Both Microsoft and BMW had recent success in China enforcing their intellectual property rights. These cases demonstrate that the Chinese courts are trying to increase their enforcement efforts related to intellectual property violations, including piracy and trademark infringement.

Microsoft v. Dazhong Insurance, Shanghai

In the Microsoft case, Microsoft challenged Dazhong Insurance, a large Chinese insurance company claiming that the company used more than 900 sets of illegal copies of Windows and Office series software. The Shanghai Pudong New Area district court agreed, finding Dazhong guilty and sentencing the company to pay Microsoft $318,000 in damages.

The dispute between the companies is one that developed over several years, as Microsoft said that it made repeated requests between 2008 and 2009 for Dazhong to stop infringing. Dazhong did not actively respond and continued with the use of the pirated software.

This case marked one of Microsoft’s biggest victories to date in its fight against piracy. While Microsoft has been involved in criminal cases against software pirates in China, the suit against Dazhong was the first time that Microsoft sought recourse in the civil court. Yao Xin, China head of the Business Software Alliance, an international industry body, hailed the court decision as a sign of Chinese authorities’ determination to crack down on piracy.

Microsoft has had other victories in China. In one major case last year, Microsoft challenged the creators of a web site that were distributing copies of an altered version of one of its Windows operating systems. According to the evidence provided by Microsoft, the web site, Tomato Garden, generated at least hundreds of thousands of dollars in advertising revenues by offering pirated software for free. Microsoft brought the case in the criminal court, and the court responded by sentencing the creators to fines and prison sentences.

Dazhong plans to appeal the decision.

BMW v. Century Baoma, Beijing

In the BMW case, BMW Automobile Company challenged Century Baoma Company, an apparel company, regarding its use of a MBWL logo that was similar to its famous BMW design logo. The dispute between the two companies began when BMW came across clothes with the MBWL logo, shown below, on sale in a shopping mall in China. The clothes were produced by the defendant, which had franchised nearly 300 stores nationwide by 2007, making close to 100 million yuan in annual sales.

BMW challenged the company for trademark infringement and unfair competition. The court found that Century Baoma changed the MBWL design and made it more like the BMW logo and ordered the defendants to stop selling the infringing products and using the disputed mark. In that case, BMW was awarded 500,000 yuan, the maximum under the current legal system when profits made by infringers are not known.

This case is notable because it is one of the few times that a Chinese court has found that three trademarks are considered “famous” in China. After securing such status, a registered trademark has protection beyond the field where it gained its fame. The marks, “BMW”, “BMW & Device,” and the Chinese characters “Baoma” are all well-known trademarks and have been used in China on clothing by BMW Lifestyle company since 2001.

“By confirming their well-known trademark status, we hope to give such famous brands wider and stronger judicial protection,” Presiding Judge Sun Yuanqing told China Daily.

BMW also had a victory in the trademark cancellation action. BMW challenged the company at the TRAB, the Chinese trademark office, which cancelled the mark, explaining that it had similar visual affects and could mislead the public if used on similar goods. Century Baoma appealed the decision to Beijing First Intermediate Court, which recently made the decision to reject the appeal.  

Please click here to view marks.

The case draws attention to “shadow companies,” which are companies that are founded to serve as a tool for another company. Shadow companies attempt to register a brand that is based upon a famous brand and then set up a business based on that brand. The overseas shadow company then franchises a firm on the mainland in China - actually the real maker of the infringing products - which in turn does illegal business under the brand. The intent is to fool domestic consumers with an imported brand.