Fair Use of a Registered Trademark does not Constitute Infringement

Abstract: fair use of a registered trademark does not constitute infringement, but users shall both have no intent to infringe and accord with the objective facts. The court facing those cases shall apply  Trademark Law to consider the original intention of Trademark Law instead of applying a rigid formula to determine that the infringement shall rely on “whether the results cause confusion”.

 

(By Luo Yanjie) Generally speaking, using a registered trademark without permission constitutes trademark infringement. However, a few exceptions to the general rule still exist. For example, in today’s post a typical case will be introduced.

 

Introduction to the case:

The China World Trade Center (“CWTC”) owned the “国贸 Guomao” trademark in Mainland China, approved for use including leasing of real estate and apartment management and rental. The Beijing-based ShiQiao Real Estate Development Co., Ltd (“ShiQiao Company”) is the developer of the “ShiQiao Apartments” in neighboring “Guomao Bridge” and “Guomao Metro Station”. After they discovered that a “世桥国贸 ShiQiao Guomao” billboard was set on top of the ShiQiao Apartments, CWTC filed a suit with the Beijing Chaoyang People’s Court, alleging that ShiQiao Company had infringed its exclusive right to its “国贸 Guomao” trademark.

 

The Chaoyang court heard the case in the first instance, and ordered ShiQiao Company to stop its infringement, eliminate the consequences of its infringement, and compensate for losses suffered by CWTC, on the basis that it found “世桥国贸 ShiQiao Guomao” to be substantially similar to “国贸 Guomao”. Dissatisfied with the decision handed down by the Chaoyang court, ShiQiao Company appealed to the Beijing No. 2 Intermediate People’s Court. The Beijing No. 2 Intermediate People’s Court, after hearing the case, reversed the first instance court’s decision and found that ShiQiao Company had not infringed the “国贸 Guomao” trademark, holding that “国贸 Guomao” simply referred to its geographical location in Beijing, and could not cause confusion among consumers when ShiQiao Company installed a “世桥国贸 ShiQiao Guomao” billboard and the company’s logo at the top of its apartment complex.

 

Lawyer’s comments:

ShiQiao Company was able to strike back in the second instance, mainly due to the reasonable interpretation made by the Beijing No. 2 Intermediate Court in this case.

 

I. The premise for fair use of a registered trademark is that the user shall not only have no intent to infringe but also accord with the objective facts.

Generally, using a registered trademark without permission constitutes trademark infringement. So by ordinary standards the ShiQiao Company’s use of CWTC’s mark likely constituted trademark infringement, because the “世桥国贸 ShiQiao Guomao” billboard consists of a combination of its own mark with “国贸 Guomao”. What is particularly interesting about this case is that the mark “国贸 Guomao” has become a name referring to a specific area of Beijing through long-term general use, such that the nearest metro station carried the name, yet it is equally true that “国贸 Guomao” is a trademark owned by CWTC.

On closer inspection of the name “世桥国贸 ShiQiao Guomao”, it can be reasonably argued that the “国贸Guomao” portion is not prominently used. On the other hand, it was used on the apartments to advertise its sales of commercial housing in Beijing’s Guomao neighborhood. In addition, ShiQiao Company’s argument that it had no intent to infringe seems like an objectively rational assertion based on these facts. Based on the above considerations, the second instance court decided that ShiQiao Company’s use of CWTC’s mark constituted fair use rather than infringement.

There are many similar cases to this in China; for example, the Nanjing LiYuan Development Group Corporation (“plaintiff”) sued the Nanjing Jinlanwan Real Estate Development Co., Ltd (“defendant”). The plaintiff was the holder of the “百家湖” (Bai Jia Hu) trademark.  Actually, “百家湖 Baijiahu” is also the name of a lake located in Nanjing. Afterwards, the defendant named a new development of high-rise flats as “百家湖•枫情国度 Baijiahu•fengqingguodu” in the neighborhood adjacent to “百家湖 Baijiahu” lake.

When combined with typical cases like this, it is common that some trademarks have other meanings aside from the meaning of the mark itself. Apart from the exclusive use of a trademark, any person could use other meanings of a trademark. If such use objectively supports such a finding and accords with common approaches to non-trademark use of a trademarked name, infringement does not exist.

 

II. Breakthrough for Trademark Law in judicial practice is that infringement relies on confusion.

In addition to the fair use of a registered trademark, the Beijing No. 2 Higher Court held that infringement would not be found when a defendant’s use of a mark would not cause confusion among consumers. This decision was a breakthrough to the provision for determining infringement in the Trademark Law, and better suits the original intention of the legislature and general principles of fairness. Item 1, Article 52 of the Trademark Law states: Using a trademark which is identical with or similar to the registered trademark on the same kind of commodities or similar commodities without a license from the registrant of that trademark is an act of infringement upon the right to exclusive use of a registered trademark. If the court strictly followed this provision, the defendant would have been guilty of infringing the plaintiff’s trademark.

However, the second instance court was flexible with its application of the law, rather than following a rigid reading of the relevant articles. Taking into consideration the primary function of a trademark is to “identify the source of goods”, the legislature’s original intent is to prevent consumers’ being confused as to the source of goods. Whether such use can confuse consumers is a general standard to determine infringement. On this point, the Beijing No. 2 Intermediate Court’s decision better accords with the original intent of Trademark Law.

 

Lawyer Contacts:

You Yunting86-21-52134918  youyunting@debund.com/yytbest@gmail.com

Disclaimer of Bridge IP Law Commentary

 

 


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