Huang Yajun (plaintiff) v.Venus Wedding Studio for Technical Service Fees and Trademark Licensing Fees Civil Case

Huang Yajun, female, born August 24, 1967, of Han nationality

Home Address: Apartment 606, No.2, Lane 108, Jiaotong Xi Road, Shanghai

Authorized Attorney: Wang Huixian, attorney-at-law of Shanghai Yiping Law Firm.

Shanghai Venus Wedding Studio Company

Address: 338 Changshou Road, Shanghai

Legal Representative: Li Junqing, board chairman

Authorized Attorney: Tang Ligang, employee of Shanghai Venus Wedding Studio Company

Authorized Attorney: Xu Shenmin, sttorney-at-law of Shanghai Gongxin Law Firm

 

 This court, after filing the case plaintiff Huang Yajun v. defendant Shanghai Venus Wedding Studio Company for technical service and trademark license fees, duly formed a collegiate panel and held an open trial. Appearing at the trial for debate were plaintiff Huang Yajun and her attorneys Huang Zhihua and Wang Huixiang, and defendant Shanghai Venus Wedding Studio Company's legal representative Tang Ligang and attorney Xu Shenmin. The hearing of the case has now come to a close.

 Plaintiff Huang Yajun alleges that on May 12, 1998, the plaintiff and Shen Chenglin, a non-party in this case, as Party B, entered into a Venus Cooperative Agreement with the defendant as Party A. The parties agreed that upon Party B's procurement of approval for operating the wedding studio, Party A shall license to Party B the registered trademark of Venus, and the two parties would enter into a trademark license contract and file such contract with the trademark bureau. The annual trademark license fee was to be RMB200,000. As the rented store space was not yet delivered, it was agreed that formalities for the procurement of the business license would be completed within one month after the delivery of the store space, and if Party B failed to procure the business license, the full amount of the trademark license fee would be returned without interest. On the day of execution of the contract, plaintiff and Shen Chenglin each contributed RMB100,000, and a total of RMB200,000 was paid to the defendant. However, as the plaintiff and Shen Changlin were unable to obtain a lease of the shop space at 385 Jinshajiang Road, in Jiading District, Shanghai, which they had contemplated to lease, they were unable to set up a wedding studio. Nor were they able to use the Venus trademark. Thereafter, the plaintiff and Shen Changlin negotiated with the defendant for return of the trademark license fee which they had paid to the defendant. However, after repaying RMB100,000 to Shen Chenglin, the defendant refused to repay the plaintiff her RMB100,000. The plaintiff holds that though the agreement between her and Shen Chenglin as one party and the defendant as the other is called a Cooperative Agreement, in effect it is a trademark license agreement, and a conditional trademark license agreement at that. In accordance with relevant provisions in the General Principles of Civil Law of the People's Republic of China, a conditional civil juristic act takes effect after the condition is satisfied. The plaintiff was unable to apply for a business license because she was unable to obtain the lease. This finally made the agreement between the two parties null and void. The money the defendant received under the agreement should be returned. For this reason, the plaintiff seeks a judgment enjoining the defendant to pay the trademark license fee of RMB100,000 plus interest, and to pay the cost of this case.

 To support her allegations, the plaintiff produced the following exhibits at the trial:

