Case Brief
The Zhejiang High Court has upheld a first-instance decision and determined that infringing use of a trade name similar to other's prior trademarks constitutes unfair competition.
Michelin, the plaintiff of the case, is a French company known for its tire products as well as the Michelin Guide for fine restaurants and hotels. In China, it has its Chinese name "米其林" and "Michelin" registered in Class 12 and Class 16.
In 2021, Michelin became aware that a company located in Zhejiang Province used "Taizhou Huang Guan Mi Qi Lin Food Factory" as its company name, the first and third characters of which are identical with the Chinese name of Michelin, and the second character is different but with the identical pronunciation. Below please find the comparison (identical parts highlighted in red) of the two marks:
According to the Article 58 of China's trademark law, whoever uses a registered trademark or an unregistered well-known trademark of another party as the trade name in its enterprise name and mislead the public, which constitutes unfair competition, shall be dealt with in accordance with the Anti-unfair Competition Law. Based on this, Michelin brought the case to the Ningbo Intermediated People's Court.
The defendant argued that canned food and tires were two different industries so there was no competition between the two parties. Furthermore, he also claimed that the trade name has been registered for over five years and thus could not be sued.
In 2022, the court issued the judgement, ruling that the defendants' using of infringing company name had constituted unfair competition. The defendant was ordered to stop using the name as its registered trade name and pay a compensation of RMB 15,000 to Michelin.
The defendants appealed. In March 2023, the Zhejiang High Court issued the final judgment which upheld the first-instance decision.
Our takeouts
Unfair competition against trade names often occurs in commercial activities. A trade name serves as the distinctive appellation for a business operator and holds significant importance as a business identifier. Consumers can distinguish different market entities through different identifiers to identify the source of goods/services. Unauthorized use of the same of similar trade name could cause confusion among consumers, harm the interests of the right owners and constitute unfair competition.
In China, trade names and company registration proceedings are governed and managed by the local Administration of Industry and Commerce, while trademarks are registered through the trademark office of the CNIPA. The proceedings are separately run in two different systems with different databases. In practice, disputes like this case often happen.
When deciding whether the use of a prior registered trademark as a company name constitutes unfair competition, it is important to take into consideration the similarity between the prior trademarks' designated goods or services and the company's business scope. In this case, although the goods under the plaintiff's trademarks are different from the defendant's industry, there is a certain level of connection between the two parties (canned food and restaurant guide), therefore, there is a competitive relationship and related public could be misled.
Furthermore, the prior registered trademarks of Michelin have been widely used and gained high reputation. The significant parts the two parties' trademark and trade name are highly similar with the same pronunciation, which could be confusing for the consumers.
Both trade names and trademarks are important for business operations. It is recommended for companies to properly choose their trade names to avoid the situation of being similar to others' prior trademark, and right owners are encouraged to seek protection under different laws according to the situations.
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.
