Johnson Electric Industrial Manufactory Ltd (hereinafter Johnson Electric) is a Hong Kong company born on April 25th, 1960.
Its business core is to manufactures electric motors in continental China, via several affiliated companies, with the first one created in 1992. These affiliates use "Johnson" as their English trade name and the Chinese characters "德昌" (pinyin: Déchāng) as their Chinese trade name.
In 2021 Johnson Electric sued Ningbo Dechang Electric Machinery Co. Ltd (hereinafter Ningbo Dechang) complaining that the cited company was using unfairly the same trade name "德昌".
Ningbo Dechang, the defendant, is a small household appliance manufacturer located in Ningbo, Zhejiang province. Ningbo Dechang has been using "德昌" as its trade name since its inception on 21 January 2002.
Johnson Electric initiated a litigation before the Ningbo Intermediate Court on the ground of unfair competition, requesting an injunction to change the defendant's trade name, and damages for an amount of 100 million yuan.
The Ningbo Intermediate Court dismissed the case and Johnson Electric appealed before the Zhejiang High Court, reducing its claim to 30 million yuan.
On April 6th, 2023, Zhejiang High Court, issued the decision in this unfair competition case.
The Court upheld the first-instance decision and claimed that, with reference to the influence, the Court found that the evidence of Johnson Electric's affiliate companies' use of the litigious trade name, prior to the creation of Ningbo Dechang in 2002, was only localized in continental China, generating an impact in the electric motor industry.
However, Zhejiang High Court determined that the sign Johnson Electric had actually been using on its products was the sign in Latin character "Johnson Electric" and not the contested trade name 德昌.
Sign used on Johnson Electric's products.
The Court found the sign used by Johnson Electric and its affiliated companies (shown in figure above) to be quite different from the litigious name. Thus, there was no established link between the name "Johnson" and the characters "德昌" that could give rise to confusion.
Furthermore, the main business of Johnson Electric was the manufacturing of motors, and related electro-mechanical components for automobiles, whereas Ningbo Dechang focused on manufacturing vacuum cleaners and components.
Both company marketing channels and the consumer bases were different. Johnson Electric was the biggest buyer of the products manufactured by its affiliated companies, while Ningbo Dechang's household appliance products were sold in continental China. Therefore, the chance of confusion was considered slim.
Zhejiang High Court concluded that the use of "德昌" did not constitute unfair competition on Ningbo Dechang side.
Lastly, proving the likelihood of confusion is essential for article 6 of the unfair competition to apply. The fact that the defendant company had the same trade name was not enough to establish that there was misleading.
The plaintiff had to prove that the name had acquired a certain reputation in China and that the defendant was committing "confusions acts". Given that, the plaintiff only proved that there is a very limited use of this subject trade name.
Since there was no confusion, there was no infringement. The courts, therefore, dismissed the claims.
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