Recently, the Hubei High Court issued a second instance judgment for a trademark infringement dispute between Zhou Liu Fu Jewelry Company Limited ("Zhou Liu Fu"), Hong Kong Zhou Liu Fu Jewelry & Gold Company International Group Limited ("Hong Kong Zhou Liu Fu"), Guangdong Fenglong Jewelry Co., Ltd. ("Fenglong"), and Wuhan City Jiang Han District Hongyi Jewelry Co., Ltd. ("Hongyi). The court upheld the trademark infringement finding from the first instance court but decreased the compensation from RMB 30 million (USD 4.18 million) to RMB 5 million (USD 696,650).
Cited Mark
Zhou Liu Fu was established in 2004 in Shenzhen and owns "Zhou Liu Fu" and "Zhou Liu Fu in Chinese ZHOU LIU FU" marks in jewelry related classes. Zhou Liu Fu had been affirmed by the China Jewelry and Jade Jewelry Industry Association as a well-known mark in China in 2015 and 2018.
Hong Kong Zhou Liu Fu was established in 2008 in Hong Kong under the legal name of "Hong Kong Zhou Liu Fu Jewelry Gold International Co., Ltd." and it had filed trademarks using the said name in Classes 14 and 35. All of its marks filed in Class 14 had been invalidated by the CNIPA. However, trademarks in Class 35 for secretarial related, accounting, medical equipment, and human resource consultation were allowed. The WeChat account of Hong Kong Zhou Liu Fu showed that it has over 572 stores nationwide in accessories and jewelry related business.
The first instance court found that the "Zhou Liu Fu" trademark owned by Zhou Liu Fu is distinctive. Fenglong and Hongyi (acting as Hong Kong Zhou Liu Fu's agent in mainland China) knowingly used such mark in soliciting franchisees, which exceeded the approved use of the trademarks owned by Hong Kong Zhou Liu Fu and was suspected as taking advantage of the fame of Zhou Liu Fu. The first instance court awarded Zhou Liu Fu RMB 30 million in compensation.
The second instance court found that Zhou Liu Fu had won a compensation of RMB 40 million through a series of rights protection lawsuits. The first instance court calculated the profit from infringement as approximately RMB 30 million based on 572 franchise stores and a franchise fee of RMB 60,000 per store. However, it did not consider that 322 out of the 572 stores had been ordered to pay compensation. Therefore, the liability for the infringement of Hong Kong Zhou Liu Fu should be reduced to RMB 5 million in order to avoid repeated compensation for the same infringement.
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