 Exhibit 1     The Venus Cooperative Agreement (the "Agreement"). The main contents of the Agreement are as follows: Party A: Shanghai Venus Wedding Studio Company, Party B: Shen Chenglin and Huang Yajun, the tentative name of the contemplated cooperative venture: Chenglin Wedding Studio Company. 1) Trademark License: Party B shall be solely responsible for the investment of, and shall complete all formalities in connection with, the establishment of the cooperative Venus wedding photographic joint venture. Upon procuring approval for such project by Party B, Party A shall duly license the well-know wedding studio trademark Venus to Party B. Thereupon the two parties will enter into a trademark license contract and file the contract with the relevant authorities including the trademark bureau. 2) Term of Cooperation: The term of cooperation shall be from August 8, 1998 to August 7, 2005 (The specific starting date shall be the date when relevant approval is procured and the business starts its commercial operation). 3) Technical services provided by Party A to Party B include: (i) Hardware installation arrowhead diagram (The design drawing shall be the responsibility of Party B); (ii) Counsel on operation equipment and assistance in obtaining supplies (Payment for the supplies shall be the responsibility of Party B). Party A shall provide a list of suppliers; (iii) Assistance in the initial recruiting and training of employees (If Party B requires training of such employees by Party A's General Management Department in Shanghai, the entailed accommodations, wages and traveling expenses shall be paid by Party B); (iv) Sample albums and materials for photo albums (Party B shall pay for the materials). Two sets of photos (30 each), as well as a 20 inch and a 24 inch photo will be provided free of charge; (v) Assistance in market research and provision of pricing strategy and policy for reference; (vi) Instruction and plan as to services flow charts; (vii) Experts will be stationed in Party B's shop to assist Party B in its business operations (Their wages should be paid by Party B at a rate not below that of Party A); (iix) Administrative assistance such as providing business reports and forms and invoices; (ix) Planning for sales promotion and interior arrangement for the opening ceremony of the Venus Wedding Studio Cooperative Venture; (x) Providing Venus CIS Standards. 4) Technical service fee and trademark license fee: RMB200,000 annually, to be paid in full on August 1 of each year. Party B shall pay to Party A in advance RMB200,000 as technical service fee and trademark license fee. As the rented store space has not been delivered, it is agreed that formalities for the procurement of the business license will be completed within one month after the delivery of the store space, and in the case of failure to complete the said formalities, the full amount of the trademark license fee (RMB200,000) will be returned without interest. This sum will not be returned beyond a one-month period. 5) Contents of counsel to be provided by Party A to Party B for operation of the wedding studio (omitted); 6) Counseling fee (omitted); 7) Management responsibilities (omitted); 8) Other provisions (omitted); 9) liability for breach (omitted); 10) effective date (i) Party A shall perform all its obligation under the contract after full payment by Party B of the trademark license fee provided for in the contract; (ii) (omitted).

 The Agreement was entered into on May 12, 1998, stamped with the seal of Shanghai Venus Wedding Studio Company Cooperative Ventures Department, and signed by Huang Yajun and Shen Chenglin, and manager of the cooperative ventures department of the defendant Chen Tianhao.

 Exhibit 2     A receipt stamped with the seal of Shanghai Venus Wedding Studio Company Cooperative Ventures Department, setting forth in the main that the RMB200,000 entry was made on the books on May 12, 1998 as payment of the annual trademark licensing fee for the cooperative venture.

 Exhibit 3     A certificate stamped with the seal of Shanghai Jiading Shangcheng Real Estate Management Company. The main contents of the certificate are: This company has contemplated leasing the shop space in the cluster of buildings at 385 Jinshajiang Road, Jiading District, which it owned, to Mr. Shen Chenglin and Miss Huang Yajun as a business site for their wedding studio. For the following reasons, the said space cannot be leased to them: 1) The shop space cannot be delivered as scheduled for reasons beyond our control; 2) This company is unwilling to take the risks that may be involved in a private business venture. Seal of Shanghai Jiading Shangcheng Real Estate Management Company, Oct. 6, 1998.

 Exhibit 4     The power of attorney and the engagement letter dated September 1998 for the hiring of attorneys Tang Xu and Chu Youde of Shanghai No. 4 Law Firm, a business letter provided by a lawyer for general non-litigation purposes, Letter to the defendant from Wang Huixiang, attorney-at-law of Shanghai Yiping Law Firm, and a letter by the plaintiff to Li Junqing, board chairman of the defendant. The main contents of the letters are requests for the defendant to return the RMB100,000 paid by the plaintiff.

