Article 59.3 of the Trademark Law provides that when a trademark registrant's application for trademark registration follows the use by another (unregistered) party of an identical or similar trademark with a substantial reputation for identical or similar goods or services, although the registered party is not entitled to prohibit the prior party from continuing to use such prior trademark within its original scope of use, it can demand that the prior party add appropriate logo(s) for the purpose of distinguishing the two marks.

According to Article 59.3, even if a trademark registrant has already acquired monopolistic rights based on its trademark registration, a prior user can still counter these trademark rights and continue its use of the trademark.

In the case Hefei Wuwuyi Network Technology Service Co., Ltd. v. Shanghai PPDAI Financial Information Services Co., Ltd. re trademark infringement[1], the court dismissed the plaintiff’s trademark infringement claims by applying Article 59.3 of the Trademark Law to uphold the rights and interests of the prior user.

In that case, the plaintiff was the owner of registered trademark No.7188389 “拍拍贷PPDAI”, filed on September 28th, 2010 and approved for services in Class 36 (including installment loans, financial loans, financial services and financial management).

The plaintiff alleged that while the defendant provided financial loan services through its website (www.ppdai.com), it used the mark “拍拍贷PPDAI”, which was identical to the plaintiff’s registered trademark, without authorization on its website, thereby infringing the plaintiff’s exclusive right to use the registered trademark. Consequently, the plaintiff demanded that the defendant stop using the enterprise name containing the mark “拍拍贷”. The plaintiff also petitioned the court to order the defendant to stop using “拍拍贷, PPDAI” on either its website or in its enterprise name.

The defendant, PPDAI, was the first P2P online private lending platform in China. Its domain name, ppdai.com, was registered in April 2007, and its website was launched in August 2007. In answer to the plaintiff’s claims, one of the defendant’s arguments was that since the defendant used “拍拍贷” prior to the registration by the plaintiff of  “拍拍贷PPDAI” , its registration of the word “拍拍贷” in its enterprise name was reasonable.

In that case the court held as follows: “拍拍贷” is the name for both the defendant’s website and its company, and “ppdai.com” is the domain name for the website operated by the defendant. The domain name “ppdai.com” was registered in April 2007. The website was originally operated by Daifeng Company, and it attracted attention from the media as the first P2P credit lending service platform in China. After over a year’s use of this mark by Daifeng Company amid frequent media reports, but before the plaintiff filed the application for the No.7188389 trademark, marks such as “拍拍贷” used by Daifeng Company on its website had already acquired a substantial reputation. With the operational expansion of the website, the reputation of the mark continued to rise, and operation of the website was shifted to the defendant after its incorporation. The defendant further signed an M&A agreement with Daifeng Company, according to which the rights and interests originally enjoyed by Daifeng Company based on the use of marks such as “拍拍贷” were transferred to the defendant. Consequently, the plaintiff is not entitled to prohibit the defendant from continued use of the mark within its original scope of use.

The court therefore dismissed the plaintiff’s trademark infringement claims, and instead affirmed the defendant’s prior user rights.