Background
The Chinese trademark of a European manufacturing company was used by a Chinese entity as part of its corporate name. Furthermore, on the website of the Chinese company, there were pictures of products similar to those manufactured by the European Company. The European company decided to take action to stop the alleged infringement.

Action Taken
The European Company had registered its trademark prior to the preā€registration of the name of the Chinese company; the European Company therefore held a priority right on the litigious wording. The trademark was used by the Chinese company to identify itself and not its products. It was therefore not possible to claim counterfeiting goods, but only a misuse of a registered trademark.

In order to collect evidence, a notary public certified that there was a website using the European company's trademark as part of the corporate name of the alleged infringer, and that the products sold by the Chinese company were similar to those manufactured by the European Company. The similarity of the product highlighted the intention of the Chinese company to benefit from the reputation of the trademark in a certain business.

An administrative action was brought before the local Administration of Industry and Commerce (AIC) in order to request the immediate change of name of the Chinese company on the grounds of priority rights due to the trademark registration and the fact that it was misleading for customers.

Outcome
An appropriate attorney was briefed to bring the case before the local AIC, presenting the trademark registration certificate, certification by a public notary and the appropriately filed in complaint application form. The local authorities did not accept the case but no official refusal in writing was provided. It was therefore not possible to appeal the decision before a higher authority.

The only remaining option for the European company was to bring the case before the judicial courts of the Province, however at present no further legal action has been taken due to the lengthy nature of a judicial procedure.

IP Lessons

• Usually dealing with a local administrative office is quicker and cheaper than initiating judicial proceeding and more effective than mediation.
• There is a risk of local protectionism in legal proceedings.

Background
A European company with an existing '.com' domain name wanted to register domain names with its Chinese and English names including all possible extensions available in Asia. Meanwhile the European company noticed that a Chinese company had registered similar '.com.cn' domain names.

Action Taken
The company was able to register several extensions such as '.net', 'net.cn' and '.cc' with the English word. The registration of the domain name with the '.com.hk' extension could not be made as it is only available for corporations duly registered under the law of Hong Kong.

The registration was made by providing the following information:

• The name of the registrant
• The domicile of the registrant
• The contacts of the registrant

It took 18 days to obtain a registration certificate indicating the ownership of the websites for domain names. The registration of the various domain names would be valid for a five year term, subject to renewal. During the registration process, the European company received confirmation that a registration with the company's name in '.com.cn' had already been made by a Chinese company but the domain name was not active.

A legal action was brought before the judicial court to claim that the name used is a widely known trade name and that the Chinese company could not in good faith have registered the same in ".com.cn".

Outcome
The court found that it could create confusion among the public. It held that the Chinese company did not use the domain name after registration and had prevented the registration of the domain name by the legitimate owner. The court finally ordered the deā€registration of the domain name but no compensation was awarded to the European company.

IP Lessons

• Chinese courts rarely consider the actual damage or harm to reputation that counterfeiting may cause and such loss or damage is rarely compensated.
• The Guideline Opinion Regarding Damages for Copyright Infringement states that mental damages can be awarded between RMB 2,000 and RMB 50,000.

Background
'SoCa'is a French company whose products are sold directly to car and truck manufacturers and then assembled in the manufacturing plant. They are also available as spare parts in specialised stores.

SoCa has registered or applied for various trademarks in classes 7 and 11 in China, either as national Chinese trademarks or via the Madrid international registration system. All these trademarks are word/figurative i.e. they contain a word together with a logo. They have not registered any simple word mark. SoCa also proceeded with the registration of the Chinese transliteration of its main trademark together with the logo. While monitoring wellā€known Chinese B2B websites (in English), SoCa found out that a Chinese trader was proposing an identical copy of its air filter for export.

Action Taken
The trader was contacted via the Internet using a commercial pretext and he confirmed that the products were available.

A private investigator was hired in order to first locate the trader, then the factory that manufactures the counterfeit air filters. Once located, an administrative raid action was conducted by the TSB (Technical Supervision Bureau) against the underground factory (i.e. a factory which is not registered in the Chinese company registry).

However, during this raid action the owner of the factory presented to the TSB officials a trademark application that he had filed a year before in class 7 (and which had not been published on the day the raids took place). The application was for a word mark identical to that which SoCa use.

The existence of this application, even though totally illegal, was sufficient to raise doubt as to the real ownership of the trademark. The administration dropped the matter and refrained from seizing the products and the machinery.