 The defendant did not submit to this court its pleading-in-answer. During trial, however, the defendant made the following defenses: 1) The contract between the two parties is a mixture of a registered trademark licensing contract and a technical service contract. The contract has become effective and the parties should perform their respective obligations thereunder. 2) After plaintiff's payment of the trademark licensing fee, she participated in the 1998 National Seminar of all Venus managers, during which she received technical training from the defendant. While providing all the technical instruction agreed on in the contract, the defendant also drew for the plaintiff a sketch of the exterior of the Jiading Venus Wedding Studio, and recommended her to another Venus cooperative venture in Shagdong for technical training. Out of trust in the plaintiff, the defendant did not request from the plaintiff a signed confirmation for receipt of all the technical instruction materials. 3) At present, the shop at 385 Jinshajiang Road, Jiading District, is completed, and is ready for lease by any enterprise or individual. The plaintiff may also lease another shop in Jiading for her business operations. 4) The plaintiff did not request for return of the paid money until after the expiration date agreed upon in the contract. So, the plaintiff's claims lack legal bases. For these reasons, the defendant seeks a judgment dismissing plaintiff's complaint.

 To support its claim, the defendant submitted to this court the following exhibits during the trial:

 Exhibit 1     The certificate provided by Wang Kefei, defendant's employee, on January 23, 1999, which certifies to the effect that the plaintiff participated in the 1998 National Seminar of all Venus managers, obtained a seat chart for participants of the national seminar, the invitation letter, and a copy of the Outline of Lectures, Topics of the National Seminar of all Venus Managers, Proposed Bills, Summary of Customers' Complaints, Wedding Studios management Methods of the 21 Century, Current Flow Chart of Customers Services, in addition to two hours of lectures an auditor.

 Exhibit 2     Registration of participants for the 1998 National Seminar of Venus Wedding Studios Managers, signed by the plaintiff.

 Exhibit 3     Samples of the Seat Charts for all participants of the National Seminar, Summary of Customers' Complaints, Wedding Studios Management Methods of the 21 Century, Marketing Strategies of China's Wedding Studios in the 21 Century, Current Flow Chart of Customers Services, etc.

 Exhibit 4     Two photos taken by Chen Tianhao, the general manager of defendant's cooperative venture department, on June 22, 1998, which show the shop under construction at 385 Jinshajiang Road, Jiading District, four photos of the exterior of Jiading Montage Wedding Studio, four photos of the exterior of Jiading Flaubert Wedding Studio.

 Exhibit 5     A sketch of the exterior of the Jiading Venus Wedding Studio drawn by the defendant

 Exhibit 6     Testimony by Chen Tiahao, the general manager of the cooperative ventures department of the defendant, to the effect that after the execution of the Cooperative Joint Venture Agreement, the defendant provided the plaintiff with documents such as a seat chart for participants of the National Seminar, Summary of Customers' Complaints, Wedding Studios Management Methods of the 21 Century, Marketing Strategies of China's Wedding Studios in the 21 Century, Current Flow Chart of Customers Services, etc., as well as a sketch of the exterior of the Jiading Venus Wedding Studio. The defendant also recommended the plaintiff for training at one of defendant's Shandong cooperative ventures.

 Exhibit 7     Four photos taken by the defendant on February 3, 1999, showing the completed shop at 385 Jinshajiang Road, Jiading.

 Exhibit 8     The memorandum of understanding (not yet approved by relevant government authorities) between Shanghai Jiading Shangcheng Real Estate management Company and Luyin Gymnasium. The main contents of the memorandum are that the two parties negotiated for the lease of the shop at 385 Jinshajiang Road, for massage and cosmetology. Both parties signed the memorandum.

 During the trial, the plaintiff and the defendant examined the above exhibits, and each party commented on the evidence provided by the opposing party. The defendant challenged the value of Exhibit 3 as evidence, holding that it is unable to prove that the plaintiff "was unable to obtain the lease for the shop at 385 Jinshajiang Road and, as a result, could neither set up the wedding studio with Shen Chenglin nor use the Venus trademark". The plaintiff challenged defendant's Exhibits 1-8. She contended that 1) She was invited by the defendant to participate in the 1998 National Seminar of Venus Managers when she told the defendant, at defendant's place of business, that she was unable to obtain the lease and that Shen Chenglin intended to withdraw from the cooperative joint venture. She did not participate in the seminar for the purpose of receiving technical training. 2) The plaintiff never procured the technical instruction materials listed in Exhibits 1-8. 3) Exhibits 7 and 8 could only prove that the shop at 385 Jinshajiang Road was completed after this dispute arose, and that someone who was not a party to this dispute intended to lease the shop. These facts, asserts the plaintiff, are not pertinent to the present case.

