[Case Number]

First instance: Shanghai Intellectual Property Court (2020) Hu 73 Min Chu No. 520

Second instance: Shanghai High People’s Court (2022) Hu Min Zhong No. 535

[Basic Facts]

N** Corporation (hereinafter referred to as “N**”) is the first oil seal manufacturer in Japan. Since May 1980, it has successively registered a number of “N**” series trademarks in China. The trademark No. 1180250 (in specific color) claimed in this case was approved for registration in 1998 for such goods as oil seals of Class 17. N** found in an investigation that the defendant E* (Tianjin) Lubricating Oil Co., Ltd. (hereinafter referred to as “E*”) registered “E**” as its company name and used the trade names “恩某” and “N**” in its business activities. It registered and used the domain name “nokrhy.com”, and used multiple trademarks such as , , , and NOK on its website and product packaging, and in its online stores, WeChat official account, brochures, and business premises, claiming that “N** Corporation is a Japanese oil manufacturer...”, “among the top brands in the lubricating oil industry”, and “leading the international market of lubricating oil brands”, etc. Among these trademarks, NOK and  are registered trademarks applied by E* or its affiliates that have been approved for the goods of Class 4 such as lubricants. T* Company (hereinafter referred to as “T*”) leased its business premises to E* and accepted E*’s entrustment to process lubricating oil, with packaging, labels and other materials provided by E*. N** believed that the trademarks concerned were well-known trademarks for oil seal products, and that the aforementioned acts of E* and T* constituted trademark infringement and unfair competition. Therefore, it filed a lawsuit with the court, requesting that E* and T* be ordered to cease infringement, eliminate the adverse impact and jointly compensate it RMB 2 million, and that E* be ordered to change its company name and cancel its domain name.

[Judgment]

Shanghai Intellectual Property Court held the view that N**’s trademarks involved in this case have been approved for goods such as oil seals, while the allegedly infringing goods are products like lubricating oils and lubricants. Although these goods belong to different classes, special focus should be given to their social attributes in specific identifications to determine whether they are similar goods or not in the general understanding of the relevant public, so as to get to the final point whether they will cause confusion or misunderstanding among the relevant public about the source of the goods. The evidence in the case indicates that lubricating oil and oil seals are usually used together on equipment such as engine because they are closely related not only in terms of functions and purposes, but also in distribution channels and marketing promotion. Based on comprehensive consideration, it can be determined that oil seals and lubricating oil constitute similar goods. Since oil seals are intermediate components in industrial products rather than mass consumer goods, whether the proprietary trademarks concerned have reached the status of well-known trademarks should be based on the general understanding of the relevant public in such professional field. The documentary evidence is sufficient to determine that the proprietary trademarks had been used in the Chinese market for years at the time of the alleged acts, and have become widely known to the relevant public. Therefore, they should be recognized as well-known trademarks. Regarding whether the alleged acts of E* constituted trademark infringement, unfair competition and false publicity, the proprietary trademarks enjoy distinctive features and high popularity in the market, and the allegedly infringing signs used by E* were highly similar to the proprietary trademarks. Among them, two were E*’s registered trademarks, which constituted trademark infringement of imitating the well-known trademarks concerned and misleading the public; other allegedly infringing marks constituted trademark infringement by using trademarks similar to the proprietary trademarks on similar goods, which was likely to cause confusion among the relevant public. E*’s registration and use of its Chinese company name “恩某” and of the domain name “nokrhy.com”, as well as related publicity activities constitute unfair competition. In addition, some of E*’s publicity activities were intended to make the relevant public believe that it originates from Japan, which may easily lead the relevant public to mistakenly believe that E* has an association with N**, and such behaviors constituted false advertising. In determining the infringement by T*, it should be noted that T*, as an enterprise specializing in lubricating oil for a long time, should have certain knowledge of oil seals which are closely related to lubricating oil and the highly well-known trademarks concerned. Under such circumstance, it still provided premises for E*’s infringement and produced infringing products upon the latter’s entrustment, for which it should bear joint liability for infringement with E*. Considering the popularity of the trademarks and the severity of related infringements, the court ruled that E* and T* should cease their trademark infringement and that E* should stop unfair competition, stop using its company name, cancel its domain name, eliminate the adverse impact, and compensate N** RMB 1.2 million, of which T* should bear RMB 400,000 for joint and several liability. E* and T* refused to accept the first-instance judgment and appealed. The court of second instance dismissed the appeal and affirmed the original judgment. 

[Significance]

This case mainly involves the determination of similar industrial products and well-known trademarks. The court fully considered the professional features of the industrial products involved in the case, and on the basis of comprehensive and careful consideration of the case facts, accurately defined the meaning of “relevant public” and “general understanding”, broke through the division of commodity classes in the Classification of Similar Goods and Services, and determined oil seals and lubricating oils as similar commodities. In addition, it reasonably determined the weight of each factor to be considered in the recognition of well-known trademarks based on the industrial products’ functional purposes and marketing methods, and held that the trademarks were well-known. Furthermore, the court determined a relatively high amount of compensation based on the business scale admitted by E*’s sales staff, and considering E*’s subjective intent to seek connections with the well-known trademarks, thereby effectively protecting the legitimate rights and interests of the right holder. This case is of considerable significance of reference for the determination of similar goods and well-known trademarks in trademark infringement cases involving industrial products. Meanwhile, by providing equal protection to the trademark rights of foreign right holders according to law, it is also conducive to bolstering the confidence of foreign investors in investment and innovation, and fostering a market-oriented, law-based, and internationalized business environment.