Facts

Guangzhou Hongfu Real Estate Co Ltd is the owner of registered Trademarks 1946396 (September 28 2002) and 1948763 (September 21 2003) comprising combination trademarks STAR RIVER in Chinese characters and device, to be used respectively for the services of "real estate rental, real estate management" in Class 36 and "architecture" in Class 37.

Hongfu assigned the trademarks to Guangzhou Star River Industrial Development Co Ltd, which licensed Hongfu to use the trademarks – enabling Hongfu to bring infringement actions in its own name. Hongfu and its affiliated companies developed several Star River real estate projects in Guangzhou, Beijing, Shanghai and other cities, and won many awards.

In 2000 Jiangsu Weifu Group Construction & Development Co Ltd launched various real estate projects using the names 'Star River Garden', 'Star Garden' and 'Star Scenery Garden' in Nantong – a city in Jiangsu Province. The names of the apartment blocks were approved by the Municipal Civil Affairs Bureau of Nantong.

Star River Co and Hongfu sued Weifu on the grounds of trademark infringement and unfair competition.

The Nantong City Intermediate People's Court ruled that Weifu's use of 'Star River Garden' as the name of its apartment blocks did not constitute trademark infringement, since it did not mislead consumers as to the developer of the buildings. The first-instance court further found that – since Weifu had not intended to free ride and had not caused misidentification among consumers – Weifu's use of 'Star River Garden' did not constitute an act of unfair competition. The court therefore dismissed the claims.

Star River Co and Hongfu appealed to the High People's Court of Jiangsu Province, which upheld the first-instance judgment.

Star River Co and Hongfu then filed a retrial application to the Supreme People's Court.(1)

Decision

The Supreme People's Court determined that Weifu's use of 'Star River Garden' as the name of its apartment blocks was likely to cause confusion and misidentification among the relevant public, due to its similarity to the cited marks, which constituted infringement. Consequently, the court overruled the first and second-instance judgments, concluding that Weifu must not use 'Star River' as the name of buildings yet to be developed and sold, and must compensate Star River Co and Hongfu Rmb50,000 for their economic loss.

Comment

The case attracted a lot of attention, since it involved the protection of trademarks registered for real estate sale services and liability after a court had found infringement. In the retrial, the Supreme People's Court clarified that when an IP right such as a trademark conflicts with a property right, whether the parties should be ordered to stop using the trademark should be based on the principle of good faith and by taking into account the public interest. The court considered the fact that the name of Weifu's apartment blocks had been approved by the local civil affairs agency. In addition, residents had been living in the complex for many years and there was no evidence to prove whether they knew, upon initial purchase, that the name of the building infringed the cited trademarks. Terminating all use of 'Star River' would have created imbalance between the interests of the trademark owner and those of the public or residents. As a result, the court did not order a complete prohibition against use of 'Star River Garden', but ruled that buildings yet to be developed and sold must not use the name. The verdict protected the trademark owner's interests to the extent allowed by the law, while minimising the harm against the public interest – highlighting the significance of the judicial guidance.

The fact that the infringing products were apartment blocks, with each unit sold individually, created an unusual situation where the final product (the apartment) did not bear the infringed trademark and where the buyer may have been unaware that infringement had been committed. Knowledge of the exact claims submitted by the plaintiffs is essential to assess the significance of this decision. If the plaintiffs requested that the first and second-instance courts affirm the existence of infringement, order the cessation of the infringement and compensate the damages caused, the court's decision did as requested and it was not necessary to rule further. However, if the plaintiffs requested that the courts order the modification of all existing buildings' names, the court's dismissal of the plaintiff's claims may be questioned. Unlike the Patent Law, the Trademark Law contains no reference to the public interest. On the contrary, it is in the interest of consumers not to be confused by an act of infringement, which could happen if the owner of one of the infringing apartments decides to resell.

For further information on this topic please contact Hui Huang, Paul Ranjard, Huimin Qin or Nan Jiang at Wan Hui Da Law Firm & Intellectual Property Agency by telephone (+86 10 6892 1000) or email (huanghui@wanhuida.com, ranjard@wanhuida.com, qinhuimin@wanhuida.com or jiangnan@wanhuida.com). The Wan Hui Da Law Firm & Intellectual Property Agency website can be accessed at www.wanhuida.com.

Endnotes

(1) Guangzhou Star River Industrial Development Co Ltd v Jiangsu Weifu Group Construction & Development Co Ltd (Supreme People's Court, (2013) Min Ti Zi 102 civil judgment).

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.