Recently, Hangzhou Intermediate People’s Court made the first instance judgment of the trademark infringement case initiated by Shantou Chenghai Jianfa Handbag Craft Factory (hereinafter referred to as “the plaintiff”) against Michael Kors Trading (Shanghai) Co., Ltd. (“Defendant 1”), Michael Kors (Switzerland) International GmbH (“Defendant 2”), Zhejiang Intime Department Store Inc. (“Defendant 3”), and Beijing JD Century Trading Co. Ltd. (“Defendant 4”), and rejected all the claims raised by the plaintiff Shantou Jianfa. The first instance proceedings of this case, one of the cases where the number of damages (CNY 95 Million) claimed is the highest in the history of trademark infringement case, has been eventually concluded.

Simon Tsi and Micheal Fu, partners from Chang Tsi & Partners, on behalf of Defendant 1 and Defendant 2 in the case, responded to the lawsuit, and filed a lawsuit separately before the same court against Shantou Chenghai Jianfa Handbag Craft Factory regarding its acts of trademark infringement and unfair competition, which is still pending at Hangzhou Intermediate People’s Court.

About the brand “MICHAEL KORS”

Michael Kors is a world-famous designer in luxury accessories and garments. He founded a company in his name in 1981 and officially launched the brand MICHAEL KORS accordingly. The products cover women series, men series, handbags, footwear, accessories, gifts, and so on. Through more than 30 years’ growth, MICHAEL KORS has become a globally well-known fashionable luxury brand and enjoyed a high reputation in China. According to 2014 China Luxury Market Research released by Bain & Company, the brand MICHAEL KORS ranks the second place among attractive emerging luxury brands. MICHAEL KORS always delivers a gorgeous, delicate and confident JET SET lifestyle and provide the customers with the delicate and casual as well as classic and modern luxury lifestyle experience.

Background of the case

Shantou Chenghai Jianfa Handbag Craft Factory (plaintiff in the case; hereinafter referred to as “Shantou Jianfa”) filed an application for registering the trademark  in Class 18 in 1997, which was granted for registration in 1999 with designated goods including various bag related goods. The client Michael Kors (Switzerland) International GmbH (Defendant 2 in the case; 

hereinafter referred to as “Michael Kors”) created the logo  in 2000 based on the initial letters of its trade name and house mark “MICHAEL KORS”, and created two logos  and  (hereinafter collectively referred to as “MK logos”) in 2007, and subsequently used the logos on bags. However, as of the date this case was initiated, Michael Kors has not been granted the registration of MK logos on bags covered by Class 18.

 

Before initiating this case, the plaintiff premeditated a series of actions, such as initiating invalidity action against the registration of “MK MICHAEL KORS” (Registration No.: 3603887; Int. Class: 18) owned by MICHAEL KORS  based on its prior registration of the mark  so as to acquire, from Michael Kors’ defense, the sales revenue information of MICHAEL KORS branded products, which was used as the calculation basis for the damages it claimed ;  ; conducting administrative raid actions and filing civil lawsuits against some small-scale shops selling MICHAEL KORS products based on the trademark  as the right basis for the purpose of obtaining administrative penalty decisions and civil judgments or mediation decision, so as to support the plaintiff’s allegation that both parties’ trademarks constitute confusing similarity.

 

After making all preparations, the plaintiff filed a lawsuit against Michael Kors and its subsidiary company in China (“Defendant 1”) and the other two retailers (Defendants 3 and 4) before Hangzhou Intermediate People's Court on the ground that Michael Kors ’ use of a series of MK logos infringeed the plaintiff's exclusive right of the registered trademark , requesting the defendants to cease infringement, and claiming for an extremely high amount of damages (Defendant 1 and Defendant 2 shall jointly compensate the plaintiff for CNY 95 Million). (Please refer to the below chart for the comparison of the involved marks)

Difficulties of the case

Complexity: The complexity of the case is reflected in the following aspects:

First, Shantou Jianfa owns the registration of the trademark  which was granted in 1999. However, Michael Kors' MK logo was created and put into actual use as early as 2000. Therefore, the commonly used defenses basded on prior usage and prior rights cannot apply to this case.

Second, the plaintiff was aware of the MK logod used by Michael Kors long ago, but it did not rush to file a lawsuit. Instead, the plaintiff officially sued Micahel Kors before the court and claimed for a high amount of damages after completing sufficient preparation work.

Third, the plaintiff also racked its brains in choosing a competent court for the case. Since one of the plaintiff’s important allegations in the case is reverse confusion, the plaintiff chose Hangzhou Intermediate High People’s Court as the competent court by means of choosing the distributor being sued for the purpose of ensuring the court would support its reverse confusion claim to the most extent.

➤ Importance: Michael Kors’ MK logos as the distinctive business logos thereof has been used synchronously and consistently around the globe for many years, and has established acorrelation one-to-one correspondence with the brand MICHAEL KORS. If the Michael Kors’ act of using the MK logs is recognized as infringement, Michael Kors shall not only have to pay a huge amount of damages, but also its future business development in China will alsobe impacted severely . Therefore, the case is indeed a key battle with no way to retreat for Michael Kors.

Highlights of the case

➤ The court was successfully persuaded to recognize that the coexistence of the MK logos used by Michael Kors and Shantou Jianfa’s trademark  in the market will not cause confusion among the relevant publics by presenting a lot of evidence regarding the differences of the trademarks itself, distinctiveness and reputation of corresponding trademarks, degree of attention of relevant publics, evidence for actual confusion, the actual use and bona fide use of the accused infringing logos, etc.

Evidence actual confusion by entrusting an authoritative company to conduct a market survey regarding confusion of the involved marks has been eventually accepted by the court.

The evidence provided by the plaintiff was carefully analyzed and was used to rebut the plaintiff’s claims.

➤ Defendant 2 in the case filed a separation litigation against Shantou Chenghai Jianfa Handbag Craft Factory before the same court in terms of the its acts of trademark infringement and unfair competition so as to prove the plaintiff’s bad faith for filing the lawsuit in the case.

Meanwhile, Michael Kors filed a civil action against Shantou Jianfa’s infringing act, requesting Shantou Jianfa to bear corresponding legal responsibilities.

Result of the case

➤ All claims raised by Shantou Jianfa are rejected.

Significance and impact of the case

➤ This is a typical case where a small Chinese company filed a lawsuit against a transnational company in terms of trademark infringement and claimed for a huge amount of damages. Due to our work, we effectively safeguard the client's commercial interests and maximize the client's legitimate interests.

➤ It can be seen from the whole trial process of this case that people’s courts have increasingly improved capability for handling complex IP infringement cases and their rapid and fair judgment demonstrates the people's courts' fairness and justice as well as diligence and efficiency.

➤ The fair trial of the case reflects the Chinese government’s good image of paying high attention to IP protection. China will further improve the system and mechanism, and laws and regulations for IP protection, thereby providemore powerful and effective protection for investors and right holders.

➤ The fair trial of the case will certainly enhance foreign companies’ confidence in investment in China. It is our belief that a good legal environment will protect the economic development.