A Dispute Re Infringement of

The plaintiff (the petitioner): Beijing Liyuan Company (Hereafter referred to as Liyuan Co.)

The defendant (the petitioner): Beijing Shunyi Guangming Cosmetics Factory (Hereafter referred to as Guangming Makeup Factory)

Cause of action: Dispute on infringement of trademark proprietary

The series number in the initial trial: (1994) Zhongjingchuzi No.381 of the former Beijing Intermediate People's Court

The series number in appeal: (1995) Gaozhizhongzi No.7 of Beijing Higher People's Court

Details of the case:

Grounds of prosecution and defense statement:

The plaintiff, Liyuan Co. files a law suit: Our company is the legal person that holds the exclusive rights to the "Head portrait" registered trademark. The commodities appraised and fixed by this trademark are soap, toilet soap, some other cleaning products, bleach, toothpaste, tooth powder, cosmetics, perfume and fine oil. Late, our company found that Guangming Cosmetics Factory used similar packaging with the "Head portrait" image trademark that we use for our products on their laundry soap and dyeing shampoo by the name of "Yixihei" and the dyeing oil by the name of "Yishuhei". This infringement will confuse our customers and infringes on our rights of the registered trademark. Therefore, our company requests that Guangming Cosmetics Factory stops this infringement and indemnifies us for our economic losses, along with issuing an apology.

The defendant, Guangming Cosmetics Factory, defends: the registered trademark of the laundering and dyeing shampoo named "Yixihei" and of the dyeing oil named "Yishuhei" produced by Guangming Cosmetics Factory is "Chunbao", and is not the trademark that Liyuan has registered. We use a "Head portrait" for decoration, but not as trademark. Therefore we do not infringe the exclusive rights of Liyuan's trademark. Moreover, when Liyuan Co. uses the "Head portrait" registered trademark, they do not use the registration mark, which breaches the provisions of Article VII in Trademark Law of the People's Republic of China. Therefore, the trademark law should not protect them.

Recognized facts in the initial trial

Through the hearing, the former Beijing Intermediate People's Court found out that: on March 10, 1993, approval by the Trademark Office of the National Industrial and Commercial Bureau, was received by the plaintiff, Liyuan Co. for the exclusive rights to the use of the "Head portrait" trademark. The commodities appraised and fixed by this trademark are soap, toilet soap, some other cleaning products, bleach, toothpaste, tooth powder, cosmetics, perfume and fine oil. No.5 Chemical Factory of Daily Use Items attached to Liyuan Co. (hereafter No.5 CFDU) began to use the "Head portrait" on its products, the laundry and dyeing shampoo named "Yixihei" in April, 1989. Later, they used it on the package of the dyeing oil named "Yijuhei". However, neither of the products bore the registered mark "?". On March 24, 1994, No.5 CFDU began to paint and use packaging with the registered mark "?". on the image of the "Head portrait". From August 20m 1991 on, Guangming Cosmetics Factory began to produce and sell the laundry soap and dyeing shampoo named "Yixihei" of "chunbao" brand. Later they produced and sold the dyeing oil named "Yishuhei". On the packages of these two products, they used a similar figure similar to the "Head portrait" trademark registered by Liyuan Company. Moreover, the words, arrangement of design and the color of the packaging of Guangming's products are really similar to that of Liyuan's products. On April 24, 1993, Sun Hongxiang, the corporation lawyer of No.5 CFDU and a lawyer in Beijing Huaxin Law Office, announced in the Economy Daily that without the permission of No.5 CFDU, no factory or firm was allowed to illegally manufacture and sell any products with an image similar to its trademark (characters and graphs, approved registered document no. 633014). Otherwise, No.5 CFDU will look upon this as infringement under the law. On December 28, 1993, No.5 CFDU entrusted Beijing Huaxin Law Office with sending a legal opinion letter to Guangming Cosmetics Factory, requesting them stop infringing and compensate for their losses. Guangming Cosmetics Factory replied that they did not infringe, and argued that No.5 CFDU lied. In addition, Guangming Cosmetics Factory sold 261 articles of laundry soap and dyeing shampoo named "Yixihei", and 196 articles of dyeing oil named "Yishuhei" of the Chunbao brand from March 1993 to March 1994; 70 articles of "Yixihei" and 289 articles of "Yishuhei" from April 1994 to November 1994. From 1993 to 1994, the average profit of No.5 CFDU gained from selling its products with Guangming brand is 353 yuan/10 boxes of laundry soap and dyeing shampoo named "Yixihei" is, and the profit from the dyeing oil named "Yijuhei" is 14.34 yuan/10 boxes. No.5 CFDU paid 25070.5 yuan for evidence and lawsuit costs.

