China: Cross-Class Protection Of Registered Trademark Via Judicial Well-Known Trademark Determination

Last Updated: 14 July 2014
Article by Guanbin Xie and Peng Cai

On May 20, 2014,in the first instance decision re H.J. Heinz Company v. Dongguan Heng Shi Education Information Ltd., the Intermediate Court of Guangzhou determined that the trademarks, "HEINZ" and " 亨氏*" registered by H.J. Heinz company ("H.J. Heinz") were well-known trademarks, and uses of the two trademarks by Dongguan Heng Shi Education Information Ltd. ("Dongguan Heng Shi) on its company name, websites and advertisement constituted infringement and unfair competition. (2011) Shui Zhong Fa Min San Chu Zi Di 262.

*" 亨氏", Chinese translation of "Heinz", the two Chinese characters are pronounced as heng shi, and will be described as "Heng Shi" in the following discussion.

Plaintiff, H.J. Heinz Company, is a globally famous food company providing food for infants and children. As early as in March 1998, H.J. Heinz registered the two trademarks in China with registration numbers 1277794 for "Heng Shi" and 1277791 for "Heinz" in class 5, baby food and medical nutritious food. The two trademarks were then exclusively licensed to H.J. Heinz's Chinese subsidiaries that distributed products under the two trademarks throughout China by local distributors. Defendant, Dongguan Heng Shi, was founded in 2007 in Dongguan City, Guangdong Province, and provided education services to children through branches in multiple cities in Guangdong. In 2010, H.J. Heinz found that the defendant had changed its name to Dongguan Heng Shi Education Information Ltd., used logos containing "Heinz" and its correspondent Chinese characters "Heng Shi" at its offices and on English and Chinese advertisement materials, and registered the same two trademarks in question in services such as education, which were different from the registered products in class 5 of the plaintiff. In 2011, H.J. Heinz raised the lawsuit before the Intermediate Court of Guangzhou after necessary and careful evidence collection.

Under the Trademark Law of China, only well-known trademarks can be protected in other different or non-similar products/services than their registered classes of products/services, that is, "cross-class protection". Therefore, since the defendant and plaintiff registered the same trademarks in different classes, the plaintiff firstly requested the court determine that the trademark "Heng Shi" and "Heinz" had been well known in Chin by year of 2010. To support its request, the plaintiff provided adequate evidence in the following 7 aspects.

1.       Distribution and business scopes of the plaintiff and its Chinese subsidiaries, including founding times of the companies, locations, products, business scopes as well as nationwide representative offices in China;

2.       Profits made by the plaintiff's Chinese subsidiaries during 2007 and 2009, and the plaintiff provided sales receipts and added-value tax receipts of its nationwide distributors as well as audit reports made by multiple accounting firms;

3.       Awards and accolades received by the plaintiff's Chinese subsidiaries in China, including a good number of product quality-related awards from 1987 to 2009;

4.       Quality management system certifications of the plaintiff's Chinese subsidiaries, including the ISO9001:2000 certification and food safety management system certifications of different food lines;

5.       Market shares of the plaintiff's Chinese subsidiaries, including infant and children food brand reports made by different marketing research institutes;

6.       Advertisements from 2006 to 2010 invested by the Plaintiff's Chinese subsidiaries, including advertisement agreements and fee receipts with different advertisement companies; and

7.       Reports on the Plaintiff and the Chinese subsidiaries including those about their charity activities.

Taking the evidence into account, the court determined that the two trademarks in question had been well known in China by 2010, and they should be well-known trademarks on class 5, food for infants and children, before 2010. Since parents of infants and children were targeted consumers of both the food for infants and children and the early education for children, the defendant's uses of the trademarks in question would mislead these consumers to believe that the plaintiff and defendant have substantial relationship. As a conclusion, the court ordered the defendant stop activities infringing the plaintiff's trademarks and unfair competition of using its company name containing "Heng Shi".

In this case, the evidence provided by the plaintiff greatly contributed the court to determine the two trademarks in question as well-known trademarks, and other trademark owners who enforce their trademark rights can make reference from the decision. In the event that determination of well-known trademark becomes necessary, the more sufficient evidence the trademark owner provides, the more likely that it would be determined well-known.

On the other hand, this case proved the principle of case-by-case determination of well-known trademark upon the trademark owner's request. In the decision, the court analyzed why the trademarks in question be well known in the part of facts and reasons, instead of deciding it in the part of orders, according to Article 13 of Supreme Court's Interpretations on Several Issues Concerning the Application of Law to the Adjudication of Civil Disputes Cases in Which Protection of Well-known Trademarks is Involved (2009), "In any civil litigation case that involves the protection of any well-known trademark, any determination of the well-known trademark by the Court shall only serve as a fact of the case and ground of adjudication and shall not be included in the text of the judgment." Article 14 of the Trademark Law of China that came into effect on May 1, 2014 also similarly states that "Well-known trademarks shall be ascertained pursuant to the request of the party concerned for the purpose of ascertaining facts for handling of trademark cases."

However, in the event that the same trademark is used by other people or companies without the owner's license in the future, the precedential determination of well-known trademark could be referenced by the court or other administrations as a matter of fact, and mitigate the owner's burden of proof to some extent.

Mr. Guanbin Xie and Mr. Peng Cai of Lifang & Partners represented the Plaintiff, H.J. Heinz Company in this lawsuit.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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