Analyses and Reflections on the NIVEA Trademark Case

 
The NIVEA decision has attracted wide media attention. According to Mr. Lei, lawyer of the Legal Department at Beiersdorf AG Beiersdorf, as early as March 2009, its Brand Protection Department discovered clues on the case in a crackdown action, and then assisted the relevant administrative authorities to investigate the case. It was found that between early March and end of April, 2009, JISHENG CHUNYAN Biotechnology (Shanghai) Co., Ltd. (JISHENG CHUNYAN), at the request of Shanghai UYAN Cosmetics Co., Ltd. UYAN, manufactured NIYEA UYAN skin care products of 161,400 bottles of 55 types to be sold by UYAN in Shanghai, Chengdu, Shenyang and Xi’an. The mark “NIYEA UYAN” and design was used on all the products. After overall consideration, Beiersdorf chose to bring the infringers to court.
 
 
 
On December 21st, 2011, after the trial, the No.2 Intermediate People’s Court of Shanghai issued injunctions against that UYAN and JISHENG CHUNYAN, and awarded 500,000 yuan in damages. The article will look into the case with respects to infringement, protection and other issues regarding the exclusive use of registered trademarks.
 
 
 
I.The registered trademarks of Beiersdorf and their distinctiveness
 
 
 
The court found that plaintiff Beiersdorf, a company organized under the laws of Germany, had registered trademarks under No. 215396, G720172 and G803978 with the Trademark Office of China, in good standing, and therefore were protected under the laws of China. Through extended use, they had established a relatively reputable awareness among the relevant consumers.
 
 
 
Beiersdorf contended that being one of the most famous global cosmetics manufacturers, it has acquired significant values and market influence in “NIVEA/妮维雅” brand. The trademarks registered in China were the mark in words “NIVEA” (No. 215396), the design marks “ ” (No. G720172) and “ ” (No. G803978).
 
 
 
These marks each contained the word “NIVEA,” which was central and distinctive. The word “NIVEA,” the original meaning of which was “white snow” in Latin, was highly creative and distinctive.
 
 
 
For the mark No.G720172, in addition to the word “NIVEA,” the color combination (i.e. the blue background, the white letters, and the silver frame) and the design (square shape with a crescent) were also strongly distinctive and uniquely creative. The word “VISAGE” at the lower part, meaning face or countenance, was disclaimed.
 
 
 
For the mark No.G803978, in addition to the word “NIVEA,” the color combination (white letters in blue background) and design (blue square shape) were strongly distinctive.

 
 
Since the above trademarks were valid when the infringement occurred, they should be protected under the laws of China. Without the authorization of Beiersdorf, no other person may use an identical or similar mark on the same or any similar goods.
 
 
 
II.Identical or similar goods
 
 
 
The Interpretation of the Supreme People’s Court on a Few Issues in the Application of Laws for the Trial of Trademark-Related Civil Disputes (Interpretation) provides in Article 11 that “The ‘similar goods’ in Article 52(1) of the Trademark Law means goods that are likely to cause confusion in terms of function, use, manufacture, distribution channels or targeted consumers, or special association generally presumed by the relevant public.” Article 12 of the Interpretation provides that “When a people’s court determines the similarity between goods or services under Article 52.1 of the Trademark Law, it shall decide it comprehensively from the general conception of the relevant public about such goods or services, and may also refer to the International Classification of Goods and Services for the Purposes of the Registration of Marks or the Differentiation Table of Similar Goods and Services.” Article 8 of the Interpretation provides that “The ‘relevant public’ in the Trademark Law means consumers that are related to the class of goods or services identified by a trademark, or any operator that is closely connected with the marketing of such goods or services.”
 
 
 
The court held that in the NIVEA case , the alleged infringing goods and the goods approved for the trademarks of Beiersdorf were in Class 3 under the International Classification; in terms of function and use, daily hairdressing or body care products; in terms of manufacturer, manufactured by manufacturers of hairdressing and cosmetic products; in terms of distribution channel, sold through supermarkets and stores of day-to-day goods; in terms of targeted consumer, targeted towards common consumers; and in terms of the general conception of the consumers, should be determined as identical with or similar to each other.
 
