Japanese retail company MUJI (Mujirushi Ryohin) has recently lost a trademark infringement case in China. Even if the judgment is limited to the trademark 无印良品 (MUJI in Chinese) and only relates to products in class 24 – such as fabric products, towels, sheets, pillow cases, bed covers and similar stuff – the news has been widely and alarmingly reported by many medias.
Some of them has also said that MUJI had been beaten by the "copycat company" in China. And -in general- the case has raised doubts over Chinese courts treating foreign companies fairly in the country. The doubts are understandable, let us review the details of the case so that everyone can have his/her own view on the case.
According to the judgment issued by the Beijing High People's Court on November 4th, 2019, MUJI is ordered to pay CNY 626,000 in damages to the Chinese company owner of the trademark 无印良品 (MUJI in Chinese) in class 24 and issue a public apology.
Why did MUJI lost trademark infringement for 无印良品 in class 24?
The “MUJI” brand was born in Japan in 1980. From 1990 it also started expanding outside Japan in many countries of the world. Coupled with the business expansion outside Japan, MUJI also extended its trademark portfolio internationally. MUJI filed trademarks for MUJI in Chinese “無印良品” in China since 1999 designating the classes 16, 20, 21, 35, 41.
Hainan Nanhua filed trademark No.1561046 MUJI in Chinese 无印良品 in class 24 on April 6th 2000 and then transferred to Beijing Cottonfield Textile Corp. Before that date MUJI didn’t file trademark for 无印良品 in class 24 in China. Hainan Nanhua was the first to file trademark MUJI in Chinese 无印良品 in class 24 in China. MUJI tried to stop the registration of the trademark by Hainan Nanhua filing opposition and prosecuting the procedure until the highest possible level of jurisdiction, the Supreme People’s Court (“SPC”).
On June 29, 2012 the SPC ruled against the Japanese company and dismissed with final judgement an opposition appeal against aforesaid trademark filed by MUJI staring from 2001. Within this procedure MUJI could only prove the use and reputation of 无印良品 on towels etc. before April 6, 2000 in Japan and Hong Kong, but not in Mainland China. No prior trademark registration and no prior use in Mainland China of 无印良品 by MUJI became the key to the failure of this lawsuit.
According to art. 13.2 of the Chinese Trademark Law, a trademark that is well-known in China shall be protected (both against unfair registrations by others and from infringements) also in respect to goods and classes which are not directly and explicitly designated in the trademark application.
The requirement for the application of this exceptional cross-class protection is the necessity to be well-known. In the present case the Court did not protect MUJI trademark because it recognized that in the 2000 (when Hainan Nanhua filed trademark) MUJI was not well-known in China.
Brand Management in China
For many foreign companies, China is one of the most attractive markets in which to conduct business. But MUJI’s case highlights the dilemma that foreign enterprises face in the country.
According to Satoru Matsuzaki, president of Ryohin Keikaku, "The lesson that I have learned from this case is: secure your own rights first when you are considering expanding your business overseas" at a press conference. "It is also important to assert your rights and make people understand them".
MUJI’s case undoubtedly has highlighted the importance of brand management in China.