contribution to the right holder’s operation, the publicity of the tortfeasor and the consequences of the infringement, etc., the court ordered the highest compensation liability of RMB 3 million. The ruling on the case is of great referential meaning for determining the compensation amount for willful infringement. Keeping to the Reasonable Boundary when Using Time-honored Brands with Special Origin [Key Words] Wuliangcai; Trademark Infringement; Unfair Competition [Abstract] The history of Shanghai Wuliangcai can trace back to the Wuliangcai Glasses Store in 1807. The Wuliangcai Glasses Company Nanjing Branch registered and formed in 1947 had no ties with Shanghai Wuliangcai. From 1989 on, Sanlian Group and Shanghai Wuliangcai registered the trademark “Wuliangcai” successively. Nanjing Wuliangcai expanded its franchising business nationwide from 2004, authorizing its branches and franchisees to use the enterprise name and logo containing the word “Wuliangcai” and claiming that it started from the Nanjing Branch established by Shanghai Wuliangcai. Sanlian Group and Shanghai Wuliangcai who believed that the above behavior of Nanjing Wuliangcai constituted trademark infringement, false publicity and other acts of unfair competition filed a suit with the court. The first-instance court ruled Nanjing Wuliangcai should immediately cease the trademark infringement and unfair competition, immediately stop its branches from registering or using the enterprise name containing word “Wuliangcai” outside Nanjing, eliminate the negative effects and make compensation. Refusing to accept the ruling, Nanjing Wuliangcai brought an appeal. Through trial, Shanghai Intellectual Property Court held that Nanjing Wuliangcai registered and used the enterprise name containing the word “Wuliangcai” before the registration of trademark involved, thus its behavior doesn’t constitute unfair competition; however, its behavior shows its intention to attach itself to the business reputation of Shanghai Wuliangcai and is sufficient to confuse relevant consumers, hence it’s necessary to restrict the territorial scope of its use of the trade name “Wuliangcai.” In addition, relevant publicity of Nanjing Wuliangcai may make the public falsely believe it has ties with Shanghai Wuliangcai, thus constituting false publicity. Accordingly, the second-instance court rejected the appeal and affirmed the original judgment. [Typical Significance] Dealing with conflicts between trademarks formed under special history background requires considering such factors as history, status quo and fairness. Instead of taking a sweeping approach, the ruling made in this case reasonably defined the boundary and properly solved the trademark conflict left by history. It has certain guiding significance for regulating the use of time-honored brands, promoting honest operation by the market players, preventing confusion in the market and protecting consumers’ legitimate rights. “LAFITTE” Infringes the Trademark Right of “LAFITE” [Key Words] LAFITTE; Non-registered Well-known Trademark; Trademark Infringement [Abstract] In October 1997, the world-renown trademark “LAFITE” of Chateau Lafite Rothschild was approved for registration on wine in China In May 2015, Chateau Lafite Rothschild found Mellowines importing and selling wine bearing “CHATEAU MORON LAFITTE” and “拉菲特庄园” while importing and selling wine produced by Chateau Lafite Rothschild, and Baozheng responsible for logistics and storage. Chateau Lafite Rothschild, which believed that Mellowines and Baozheng jointly infringed upon its exclusive right to the registered trademark “LAFITE” and the right to “拉菲” which shall be identified as a non-registered well-known trademark, brought an action before the court, requesting to order Mellowines and Baozheng cease the infringement, eliminate ill effects and compensate for the losses. Through trial, Shanghai Intellectual Property Court held that the sued infringers infringe upon Chateau Lafite Rothschild’s exclusive right to registered trademark and trademark right; Mellowines’ import and sales of infringing wine constitutes trademark infringement and Baozheng’s behavior constitutes contributory infringement. Accordingly, the court ruled the infringers stop the infringement, remove the negative effects and jointly compensate Chateau Lafite Rothschild RMB two million for economic loss and reasonable expenses. Neither party brought an appeal after the first instance, and the first-instance ruling has taken effect. [Typical Significance] Despite the fact that neither our Trademark Law nor its judicial interpretation stipulates that non-registered well-known trademarks are entitled to compensation if suffering infringement, the use of non-registered well-known trademarks inevitably occupies the goodwill of the right holders. Therefore, infringers may still be ordered to bear the compensation liability. The ruling in this case has certain guiding and referential significance for the trial of cases involving non-registered well-known trademarks in judicial practices. Also, it will be beneficial for regulating China’s imported wine market and guiding the honest operation of wine importers. Installing POS Machines in the Name of UnionPay Without Authorization Constitutes