 The parties were not in dispute with respect to the following facts during the trial:

1. The defendant is a cooperative joint venture invested with money from Taiwan. Its business scope encompasses photography, enlargement of color photos, wedding services.

2. In 1998, the plaintiff and Shen Chenglin, a non-party, sought to form a cooperative joint venture with the defendant and set up Chenglin Wedding Studio (tentative name) in Jiading, Shanghai. On May 12 of the same year, the plaintiff and Shen Chenglin, as Party B, entered into the Agreement in question with the defendant as Party A. On the same day the plaintiff and Shen Chenglin paid RMB200,000 in cash to the defendant who gave a receipt for such payment.

3. In mid June of the same year, the plaintiff sought but failed to obtain a lease for the shop at 385 Jinshajiang Road, Jiading District. Thereafter Shen Chenglin withdrew from the joint venture.

4. In the same month, the plaintiff participated in the 1998 National Seminar of Venus Managers, during which the plaintiff went to one of defendant's joint ventures in Shandong for training.

5. On Oct. 14, the defendant reached an agreement with Shen Chenglin, pursuant to which the defendant returned RMB100,000 to Shen Chenglin. The plaintiff sought, unsuccessfully, to have her money back. Subsequently she brought suit to this court.

 The above facts are acknowledged by this court.

 At issue are the following questions of fact:

1. Whether the 1998 National Seminar of Venus Managers, which the plaintiff attended, is related to the contractual obligations of the two parties under the Agreement.
 This court holds that the plaintiff participated in the 1998 National Seminar of Venus Managers after she entered into the Agreement with the plaintiff. The topics discussed at the Seminar are directly related to the technical training agreed on in the Agreement. So there is reason to think that plaintiff's participation in the 1998 National Seminar of Venus Managers is related to the performance by both parties of their obligations under the Agreement. Plaintiff's contentions on this point are denied by the defendant, and plaintiff has not produced any evidence to support such contentions. Therefore we will not admit these contentions into evidence.

2. Whether the plaintiff obtained from the defendant the seat chart for participants of the national seminar, the invitation letter and outline of the lectures, Topics of the 1998 National Seminar of Venus Managers, Proposed Bills, Summary of Customers' Complaints, Wedding Studios Management Methods of the 21 Century, Marketing Strategies of China's Wedding Studios in the 21 Century, Current Flow Char of Customers Services, etc.
 This court has found that Wang Kefei and Chen Tianhao are employees of the defendant. Their testimony cannot prove that the plaintiff obtained the above technical materials from the defendant, since the plaintiff denies having received such materials and Wang Kefei and Chen Tianhao cannot produce plaintiff's signed receipt as proof for delivery of such materials. As to Exhibits 2-5 submitted by the defendant, they can only prove that defendant has such technical materials. They cannot prove that plaintiff ever received such materials. The defendant's contention that the plaintiff obtained technical materials from the defendant is not supported by adequate evidence, and this court refused to make a finding to this effect.

3. Whether the plaintiff went to one of defendant's joint ventures in Shandong for training at the recommendation of the defendant.

 This court finds that the wedding studio plaintiff went to for training is defendant's joint venture. It is reasonable to believe that the plaintiff went there fore training at the recommendation of the defendant, after she entered into the Cooperative Joint Venture Agreement with the defendant. The plaintiff alleges that her going there has nothing to do with the defendant. But she has not submitted any supporting evidence to prove this allegation. We would presume that she went there for training by the recommendation of the defendant.

 In addition, the two parties differ in their interpretation of Article 4 of their Agreement:

 The defendant holds that the provision that "the RMB200,000 will not be returned beyond a one month period" in Article 4 of the Agreement means that the plaintiff will forfeit her right to reclaim her payment one month after she fails to have the shop delivered to her. Therefore, according to Article 4 of the Agreement, the plaintiff no longer had the right to reclaim the money she paid, because more than a month had elapsed after she learned that the shop at 385 Jinshajiang Road, Jiading, would not be delivered. The plaintiff, however, holds that judging from the context of Article 4 as a whole, "the RMB200,000 will not be returned beyond a one month period" means that the plaintiff would lose her right to reclaim the money she paid one month after her failure to procure the business license. In this dispute, the plaintiff requested that the defendant return the money within one month after she learned that she would not be able to procure a business license. Therefore she did not exceed the time limit set by this provision.

