The Xi'an Yanta District Court recently concluded a bad faith intellectual property disputed between the Plaintiff Xi'an Beilin Guoxing Dental Clinic Co., Ltd (“Guoxing Dental Clinic”) and the Defendant Xi'an Kai Wen Hospital Co. (“Kai Wen Hospital”).
The Court found that Kai Wen Hospital had filed a trademark infringement lawsuit (“Lawsuit No. 62”) against Guoxing Dental Clinic in 2023 and sought an order for Guoxing Dental Clinic to pay RMB200,000 (USD27,418) in economic damages. That court ultimately found that Kai Wen Hospital was not the trademark owner of the four disputed trademarks and that Kai Wen Hospital failed to provide the original evidence of its claim that Guoxing Dental Clinic infringed upon its trademarks. Therefore, the court rejected all of Kai Wen Hospital's litigation requests. Guoxing Dental Clinic claimed that due to said litigation filed by Kai Wen Hospital and its subsequent complaint to the Bureau of Health of Beilin District, it had delayed obtaining the administrative license and delayed its opening by one-month. Based on the evidence currently available, it was not clear that Lawsuit No. 62 and complaint resulted in Guoxing Dental Clinic's delay in obtaining the administrative license, but it was certain that, as a result of the filing of the said lawsuit, Guoxing Dental Clinic incurred litigation costs such as attorneys' fees. Therefore, the evidence can prove that there were actual infringements that caused damages, and a causal relationship between infringement behaviors and damage results in this case, so the key to this case is whether the behavior of Kai Wen Hospital's filing of the Lawsuit No. 62 was in bad faith.
The Court found that the following factors should be taken into consideration to determine whether Kai Wen Hospital filed Lawsuit No. 62 with subjective malice:
First, the basis of Kai Wen Hospital's rights in Lawsuit No. 62 and its ability to understand that basis of rights. According to the Notice of Assignment/Transfer of Trademarks dated November 6, 2022, Kai Wen Hospital has assigned the four trademarks in the case to Zhen YANG, an outsider. Kai Wen Hospital was not the trademark owner of the four trademarks in the case at the time of filing Lawsuit No. 62. Upon inquiry by the court, it was learned that the transfer agreement to the outsider Zhen YANG was stamped with the official seal of Kai Wen Hospital and signed by Zhuo SUN, the legal representative of Kai Wen Company. As an independent commercial entity with multiple trademark registrations, it should have been aware of the consequences of the signing of the “assignment agreement,” and should have known it did not have the basis of the right to file Lawsuit No. 62.
Second, Kai Wen Hospital's purpose in filing Lawsuit No. 62. After filing Lawsuit No. 62 on March 24, 2023, Kai Wen Hospital initiated a complaint with the Bureau of Health of Beilin District on March 27, 2023, and set forth in the complaint materials that it had filed a trademark infringement lawsuit with the Xi'an Beilin District Court against Guoxing Dental Clinic, and claimed that Guoxing Dental Clinic infringed upon its trademark right and its actions amounted to unfair competition, and requested that its illegal behavior be investigated and punished. At the same time, in view of the company's dishonest business practices, it requested the Bureau of Health of Beilin District to apply a stricter standard in approving Guoxing Dental Clinic's license to practice as a medical institution. Combining the above public notice, the time of filing the complaint, and the content of the complaint, it was difficult to exclude the possibility that Kai Wen Hospital filed Lawsuit No. 62 in order to file a complaint against Guoxing Dental Clinic at the time Guoxing Dental Clinic filed to obtain its license with the Bureau of Health of Beilin District. Therefore, it is difficult to conclude that Kai Wen Hospital filed Lawsuit No. 62 with the purpose of defending its rights according to the law and was properly exercising its right to litigate.
Given the above, it can be concluded that Kai Wen Hospital's filing of Lawsuit No. 62 was a bad faith filing of intellectual property litigation.
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.