Infringement [Key Words] UnionPay; POS Machine; Trademark Infringement [Abstract] China UnionPay takes UnionPay as its trade name and has registered a number of trademarks. Daonuo made and used a trademark identical with or similar to UnionPay’s registered trademark as well as its company name and trade name. It also sold POS machines with UnionPay’s mark, forged and used UnionPay’s seal and authorization document to promote bank card services to customers independently or jointly with Yuntaimingde. UnionPay held that Daonuo’s behavior constituted trademark infringement and unfair competition, thus bringing an lawsuit before the court. Through trial, Shanghai Intellectual Property Court held that Daonuo’s behavior infringed UnionPay’s exclusive right to its registered trademark and constituted unfair competition for authorization use of other company’s name. Daonuo, which falsely claimed on its official website that it had a strategic partnership with UnionPay and forged and used UnionPay branch’s seal and authorization document to promote bank card services to customers, committed false publicity. Accordingly, the court ruled that Daonuo cease the infringement, eliminate the negative effects and compensate RMB600,000 for economic loss and RMB102,000 for reasonable expenses. [Typical Significance] UnionPay does not produce or sell POS machines, let alone enter any POS machine installation agreements with merchants. However, some illegal enterprises market and install POS machines in the name of UnionPay to attract merchants, bringing hazards to merchants’ capital safety. Therefore, merchants intending to be special merchants of UnionPay cards should be careful and choose formal banks or qualified third-party acquirers and be cautious of enterprises marketing POS machines in the name of UnionPay in avoidance of economic loss. The Judgment on Whether Software Interference Constitutes Unfair Competition in the Internet Environment [Key Words] Tmall.com; Shopping Assistant; Unfair Competition [Abstract] Tmall.com is the operator of the shopping platform Tmall. While Zaihe operates the website B5M.COM and entrusted Zaixin to develop the B5T shopping assistant. When a user installs and operates the software B5T, first, the top of Tmall platform’s pages will be inserted with a banner bearing the content of the website B5M.COM, which can be retracted by clicking; second, the commodity pages of Tmall will be inserted with a sign and a button, by clicking which the page will skip to B5M.COM. Then the user may complete the transaction on B5M.COM and B5M.COM will buy the products from the Tmall merchant for the user. The first-instance court held Zaihe and Zaixin’s behavior constituted unfair competition and ordered them tobear the civil liability of compensating RMB 1.1 million and eliminatingnegative effects. Zaihe and Zaixin refused to accept the ruling and filed an appeal. Through trial, Shanghai Intellectual Property Court held that the signs and buttons inserted by Zaihe and Zaixin on the commodity pages of Tmall were embedded at conspicuous places on the web page to guide consumers to trade on their website, and users can’t choose to close them. Thus, such behavior constitutes excessive interference. The software involved in the case will not only damage the Tmall.com’s interests, but also impair the co-existence ecology of services such as e-commerce, price comparison, and buying assistance service. Accordingly, the court rejected the appeal and affirmed the original judgment. [Typical Significance] Many so-called interfering actions on the Internet contain certain technological innovation. Unfair Competition Law protects diversified legal interests. Apart from legitimate interests of operators, it also aims to protect the interests of consumers and even the public by regulating unfair competition. In order to judge whether a behavior violates commercial ethics, we should consider a broader market environment and more stakeholders. The ruling in this case has a positive significance for maintaining the market competition order of online shopping. Unauthorized Live Broadcast of E-sports Game Harms the Interests of Event Operator [Key Words] First Case Nationwide; DOTA2; E-sports Live Streaming [Abstract] DOTA2 is a world-renown e-sports game developed by Valve Corporation. In 2014, Shanghai Yaoyu Culture Media Co., Ltd. entered an agreement with the game operator to jointly run the Dota 2 Asia Championship 2015. Yaoyu enjoyed the exclusive video broadcasting right of the game in Mainland China. However, Douyu, without authorization, made a live broadcast of such event by way of putting up the screenshots of the event accompanied by the comments of the host while watching the event on the client side. Yaoyu held Douyu’s behavior infringed upon Yaoyu’s legitimate interests, thus filing a suit with the court, requesting to order Douyu cease the infringement, remove negative effects and compensate for economic losses and expenses for right protection. The first-instance court ruled Douyu compensate Yaoyu RMB 1.1 million for economic losses and expenses for right protection and eliminate effects. Unsatisfied with the ruling of first-instance court, Douyu brought an appeal. Through trial, Shanghai Intellectual Property