 This court holds that the key issue in this dispute is whether Shanghai Venus Wedding Studio should return to plaintiff Huang Yajun the RMB100,000 she has paid. Related to this issue are the questions 1) Whether the Agreement in question is a mixture of a registered trademark licensing agreement and a technical service agreement for instruction on wedding studio photography and management methods, or a simple registered trademark licensing agreement; 2) Whether the Agreement is a conditional agreement which has not yet become effective, or one that is unconditional and has become effective; 3) Whether the defendant has provided technical instruction on wedding photography; and 4) should Article 4 of the Agreement be interpreted.

 To the above questions, on which the parties' opinions differ, the court holds as follows:

1. Judging from the language of the Agreement and the actual need of the plaintiff and Shen Chenglin for instruction on wedding photography and management, we can say that the Agreement embraces the license of the Venus registered trademark and instruction on wedding photography and management methods. It is a mixture of trademark licensing agreement and an agreement for provision of technical instruction on wedding photography and management methods, by which the two parties defined their rights and obligations. The plaintiff's contention that the Agreement is a simple trademark licensing agreement cannot stand. From this finding we can draw an inference that though the receipt provided by the defendant on May 12, 1998 stated plaintiff's payment as one for trademark license, the payment should be deemed as payment for both the trademark license and for technical instruction on wedding photography.

2. According to relevant provisions of the Trademark Law of the People's Republic of China and the Implementing Rules of the Trademark Law of the People's Republic of China, in licensing a registered service trademark to others, the owner of such registered service trademark should sign a trademark licensing agreement and file it with the State Administration of Industry and Commerce. In addition, the licensee should meet the qualifications for a provider of commercial service. This is to say that the licensee should be either a business enterprise, an institution which engages in commercial activities as a sideline, or a rural or urban private entrepreneur. Neither the plaintiff nor Shen Chenglin the nonparty meets the qualifications for a provider of a commercial service. For this reason, neither the plaintiff nor Shen Chenglin can enter into the trademark licensing agreement as licensees with the defendant. Obviously, in this case, the plaintiff, Shen Chenlin and the defendant were aware of the question of qualifications for the licensee in a trademark licensing agreement. That is why they stated in the Agreement that "Party B: Huang Yajun and Shen Chenglin, a business venture tentatively named Chenglin Wedding Studio", and that "upon Party B's procurement of approval for operating the wedding studio, Party A shall license to Party B the registered trademark of Venus, and the two parties would enter into a trademark license contract and file such contract with the trademark bureau and other relevant authorities". According to relevant provisions of law and the agreement of the parties, we should find that the terms of Agreement between the plaintiff and Shen Chenglin as one party and the defendant as the other with respect to the license of the Venus trademark are terms that will become effective only upon satisfaction of certain conditions. These conditions include the satisfaction by Chenglin Wedding Studio of qualifications for a provider of wedding photographic services, and the execution of the trademark licensing contract with the defendant as well as filing of the contract with the trademark bureau and other relevant authorities. So far, these conditions have not been satisfies.
 As to Article 4 of the Agreement, we think that it should be deemed as an agreement of the parties on the payment and return of the technical service fee and trademark license fee. Though the delivery of the shop and the procurement of the business license in the article bear directly on the question whether Chenglin Wedding Studio would be established, and whether Party B in the Agreement would have the capacity to operate the wedding studio service, they are only the preconditions or bases for the effectiveness of the trademark licensing provisions. They are not provisions of the trademark licensing agreement nor the conditions for the effectiveness of the Agreement itself.
 Meanwhile, it is worth noting that the plaintiff, Shen Chenglin and the defendant did not add any conditions for the effectiveness of the wedding studio technical service agreement. This is to say that as part of a mixed contract, the Venus trademark licensing agreement would not become effective until the above conditions for effectiveness are satisfied. As the other part of the mixed contract, the wedding studio technical service agreement would become effective upon the signing of the Agreement. Both the plaintiff and the defendant have failed to present a complete and impartial picture of the situation because they emphasize only the points which strengthen their respective positions. This court refuses to take the one-sided view of either party.

