On 30 December 2016, the KWM IP litigation team helped US Deere & Company and its Chinese subsidiary John Deere (China) Investment Co., Ltd. (“Deere China”) win at first instance a lawsuit involving trademark infringement and unfair competition. The Beijing IP Court confirmed that Deere & Company’s trademarks, “JOHN DEERE” in Classes 7 and 12, and “约翰·迪尔” in Class 7 were well-known marks It ordered the three defendants to cease infringement,, make a public statement to eliminate adverse effects, found unfair competition and awarded the plaintiff RMB 5 million in punitive damages and RMB 360,000 in reasonable expenses. On 10 January 2017, at a press release for the second anniversary of the Beijing IP Court, the case was selected as a paradigm of “strengthening judicial protection of IPRs”.

Case brief

Founded in 1837, Deere & Company is one of the largest manufacturers of agricultural machinery in the world. It entered the Chinese market in 1976, established its first Chinese subsidiary, John Deere Jialian Harvester Company Ltd. in 1997, and set up a wholly owned company, Deere China, in 2000. Its registered trademarks, “JOHN DEERE”, “约翰·迪尔”, and “ ” are Deere & Company’s core marks widely used on agro machinery components and parts in Class 7 agro machinery products, Class 12 tractors and Class 4 industrial. Meanwhile, Deere & Company also owns registered trademarks such as “HY-GARD” and “PLUS-50” in Class 4.

The defendant John Deere (Beijing) Agricultural Machinery Co., Ltd. and the other two were actually controlled by the same person, who not only set up a number of copycat enterprises with the name of “约翰迪尔” in China, but also incorporated in Washington State, USA a shell company named “US John Deere Group” (which had been forbidden permanently by the US Federal Court to use Deere & Company’s trademarks and trade names). The defendants had long claimed to be Chinese subsidiaries of the “US John Deere Group”, and through work division and cooperation among themselves, produced and sold industrial oils in China under trademarks identical with or similar to Deere & Company’s registered trademarks, and registered “Jialian Deere” as a trademark in Class 4 (industrial oils). Apart from trademarks, the defendants had used company names, domain names and industrial designs imitating Deere & Company’s marks, and through unfairly competitive means such as false advertising and defamation, had caused material damage to Deere and Company. During the litigation, to turn the facts on their heads, they even brazenly filed a lawsuit against Deere & Company for infringement of their industrial design patent imitating Deere & Company’s IP. To safeguard their legitimate rights and interests, Deere & Company and Deere China brought a lawsuit before the Beijing IP Court against the three defendants for trademark infringement and unfair competition.

Highlights of this Case

(I) It makes it clear that protection for well-known marks is more than cross-class protection. Where an ordinary trademark imitates a registered well-known trademark on the same or similar product and constitutes trademark infringement, the courts may consider the case under Article 13 of the Trademark Law.

The law provides stronger protection for well-known trademarks than ordinary trademarks, and this is reflected in Article 13 of the Trademark Law. The common understanding of this Article is that it protects a well-known unregistered trademark as if it were an ordinary registered trademark and protects a well-known trademark across different classes. In fact, the protection under Article 13 of the Trademark Law for well-known trademarks is not limited to protection under Article 13. It is also reflected in Article 11 of the Supreme People's Court Interpretation on Several Applications of Law Issues in the Handling of Civil Disputes Involving the Protection of Well-known Trademarks (“Judicial Interpretation on Well-Known Trademarks”). According to the Interpretation, any infringement dispute involving ordinary trademarks should first be submitted to the competent administrative authority for resolution, and the dispute may not be directly accepted by the court[1]. However, according to Article 11 of the Judicial Interpretation on Well-Known Trademarks, where the defendant’s registered trademark violates Article 13 of the Trademark Law by copying, imitating or translating the plaintiff’s well-known trademark, and thus constitutes trademark infringement, the court may directly accept and decide the case[2]. However, protection given by Article 13 of the Trademark Law in a dispute between a registered trademark and a well-known trademark is “cross-class protection”. If a well-known trademark is imitated by an ordinary registered trademark on the same or similar product, does Article 13 of the Trademark Law apply? In other words, is protection for well-known trademarks under Article 13 of the Trademark Law limited to “cross-class protection”? The Trademark Law and the Judicial Interpretation on Well-Known Trademarks do not provide for that exhaustively. This article discusses this legal issue.

