Italy: Protection Against Trade Mark Infringement In China Seen From The Italian Perspective: Ariston Thermo China Co Ltd And M&B Marchi E Brevetti Srl v Foshan Shunde A Li Si Dun Electric Appliance Co Ltd

Last Updated: 7 March 2012
Article by Agata Sobol and Federica Santonocito

Reprinted from E.I.P.R Issue 10, 2011

This is a comment regarding a judgment obtained by an Italian company (M&B Marchi e Brevetti, which is part of the Ariston group) and its Chinese subsidiary (Ariston Thermo China Co Ltd) having a long-term presence in China and specialising in the manufacture and marketing of household water heaters. An interesting aspect of this case is the fact that the Shanghai Court judges have punished quite severely the trade mark infringers using a similar mark which is particularly well known to the Chinese public, even though it is not one of the "celebrity" brands, typical of fields like fashion and luxury goods.1

Background

The Italian group Ariston, one of the world's leaders in the production and marketing of water heaters bearing the same brand, has faced serious trade mark infringement in the Chinese market. The infringer was a company from Foshan city, called Shunde A Li Si Dun Electrical Appliance (A Li Si Dun—is the Chinese equivalent of the word "Ariston").

The Chinese company produced and advertised water heaters bearing the brand name "A Li Si Dun" and "Arizhu + house device" which was similar to the Ariston registered trade mark (see the comparison between the two trade marks in Figures 1 and 2 below). It was also the proprietor of a domain name very similar to a Chinese version of the Ariston brand (http://www.arisitun.com [Accessed July 18, 2011]). The products of that company presented serious problems: the Chinese press reported circumstances in which the explosion of water heaters caused serious injury and even death to consumers, and reference was always made to the "A Li Si Dun" trade mark, exactly the same as Ariston's Chinese brand.

Figure 1 The Ariston trade mark

Figure 2 The Arizhu trade mark

In early 2010, two companies of the Ariston group (the Italian holder of the Ariston trade marks portfolio and the Chinese branch company) filed a civil suit before the Shanghai Court against the infringer and its Shanghai distributor, claiming trade mark infringement and unfair competition, and seeking injunction, damages and publication, on the part of the infringers, of a statement in the local press aiming to eliminate the negative effects of the confusion that had arisen between the signs and to restore the good reputation of the Ariston brand in China. Since the Ariston group has been manufacturing and marketing its products on the Chinese market for more than two decades and has invested considerable amounts in advertising of its brand, all relevant documents were filed in order to show the judges that the brand was important and well known (which increased also the prejudice suffered by the Italian group due to infringement).

Judgment from the Shanghai Court

The judgment was rendered at the end of February 2011, in less than one year. The panel of judges held that both the "A Li Si Dun" and the "Arizhu + house device" signs used by the defendant infringed the plaintiff's registered trade marks. In particular, as far as the earlier sign is concerned, the Shanghai Court stated that A Li Si Dun is the dominant element of Ariston's complex trade mark (composed of the words Ariston and A Li Si Dun as well as of the house device; see Figure 1), owing to the fact that its being written in Chinese characters attracts more attention from Chinese consumers. Therefore the "A Li Si Dun" sign, even used without other elements, still interferes with the complex Ariston trade mark. With reference to the "Arizhu + device" sign, the court declared it was sufficiently similar to the plaintiff's "Ariston + device" trade mark to cause a risk of confusion for consumers when used on the same kind of product.

As a consequence, the judges issued an injunction enjoining both Chinese companies from using both signs on the products, on advertising materials, as a domain name (which was also found infringing, as "arisitun" was very similar to "alisidun") and as a company name. The infringing manufacturer was also condemned to provide compensation for the prejudice caused to Ariston, in the amount of RMB 300,000 (approximately $45,000, which is an important amount of statutory damages according to Chinese standards), and to the publication of a statement, to be approved by the Shanghai Court, on two national newspapers.