The judgment and related grounds of the initial trial

The former Beijing Intermediate People's Court concludes that: according to the provisions of the Trademark Law of our country, registered trademark refers to the trademark permitted to be registered by the Trademark Bureau. If they get the certification for the registered trademark, they hold the exclusive right to the trademark. Article VII of the Trade Mark Act prescribes, "……whoever uses a registered trademark should print "registered trademark" or registered mark clearly. The defendant, Guangming Cosmetics Factory, used the design on its package box for the products of the laundry dye and dyeing shampoo named "Yixihei" and the dyeing oil named "Yishuhei" of the Chunbao brand, which is similar to the "Head portrait" registered by Liyuan Co. on products of the same type. It is enough to cause confusion among customers and this infringe upon the registered trademark exclusive rights of the plaintiff, Liyuan Company. Therefore, Guangming Cosmetics Factory should stop infringing immediately, and compensate for the economic loss of Liyuan Company in accordance with the law. Whereas Guangming Cosmetics Factory began to use the design similar to the image "Head portrait" of the trademark of the plaintiff before the plaintiff, Liyuan Co., was permitted to register the image trademark of "Head portrait". The plaintiff, No.5 CFDU branch of Liyuan Co, did not use the registered mark "?" in a period of time when Guangming used the trademark. Therefore, the amount of compensation that the plaintiff, Guangming Cosmetics Factory, for the infringement on the exclusive rights of the registered trademark of the defendant, Liyuan Co., can be reduced accordingly by taking the circumstances into consideration. Hereby, in accordance with Article 118 in the General Rules of Civil Law, Article 7, Item 4 of Article 38 and 39 in the Trademark Law, the former Beijing Intermediate People's Court makes judgment as follows:

1. Guangming Cosmetics Factory is to stop infringing upon the exclusive rights to the registered trademarks with the "Head portrait" image immediately when this court verdict becomes effective.

2. Guangming Cosmetics Factory is to pay the compensation of RMB800,000 for losses caused by infringement within ten (10) days of this court's verdict becoming effective.

3. Other claims raised by the plaintiff, Liyuan Company are rejected.

The legal costs of this suit are RMB5,510, which will be paid by Guangming Company.

Grounds of appeal and defense statement

Guangming Cosmetics Factory refused to accept the judgement of the initial trial as final and so appealed to the Beijing Higher People's Court.

Guangming Cosmetics Factory appeals the suit: the judgement of the initial trial stated that No.5 CFDU branch of Liyuan Co. began to print and use the packaging with ? on the image of the "Head portrait" on March 24, 1994. However, when calculating the amount of compensation, they started calculating from August 20, 1991, increasing the sum intentionally. It is obviously unfair, and it's wrong to rule the petitioner to compensate for the economic loss of RMB800,000. In addition, the approximate ambit of trademark infringement and upholstering design was confused in the judgement of the initial, which breached the principles of handling the disputes of trademark infringement. Furthermore, it was illogical when the court of the initial trial ruled Guangming to pay the legal costs.

Liyuan Co. obeyed the original judgement and defends that: On March 10, 1993, when the packages in order to avoid wasting stock. Due to the technical difficulties of making and designing the new package, our factory put the new packages on the market from March 24, 1994, adding ? to the image of "Head portrait" trademark in the new package. However, this cannot exempt or reduce the infringement responsibility of Guangming Cosmetics Factory. Moreover, the present factory vice-director in Guangming Cosmetics Factory used to work in our company, knowing the business status of our factory. Therefore, the infringing act of Guangming Makeup Factory violated it deliberately. Not only does the infringing act of Guangming Cosmetics Factory fall under the General Rules of Civil Law and Trademark Law, but also falls under anti-competition rules. We move for the court of appeal to increase the force of taking strong measures against acts of infringement, and uncover all the infringement activities of Guangming Cosmetics Factory, and rule them to compensate for the economic loss of our company, RMB100,000.

Recognized facts in the appeal

The facts found by the court of appeal are basically the same as those of the court of the initial trial. However, during the course of the appeal, Guangming Cosmetics Factory provided evidence of its sales volume, which indicated that there were 180 boxes of "Yixihei" and 40 boxes of "Yishuhei" in each case sold. Therefore, Guangming Cosmetics Factory considered that the original court calculation of infringement compensation was in err. Through investigation, it is surely wrong for the original court to calculate the illegal profits at 200 boxes per case, which is what Guangming Cosmetics Factory received for infringement compensation.

The judgment and related grounds of the appeal

Through the mediation of Beijing Higher People's Court, both parties come to the following agreements voluntarily:

1. Beijing Shunyi Guangming Cosmetics Factory pays for the economic loss of RMB550,000 to Beijing Liyuan Co., RMB300,000 before April 15, 1995 and RMB250,000 before June 30, 1995.

2. The legal cost of the initial trial, RMB5,510 is paid by Beijing Liyuan Co., and that of the appeal is paid by Beijing Shunyi Guangming Cosmetics Factory.

The above mentioned agreement conforms to the provisions of the related law, and is affirmed by Beijing Higher People's Court.

Comment

Does the law protect trademarks without the registration mark?

According to the Trademark Law of the People's Republic of China, once the trademark is permitted to be registered, it gives the exclusive right of a registered trademark, and is protected by the law. The Rules for the Implementation of Trademark Law prescribe that people should indicated the registered mark while using it. However, such provisions are applicable to legal users of registered trademark when they use the trademarks, but it is not problem related to the trademarks' protection. The precondition of the registered trademark being protected by the law is not in whether it has the registration mark, but in whether the trademark has been verified and approved by the authorities for registration. In fact, it is both the right and obligation for the legal user of the registered trademark to add the registered mark "?" to the registered trademark. Law stipulates that a legal user shall add the registered mark when using their registered trademark, which is for the convenience of the trademark management department to manage the service condition of trademarks in circumstances of registered trademarks and non-registered trademarks coexisting. Legal usage of the registered trademark must fulfil the obligation. For customers, the registered trademark with "?" creates trademark management department can deal with registered trademarks without "?" according to the law, which does not mean the legal users of registered trademark give up their exclusive rights, nor can any other proprietor adulterate the marks nor confuse the customers. Therefore, the registered trademark without "?" does neither effect the protection of the registered trademark exclusive rights under the law, nor can the infringer exempt to reduce their infringement liabilities.