The court held that Article 13 of the Trademark Law provides cross-class protection for well-known trademarks when registration of a trademark is sought, and it is intended to provide stronger protection for well-known trademarks than for ordinary trademarks. Though Article 13 does not expressly provide for the circumstance where an ordinary trademark copies, imitates or translates a well-known trademark registered in China on the same or similar product, considering the legislative intent and natural interpretation of the law, such circumstance is more worthy of protection under Article 13 than the copying, imitating or translating a well-known trademark registered in China on a different or dissimilar product. The Supreme People’s Court administrative order [(2011) Zhi Xing Zi No. 15] also confirms that since Paragraph 2 of Article 13 of the Trademark Law is applicable to registration of a trademark for a different or dissimilar product, it is certainly applicable to registration of a trademark for the same or similar product. Similarly, because under Article 11 of the Judicial Interpretation on Well-Known Trademarks, a court may directly hear any dispute between a well-known trademark and an ordinary trademark on different or dissimilar product, based on the stronger protection for well-known trademarks, this supports the court’s jurisdiction to handle a dispute between a well-known trademark and an ordinary trademark on the same or similar product, under Article 11. Therefore, the protection under Article 13 of the Trademark Law for well-known trademarks should not be limited to cross-class protection. In respect of a dispute between a registered well-known trademark and a registered ordinary trademark on the same or similar product, the court may apply Article 13 of the Trademark Law in accordance with Article 11 of the Judicial Interpretation on Well-Known Trademarks.

For the above reasons, when it was found that the defendant’s trademark “Jialian Deere” registered in Class 4 (industrial oils) was similar to the plaintiff’s well-known trademark of “JOHN DEERE” No. 206346, and trademark of “约翰.迪尔” No. 7879578, in Class 7 (agricultural machinery) as well as the plaintiff’s well-known trademark “JOHN DEERE” No. 206347 in Class 12 (tractors), the court ruled that the defendant’s use of its registered trademark “Jialian Deere” constituted copying, passing-off or translation of the plaintiff’s well-known trademarks of “JOHN DEERE” and “约翰.迪尔” , and should be prohibited.

(II) It confirms the judicial policy to strengthen the protection of IP. In a single case it found several infringements, recognized three well-known trademarks, applied punitive damages, and admonished the defendant for withholding evidence.

1. Wrongdoing constituted several infringements

This is a case involving “comprehensive, multiple-level and in-depth” malicious infringements. The infringements committed by the three defendants and their actual controller involved trademarks, domain names and trade names. They also engaged in unfair competition by means of false advertising, and defamation. The court ruled that the defendants committed several infringements, including trademark infringement and unfair competition, and it moved to fully protect the plaintiff’s legitimate rights and interests.

2. Recognition of three well-known trademarks in one case

In order to fully protect the plaintiff’s IP, the court recognized three trademarks of Deere & Company as well-known trademarks. The plaintiff provided substantial evidence to prove the three trademarks in question were well known, including product sales contracts and invoices, advertising contracts and invoices, financial audit reports, industry awards and certificates, and media coverage etc. The court decided that such evidence was sufficient to prove that the plaintiff’s trademarks, “JOHN DEERE” No. 206346 and “约翰.迪尔” No. 7879578 in Class 7 (agricultural machinery), and “JOHN DEERE” No. 206347 in Class 12 (tractors) constituted well-known trademarks.

3. Application of punitive damages, and admonition of the defendant for obstructing the provision of evidence

This is another typical case where the Beijing IP Court has granted punitive damages based on the circumstances and according to the allocation and determination rules of burden of proof with respect to infringement damages under Article 63 of Trademark Law. The plaintiff claimed that damages should be determined based on the profits of the defendants from the infringements, and punitive damages should be granted. The total amount of damages claimed by the plaintiff was RMB 5 million. In this regard, the collegiate bench gave both parties a full opportunity to provide evidence. The plaintiff provided full evidence through various available channels of collecting proof, and submitted the basic data and computation logic for the amount claimed. However, the defendants refused to submit the accounting books and documents relating to the infringements during the trial, and the court explained to the defendants many times the burden of evidence under Article 63 of the Trademark law. But the defendants still failed to provide the books and documents. The court decided that the defendants withheld and concealed sales evidence adverse to them, and this constituted obstruction of proof of damages. In its decision the court took into account that the defendants committed infringements in various ways, there were many infringing trademarks involved, the infringements were comprehensive and also involved unfair competition, and, particularly, the infringements continued after an administrative penalty was imposed, the circumstances were severe, and the intent was malicious. Consequently the court fully supported the plaintiff’s claim for damages of RMB 5 million, and the reasonable expenses of over RMB 360000, after verifying and adjusting the plaintiff’s computation formula, and admonishing the obstruction of proof of damages by the defendants.

This case was handled by the team of Judge Zhang Lingling of the Beijing IP Court. Since the infringements were complex and the amount of evidence large, the collegiate bench arranged for the parties to present and examine the evidence on a number of occasions. The court provided a full opportunity to both parties to provide proof of evidence, and patiently and carefully sorted out the evidence and investigated the facts. This first instance decision is over 70 pages long, and sets out the detailed investigation of the facts, and a sound analysis of relevant legal issues. The decision cracks down powerfully on a malicious long term passing off which behaviour is hated by the business community. It represents the determination of our judiciary to “strengthen the protection of IP firmly”, and boosts the morale and confidence of lawful operators in the market.