In a March 2016 decision the Supreme People's Court ruled that reputation is a factor when evaluating trademark similarities and likelihood of confusion. In Michelin the court considered the high reputation of the infringed trademarks, in addition to the elements of the combination marks and the infringers' bad faith.

Facts

Compagnie Générale des Etablissements Michelin is a world-famous tyre manufacturer and a Fortune 500 company. Its main trademarks MICHELIN (Figure 1), MICHELIN and the Bibedum device (Figure 2) and MICHELIN in Chinese characters (Figure 3) have frequently been recognised as well-known trademarks by China's judicial and administrative bodies.

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In 2010 Michelin discovered that Sen Tai Da Group Co, Ltd (Sentaida) – which had been Michelin's distributor from 2006 to 2009 – was using the trademarks below:

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In addition, Sentaida was using the trademark SEN QI LIN in Chinese characters and the domain name 'cenchelyn.com', and had registered a company with the trade name Qingdao Sen Qi Lin Tire Co, Ltd (Senqilin).

Michelin also discovered that Li Daowei – Sentaida's local dealer in Chongqing – had been using Michelin's Chinese character trademark (Figure 3) with the phrase 'Landsail tires' in its online sales of Landsail tyres, which were manufactured by Sentaida.

Moreover, Michelin discovered that online customers had confused Senqilin and Michelin.

Michelin filed lawsuits in March 2011 against Sentaida, Senqilin and Li Daowei with the Chongqing Fifth People's Court, claiming trademark infringement and unfair competition.

Decision

The first and second-instance judgments of the Chongqing Fifth People's Court and the Chongqing High People's Court, respectively, both held that Li Daowei's use of Michelin's Chinese character trademark (Figure 3) constituted trademark infringement and ordered it to pay Rmb50,000 in damages.

The courts also found that one of Sentaida's trademarks (Figure 4) was similar to the MICHELIN combination trademark (Figure 2).

The courts ordered Sentaida and Senqilin to pay Rmb10,000 in damages.

However, the courts rejected the claim of similarity between another of Sentaida's trademarks (Figure 5) and the MICHELIN trademark (Figure 1).

Michelin applied to the Supreme People's Court for a retrial, submitting evidence of the continuation of the infringement and its past relationships with the infringers.

In March 2016 the Supreme People's Court repealed the first and second-instance judgments and raised the amount of damages to be paid by the defendants to Rmb500,000. In addition, the court affirmed that both of Sentaida's CENCHELYN trademarks (Figures 4 and 5) were similar to the MICHELIN combination trademark and the MICHELIN trademark (Figures 2 and 1).

Comment

The Supreme People's Court made a bold decision in raising Michelin's compensation from Rmb60,000 to Rmb500,000, which is the maximum amount of discretional compensation allowed under the Trademark Law 2001. In doing so, the court took into account – among other things – the duration and outcome of the infringing acts and the reputation of the infringed trademarks.

The Supreme People's Court also provided wider protection for Michelin's trademarks by recognising that Sentaida's CENCHELYN trademark (Figure 5) was similar to the MICHELIN trademark (Figure 1).

For further information on this topic please contact Binbin Du at Wan Hui Da Law Firm & Intellectual Property Agency by telephone (+86 10 6892 1000) or email (dubinbin@wanhuida.com). The Wan Hui Da Law Firm & Intellectual Property Agency website can be accessed at www.wanhuida.com.

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