In September 2011, Cartier, the famous luxury jeweler and watch manufacturer, won a trademark infringement and unfair competition lawsuit in Shanghai Intermediate People's Court (Court) against three ceramics manufacturers, Foshan Mingkun Ceramics Co., Ltd., Kingsyoma Decoration Materials Co., Ltd., and the Shanghai Chapter of Individual Business Households Cloud Tree Ceramic (collectively, ceramics manufacturers).
Owners of famous brands can obtain well-known mark protection in China provided they can demonstrate that their trademark is widely known by and enjoys a relatively high reputation in the relevant Chinese marketplace.
As demonstrated in the following two cases involving the Cartier trademark, well-known mark status affords a brand owner broad protection that can prevent a third party from using an identical or similar mark on goods that are similar, or even unrelated, to those that bear the mark of the brand owner.
Watch Out: A Tale of Two Cartier Trademark Cases
In 2003, Kentier applied to register the mark “Cartier Ken Di Ya” for use in connection with wood flooring. “Ken Di Ya” appeared in Chinese characters and is recognized as the Chinese equivalent of the term Cartier. Cartier opposed registration of the mark, arguing that the marks were highly similar and confusion in the marketplace was likely.
The China Trademark Office (CTMO) found that the goods of the parties were dissimilar and, notwithstanding the similarities in the marks, that the Cartier trademark was recognized as a well-known mark prior to Kentier's filing of its trademark application with the CTMO. Accordingly, Cartier's trademark rights extended only to the goods to which its mark was registered, and Kentier's mark proceeded to registration. Cartier then sued Kentier for trademark infringement and unfair competition in Beijing. During the course of litigation, Cartier's trademark was recognized as a well-known mark by the CTMO, but years later in 2008, Kentier again prevailed in the civil suit by demonstrating that it had acquired a trademark registration before Cartier had achieved well-known mark recognition. To date, Kentier continues to use the Cartier mark in connection with its wood flooring products.
Time for a Change
Interestingly, just one year later, in 2009, Cartier challenged use of the Cartier mark by a Guangdong-province-based company that was manufacturing ceramics products and selling them in Shanghai. Advertising and marketing brochures for the products boldly featured the Cartier mark as part of the name for a product line. Cartier accused the ceramics manufacturers of trademark infringement, arguing that use of the Cartier mark was intended to mislead the customer and give the impression of a connection between their products and genuine Cartier goods. The ceramics manufacturers countered that the Cartier mark is not registered for use on ceramic products, is not a well-known trademark in China, and accordingly is only entitled to the protection that extends to the class in which it is registered.
Even though the mark was previously recognized in 2004 by the CTMO as well known, under Chinese law, because the defendant objected to this designation, the Court was required to review the mark's current status. Cartier, having the burden of proof, provided evidence that the mark was “still” well known in China. The Court, persuaded by the evidence, found that the Cartier trademark was still well known in the relevant Chinese marketplace and should be afforded a broad scope of protection. Accordingly, the Court ruled that the defendants deliberately infringed Cartier's trademark even though the defendants' ceramic products were significantly different from, and did not share the same international classification with, the Cartier goods (jewelry and watches). Accordingly, the Court awarded Cartier damages of RMB 500,000 (approximately U.S. $78,000).
Keep Watch on a Mark's Well-Known Trademark Status
In the two Cartier cases, the defendants used the Cartier trademark on products classified in different categories than the goods for which Cartier owns trademark registrations (jewelry and watches). The scope of protection that was afforded the Cartier trademark was influenced by the status of the Cartier trademark. Kentier sought trademark protection for the “Cartier Ken Di Ya” mark before Cartier was recognized as a well-known mark, and therefore the scope of protection was narrow. In the ceramics case, the watchmaker prevailed, mainly because the Cartier mark was recognized as a well-known mark on or before the ceramics manufacturers began using it. The different outcomes demonstrate that obtaining well-known mark recognition plays an important role in trademark enforcement in China.
China Trademark Law bars a third party from using or registering a copy, translation, or imitation of a well-known trademark on identical or similar goods. Compared with a traditional trademark, a broader scope of protection is afforded so-called well-known trademarks because protection is not limited to the category in which the mark is registered. Well-known mark status can be recognized by administrative determination or by a judicial finding. For an administrative determination, the applicant must submit evidence to the CTMO during examination or the Trademark Review and Adjudication Board (TRAB) during a trademark opposition proceeding. During a trademark infringement or unfair competition case, a trademark owner also may present evidence that a mark is well known.
In practice, the trademark owner must present sufficient evidence to the CTMO, TRAB, or the courts to prove a trademark's well-known status in the China market. This evidence may include promotional materials and advertisements made in China in the past five years; media reports and press releases regarding the trademark; marketing and advertising spending; brand protection activities; brand survey results; entry, expansion, and investment in the Chinese market; trademark registration in China; and prior administrative or judicial findings involving the status of the mark.
In asserting a claim for well-known mark status, trademark owners should bear in mind three principles recognized by the courts: passive, necessity, and case-by-case. The CTMO, TRAB, or the courts do not recognize well-known mark status voluntarily. The courts act “passively,” meaning the judge will not grant well-known mark status when the status of the mark is immaterial to the outcome of the case. If the traditional trademark protection suffices to resolve the dispute, TRAB or the courts will not consider the applicability of the well-known trademark doctrine, because it is unnecessary to do so. Finally, even if the trademark was previously recognized as a well-known mark, one cannot obtain permanent well-known mark status. The courts will determine, on a case-by-case basis, whether the trademark is still well known.
According to the PRC Supreme People's Court (SPC) Judicial Interpretation of Several Issues Regarding Application of Laws in Well-Known Trademark-Protection-Related Civil Disputes, only certain courts at the intermediate level or above located in provincial capitals or other designated cities have jurisdiction over cases to determine well-known mark status. One court is not bound by a well-known mark finding of another court; however, in practice, a well-known mark status recognition found in a Beijing or Shanghai court will strongly influence decisions by other courts.
High Time for Trademark Vigilance
Where appropriate, trademark owners should be vigilant in seeking and maintaining well-known mark status. Keeping trademark-usage evidence as part of a routine brand protection strategy protects brand owners should the status of their well-known mark recognition be challenged. Having a strategy in place to monitor and safeguard this evidence of use is equally important because according to the Third Draft of the new China Trademark Law, evidence of three years of trademark use in the Chinese territory is required for a brand owner to receive damages in trademark infringement litigation.