(By Luo Yanjie) Our former trademark laws had not yet stipulated whether a prior user constituted trademark infringement against the exclusive right holder of a registered trademark. However, the implementation of the update Trademark Law this year solved the problem. In today’s post, we will introduce a typical case concerning the prior user succeeded in competing against the exclusive right holder. Even though the case was judged before the implementation of the update Trademark Law, its judgment was kept pace with legislative purpose of the update Trademark Law.

Introduction to the Case:

Appellant (Plaintiff at first instance): Liang Huo and Lu Yijian

Respondent (defendant at first instance): Anhui Caidie Bakery Co., Ltd (transliterated from “安徽采蝶轩蛋糕集团有限公司”) (the “Caidie Bakery Co., Ltd”)

Court of first Instance: Hefei Intermediate People’s Court  No.: (2012)合民三初字第163号

Court of second Instance: Anhui Province Higher People’s Court  No.: (2013)皖民三终字第72号

On October 28, 1999, the Legal Representative Lu Yijian of the Zhongshan City Catering Company applied for registering “采蝶轩” trademark (the “disputed trademark”) (pictured at left) under Class 30 for coffees, teas, syrup, cakes and wheat flours. On April 14, 2001, the disputed trademark was transferred to Zhongshan City Shiqi District Hongji Food Factory. On September 14, 2003, Lu Yijian and Liang Huo received the disputed trademark from its exclusive right holder, and separately obtained total of 9 relevant trademarks in different types and contents, consisting of various patterns, characters and Pinyin, regarding of the disputed trademark.

Caidie Bakery Co., Ltd, established on June 8, 2000, with its business operation for cakes production and sales, applied for “采蝶轩” trademark of clerical script (pictured at right) under Class 35 for advertisement and business management of hotels. Caidie Bakery Co., Ltd’s “采蝶轩” trademark had received many honorary in Anhui Province and put the identical trademark at the early of 1990s into its cake shops. However, Lu Yijian and Liang Huo considered that the conducts of Caidie Bakery Co., Ltd constituted trademark infringement and then brought the case to the courts.

The court accepted the case and held in the following:

1. The disputed trademark of Lu Yijian and Liang Huo was approved for the restaurants and snack-bars, without for cake shops. In actual life, the approved use of restaurants was quite different in purpose, content, way of serving and target consumers from cake shops of Caidie Bakery Co., Ltd.

2. Considering that the “采蝶轩” trademark of Caidie Bakery Co., Ltd could be distinguished from the dispute trademark in butterfly graphics, the differences are obvious between the two trademarks and thus are unlikely to constitute “similar trademark” pursuant to the Trademark Law.

3. Caidie Bakery Co., Ltd had used the “采蝶轩” trademark prior to that of the exclusive right holder of the disputed trademark. Subjectively, Caidie Bakery Co., Ltd has not designed to use other’s trademark, without the purpose of free-riding well-known brands. Objectively, the use of “采蝶轩” trademark by Caidie Bakery Co., Ltd has not yet led the public into thinking that the two trademarks are associated and cause confusion.

For these reasons, Anhui Province Higher People’s Court rejected the claims of the appellant and determined that the respondent did not constitute trademark infringement.

Lawyer’s Comment:

1. What’s the meaning of “trademark priority right”?

Pursuant to the Trademark Law, trademark application shall conduct the principle of voluntariness. Therefore, there are registered trademark and unregistered trademark in reality. However, it is likely that the unregistered trademark may be used prior to the registered trademark. Thus a problem brought from whether the subsequent exclusive right holder of a registered trademark can prevent the prior trademark user from continuous use of the involved trademark. In other words, the problem is whether the prior user shall obtain the priority right. In our former trademark laws, there is no specific regulation towards the problem. However, in practices, local courts have different opinions towards the problem.

2. The update Trademark Law affirmed the trademark priority right, but the prior trademark user shall obtain priority right under certain conditions.

With regard to the above-mentioned problem, the implementation of the update Trademark Law affirmed the answer to the problem. Paragraph 3, Article 59 of the update Trademark Law stipulates that, where an identical or similar trademark has been used in connection with the same goods or similar goods by others before the registrant’s application, the exclusive right holder of said registered trademark shall have no right to prohibit other people from using the aforesaid trademark from continuous use of such trademark within the original scope, but may request its users to add proper marks for distinction.

Seen from this provision, we could know that the update Trademark Law affirming the trademark priority right is conditional. It shall be within the two following conditions: first, the prior use of the trademark shall be prior to the use of the exclusive right holder, other than the date of the registrant’s application. Second, the prior unregistered trademark shall receive some influence.

In this case, Caidie Bakery Co., Ltd had used the disputed trademark prior to that of the appellant, and also owned many honorary, which are conformed to the update Trademark Law. Therefore, despite the fact that this case was judged before the implementation of the update Trademark Law, its judgment was kept pace with the legislative purpose of the update Trademark Law. As such, we agreed with the judgment.

Lawyer Contacts

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

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