The judgment also confirms that the Ariston water heaters and the Ariston brand enjoy a high reputation among Chinese consumers, but the official declaration of the status of well-known trade mark was denied owing to the fact that in this particular case the declaration of infringement did not require the recognition of such a status.

Comment

The judgment here at issue confirms that foreign companies can count on a fast and efficient system of justice in China, which has improved in the past few decades as far as intellectual property law is concerned. The point that could be highlighted is the problem of recognition of the trade mark's well-known status.

It might sound surprising that while the declaration of that status was denied in the judgment, the judges, however, expressly confirmed the "high reputation" of the ARISTON trade mark in China. It is thus possible that the owner of a famous (and indeed well-known) trade mark can see its request for recognition of well-known status rejected. Therefore the "high reputation" of a mark either is not sufficient in order for that mark to be officially considered well known in China or it is sufficient but in the Ariston case there arose further issues that excluded any possibility of well-known status recognition. Let's see which one of these two options applies here.

Definition of well-known trade mark in China China's current discipline of well-known trade marks has been established by a set of laws and regulations providing the proprietors of such marks with a unique instrument to enforce their rights before both public administration institutions and courts, in cases where trade marks which are not well known could not find protection.

More specifically, the concept of a well-known trade mark was introduced into Chinese law as part of the second revision of the Trademark Law in 2001. Article 14 of the Trademark Law sets out relevant factors that must be taken into consideration when determining whether a mark is well-known: (1) reputation of the mark among the relevant public; (2) period of time in which the owner has made a continuous use of the mark; (3) period of time, extent and geographical area of advertisement of the mark; (4) already obtained decisions or judgments referring to the protection of the mark as a well-known mark; and (5) any other factors relevant to the mark's reputation.

The complete definition of "well-known trademark" was introduced in 2003, in the Act entitled "Recognition and Protection of Well-Known Trademarks Provisions" (the Provisions) by the State Administration for Industry and Commerce (SAIC). According to r.2 of these Provisions:

"A well-known trademark refers to a trademark that is widely known to the relevant sectors of the public and enjoys a relatively high reputation in China. Relevant sectors of the public shall include consumers of the type of goods and/or services to which trademark applies, operators who manufacture the said goods or provide the said services, and sellers and other persons involved in the channels of distribution of the type of goods and/or services to which the trademark applies."

The requirements seem to be two:

  1. high reputation in the entire country;
  2. wide knowledge of the trade mark among interested consumers and on the market for the reference products.

Of the two, the earlier one appears more important, since the nationwide reputation is surely more difficult to obtain than the recognition on the market in which one operates. It must be added that a mark need not be well known in every Chinese region, although a strong reputation in only one or few regions may not be sufficient. For this reason, foreign companies operating in China register trade marks also in their Chinese transliteration. Certain overseas enterprises even choose to combine their Western (usually well-known) mark with its Chinese version, as Ariston did (see the trade mark in Figure 1). In this way, they make it easy for Chinese consumers to identify and remember their distinctive signs, which is the first step in order to acquire reputation (according to a 2008 ruling of the Beijing Higher People's Court, a mark's foreign reputation will be given only a little weight when determining whether it is well known, since reference should be made to its recognition among Chinese consumers).

In the light of the above, it seems that the confirmation of the Ariston brand's high reputation in the judgment here at issue is actually the confirmation of its well-known character. Therefore the reason for the refusal to officially declare that circumstance was merely formal and due to very restrictive rules for the recognition of well-known trade mark status.

As far as the rules are concerned, they are slightly different depending on the type of procedure followed by a trade mark owner in order to obtain a declaration of well-known status. In the Ariston case, the recognition of that status was requested before a court (namely the Shanghai Court) but such a request can be also made, as an alternative, before an administrative authority.

