China: "LAO GAN MA" Trademark Case—The First Judicial Judgment On The Dilution Of A Well-Known Trademark In China

The trademark and unfair competition dispute involving Guiyang Nanming Laoganma Food Co., Ltd. (hereinafter referred to as "Guiyang Laoganma Company") vs. Guizhou Yonghong Food Co., Ltd. (hereinafter referred to as "Guizhou Yonghong Company") and Beijing Auchan Supermarket Co., Ltd. (hereinafter referred to as "Beijing Auchan Supermarket") was selected into Fifty Typical Intellectual Property Cases of Chinese Courts 2017 issued by the Supreme People's Court of the People's Republic of China and Ten Typical Intellectual Property Judicial Protection Cases of Beijing Courts 2017 issued by the Higher People's Court of Beijing. This case attracted high attention from the theorists and practioners in China because it's the first case that Chinese Court determines the infringement of a well-known trademark right by diluting the distinctiveness of the mark.

Beijing Intellectual Property Court (hereinafter referred to as "court of first instance") affirmed the following facts: the Plaintiff Guiyang Laoganma Company is the owner of No.2021191 trademark, "LAO GAN MA" (hereinafter referred to as "involved well-known trademark"). This trademark is approved to be used on the fermented soybeans, chili sauce (flavoring), fried chili oil, etc. in Class 30. This trademark has been identified as a well-known trademark by the Chinese Trademark Offices, Trademark Review and Adjudication Boards and courts for many times. The Defendant Guizhou Yonghong Company is the owner of several registered trademarks of "Niutou brand and picture" which is approved to be used on beef food in Class 29 and was identified as well-known trademarks in 2010. In September 2015, Guiyang Laoganma Company purchased beef sticks (hereinafter referred to as "product alleged of infringement") from Beijing Auchan Supermarket produced by Guizhou Yonghong Company. The trademark of "Niutou brand and picture" owned by Guizhou Yonghong Company is printed on the upper part of its packaging, while the characters "LAO GAN MA FLAVOR" and "LAO GAN MA FLAVORED BEEF STICK" are respectively printed in the middle of the front and behind of the packaging. Guizhou Yonghong Company printed the characters because it has started purchasing bean sauce of "LAO GAN MA" from Guizhou Laoganma Company since 2014 as flavorings for producing the foregoing alleged infringing products.

The court of first instance held that: the Defendant Guizhou Yonghong Company used the involved well-known trademark as the series name of its beef stick product, and described its own product with the involved well-known trademark, so consumers would mistake that there is a certain connection between the product alleged of infringement and Guiyang Laoganma Company. Therefore, the Defendant was adjudged to inappropriately take the advantage of the good reputation of the involved well-known trademark to advertise its own product. Besides, the Defendant Guizhou Yonghong Company used "LAO GAN MA FLAVOR" as a kind of flavor, which may dilute the distinctiveness of the involved well-known trademark and weaken the unique relationship between the involved well-known trademark and Guiyang Laoganma Company, even cause the involved well-known trademark to be generally recognized as a flavor name, which significantly damaging the distinctiveness and identifiability of the involved well-known trademark. Thus the commercial operation from Guizhou Yonghong Company's to label the characters of "LAO GAN MA FLAVOR" is regarded as a dilution of a well-known trademark. The court of first instance made the following judgment: Guizhou Yonghong Company and Beijing Auchan Supermarket are ordered to stop the act of infringement upon Guiyang Laoganma Company, and Guizhou Yonghong Company should compensate for the losses of the Plaintiff.

Guizhou Yonghong Company refused to accept the judgment of first instance, and appealed to the Higher People's Court of Beijing. Upon hearing, the Higher People's Court of Beijing held that the facts were found clearly and laws were applied correctly by the court of first instance, and the first-instance judgment shall be upheld.

In this case, our firm acted on behalf of Guiyang Laoganma Company throughout the whole procedure. By analyzing the act alleged of infringement as well as the objective of the lawsuit of Guiyang Laoganma Company, we proposed the litigation strategy of claiming the act alleged of infringement as dilution of the well-known trademark. The litigation outcome satisfied our client, and effectively safeguarded the legitimate rights and interests of Guiyang Laoganma Company. We hold the point that trademark owners usually paid a huge cost to establish and safeguard a well-known trademark, and it is an important interest of the right holders to maintain such a good brand effect and protect the brand images from being affected and damaged in the eyes of consumers. Once the dilution occurs, the distinctiveness of the well-known trademarks will be tremendously weakened and even no longer exists and the identifiability of such trademarks will also be profoundly influenced such that the function of distinguishing sources of the goods and manifesting goodwill cannot be exerted and the value of the well-known trademarks will be seriously weakened. Thus, it is necessary for the owners of the well-known trademarks to take anti-dilution measures to protect well-known trademarks.

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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