Court held live broadcast of the event involved without the authorization of the event operator violated the principle of good faith as required in the Anti-unfair Competition Law and generally-acknowledged commercial ethics, damaged the legitimate interests of the game organizer, thus constituting unfair competition. Accordingly, the court ruled to reject the appeal and affirmed the original judgment. [Typical Significance] This is the first case concerning a dispute over copyright infringement and unfair competition arising from online live broadcast of e-sports game in China and a new-type case in the field of intellectual property emerging with the development of e-sports game industry. The trial of the case plays a guiding and regulatory role on the rapidly developing e-sports game industry in China. Only fair, orderly and free competition can guarantee the long-term and healthy development of the industry. Objective Standards for Judging Design Similarity [Key Words] M&G; Deli; Design Patent [Abstract] M&G is the patenteeof the design patent named “Pen (AGP67101).” It found Deli was manufacturing and selling a gel pen which M&G believed identical with the above patented product, and the designs of the two were very similar. M&G held that the defendant’s behavior infringed its patent right and thus filed a litigation with the court, requesting to order the sued tortfeasor stop the infringement and bear compensation liability. Through trial, Shanghai Intellectual Property Court held the design features such as the shape of the main body of the patented pen design were adopted in the sued design. Thus, the two designs are similar as to the overall design style and the main features. Although there are different design features such as the concave line on the penholder, the differences are insufficient to constitute substantial differences on the overall visual effect. The patented design did not mention any clear protection of the colors in its brief description, but adding elements such as color, patent etc. to the sued infringement design is regarded as extra added design elements and will not have substantial influence on the judgment of the infringement. Therefore, Deli’s implementation of M&G’s patented design constitutes an infringement upon the patented design. In view of the above, the court ruled the sued tortfeasor stop the infringement and compensate RMB100,000 for economic losses and reasonable expenses. [Typical Significance] The case made some explorations on the objective standards on the judgment of design similarity. Specifically, the determination conclusion was reached by starting from the similar and distinctive design features of the sued product and the patented product and making an objective analysis on their influence on the overall visual effect. The ruling of the case is of great referential significance for the determination of design similarity of common products in life. Both parties accepted the ruling. Deli proactively contacted the court and fulfilled the effective ruling. Technical Proposals Not Falling into Patent Protection Scope Do Not Infringe [Key Words] Mobike; Dispute over Patent for Invention; Innovation Economy [Abstract] The plaintiff Hu believed the technical features of the lock control system on the Mobike bicycles rented by Mobike Company were identical with those of the invention patent “a kind of electric car control system and its operation method” he enjoys, thus bringing an action to Shanghai Intellectual Property Court, requesting to rule the defendant pay compensation for infringement. Shanghai Intellectual Property Court held in the first instance that in the patent claim 1 the four components of the QR code recognizer must be integrated, the electric connections do not include the connection of wireless communication signal, and the sued Mobike lock control system does not contain technical features including the “QR code recognizer,”“graphic decoder... electric connection with QR code comparator” and “the controller triggers the alarm when the signals compared are inconsistent” recorded in the patent claim 1. The sued Mobike lock control system and its operation method doesn’t fall into the protection scope of the patent involved. Thus, the court rejected all the claims of the plaintiff Hu. Shanghai High People’s Court rejected the appeal and affirmed the original judgment. [Typical Significance] The typical significance of the case is that it sends a message to new-type innovation enterprises and patentees that people’s courts are trying intellectual property disputes fairly and impartially in accordance with law, and that while protecting the patent right entitled to patentees by operation of law, the courts are also safeguarding the legitimate interests of new-type innovation enterprises. In this case, the sued technical proposal realized the interaction among the vehicle, mobile and Cloud, while the patent involved only realized the interaction between the lock control system on the vehicle and the QR code, showing that the sued technical proposal makes a creative progress compared with the patent involved. As a new-type reform court, Shanghai Intellectual Property Court will protect business environment, technological innovation and convoy