LEGO Wins Trade Mark Infringement & Unfair Competition Dispute
On 1 April 2021, the Guangdong Higher People’s Court announced that LEGO was awarded RMB 30 million in damages for trade mark infringement and unfair competition against Guangdong Meizhi Zhijiao Technology Co., Ltd. and a related entity, Shantou Zhilepin Toys Co., Ltd. and Guangzhou Zhiwan Trading Co., Ltd. (“Zhiwan Trading”) (collectively, the “Defendants”) at second instance.
LEGO brought an action to the Guangdong Higher People’s Court for trade mark infringement and unfair competition agains the Defendants, who were involved in the manufacture and sale of “Lepin” or “乐拼”-branded toy products. LEGO claimed that the “Lepin” and “乐拼” marks were similar to its “LEGO”, “乐高” and “CHIMA” registered trade marks. It was also found that the Defendants’ products were similar to its own products in terms of overall design and assembly, which can easily lead to confusion by the relevant public that the Defendants’ products were related to LEGO’s products. A total of RMB 30 million was claimed for economic losses and reasonable expenses.
The first instance court held that the Defendants’ use of the infringing marks were sufficient to cause confusion and misunderstanding among the relevant public and infringes upon LEGO's exclusive right to use its registered trade marks, constituting as unfair competition. Regarding the determination of the amount of compensation, the court of first instance held that the evidence provided by LEGO could not prove that the Defendants’ profits from the infringement reached RMB 30 million or that their profits from the infringement clearly exceeded RMB 3 million. Finally, the court considered the reputation of LEGO’s trade marks and the Defendants’ subjective fault in the infringement, and held that the Defendants are jointly and severally liable to compensate LEGO for the economic loss of RMB 3 million, of which Zhiwan Trading was jointly liable for RMB 300,000.
After the first instance judgement, both sides filed an appeal to the Guangdong Higher People’s Court. In the second instance, the Guangdong Higher People’s Court established the Defendants’ infringements. In terms of determing the amount of damages awarded, according to the relevant ruling, the revenue made from the manufacture and sale of the infringing products by the Defendants was RMB 330 million from 11 September 2017 to 23 April 2019. In addition, based on the sales data of “Lepin” products provided by Zhejiang Taobao Network Co., Ltd., it can be reasonably presumed that the amount of sales of infringing products has exceeded RMB 500 million. Based on reasonable estimates with reference to the profit margin of related industries, the overall profit of the infringing products involved should exceed beyond RMB 160 million.
In the end, the court held that there was malicious infringement on part of the Defendants. The Guangdong Higher People’s Court supported LEGO's claim for damages and compensated LEGO RMB 30 million for economic loss.
Alibaba's Application For "Double 11" Trade Mark Rejected At Second Instance
On 14 January 2019, Alibaba made a trade mark application to register the “Double 11” trade mark which was later rejected by the CNIPA. Alibaba brought an action to the Beijing Intellectual Property Court.
The Beijing Intellectual Property Court held at first instance that the disputed mark lacked distinctive features and would not be recognized as a trade mark by the relevant public, falling under the provisions of Article 11(1)(3) of the PRC Trademark Law. In accordance with Article 69 of the PRC Administrative Procedure Law, the court rejected Alibaba’s claim. Alibaba later filed an appeal to the Beijing Higher People’s Court.
After hearing the case, the Beijing Higher People's Court found that the disputed "Double 11" trade mark could be easily understood as "November 11". In actual use, the relevant public would easily recognize it as a specific date. The disputed trade mark is designated for use in the reexamination service, and it is difficult for the relevant public to identify it as a trade mark indicating the source of such service as it lacks distinctiveness and falls under the circumstances stipulated in Article 11(1)(3) of the PRC Trademark Law. The Beijing Higher People’s Court ultimately rejected Alibaba’s appeal and upheld the original judgement.
First Case in China: Beijing Haidian Court Recognises Live Broadcasting Sale Platforms as E-commerce Platforms
Recently, the Haidian Court heard a trade mark dispute between Saishi Trading (Shanghai) Co., Ltd. (“Saishi”) and Laizhou Hongyu Arts & Crafts Co., Ltd. (“Hongyu”). This case is the first case in which live streaming sales platforms are recognized as e-commerce platforms, and also the first case to identify the nature of such platform since the implementation of the “Trial Measures for the Administration of Live Streaming Marketing”.
Saishi discovered that Hongyu was selling handbags containing the "AGATHA" trade mark and logo on the Douyin platform, and brought an action for trade mark infringement against Hongyu and Bytedance to the Beijing Haidian Court. The Beijing Haidian Court considered the following combination of factors: the trade mark's drawings, the categories of goods approved for use, the goods in question and the logo on the price tag, the fact that the company had not sub-licensed the trade mark to a third party, and the fact that Hongyu had not submitted sufficient evidence to prove that its behavior was in compliance with the PRC Trademark Law. It was held that Hongyu's sale of the goods violated Article 57(3) of the PRC Trademark Law, constituting as trade mark infringement.
In addition, users on Douyin can engage in Internet marketing activities by opening the "merchandise window" function, and the live broadcast interface on Douyin shows the name, picture, price and other information of the goods in question. The fact that Douyin users can directly check the order information of the goods they purchased in their accounts and that they need to click the shopping cart in the interface to enter the store and complete the transaction when watching the live broadcast, the court held that Douyin is an e-commerce platform. Bytedance, as the operator of Douyin, is therefore an e-commerce platform operator. However, after considering that Bytedance had performed timely pre-audit, prompting, and disposal measures, it was found that Bytedance had fulfilled its reaonsable duty of care. In the end, the court held that Hongyu was to compensate Saishi RMB 300,000 for economic loss and RMB 10,598 as reasonable expenses.