Can “Registered Mark” Serve as a Shield against Ongoing Emergence of Infringing Marks?

—Case Review of Trademark Right Dispute among ASICS VS Qiloo and XU          

Reading Tips

Recent years, to take free ride of renowned brands and circumvent risks, non-law abiding marketers tend to register either similar marks in the same class as well-known brands, or firstly register identical/ similar marks in similar class and subsequently to confuse the relevant public by means of deformation. When facing the complaint raised by the brand owner to law enforcement authorities, they will present trademark registration certificate and argue the use of their trademark complies with legitimate procedure, thus causing trouble to the enforcement.

Some people consider the above act belongs to non-standard uses of trademark set forth under Article 49 Trademark Law. Controversy exists around whether such “irregular uses” may constitute trademark infringement, and whether perpetrator can be subject to punishment /penalty.

In fact, the jurisprudential circle has long reached consensus over the issue. Such non-standard use will constitute infringement if the use has caused confusion to another party’s registered mark and transcended the ambit of legitimate rights. Article 1.2 under Supreme People's Court Interpretation of Several Issues on the Trial of Trademark Civil Dispute Cases Concerning the Conflicts between Registered Trademarks or Trade Names and Existing Prior Rights specifies, “People’s Court should accept the case where the Plaintiff files an action on the grounds that another party uses a registered mark beyond the prescribed scope or by way of altering distinctive features, splitting, formation, to the extent that it appears identical or similar to the Plaintiff’s registered trademark”. In practice, part of administrative authorities, including AIC or Customs, have been casting so much doubt upon this aspect that infringement cannot be established eventually.

Case Facts

In May 2011, Quanzhou Qiloo Company put on display shoe sample as shown in figure 2 during Canton Fair. Trademark Holder ASICS Corporation lodged a complaint with Complaint Reception Station for IPR and Trade Dispute of Canton Fair, by reason of similarities between its registered mark and logo in use by Qiloo. The Dispute Office subjected the allegedly infringing products to removal from shelves.

On August 23, 2013, Xiamen Customs detected and intercepted 9599 pairs of shoes carrying logos as shown in Figure 2. Qiloo afterwards submitted authorization documents pertaining to TM No. 5647108 “”. The Customs finally decided to release the products involved, owing to failure to establish the infringement in statutory timeframe.

On November 10, 2013, Nan’an AIC of Fujian Province seized 700 pairs of the shoes in Figure 2 during raid action on XU’s business location. Judging by statement, authorization letter and ordering contract handed by XU, the products were made under commission from Qiloo.

The Court’s Opinion 

The Court of second instance has made an in-depth analysis on how to determine nature of this case:
(I) The use of infringing mark “” under dispute on exported commodities by Qiloo belong to acts of using in the contect of Trademark Law

In the first place, the export was an act of direct exportation to Turkey, which means the sports shoes produced by Qiloo had entered into the process of transportation upon completion of sales. Because of the differences in respective circumstances, judgment rules on foreign-related OEM therefore are not applicable to cases relating to direct trade exportation.
Secondly, the sales activity was completed within the territory of P.R. China, though the purchaser of the exported goods as made by Qiloo was based in Turkey. When making purchase in Chinese territory, foreign exporter distinguishes goods providers by different trademark logos. In this regard, the allegedly infringing logo “” in use by Qiloo has served to identify the source of the goods within China. According to Article 48 Trademark Law, “the use of trademarks as stipulated in this Law refers to the affixation of trademarks to commodities, commodity packaging or containers, as well as commodity exchange documents or the use of trademarks in advertisements, exhibitions, and for other commercial activities, in order to identify the source of the goods”. The use of the disputed mark “” by Qiloo at the time of exportation has constituted usage in the context of trademark.

(II) The disputed “” and ASICS registered mark “” constitute similar marks, likely to cause confusion to the relevant public

On one hand, the “” mark of ASICS Corporation has completed registration in various countries and regions all over the world. The trademark enjoys renowned status and reputation in the field of running shoes and sneakers. On the other hand, when comparing the allegedly infringing “” logo and the “” mark, the two appear similar in respect of design and line formation. The difference only consists in that the lines in “” logo do not close. Apart from that, there are no distinctive differences in visual effect as a whole. Articles 9 and 10 under Interpretation of the Supreme People's Court of Several Issues Concerning the Application of the Law to the Trial of Civil Dispute Cases Involving Trademarks have set forth related guidelines. In determining the similarity of trademarks, people should carry out a comprehensive analysis on whether overall structure or major part will create a likelihood of confusion, by taking into consideration market reputation and distinctiveness of the mark under dispute, by pondering and comparing compositions, colors of the graphics and/or formation of each component. On such basis, the allegedly infringing “” logo has constituted a similar mark to the “” mark registered by ASICS Corporation.  

 (III) Qiloo argues its use of the infringing “” logo under dispute on exported commodities is de facto use of ZHANG Yanpeng’s registered mark “”. Such reason for defense is not justifiable.
Article 56 of Trademark Law provides “the exclusive right to use a registered trademark is limited to the trademark which has been approved for registration and to the goods in connection with which the trademark is to be used”. When the “” mark owned by ZHANG Yanpeng legally coexists the “” mark of ASICS CORPORATION, Qiloo as the licensee of the trademark “”, should use the “” mark in strict compliance of Trademark Law. Through comparison, the infringing logo “” used by Qiloo under dispute is significantly different from the mark “” licensed by Zhang Yanpeng, but more similar to the “” mark of ASICS CORPORATION. It is self-evident that Qiloo has made neither standard use nor reasonable differentiation from and avoidance of the legally coexisting trademark. The acts have therefore constituted infringement against exclusive rights attaching to registered mark “” of ASICS Corporation.
 

Ruling Result

Based on the foregoing, Higher People’s Court of Fujian Province ruled in final judgment that Qiloo shall immediately cease the infringing activities, together with compensation payable to ASICS Corporation for economic loss totaling RMB400, 000.

Case Review

The Judgment expressly defines behaviors relating to non-standard use of registered trademark:
1) In the case of non-standard use of registered mark alone, the user shall be subject to rectification in accordance with Article 49 of Trademark Law;
2) If the mark under non-standard use, without reasonable differentiation from or avoidance of legally coexisting mark, further constitutes a similar mark with another party’s registered trademark and causes confusion, such circumstance thus falls within the ambit of trademark infringement described under Article 57.1.2 of Trademark Law. The infringer shall assume infringement liability accordingly.

If retracing the legislative intent of Trademark Law, we will understand Trademark Law aims to provide good order protocol for trademark use and trademark registration. Trademark Law exerts protection over trademark on the basis of “registration”. Except as otherwise provided by law, such protection is limited to the registered design and to the goods in connection with which the trademark is to be used. If using the mark in excess of approved scope, or changing graphics of the registered mark without prior approval, registrant is no longer entitled to exclusive trademark rights.

In such circumstances, whether trademark infringement is established or not shall be based upon comparison between trademark form in de facto usage and registered mark owned by another party. If modifying trademark design to the extent of appearing similar to another party’s registered mark, of likely causing confusion to the relevant public, the activity shall constitute trademark infringement and the user shall undertake corresponding legal responsibilities. Regarding non-standard usage of trademark, AIC authority should, in course of enforcement, draw comparison between the mark in actual use on the infringing product under dispute and the mark owned by the complainant. If the two constitute similar marks, which will possibly confuse the relevant public (without limitation to domestic consumer), the administrative authority shall make a determination of infringement, in efforts to prevent the so-called “registered trademark” from becoming a shield of look-alike infringing mark.