 
 
III. Whether the mark “ ” of UYAN and the registered trademarks No. 215396, G720172 and G803978 of Beiersdorf are similar
 
 
 
According to the Administrative Penalty Decision (HGSJAC Zi [2009] No. 140200910206) by Jiading Sub-branch of Shanghai Municipal Industrial and Commercial Administration, the goods concerned, which were determined as infringing and confiscated by the Sub-branch, used the mark “ .” In addition to the identicalness or similarity between the alleged infringing goods and the approved goods, whether there is infringement or not should be determined based on the identicalness or similarity between the marks used by the alleged infringing goods and the approved trademark. Article 9.2 of the Interpretation provides that “To be ‘similar’ ... means that in comparison with the registered trademark of the plaintiff, the alleged infringing mark comprises words or letters of similar form, pronunciation or meaning, or designs of similar composition or colors, or that the combination of its elements constitutes a similar whole, or the combination of its three-dimensional shapes or colors constitutes a similar whole, so that the relevant public are likely to make mistake or get confused about the origin or any special connection of the alleged infringing mark with the registered trademark.” Article 10 of the Interpretation further provides that an identical or similar mark shall be determined based on “the general awareness of the relevant public... The comparison shall be done with both the whole and the essential part of the mark... Consideration shall also be given to the distinctiveness and fame of the registered trademark to be protected.”
 
 
 
In the NIVEA case, firstly, the mark “ ” o f U YAN contains t he word “NIYEA,” which is similar to the trademark No. 215396 “NIVEA” of Beiersdorf. The essential part, “NIYEA,” is the same as the trademark “NIVEA” except for the letter “Y.” Formally, “Y” looks very similar to “V,” and constitutes a similar letter. In pronunciation, the two words are extremely likely to be confused with each other. In meaning, neither means anything. Thus, from the essential parts, the mark of UYAN is similar to the trademark of Beiersdorf. Secondly, the mark “ ” of UYAN is similar to the trademark No. G803978 “ ” of Beiersdorf. The former plagiarizes the latter’s square shape, deep blue background and white letters, and also contains extremely similar essential textual part. On the whole, it can lead the relevant public to mistakenly believe that the allegedly infringing products originate from or are connected with the goods for which the trademark of Beiersdorf has been approved.
 
 
 
Thirdly, the mark “ ” of UYAN is similar to the trademark N o. G720172 “ ” of Beiersdorf. In composition, they both use outer frames, and have their internal words divided into an upper part and a lower part by a halfmoon separation. In color, they both use silver white frames, blue backgrounds, white words and half-moon separations. In text, they both use the same font, and their essential parts, i.e. “NIYEA” and “NIVEA”, appear and pronounce very similar. On the whole, the two marks are similar, despite some minute differences, such as the directions of the half-moon curve, and the lower parts of the text, which can hardly be perceived by a casual observer.
 
 
 
The court held that according to Article 52.1 of the Trademark Law of the People’s Republic of China, it constitutes an infringement of the exclusive right to use a registered trademark if one “uses a mark that is identical with or similar to a registered trademark on goods identical with or similar to the goods approved for such registered trademark without the authorization of the registrant of the registered trademark.” Since the NIVEA trademarks of Beiersdorf was highly famous, the defendant, JISHENG CHUNYAN, which started to deal with cosmetic products from 2005, should have known about the existence of the NIVEA trademarks. Failing due diligence, it accepted the entrustment of the other defendant, UYAN, and manufactured and delivered the allegedly infringing products to the latter for selling to external parties. The two defendants shared the same infringing intention and act, and should be jointly liable for the infringement.
 