It should be noted that SoCa subsequently opposed this trademark. It will, however, take some time before SoCa obtains a favourable final decision. Meanwhile the counterfeiter can still capitalise on the existing situation to continue its illegal activity.

IP Lessons

• It is extremely important to have a good trade mark filing strategy and apply as soon as possible (even before the launch of the products) for the trademark which will be used.
• The simpler the mark, the better the protection will be.
• Before conducting a raid action it is extremely important to search through the Chinese trademark registry in order to verify that there are no pending unpublished applications.
• It is also crucial to monitor the published applications with the help of an IP counsel in order to oppose illicit filing.

Background
A small processing enterprise was engaged in processing sanitary ware for Chinese and foreign clients. Early in 2005, a world leading manufacturer of sanitary fittings, SanCo, that had registered its trademarks in China, found that the small Chinese processing enterprise was manufacturing products bearing their own registered trademark.

Action Taken
SanCo complained to the Ningbo Administration for Industry and Commerce (AIC) who coordinated two separate raid actions against the Chinese company that same month.

Meanwhile, SanCo was preparing to take legal action before the People's Court in order to seek financial compensation. The infringing company however, offered to settle the case and signed a firm commitment that it would stop any infringing activities and also that if it re-committed such infringement it would pay SanCo damages based on the number of infringing goods multiplied by the price of SanCo 's authentic products. SanCo decided not to institute a proceeding against the Chinese company.

In 2007, the infringing company was again found manufacturing 2,904 sets of infringing goods bearing SanCo's registered trademark. The infringing company had sold about one thousand sets of the infringing goods, and the other 1,904 sets were seized by the Ningbo AIC. SanCo requested that the infringer honour its contract and pay compensation of RMB 4.58 million.

The infringing company refused, leading SanCo to instigate proceedings before the Local Intermediate People's Court.

Outcome
The court held that the defendant having made a promise after the previous infringement case had violated the good faith principle by infringing the plaintiff's trademark for a second time and should bear the civil liabilities for its acts. Therefore, the Court calculated the amount of damages according to the price of SanCo 's authentic products and ordered the defendant to pay compensation of RMB 3.52 million.

IP Lessons

• Although infringement disputes can be resolved non-litigiously, continued monitoring of suspected infringers is needed to guard against breaking the terms of the settlement.

Background
Since 1980, a French clothing brand has owned a registered trademark in China. In April 2006, a company in Jiangsu attempted to export a batch of 13,000 cotton Tā€shirts bearing the exact reproduction of their trademark.

Action Taken
Following leads provided by the French company, Shanghai Customs officials opened the container and seized the batch of shirts, and, when the counterfeiting was confirmed, confiscated the stock and imposed a fine of RMB 25,000 on the Jiangsu company.

Given the large quantity of counterfeit goods, the French company considered that such a small fine was not sufficient punishment and brought an action against the company before the Shanghai Pudong New District People's Court, claiming compensation for RMB 3,000,000

Outcome
Since the entire stock of counterfeit had been seized, it appeared that the Court was not going to award a large sum of money, considering that after all no real damage had been caused. Therefore, the Court encouraged the two parties to discuss the case and try to settle it. During the discussion, the French company put forward that the criminal threshold (50,000 RMB) was definately going to be confirmed by a criminal court if charges were pressed against the managers of the Jiangsu company. The two parties finally reached an agreement pursuant to which the Jiangsu company paid a total of 800,000 RMB to the French company and signed a contractual agreement not to reā€infringe the French company's trademark.

IP Lessons

• Mediation is actively encouraged by the Chinese courts as a method of dispute resolution.

Background
In early April 2005, the same French company as mentioned above found that a Beijing company had set up shops in numerous shopping malls and was engaged in selling garments bearing a trademark representing an image very similar to its registered trademark. After some research, it was found that the goods were produced by a company in Guangzhou, and that the infringing trademark was in fact registered in the name of this company.

However, the registered trademark of the Guangzhou company was somewhat different. The trademark certificate showed some additional background decoration, some Chinese characters and some added letters. This 'decoration' however, was not visible on the garments sold in the Beijing boutiques. Either they were sewn in the same colour as the shirt, thus almost invisible, or were completely deleted.

Action Taken
In July 2007, the French company lodged a lawsuit against the three defendants (the Beijing company, the shopping centre and the Guangzhou company) before the Beijing Intermediate People's Court nĀ°1.