In any case, in relation to both these procedures, new and more detailed rules were introduced in April 2009, in accordance with the 2001 Trademark Law and its Implementing Regulations. More specifically, both SAIC and China's Supreme People's Court have released two documents that aim to regulate, clarify and standardise the rules and procedures governing the recognition of well-known trade marks throughout China. To this aim, SAIC issued the "Detailed Rules on the Recognition of Well-Known Trademarks" (the Detailed Rules) to be applied before administrative authorities (mainly the Chinese Trademark Office and TRAB, these being SAIC subsections). The Supreme Court released the "Interpretation on the Application of the Law Concerning Several Issues Regarding the Trial of Civil Disputes Related to the Protection of Well-known Trademarks" (the Civil Disputes Interpretation), to be applied in judicial proceedings.

Generally speaking, the well-known status of a trade mark is examined by authorities (either administrative or judicial) only if this is deemed necessary in order to carry on the main proceeding. Let's see exactly what is meant under "necessary".

Well-known trade mark recognition before the courts

According to the Chinese Supreme Court, it is possible to claim for a declaration of well-known status where the plaintiff's trade mark is registered in China and the infringer uses it (or a similar mark) for different products or where the plaintiff's trade mark is not registered in China but is being used by the infringer. If this is the case, the plaintiff should file all necessary evidence in order to demonstrate that its (registered or unregistered) trade mark is well known to Chinese consumers.

More in detail, in case of proceedings before civil courts, the Civil Disputes Interpretation clarifies the cases in which the well-known status of a trade mark may or may not be examined:

  1. the infringed well-known trade mark is not registered in China but is used and widely known by the Chinese public;
  2. the infringed well-known trade mark is registered, but for goods or services other than those for which the infringer uses an identical or similar mark (for instance, Eastman Kodak Co v Hangzhou Meichi Trading Co Ltd, a case before the Changsha Intermediate Court);
  3. the infringer uses the plaintiff's well-known trade mark as a company name (Shanghai Starbucks Coffee Co Ltd and Shanghai Sturbucks Coffee Nanjinglu Road Subsidiary v US Sturbucks Corp and Shanghai Unite Sturbucks Coffee Co Ltd, case before the Courts of Shanghai. The second instance court decision was rendered on December 20, 2006);
  4. the defendant in an infringement case counterclaims that the enforced trade mark is a copy of its unregistered well-known trade mark.

To the above mentioned situations, one may also add disputes on domain names registered in violation of earlier well-known trade marks. Nevertheless, the judicial practice shows that the status of well-known trade mark was recognised only in few domain name cases (the website associated with the disputed domain name must be engaged in commercial activities relating to goods and services other than those of the enforced trade mark, just as requested in the case under (ii) above).

Moreover, a competent court will deny declaration of the well-known status of a trade mark where:

  1. the trade mark infringement or unfair competition could be established even though the enforced mark was not well known (in other words, where the infringing marks are used for identical or similar products and where the enforced mark is duly registered in China);
  2. trade mark infringement or unfair competition could not be established because other requirements necessary for their recognition (other than those concerning the well-known trade mark) were not fulfilled.

Well-known trade mark recognition before administrative authorities

As far as administrative proceedings are concerned, the competent authorities will recognise the well-known status of a trade mark where the owner of the said trade mark files:

  1. an opposition proceeding against the registration of a third party's identical or similar mark (before the Chinese Trademark Office);
  2. a cancellation proceeding (before TRAB);
  3. a request for the AIC (Authority of Industry and Commerce) to act against an infringer (generally the authority makes a raid and issues an injunctive order).

Final remarks

Therefore in China the well-known status of a trade mark will be officially declared only if this is strictly necessary in order to decide the specific case in which such a request has been made by the trade mark owner. If the case can be decided without that declaration, namely if the infringement exists even for a mark that is not well known, the request will be rejected. This is exactly what happened in the Ariston case: since the enforced marks were all duly registered in China and since the infringers' products were identical to those for which the marks had been registered, there was no need to analyse documents concerning the mark's reputation among the Chinese public and to declare this specific status in the judgment.

