(By Luo Yanjie) An enterprise name attempting to use a well-known trademark is quite the norm in China. In today’s post, we would like to introduce a typical case where the courts made a final judgment that the infringer constitutes infringement but does not change its enterprise name. However, the judgment is far from playing its role in the containment of this violation.

Introduction to the Case:

Appellant (Defendant at the first instance): Beijing Royal VIDAL SASSOON Beauty Hair School (the “Royal School”)

Respondent (Plaintiff at the first instance): Procter & Gamble Co., (the “P&G”)

Court of first instance: Beijing No.2 Intermediate People’s Court  No.: (2013)二中民初字第1884号民事判决

Court of second instance: Beijing Higher People’s Court  No.: (2013)高民终字第3251号

Procter & Gamble Co., also known as P&G, is one of the biggest consumer goods companies. “VIDAL SASSOON” and “沙宣”(transliterated from VIDAL SASSOON) are famous hair products under the name of P&G, coming from the name of its creator Vidal Sassoon. P&G has the exclusive trademark rights of “沙宣”, “沙宣美发” and “VIDAL SASSOON” (the “disputed trademarks”) under the approval in the territory of China.

In 2007, Fengtai District Branch of Beijing Administration for Industry and Commerce (the “Fengtai Branch Administration”) determined that the Royal School was unauthorized to use the disputed trademarks and the words “ROYAL VIDAL SASSOON BEAUTY HAIR SCHOOL”, constituting trademark infringement as well as unfair competition. Based on the reasons, Fengtai Branch Administration made an administrative decision that Royal Scholl shall stop infringement and compensate RMB 130,000. In 2002, P&G found out that Royal School still has used the disputed trademarks and the words “ROYAL VIDAL SASSOON BEAUTY HAIR SCHOOL” without authorization from P&G. Therefore, P&G brought the Royal School to the court.

Beijing No.2 Intermediate People’s Court heard the case and held the following:

1. Royal School has the counterpart competitive relationship with P&G. Royal School’s would, despite registered at Fengtai District Beijing, recruit students without geographical limitations. Based on this reason, Royal School’s claim that it has a regional service area and thus wouldn’t establish a counterpart competition relationship with P&G has little basis in fact. Therefore, Royal School used the disputed trademarks as its enterprise name and thus is likely to lead the public into false thinking that Royal School and P&G are associated with each other and cause confusion.
2. The afore-mentioned conducts of Royal School took the advantage of “VIDAL SASSOON” owned by P&G and deliberately intended to ride the well-known trademark, thus constituting unfair competition.
3. Prohibiting Royal School from using “VIDAL SASSOON” in relevant scope is sufficient to cease the trademark infringement and unfair competition of Royal School, without changing its enterprise name.

For these reasons, Beijing No.2 Intermediate People’s Court determined that Royal School shall constitute infringement. Dissatisfied with the original judgment, Royal School appealed but failed with the affirmation of original judgment backed by Beijing Higher People’s Court.

Lawyer’s Comment:

1. Labeling the actual enterprise name by the defendant may also constitute infringement.

In this case, the defendant’s enterprise name was legally registered with the government. However, from the perspective of the original judgment, it is not saying that labeling the actual enterprise name is legal. When making judgment, it shall be judged comprehensively, such as the defendant’s original intention. In this case, except the information of enterprise name, the defendant also labeled the same words as “沙宣” and “VIDAL SASSOON” in the disputed trademark on its ads and improvement. On the ground that P&G has acquired a higher awareness in the public, Royal School is engaged in the closer business operation similar to that of P&G. The court held that it is necessarily led the public into thinking that they are associated with each other and cause confusion, and thus the court determined Royal School to constitute infringement, on the ground that the Royal School had the intent to ride the awareness of “VIDAL SASSOON”. On the whole, the judgment maintained the fairness and justice of the market, which I agree with.

2. Why did the court determine that the defendant may not change its enterprise name?

With regard to a common infringement, ceasing infringement is a key content to undertake liability. Considering that the right of enterprise name is independent from the trademark right, it is only under certain circumstance that enterprise name constitutes infringement against the trademark. As for how to undertake the liability of infringement under such circumstance, there are no clear provisions. The only legislative basis is the Article 4 of the Provisions of the People’s Supreme Court on Several Issues Concerning the Trial of Civil Disputes Cases Involving Confliction between Registered Trademarks or Enterprise Names with Prior Rights, stipulating that in the event an accused enterprise name infringes the exclusive right to use a registered trademark or constitutes unfair competition, the people’s courts may, based on the claims of the plaintiff and the circumstances of the case, determine that the defendant shall bear civil liability such as stopping and standardizing the use of the name.

Practical, the court may make a comprehensive judgment about the different liabilities according to actual facts. In general, the standard is that, if a prior well-known trademark was rush registered as an enterprise name with an unjustified method, such act itself is illegal and thus the court is likely to request the enterprise stopping using the enterprise name. On the contrary, if the infringer only constituted violation through highlighting some of the enterprise name, the court may request the infringer for standard use. In my personal opinion, in this case where the defendant using the “VIDAL SASSOON” as its enterprise name itself had already constituted infringement, the court shall determine preventing the defendant from using its enterprise name, instead of standard use.

Lawyer Contacts

You Yunting：86-21-52134918  youyunting@debund.com/yytbest@gmail.com

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