Outcome
The Court determined that the Guangzhou company having a registered trademark in a way that is different to the registration, but is similar to another registered trademark, thus creating confusion, constitutes a trademark infringement. The court ruled that the Guangzhou company should cease manufacturing and selling the infringing garments, and should pay an economic compensation of RMB 500,000. The Beijing company and the shopping centre were ordered to pay RMB 200,000 and RMB 60,000 compensation respectively.

The Guangzhou company appealed to the Beijing Higher People's Court, which eventually maintained the firstā€instance judgment and dismissed the appeal.

IP Lessons

• Registered trademarks can be infringing if they are not applied in as they are registered. Be aware of trademarks that are superficially different from your own.

Background
A French brand of artist paper, FRAPAP was registered in China, but its Chinese transliteration was not. When FRAPAP applied for the Chinese equivalent, sounding very similar to its original, it was found that a Chinese company had filed an application earlier for the very same characters and the same products. FRAPAP realised that the registration of its trademark in roman letters did not imply necessarily that it would be protected against a registration of Chinese characters sounding alike. Numerous Chinese characters can be pronounced in the same way but hold different meanings. Therefore, they would have had to file a distinct trademark application for their chosen transliteration.

Action Taken
Even though it was a reputable brand in France, the company could not claim to have a substantial reputation in China. It was therefore impossible to rely on the protection of a well known trademark in China. It nevertheless decided to file a complaint against the Chinese application, and conducted an investigation into the applicant, a company curiously specialised in electronics, and which could not have had a serious interest in the business of paper for artists.

The investigation revealed that this electronics company had offices in Shenzhen, in a location that was also the registered office of another company: the distributor of FRAPAP's main foreign competitor. Both companies had the same General Manager.

The link was established between the rejected application and this competitor, who was obviously acting with the purpose of blocking any possibility for FRAPAP to refer to its own name in Chinese.

Outcome
The investigation showed that the opposed application was made in bad faith and the opposition was successful. The French company was therefore as a result able to register its name in Chinese.

IP Lessons

• This case was successful due to the diligent investigation that was carried out.

Background
A French company "A" has entered into a joint venture agreement with a Chinese company "B" in order to manufacture and export a seasonal garment collection to Europe.

To minimise costs, the design of each individual piece of clothes has not been protected in China. However the trade mark appearing on the collar label is registered.

"A" was providing their new patterns to "B", 3 to 4 months prior to the launch of their collection. "B" was then sub-contracting the manufacture of the garments to a factory of which "A" was not aware. The goods were then exported by "B" to "A" which was receiving the goods for distribution in their stores. "A" did not have any local representative to supervise and check production and quality.

After two or three collections were manufactured, the quality of the production started going down to the extent that "A" had to refuse entire shipments of goods. As the poor quality of the products was putting its business in jeopardy, "A" was forced to find an alternative way to manufacture the goods.

Finally, after exchanging correspondence and warning letters, "A" and "B" finally decided to terminate their contractual relationship.

In the meantime, "A" was informed by one of its local agent about products bearing identical or similar trade marks being sighted in shops located in South-East China.

Immediately, "A" thought that "B" might be involved in this business. Yet it did not have any evidence of it, since "B" was sub-contracting the manufacture of the goods to another factory that "A" did not know about.

Strategy and Actions
"A" decided to take action and hired a private investigator in order to try to locate the factory where these garments were produced. It proved quite easy to locate the counterfeiter since most stores selling the fake products were owned by the owner of the manufacturing plant.

An informant was placed inside the factory to monitor its activities. "A" rapidly found out that since they were not providing any new designs to "B", the identified factory was not producing identical garments anymore.

At the right time, administrative raids were conducted simultaneously by the AIC (Administration of Industry and Commerce) against the stores and the factory. Of course, only those goods bearing identical or similar trade marks were confiscated by the AIC.

The number of products found was not in excess of 1,000 due to the fact that without receiving designs from new collection anymore, only fewer clients were interested to buy fake products.

Forms of Abuse
Products found by "A" in these stores were of three types:

• identical designs bearing identical trademarks with label of excellent quality (probably the same used for the manufacture of genuine products);
• identical designs but with similar trademarks (one trademark closely resembled "A"Ā“s trademark and another did not); and
• identical designs without any trademark.

Ā 

"A" does not work anymore exclusively with one partner, and not exclusively in China.

Contracts have been modified in order to obtain prior to the signature all possible information on sub-contractors.

However, the designs are still not registered in China and in those countries where the goods are manufactured.