 
 
IV.The infringing act and subjective intention of UYAN
 
 
 
To conclude, the court ruled as follows: (1). The defendants, UYAN and JISHENG CHUNYAN, shall be enjoined from infringing upon the exclusive right of the plaintiff, Beiersdorf, to use the registered trademarks No. 215396, No. G720172 and No. G803978; (2). The defendants, UYAN and JISHENG CHUNYAN shall, jointly and severally, pay 500,000 yuan to the plaintiff, Beiersdorf, to compensate for its economic losses, including reasonable costs, within ten days of the effectiveness of the judgment; (3). For the court fee o f 9,839.21 yuan in total, the plaintiff, Beiersdorf, shall bear 846.95 yuan, the defendant, UYAN, 4,496.13 yuan, and the other defendant, JISHENG CHUNYAN, 4,496.13 yuan. After the ruling, JISHENG CHUNYAN disagreed with the judgment and argued that the judgment failed to ascertain many facts, and that it had never manufactured any allegedly infringing product for UYAN. Thus, it appealed to the Shanghai Higher People’s Court, requesting that the original judgment be reversed, or the case be remanded for a new trial, or the original judgment be amended.
 
 
 
Beiersdorf argued that UYAN infringed upon its registered trademarks through manufacturing and selling the infringing products. The manufacturing act of UYAN was evidenced by the following: (1). The Administrative Penalty Decision stated that UYAN used the image “ ” on both sides of its products, thereby infringing upon the exclusive use right of Beiersdorf to the registered trademark “ .” UYAN entrusted JISHENG CHUNYAN to manufacture the infringing products, and JISHENG CHUNYAN delivered the finished products to UYAN. The above proved that both UYAN and JISHENG CHUNYAN were engaged in the act of manufacturing the infringing products; (2). The order contract between UYAN and JISHENG CHUNYAN showed that UYAN ordered from JISHENG CHUNYAN products that complied with the specifications of UYAN; (3). The infringing product borne on its back the following note: “Authorized by German NIVEA (Hong Kong) Co., Ltd.” and “The product has been developed by German NIVEA (Hong Kong) Co., Ltd.” The investigation by Beiersdorf found that the so-called German NIVEA (Hong Kong) Co., Ltd. had been a shell company incorporated and registered in Hong Kong by the legal representative of UYAN.
 
 
 
The act of selling UYAN was evidenced by the following: (1). The Administrative Penalty Decision stated that UYAN sold to external parties the products delivered by JISHENG CHUNYAN, and that the illegal operation was valued 811,405.44 yuan according to the bill of sales and inventory of UYAN; (2). The product sample obtained by the court and the photographs taken by the Beiersdorf lawyer of the dossier concerned of the related industrial and commercial administration showed that the name and the address of UYAN were displayed on the outer package of the product as the dealer; (3). The bill of sales of UYAN, as the Beiersdorf lawyer retrieved from the dossier concerned of the related industrial and commercial administration showed that UYAN sold the products to Xi’an, Shenyang and Chengdu.
 
 
 
UYAN contained an apparent subjective intention of infringement in that: (1). UYAN used the English word and image marks that were extremely similar to the registered trademarks of Beiersdorf, and marked its product with “妮雅语嫣” by imitating the Chinese translation of Beiersdorf’s “NIVEA”, i.e. “妮维雅”; (2). UYAN also copied the package decoration design of the product of Beiersdorf The color combination, font and composition were extremely similar. The copying act proved that UYAN knew clearly the trademarks and packaging design styles of Beiersdorf, and that UYAN contained a subjective malicious intention to infringe; (3). The German NIVEA (Hong Kong) Co., Ltd., which was a shell company registered in Hong Kong by Song Dianjun, the legal representative of UYAN, had no actual operations, and was formed to promote the products of UYAN by taking advantage of the fame of the Beiersdorf trademarks and the Hong Kong shell.
 
