(By You Yunting) Perfetti Van Melle Confectionery (China) Co., Ltd. (“Perfetti”) has a well-known candy named Alpenliebe, whose slogan is “浓浓奶香情 Nong Nong Nai Xiang Qing”. “浓浓 Nong Nong” refers to a strong scent, while “浓浓奶香情 Nong Nong Nai Xiang Qing” in English refers to a “strong milk taste,” i.e., the candy is notable for its rather strong milky flavor. A Zhejiang-based company owned the “浓浓 Nong Nong” trademark under the classification for candies, and filed a lawsuit accusing Perfetti of infringement and unfair competition for its use of that slogan. In today’s post, we will introduce relevant legislation on substantiality and procedure in this particular case.
Introduction to the case:
The PingFen Company registered the “浓浓 Nong Nong” trademark (“disputed trademark”) under Class 30 for candies in 1998. Subsequently, PingFen Company found Perfetti made use of the “浓浓 Nong Nong” trademark on its Alpenliebe candy packages, and filed a lawsuit against Perfetti, demanding it stop its trademark infringement and unfair competition practices, eliminate its package design for Alpenliebe’s packages, and provide compensation in the amount of RMB 200,000 Yuan for PingFen’s economic losses.
Perfetti filed a counterclaim in response, alleging that Perfetti is a wholly-owned subsidiary of Perfetti Van Melle S.P.A, which produces a well-known series of candies under the brand name Alpenliebe, and holds the rights on all packages and designs currently in use, including the package with the “浓浓奶香情 Nong Nong Nai Xiang Qing” slogan. Perfetti alleged the facts of the case showed that the candy packages produced by PingFen Company made use of the words “浓浓奶香情 Nong Nong Nai Xiang Qing”, and unauthorized of a substantially similar type of packaging, like that of Perfetti’s Alpenliebe, constituted unfair competition. Taking these specific factors into consideration, in its counterclaim Perfetti requested the court to rule that PingFen’s business practices constituted unfair competition, and that PingFen should make an apology to Perfetti.
Taking Perfetti’s counterclaim into consideration, the Zhejiang Higher People’s Court held that one of the characteristics of counterclaims in judicial practice is that they shall have bearing on the principal action, i.e., the counterclaim should implicate the original action it is filing a counterclaim against. In other words, a counterclaim must be such that it counters allegations in the original set of facts, or must be based on substantially the same set of relevant laws as in the original action. In this case, on the basis of the fact that the claims filed by PingFen Company are trademark infringement and unfair competition, the Zhejiang Higher Court, after identifying the evidence presented, determined that the case can only be described as a case of trademark infringement, because PingFen Company failed to provide evidence to prove the “浓浓 Nong Nong” candies and packages were well-known goods.
On the other hand, the court determined that Perfetti’s counterclaims constituted unfair competition, because PingFen Company’s product packaging utilized the words “浓浓奶香糖 Nong Nong Nai Xiang Qing”, a slogan substantially similar to that of Perfetti’s Alpenliebe candy. In addition, the court found that the principal action at hand was not implicated in Perfetti’s counterclaims. Therefore, the court held that Perfetti’s counterclaims did not meet the requirements of a counterclaim. However, despite not meeting the reasonable requirements of a counterclaim, the court held that Perfetti could still safeguard its rights to the slogan based on the facts surrounding the infringement.
In addition, in hearing the trademark infringement, after hearing the case, the court determined that Perfetti’s use of the slogan did not constitute infringement. Concerning the facts presented that “浓浓 Nong Nong” is not a prominent use of the slogan, it was considered unlikely that consumers would misunderstand the use of “浓浓 Nong Nong” as an adjective to describe milk-based products with a strong milky flavor, the court stated that Perfetti’s use of the descriptor “浓浓 Nong Nong” on its candy packages was a reasonable, fair use of the mark.
Lawyer’s comments:
1. The essence of this case is that a small company registering a trademark with characteristic words safeguards its legal rights against big companies. As for a trademark like the one in this case, Article 49 of the Implementing Regulations of the Trademark Law of the People’s Republic of China states: where a registered trademark contains the generic name, shape or model of the goods in respect of which it is used, or directly indicates the quality, main raw material, function, use, weight, quantity and other features of the goods, or contains a place name, the holder of the exc1usive right to use the registered trademark has no right to prohibit others from duly using it. Therefore, Perfetti’s use of the words “浓浓 Nong Nong” in its slogan “浓浓奶香情 Nong Nong Nai Xiang Qing” in describing characteristics of its milk candy was determined to be a fair use of the mark.
2. The author does not agree with the Zhejiang Higher Court’s rejection of the counterclaims presented to it by Perfetti. Concerning the fact that the Zhejiang Court relied on its finding that there was no unfair competition between the two companies as a basis for PingFen’s failure to prove the “浓浓 Nong Nong” candies were well-known goods, the Zhejiang Higher Court erred when it invalidated PingFen’s claims for unfair competition, and rejected Perfetti’s counterclaims. This decision obviously breaks the rules of procedure; it is not possible to determine a trademark infringement case without trial, because this violates well-grounded Civil Procedure Law of the People’s Republic of China.
As provided in Article 13 of Civil Procedure Law of the People’s Republic of China: “The parties shall be entitled, within the scope stipulated by law, to dispose of their civil rights and their litigation rights.” Article 51 states: “The defendant may confirm or repudiate the claim and shall have the right to file a counterclaim;” based on this rule, PingFen was entitled to file a claim of unfair competition, and Perfetti should have been entitled to file an appropriate counterclaim.
Furthermore, the two parties’ claims of unfair competition in this case were valid. On account of the fact that PingFen did provide little evidence of the candies’ packaging to support unfair competition, the relevant laws and regulations do not ask the parties to provide sufficient evidence when filing a lawsuit. The regulation is such that the parties are given substantial autonomy in filing lawsuits, with the caveat that any party that brings suit in court against another party shall bear the burden of providing evidence to support its claims. It goes without saying that a party that fails to provide sufficient evidence will bear the consequences in losing its lawsuit. In conclusion, the court’s decision that only a trademark infringement case existed was a violation of the relevant provisions of Civil Procedure Law of the People’s Republic of China
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Lawyer Contacts
You Yunting：86-21-52134918 youyunting@debund.com/yytbest@gmail.com
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