How China Court Judges the Conduct of Using a Trademark as Enterprise Name?

miergu(By Luo Yanjie) In practice, for the purpose of free-riding well-known brands, many operators often use another’s trademarks as their enterprise name to confuse consumers. As such, these conducts still constitute trademark infringement. In today’s post, we will introduce a typical case concerning that using another’s trademarks as enterprise names may constitute trademark infringement.

 Introduction to the Case:

Plaintiff: Shanghai Jinsu Industrial Co., Ltd (the “Jinsu Co., Ltd”)

1st Defendant: Miergu Pipe Industrial Company (liter translated from “美尔固管业公司”)

2nd Defendant: Ms. Tao

Court of first instance: Yangpu District Primary People’s Court

Court of second instance: None

Jinsu Co., Ltd holds the exclusive right of “美尔固”trademark (reads “Mei Er Gu” in Chinese) and “MIERGU” trademark. After its continuous operation and promotion, both the “美尔固” trademark and “MIERGU” trademark (hereinafter the “disputed trademarks”) have obtained good reputations. In March 2010, in a building materials market in Guangyue Road, Shanghai, Jinsu Co., Ltd purchased some pipes and water pipe fittings tagged with the disputed trademarks on their packaging from a self-employed entrepreneur Ms. TAO. Upon inquiry, the pipes and water pipes fittings (the “disputed products”), tagged with the “美尔固” trademark and “Meiergu” trademark, are manufactured by a Hong Kong-based Miergu Pipe Industrial Company which the unique investor Mr. LUO registered in March 2009. Besides, the unique shareholder Mr. LUO and the self-employed entrepreneur Ms. TAO are under a husband-wife relationship.

Jinsu Co., Ltd claimed that the conduct of Miergu Pipe Industrial Company infringed the exclusive rights of Jinsu Co., Ltd and thus constituted unfair competition. In addition, Ms. TAO, acted as a self-employed entrepreneur, sold the products which infringed the disputed trademarks and thus are likely to constitute trademark infringement against Jinsu Co., Ltd. Therefore, Jinsu Co., Ltd brought the Miergu Pipe Industrial Company and the self-employed entrepreneur Ms. TAO to the court.

Yangpu District Primary People’s Court heard the case and held the following:

1. Even though “Meiergu” has a little difference in the spelling with “MIERGU” trademark, the “Meiergu” on the packaging of the disputed products exists a high degree of overall similarity to that of “MIERGU” trademark. As such, it is likely to lead the public into thinking that the disputed products manufactured by and between Meiergu Pipe Industrial Company are associated with each other and cause confusion, and thus Meiergu Pipe Industrial Company constituted trademark infringement.

2. The self-employed entrepreneur Ms. TAO shall cease the sales of the disputed products which are tagged with the characters of “美尔固”and “Meiergu”. Under the fact that the seller Ms. TAO was at fault, Tao shall make compensation to the plaintiff.

For the above reasoning, the court decided the defendants to constitute trademark infringement and compensate RMB 80,000 for the plaintiff. Among the overall compensation, Ms. Tao shall bear the joint liability for the compensation of RMB 20,000.

Lawyer’s Comment:

1. Malicious using another’s trademarks as enterprise name and highlighting the use may constitute trademark infringement.

According to the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in Hearing Civil Cases Related to Trademark Disputes, “Any of the following acts shall constitute an infringement upon another’s exclusive right to a registered trademark as stipulated in the Item 5 of Article 52 in the Trademark Law: 1). using words identical or similar to another’s registered trademark as a trade name in a distinctive manner on identical or similar goods, and thus causing possible confusion among the relevant public; 2)…”

In this case, the “美尔固” trademark was approved for registration in 2003 and has received a highly good reputation in the same industry and among the public. When the Hong Kong-based Meiergu Pipe Industrial Company, as a competitor, is first established, it shall know the highly awareness and popularity of the “美尔固” trademark. As such, Meiergu Pipe Industrial Company had the intention to its registration and use of “美尔固” as a enterprise name and highlighted the use of “美尔固” on its products. Therefore, the court determined Meiergu Pipe Industrial Company to constitute trademark infringement.

2. Any one who knows it is artificial still sells it shall take liability of infringement.

According to the Trademark Law, selling goods that violate the exclusive right to use a registered trademark may constitute trademark infringement. Even though, the Trademark Law also stipulates that “in the event that a party unknowingly sells goods that infringe upon another party’s exclusive right to use a registered trademark but can prove that it has obtained the goods lawfully and is able to identify the supplier shall not be held liable for damages.”

In this case, however, the seller Ms. TAO, who is the wife of the unique investor of the Hong Kong-based Meiergu Pipe Industrial Company, shall have known that the Meiergu Pipe Industrial Company had intention and thus she is likely to assume the liability of compensation. Furthermore, because Ms TAO shall take the liability of the selling behavior for the disputed products, not the manufacturing behavior, therefore the court decision made her assume the liability for part of the compensation.

Lawyer Contacts

You Yunting86-21-52134918

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