3. According to the principle that "the party who asserts facts and reasons should have the burden of proof with respect to such assertions", the defendant should have submitted to this court relevant evidence when it asserted that it had rendered technical services as required in their Agreement. Though Exhibits 1-7 of the defendant were meant as proof for this assertion, their value as evidence for this assertion is questionable. While admitting that it did not request the plaintiff to sign the confirmation sheets for delivery of the wedding studio technical instruction materials, the defendant has failed to submit adequate and corroborating evidence to prove that it had indeed provided the plaintiff with the required wedding studio technical instruction materials. Obviously, it has failed to meet its burden of proof. Therefore, we refuse to accept its contention that it provided the plaintiff with the required wedding studio technical instruction materials.
 However, that the plaintiff participated in the 1998 Seminar of Venus Managers, and that she went to one of defendant's cooperative joint ventures in Shandong for training, are established facts. Since the plaintiff received such training, and since such training is directly related to the provisions of the Agreement between the two parties and to the performance thereof, it should be regarded as a supplement to the two parties' agreement on wedding studio technical instruction provision, though the Agreement contains no provisions for it. For this reason, we think it appropriate to hold that the plaintiff accepted some wedding studio technical instruction, which, though outside the scope of the Agreement, was added thereto as a supplementary provision.

4. The provision in Article 4 of the Agreement regarding conditions for return of the payment is not clearly stated, and therefore the two parties interpret this provision differently. However, at heart of the question are 1) That the provision between the plaintiff, Shen Chenglin and the defendant concerning the trademark license is a conditional one, and that the conditions for the effectiveness of such provision are not satisfied; 2) That defendant's contention that it provided to the plaintiff the wedding studio technical instruction required under the Agreement does not have supporting evidence; the defendant only provided to the plaintiff some instruction which is outside the scope of the Agreement and which is added thereto as a supplementary provision; 3) It is impossible now to implement the Agreement, the events on which the defendant must rely for its claims of the technical service fee and trademark license fee have not occurred, and therefore such claims no longer have any justification. For these reasons, the technical service fee and the trademark license fee, which the defendant received from the plaintiff under the Agreement, should be returned to the later. The ambiguity in the conditions for return of the payment in the Agreement provides no justification for defendant's refusal to return the payment, any more than it does for plaintiff's claim for return of such payment.

 Besides, this court refuses to take into consideration defendant's contentions that the shop at 385 Jinshajiang Road, Jiading is completed, and that the plaintiff can still lease such shop or any other shop in Jiading for operation of a wedding studio, because they are obviously at variance with the Agreement of the parties, and are irrelevant to the disputed facts.

 While holding that the defendant should return the technical service fee and trademark license fee which it received according to the terms of the Agreement, we also think it worth noting that 1) The plaintiff in fact received some wedding studio technical instruction, though it is outside the scope of the Agreement, and for this reason, on the basis of fairness and justice, and the principle that "rights and obligations go hand in hand", the plaintiff should pay to the defendant something which is commensurate with the services she received from the defendant. Because there is no provision concerning the specific amount of technical service fee in the Agreement, nor did the two parties teach any understanding with respect to payments for services that are outside the scope of the Agreement, this court will use its own discretion in determining the amount the plaintiff should pay to the defendant by taking into consideration the actual circumstances of this case, and will subtract such amount from what the defendant should repay the plaintiff. 2) In view of the above-mentioned circumstances, this court will not support plaintiff's claim for interest payments.

 To conclude, in accordance with Articles 4 and 26 (3) of the Trademark Law of the People's Republic of China, Articles 47 and 49 of the Law of the People's Republic of China on Technology Contracts, and Article 62, 134(1)(iv) of the General Principles of Civil Law of the People's Republic of China, we decide as follows:

 

 

 

Xie Chen            Presiding Judge

Xue Chunrong        Judge

Chen Mo            Acting Judge

May 21, 1999

Ji Jing              Clerk