Most Read Contributor in South Africa, September 2016
A Chinese court recently ordered a Chinese company that had
blatantly infringed one of the world's better known trade marks
to pay significant damages to the trade mark owner. African
companies that have heeded their lawyers' advice and registered
their trade marks in China should take heart from this.
The facts in this case are simple. The 3M Company has two
Chinese trade mark registrations for the trade mark 3M. These
registrations are in class 17 and they cover "thin sheets or
strips made from retro-reflective materials" and
"retro-reflective plastic film other than for packing (to
improve and boost visibility and safety)". A subsidiary, 3M
China Ltd, is a licensed user of the trade marks, and it has been
manufacturing and distributing 3M vehicle retro-reflective marking
products in China since 2004.
A local company, Changzhou Huawei Advanced Material Co Ltd
("Huawei"), filed an application to
register the less-than-original trade mark 3N in class 19 for a
range of goods. 3M opposed this application but the trade mark
authorities accepted the application for a limited specification.
3M took this decision on appeal to the Trademark Review and
Adjudication Board which upheld the opposition. That put paid
to the trade mark application.
3M also launched trade mark infringement proceedings in the
Hangzhou Intermediate Court. It sought all the usual relief –
an injunction, damages and legal costs. Huawei defended this action
by raising some interesting defences. It said that the trade marks
3M and 3N were not similar and, even if they were, they
wouldn't be confused. This is because it had been using the
trade mark 3N for a number of years on goods that were cheaper than
3M's, and that it had, in the process, built up a stable
market. Finally, it said that it had never intended to infringe the
trade mark 3M – as part of this argument, it claimed that 3N
comprised the initials of the company's corporate philosophy or
slogan, which was "New Concept, New Technologies, New
The court of first instance found for 3M. It made the point that
the 3M mark was distinctive and well known. It said that as the
trade marks were visually similar, there was a likelihood of
confusion or, at very least, association. Further, it said that the
infringement was clearly intentional because the company had never
promoted its apparent slogan.
The court issued an injunction ordering the company to stop
selling goods under the trade mark 3N and it ordered Huawei to pay
3M's legal costs. However, most noticeably, the court ordered
Huawei to pay damages of RMB3.5-million, despite the fact that
there was apparently a statutory limit of RMB500 000 under the 2001
legislation that applied to this case. In coming to its finding,
the court took account of the long duration and the large scale of
Huawei's infringing activity, as well as the considerable
profit that it had made through its infringing activity. The court
also expressed its disapproval at Huawei's refusal to submit
Huawei took this decision on appeal, but the Zhejiang High Court
upheld the decision. It said that it would be quite wrong for a
court to recognise the defence that there would be no confusion
because of the considerable market share and client base that the
alleged infringer company had acquired through its unlawful
conduct. Recognising this would simply be sending this message to
other potential infringers – go big or go home!
As stated at the outset, this is an encouraging decision for
companies with business interests in China – one that shows
that Chinese courts understand trade marks and takes them
seriously. ENSafrica assists clients with the protection,
maintenance and enforcement of their IP rights around the world,
including in China.
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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