The Changsha Intermediate People’s Court (“Changsha Court”) applied Article 2 of the Anti-unfair Competition Law and found that an online vendor selling genuine Avène products while claiming its platform to be the official Avène website committed an act of unfair competition.

Case Summary:

Pierre Fabre Dermo-Cosmetique (“Pierre Fabre”) owns the registered trademarks “Click here to view image.” and “Click here to view image” in China designating products “cosmetics, soap, shampoo, mineral or hotspring spray for beauty use”.

In 2014, Pierre Fabre found an online mall pretending to be “Avène’s Official Website in China” or “Avène’s Online Mall in China,” and using Pierre Fabre’s advertising materials.

WAN HUI DA notarized the webpage contents of the online mall and made a notarized purchase at the online mall on September 1, 2014. The notarisation procedure revealed a company named Changsha Hui Ji E-commerce Co., Ltd. (Changsha Hui Ji).

Pierre Fabre initiated a civil lawsuit against Changsha Hui Ji before the Changsha Court on the ground of trademark infringement and unfair competition, requesting cease of infringement, indemnification for damages caused and a public apology.

In the court proceeding, Changsha Hui Ji argued that the Eau Thermale Avène products offered for sale in its online mall came from a legitimate source; therefore, the use of Pierre Fabre’s trademark and advertising materials was fair and did not constitute infringement nor unfair competition.

On October 28, 2015, the Changsha Court rendered a judgment upholding Pierre Fabre’s unfair competition claim and ordered Changsha Hui Ji to:

Cease all acts of unfair competition immediately;

Pay RMB 40,000 to Pierre Fabre in compensation for its economic loss.

The Court reasoned that although the defendant’s website offered genuine products, its use of the plaintiff’s trademarks, pictures, and advertising materials of relevant products should have been confined to a necessary and reasonable extent. The Court further stated that the defendant’s prominent use of Pierre Fabre’s registered trademarks and its self-identification as “Avène’s Official Website in China,” or “Avène’s Online Mall in China,” combined with pictures and advertising materials identical with the plaintiff’s website content, were likely to mislead the relevant public to misconstrue that its online mall was operated or licensed by Pierre Fabre, thus giving the defendant unfair competition advantages. The defendant was found in violation of business ethics and principles of good faith outlined in Article 2 of the Anti-unfair Competition Law.

WAN HUI DA represented Pierre Fabre in the civil litigation.

Comments:

This case serves as a point of reference to establishing the boundary between fair and unfair use of trademarks.

It was listed as one of the 50 exemplary IP cases of 2015 by the Supreme People’s Court.