From that perspective, the approach followed in China (well-known status of a trade mark will be examined only in cases where it is deemed necessary) is completely different from the one of the European courts, the latter always analysing and taking into consideration the well-known status of a trade mark, where this is adequately proved by the interested party. Indeed, according to Recital 10 of the Preamble to European Directive 89/104 on trade marks, the appreciation of likelihood of confusion depends on numerous elements and, in particular, on the recognition of the trade mark on the market. The European trade mark discipline thus links the recognition of distinctiveness with the likelihood of confusion of a trade mark (the more distinctive the mark, the likelier the risk of confusion), so that the well-known status must always be considered, where existing. In European law, the high distinctiveness due to the knowledge of a trade mark among consumers will always have a positive influence on the assessment of the likelihood of confusion.2 This is not the case in China: the widespread knowledge of the trade mark among consumers will play an important role only where it is otherwise impossible to declare the existence of a risk of confusion. This difference is due to the fact that the Chinese declaration of well-known status of the mark has really important consequences for its owner.

More specifically, obtaining well-known status is extremely useful for the future enforcement of their trade marks. Indeed, once it is declared well known, a mark enjoys the cross-class protection and the infringement litigation seems to be less complex (including more considerable damage compensation). Furthermore, the rights and privileges of well-known trade marks recognised by the Chinese authorities are obviously higher than those enjoyed by proprietors of marks that are not well known. Indeed, the earlier are protected under the Trademark Law even if they are not registered (in accordance to the Paris Convention) and they can be enforced for unfair competition against an infringer in order to obtain an injunction enjoining the infringer from using the mark as a domain name, whereas this measure cannot be used to protect trade marks that are not well known (in other words, there is no "anti-cybersquatting" protection for regular trade marks). Therefore acquiring well-known status provides a strong protection in the Chinese trade mark law, wider than the European one where well-known status only grants cross-border protection.

It should be added that acquiring well-known status for a trade mark is not that easy. Indeed, in the past few decades the recognition of well-known status has become an important objective for the owners of well-known trade marks and the cases have become so many that the Chinese Supreme Court decided (in 2008 and 2009) to limit the access to this special status in order to avoid any sort of abuse. This limitation led to the establishment of grounds and cases in which such a declaration may be applied for (as set forth before). Administrative proceedings, too, were reviewed in 2009 (in the "Working Rules" issued by SAIC).

Nevertheless, in the past few years many companies have tried to achieve recognition for their brands, applying for an official confirmation of this status in cases of civil or administrative litigation concerning their marks. The first trade mark to be recognised as well known in China was the foreign trade mark PIZZA HUT; the decision was rendered in 1987, during an opposition proceeding against the registration of a third party's similar trade mark. In 1989 the Chinese authorities recognised the first well-known Chinese trade mark (TON REN TANG). Subsequently, many other marks were declared to be well known, including NISSAN, BAYER, TISSOT, YSL, CARTIER, McDONALD'S and the M device, GOOGLE, SHISEIDO, ROLEX, PANASONIC, L'ORÉAL and SAMSUNG. Some others have been recognised as well known in their Chinese transliteration, such as WALMART, BLOOMBERG, TOYOTA, PORSCHE and STARBUCKS (which became XINGBAKE in its Chinese transliteration). On the other hand, courts will continue to play an increasingly important role in trade mark protection in China for a number of reasons, including the judicial review of administrative enforcement cases and the institution of more specialised intellectual property court divisions.

Footnotes

1 See Ariston Thermo China Co Ltd and M&B Marchi e Brevetti Srl v Foshan Shunde A Li Si Dun Electric Appliance Co Ltd, Shanghai Intermediate People's Court (February 24, 2011).

2 See Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc (C-39/97) [1998] E.C.R. I-5507; [1999] E.T.M.R. 1; and similarly Lloyd Schuhfabrik Meyer & Co GmbH v Klijsen Handel BV (C-342/97) [1999] E.C.R. I-3819, [1999] E.T.M.R. 690.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
LCA Studio Legale
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
LCA Studio Legale
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions