Revocations and damages: the 2020 China decisions shaping trademark practice

Last year was an active one in terms of trademark decisions in China. The second of a two-part look at the decisions that should be on rights holders’ radars presents revocations for non-use decisions and those that illustrate the raising level of financial compensation awarded by the courts, which do not hesitate to use punitive damages and endorse contractual damages.

Most of the judgments were rendered by the Beijing IP Court and the Beijing High Court, with prosecution disputes handled by the trademark administration (ie, the China National IP Administration (CNIPA), which replaced the China Trademark Office (CTMO) and the Trademark Review and Adjudication Board (TRAB) after an administrative reshuffling). 

Revocations for non-use

According to Article 49 of the Trademark Law, a mark which has not been used for three consecutive years may be revoked upon request of any party. Several cases determine what can be considered as use sufficient to resist an application for revocation.

German company HAMA requested the revocation of the trademark HANA (products of paper in Class 16) based on lack of use. Hana produced sales contracts signed by two purchasers, but the CTMO did not accept them and revoked the mark. The TRAB, however, accepted such evidence of use and maintained the registration. Hama, the applicant, appealed to the Beijing IP Court, arguing that all the evidence concerned exports out of China, in an original equipment manufacturer context, and could not satisfy the requirement of Article 49 of the Trademark Law. Both the Beijing IP Court and the Beijing High Court ((2019) Jing Xing Zhong No 4766) rejected such argument and confirmed that the export of products constitutes satisfactory evidence of use, allowing the registrant to resist a claim of revocation.

The famous car manufacturer Lamborghini, owner of the trademark URUS in Class 12 (automobile parts) successfully resisted a revocation claim based on non-use by proving that it had the genuine intention to use the mark and had made necessary preparation for such use. Both the Beijing IP Court and the Beijing High Court ((2020) Jing Xing Zhong No 1531) rejected the appeals made by the TRAB.

However, in order to resist a non-use revocation, it is necessary that the evidence of use produced by the trademark owner concerns the exact same trademark in question and not another trademark containing the same sign. This disagreement happened to Shenzhen Shenyaqi Clothing Company, owner of the trademark ‘CARLI + logo’, registered in Class 25. The licence agreement produced as evidence of use concerned another CARLI trademark (without the logo). While the TRAB and the Beijing IP Court had accepted the evidence and maintained the registration, the Beijing High Court ((2019) Jing Xing Zhong No 5932) refused and revoked the mark.

Rising civil damages

Punitive damages were introduced into the Trademark Law in 2013. More and more cases are awarding such kind of damages, even in unfair competition cases (the Anti-unfair Competition law does not provide for such punitive damages). Contractual damages are also considered in some cases.

Yanhuang Yingdong Technology Development Co, owner of several AWS trademarks, registered for various computer programs (downloadable software), sued the China subsidiary of US-based Amazon, which uses the letters AWS in its cloud services as an acronym of Amazon Web Service. Amazon argued that there was no possible confusion between the AWS trademark used by the plaintiff and the ‘cloud services’. The Beijing High Court ((2018) Jing Min Chu No 127), citing a judicial interpretation of the Supreme People's Court which defines the concept of similar goods, awarded Yanhuang Rmb76.723 million on the basis of punitive damages.

WYETH, a US-based baby powder producer and owner of the trademark WYETH and its transliteration in Chinese characters, obtained against Guangzhou Wyeth Rmb30 million as punitive damages, before the Hangzhou Intermediate Court. This decision followed a 16-year battle over the invalidation of the defendant's bad-faith trademarks for baby lotion in Classes 3, 10 and 16 ((2019) Zhe 01 Min Chu No 412).

CHAPTER 4 CORP, owner of the brand Supreme in Class 25 (apparel and hats), took five years, between 2014 and 2019, to obtain the registration of its trademark in China (due to an opposition procedure). Before the trademark was registered, CHAPTER 4 CORP filed a civil action against a copycat before Hangzhou Intermediate Court on the ground of unfair competition and later amended its claims to add the ground of trademark infringement after securing its trademark registration. In December 2020 the court rendered the first-instance judgment, ordering the defendant to cease the infringement and awarding the full amount of Rmb8.5 million ((2019) Zhe 01 Min Chu No 4193).  

Schneider Electric sued Suzhou Schneider Elevator Company over alleged trademark infringement before the Jiangsu Suzhou Intermediate Court, asking for Rmb120 million as damages. The court made a calculation and reached the amount of Rmb20 million. Then, the court considered the reputation of the plaintiff's business of switches and circuit breakers and the relation between elevators and those products, and added 100% as punitive damages with an award of Rmb40 million ((2019) Su 05 Zhi Chu No 643). An appeal before the Jiangsu High Court is pending. It will be interesting to know whether the High Court will uphold the punitive damages in a case of unfair competition.

The US-based Callaway Golf, owner of the trademark ‘Callaway + logo’ mark in Class 25 (hat brims and hats) found an infringer operating at the 2017 Guangzhou Fair and obtained, on the spot, a written undertaking that the infringer would not infringe again, failing which they would pay an amount of Rmb1 million. The infringer was caught again the next year. Callaway launched a civil action before the Guangzhou Intermediate Court, which acknowledged the contractual freedom and awarded the exact claimed amount of Rmb1 million. The decision was upheld by the Guangzhou IP Court ((2019) Yue 73 Min Zhong No 5977).

This article first appeared in WTR in February.

The first part of this article presented insight into key decisions addressing trademark refusal, oppositions and invalidations on relative grounds.