innovation economy with fair justice. Disposed Patent Right Can Not Be Reasserted [Key Words] Drug Patent; Ownership Dispute; Implied Transfer [Abstract] The plaintiff Wang, who graduated from Yale University with a doctor’s degree in chemistry, is of high attainment in new drug research and development. Defendant Zhang, a classmate of the plaintiff Wang, invested to set upBetta and invited the plaintiff to serve as science consultant. In March 2004, Wang provided the original technical note of a diabetes drug to Zhang. In April 2004, Betta Shanghai, which was established by Zhang, applied to SIPO for the patent of invention called “GLP-1 analogue, its composition and application method” with six people including Zhang as the inventors. Later, the patent was transferred to the defendant Betta. In 2010, Wang and Zhang signed a letter of intent, promising to reward the plaintiff with the shares of Betta and Betta Zhejiang (whose name was later changed into defendant Betta). But Wang didn’t get the corresponding shares afterwards. Wang held that he was the real inventor of the patent involved, thus filing a lawsuit with the court, requesting to order he was the inventor and patentee of the patent involved. Shanghai Intellectual Property Court held through trial that according to the evidence it’s confirmed that the plaintiff delivered the English patent document involved to the defendant Zhang and Betta Shanghai applied for the patent involved; hence the plaintiff is the patent inventor. But the plaintiff took the initiative to deliver the patent document to Zhang for patent application without expressing the intention to bear the payment obligation as the patent applicant or patentee or ever actually undertaking such obligation. Furthermore, the two parties had agreed on profit sharing after the industrialization of the patent. Thus it’s identifiable that the plaintiff gave up the right to apply for the patent involved for practical reasons and transferred the right of patent application. He reasserted to confirm him as the patentee after the approval of the patent application. Accordingly, such reassertion can neither be established nor supported by the court. [Typical Significance] In the process of industrialization and commercialization of scientific and technological achievements, disputes over patent ownership frequently occur. Proper trial of such disputes is of great significance for promoting the development of innovation economy. This is a typical case that arises during the flow of inventions. Especially when patented technology is technology investment and in the course of patented technology trading how to define the inventor of the invention and the ownership of the patent right becomes the focus of dispute and trial difficulty in the case. Shops Selling Authentic Products CanNot Use the Trademark of the Products as Shop Sign [Key Words] Service Trademark; Commodity Trademark; False Publicity; Unfair Competition [Abstract] Guccio enjoys the exclusive right to use the goods mark of commodities such has GUCCI bags and the service mark of services such as goods display. Companies Panduofu and Xinggao rented shops in the Milan Plaza operated by the company Milan to sell commodities including GUCCI bags, and highlighted the word “GUCCI” on the signboard and in inner decoration. Milan advertised GUCCI as a brand settling in the plaza on its official website and Sina Weibo. Thus, Guccio brought a charge against the three defendants, claiming their behavior constituted trademark infringement and unfair competition and requesting to order them stop infringement and compensate for the losses. The first-instance court ruled the three defendants cease infringement and compensate for the losses. Unsatisfied with the result, the three brought an appeal. Shanghai Intellectual Property Court held in the second instance that the three defendants’ way of using the sued mark at conspicuous places of the store involved went beyond the necessary scope for explaining and describing the commodities they operate. The publicity on its website and Weibo might also mislead people to falsely believe the operator of the shop involved was Guccio or any of its affiliates. They gained undue competition advantage and infringed upon Guccio’s exclusive right to use the service mark, thus constituting unfair competition. However, as the products sold by the defendants are authentic GUCCI products, they didn’t infringe Guccio’s exclusive right to use goods mark. Hence, the three defendants should bear joint liability for infringing upon Guccio’s exclusive right to use service mark and unfair competition. Accordingly, the court dismissed the appeal and sustained the original judgment. [Typical Significance] Even sellers of authentic products should use relevant trademark to the reasonable extent. Authorized use of trademark on the shop signboard is not allowed as it may mislead consumers to confuse the shop and the flagship and exclusive shop of the trademark holder. The ruling of the case safeguards the legitimate rights of the trademark holder, reduces the cost for information communication between consumers and the trademark holder, and creates a safe, reliable, fair, transparent and predictable business environment for IPR holders.