 
 
V. The infringing act and subjective intention of JISHENG CHUNYAN
 
 
 
JISHENG CHUNYAN infringed upon the registered trademarks of Beiesdorf by manufacturing the alleged infringing products. The manufacturing act of JISHENG CHUNYAN was evidenced by the following. (1). The Administrative Penalty Decision stated that UYAN entrusted to JISHENG CHUNYAN the manufacture of the alleged infringing product, and JISHENG CHUNYAN delivered the finished products to UYAN. The facts ascertained by the Administrative Penalty Decision cannot be reversed unless JISHENG CHUNYAN provides assertive evidence to the contrary. JISHENG CHUNYAN failed to produce any evidence during the time limit; (2). The product sample obtained by the court and the photographs taken by the Beiersdorf lawyer of the dossier concerned of the related industrial and commercial administration showed that the name and the address of JISHENG CHUNYAN were displayed on the outer package of the product as the manufacturer; (3). The order contract from the dossier of the related industrial and commercial administration further proved that JISHENG CHUNYAN accepted the entrustment of UYAN to manufacture the alleged infringing products. The contract, which was seized during an investigation of UYAN, was attached with the official stamp of JISHENG CHUNYAN. The date of the contract (i.e. March 23rd, 2009) and the date of delivery (i.e. March 27th, 2009, and April 4th, 2009) shown on the contract matched the date of entrustment and the date of delivery ascertained in the Administrative Penalty Decision. The product names in the contract coincided with the product names and specifications on Page 2 of the Administrative Penalty Decision, such as Elastin (elastic & shining) 300ml and Elastin (moving hair curls) 300ml. Although the stamp of UYAN was not attached, it is determined that the contract had come into force and the performance had been completed, in light of other evidence (i.e. the information on the physical product, and the Administrative Penalty Decision). Although the words to designate the entruster or the entrustee were problematic in the contract, this did not deny the existence of the entrustment relationship, nor the fact already proved by other evidences.
 
 
 
JISHENG CHUNYAN’s argument that it had cooperated with UYAN only in cream products other than in washing products was apparently inconsistent with the Administrative Penalty Decision and the order contract. Also, it was against common sense that while admitting its cooperative relationship with UYAN in 2009, it claimed that UYAN misused its name and health permit without its knowledge.
 
 
 
JISHENG CHUNYAN contained a subjective intention to infringe. In view of the fame of the NIVEA/妮维雅 trademarks of Beiersdorf, JISHENG CHUNYAN could never have no knowledge of the existence of the brands and related goods. But, it failed due diligence when it accepted the entrustment of UYAN to manufacture the alleged infringing products. It was engaged in manufacturing the products and delivered the same to UYAN for selling to external parties. Thus, JISHENG CHUNYAN and UYAN shared the infringing intention and act as well as the illegal incomes from so doing. JISHENG CHUNYAN should be jointly liable for the infringement.
 
 
 
In the second-instance trial, the appellee, UYAN, did not file any reply with the court. The appellant, JISHENG CHUNYAN, filed three pieces of new evidence to prove that the alleged infringing products were manufactured by another company entrusted by UYAN, and that JISHENG CHUNYAN was never engaged in the manufacture of the same. Finally, the court ruled to reject the appeal of JISHENG CHUNYAN for lack of proper factual and legal bases.
 
 
 
VI.Afterthought
 
 
 
The world famous NIVEA brand has just welcomed its 100th anniversary with a large number of promotional activities throughout China. “Trademark infringement is extremely unfair and gives a huge blow to mature brands,” said Mr. Lei. “Such a brand as NIVEA has been established with a huge investment. But, an infringer easily misuses it to cheat consumers for money. For this sake, Beiersdorf has set up a Legal Department, which has two divisions under it: one is a group of professional lawyers to deal with intellectual property-related issues, the other is a separate horizontal GPU department, that is, the Brand Protection, to deal with counterfeits in the market, to put it simply, it works with the administrative enforcement agencies to fight against fakes and counterfeits. The above departments work together to protect the NIVEA brand globally. The cause for this case was that there has been continuous infringement in recent years and we find that administrative enforcement alone was not enough to deter the offenders. Similar infringers, after being discovered, will come up somewhere else with another face, such as, to change NIVEA to NIYEA. We need the legal alternative to protect our intellectual property rights in the court system.”