Genuine Zongzi in Fake Packages? Second-Instance Judgment Rendered on Dealer’s Infringement of China Time-Honored Brand Wu Fang Zhai’s Trademarks

 

Shanghai Law Journal June 3, 2022 15:27 Published in Shanghai

Recently, the Shanghai Intellectual Property Court (hereinafter referred to as the “Court”) made the final judgment on the appeal over trademark infringement between the appellant Zhejiang Wufangzhai Industry Co., Ltd. (hereinafter referred to as “Wu Fang Zhai”) and the appellees Suxiege Co., Ltd. (hereinafter referred to as “Suxiege”) and Shanghai Yingli Industry Co., Ltd. (hereinafter referred to as “Yingli”), rejecting the appeal and upholding the original judgment.

Wu Fang Zhai claimed to the first-instance court as follows. Wu Fang Zhai, founded in 1921, enjoys high visibility and has been recognized as a “China Time-honored Brand” and a well-known trademark. In 2018, law enforcement officers from the Jing’an District Market Supervision Administration of Shanghai investigated and dealt with gift boxes printed with text and graphic trademarks such as “Wu Fang Zhai” sold by Suxiege. The zongzi in the gift boxes involved came from an authorized dealer of Wu Fang Zhai, but Wu Fang Zhai never produced or authorized other companies to produce or sell such gift boxes.

According to investigation, Yingli provided the zongzi and gift boxes, and Suxiege sold them together. Therefore, Suxiege and Yingli infringed Wu Fang Zhai’s exclusive right to use its trademarks No.9720610 “Wu Fang”, No.10379873 “Delicious Wu Fang” and No.31907 “Wu Fang Zhai” and thus should bear joint liability.

In addition, Yingli’s sale of zongzi gift boxes constitutes the use of same trademark on the same commodity, infringing Wu Fang Zhai’s exclusive right to use its trademark 3781249 “Wu Fang Zhai”. Wu Fang Zhai requested the court to order Suxiege and Yingli to immediately stop the production and sale of and destroy the packing boxes and commodities with the above trademarks and jointly compensate a total of 300,000 yuan for economic losses and reasonable expenses.

The court of first instance held as follows. The zongzi in the gift boxes were genuine and came from the seller authorized by Wu Fang Zhai. Wu Fang Zhai also confirmed in the trial that the loose vacuum-packed zongzi were printed with Wu Fang Zhai’s old man and circular pattern and production date, and that the packaging, shelf life and quality of the loose zongzi were no different from those in the gift boxes. We can see the use of marks basically the same as registered trademarks on the gift boxes involved neither impairs the trademark function of indicating the source nor the function of quality guarantee. Therefore, the acts of Suxiege and Yingli did not infringe Wu Fang Zhai’s rights in registered trademarks No. 9720610, 10379873 and 331907. Suxiege’s highlighted use of the marks “Wu Fang”, “Delicious Wu Fang” and “Wu Fang Zhai” on the gift boxes involved sold by it constitutes the use in the sense of trademark law. Its use of the trademarks same as registered trademarks on the same kind of commodity infringes Wu Fang Zhai's exclusive right to use its registered trademark No.3781249. Considering the popularity of the trademarks involved, the subjective fault of the infringers, the infringement impact, the attorney fee paid by Wu Fang Zhai and other factors and considering that the zongzi in the gift boxes involved did come from Wu Fang Zhai, the court ordered a total compensation of 30,000 yuan for damages and reasonable expenses.

Dissatisfied with the result, Wu Fang Zhai appealed to the Shanghai Intellectual Property Court on the ground that the first-instance finding that the acts of Suxiege and Yingli did not infringe its rights in registered trademarks No. 9720610, 10379873 and 331907 was wrong and the compensation amount was too small. It requested to order that Suxiege and Yingli jointly compensate 150,000 yuan for its economic loss.

Through trial, the Shanghai Intellectual Property Court held that Suxiege and Yingli infringed Wu Fang Zhai’s exclusive right to use its registered trademarks No. 9720610, 10379873 and 331907 and should be liable for compensation since they repackaged the loose zongzi from Wu Fang Zhai into the gift boxes which did not indicate source and looked similar to Wu Fang Zhai’s gift boxes and sold them in the name of Wu Fang Zhai, and the gift boxes involved were printed with “Wu Fang Zhai”, “Delicious Wu Fang”, “Wu Fang” and other characters similar to or identical with registered trademarks.

The reasons are as follows: 1. Although the loose zongzi are genuine ones from Wu Fang Zhai, the alleged infringing zongzi gift boxes are not the same as the genuine ones from Wu Fang Zhai as they differ in packaging and sales price; 2. In terms of the commodity type on which the registered trademarks were approved to be used, zongzi gift boxes are also zongzi products, so Suxiege and Yingli have used trademarks similar to registered trademarks on the same type of commodity; 3. Selling loose zongzi packed into fake gift boxes confuses the related public about the zongzi gift boxes, impairs the source indication between the registered trademarks on the gift boxes and the commodity in them, encroaches on the market share of genuine gift boxes, and influences the business reputation of Wu Fang Zhai.

Hence, the first-instance court’s finding that the acts of SuXiege and Yingli did not infringe the rights in registered trademarks No.9720610, 10379873 and 331907 is an error in law application and should be corrected. Furthermore, according to the existing evidence, the sales volume of Suxiege and Yingli is small, and the profit is not high. There is a small average price difference between the loose zongzi and gift-box zongzi of Wu Fang Zhai. As Suxiege and Yingli did buy the loose zongzi from Wu Fang Zhai, they did not cause great losses to it. In view of the foregoing, the Shanghai Intellectual Property Court held selling the repackaged genuine zongzi from Wu Fang Zhai constituted trademark infringement, but after taking the case into full consideration, affirmed the amount of compensation ordered by the first-instance judgment. Therefore, the above judgment is rendered.

Written by Chen Youmin, Hu Mi, Ye Mingxin

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