1.    Background and Summary

Wyeth LLC is a wholly-owned subsidiary of Pfizer Inc., the world’s largest research-based biopharmaceutical company. It develops premium-quality and scientifically-designed nutritional products for infants and young children, as well as pregnant and lactating mothers.

Wyeth LLC began to sell Wyeth branded infant milk powder (in Class 5) in China since the 1980s. By virtue of extensive use and promotion, its marks “Wyeth” and “Wyeth in Chinese” have acquired high reputation and wide influence in China.

In May 2001, a local enterprise named Bowu Trading Store at Dongfeng Town, Zhongshan City in Guangdong Province of South China, applied for registration of six “ ” and “ (WYETH in Chinese)” marks on bath lotion, feeding bottles, diapers, etc. in Classes 3, 10 and 16. Later the aforesaid marks were successively assigned to a natural person Mr. Guoji LU, Wyeth (China) Limited, and Guangzhou Wyeth BB Mother-Infant Products Co., Ltd. (“GW”) [Note: Mr. Guoji LU, Wyeth (China) Limited, and GW have no relationship with Wyeth LLC].

After acquiring the “Wyeth” and “Wyeth in Chinese” marksbyassignment, GW used themon feeding bottles, bath lotion, diapers, etc.that have closerelation withinfantfoods, copiedWyethLLC’sproduct packagingandtradedress, anddeliberatelycommunicatedfalseinformation to mislead consumers.

Wyeth LLC lodged oppositions against these marks with China Trademark Office (“CTMO”) and later reviews of opposition with Trademark Review and Adjudication Board (“TRAB”), and instituted administrative lawsuits with Beijing First Intermediate People’s Court, but none was upheld. After these marks were granted registration, Wyeth LLC filed invalidations with the TRAB. Later the case underwent the Court’s first instance and second instance, then back to the TRAB for re-examination, and the Court’s another round of first instance and second instance. In total, it lasted for 16 years and underwent more than a dozen administrative and legal procedures.

The applications for the 6 disputed marks were filed on May 29, 2001 and published on April 21, 2002. Wyeth LLC lodged oppositions with the CTMO, later reviews of opposition with the TRAB and lawsuits with the Court, but was not upheld.

OnJuly26, 2011, WyethLLCfiled invalidations against the six disputed marks with the TRAB onthegroundsthatthese markscontravenedArticle41.1oftheTrademarkLawofthePeople’sRepublicofChina (“theTrademarkLaw”), “theregistrationofatrademarkwasacquiredbyotherimpropermeans”, andthattheyareliabletocreateconfusionamongthepublicandhave “otherunwholesomeinfluences” specifiedinArticle10.1.8oftheTrademarkLaw. OnSeptember10, 2013, theTRABinvalidatedthedisputed marks according toArticle10.1.8oftheTrademarkLaw.

GW was dissatisfied with the TRAB’s decisions and sued to the Court. Both the first instance Court (Beijing First Intermediate People’s Court) and the second instance Court (Beijing High People’s Court) held that the disputed marks did not contravene Article 10.1.8 of the Trademark Law, reversed the TRAB’s decisions and ordered the TRAB to make new decisions.

On April 21, 2015, the TRAB invalidated the disputed marks once again on the grounds that these marks contravened Article 41.1 of the Trademark Law. Once again, GW was dissatisfied with the TRAB’s decisions and sued to the Court. Then both Beijing Intellectual Property Court and Beijing High People’s Court dismissed GW’s claim and the case finally came to an end.

On March 30 and May 10, 2018, Beijing High People’s Court held via its judgments including (2017) Beijing-Admistrative-Final-No.487 that the disputed marks contravened Article 41.1 of the Trademark Law, “the registration of a trademark was acquired by other improper means”, and thus should be invalidated.

The reasoning of Beijing High People’s Court is as follows: “WYETH” is not a common foreign word in Chinese. It together with its Chinese equivalent possess high originality and distinctiveness. The evidence produced by Wyeth LLC is sufficient to demonstrate that the marks “Wyeth” and “Wyeth in Chinese” it used and registered in relation to infant foods had had wide influence among the relevant public in China, prior to the application date of the disputed marks. The original applicant of the disputed marks Mr. Guoji LU and GW should be aware of that. The original applicant of the disputed marks applied for quite a few marks of “Wyeth” and “Wyeth in Chinese” on goods in Classes 3, 10 and 16 that are closely related to infant goods. Mr. Lu and GW have acted in obvious bad faith.    

In addition, Mr. Lu has applied for dozens of marks in many classes, including “Nao Bai Jin in Chinese” and “DETTOL”, which are others’ prior trademarks with considerable reputation, and there is no evidence showing his intention to use them. Mr. Lu’s act to apply for a large number of marks including the disputed marks in this case is an act of hoarding marks in bad faith. His act is devoid of legitimacy and disrupts the trademark registration order.

Meanwhile, GW, after acquiring “Wyeth” and “Wyeth in Chinese” trademarks byassignment, usedthem on maternalandinfantgoodstofree ride onWyeth LLC’s product packaging and trade dress and deliberately communicated misleading information to consumers. Such act of obvious bad faith should be prohibited.

It took us, Corner Stone & Partners six years to win the final ruling since we intervened in the invalidation proceedings in 2013. The time span is long. The evidence is enormous. During the interim, the Beijing Intellectual Property Court replaced Beijing First Intermediate People’s Court to hear administrative IP cases. Moreover, in practice, the administrative and judicial organs in China still have disputes on which articles of Trademark Law should be applied to remove bad faith trademark applications and registrations. All these factors compound the situation and increase the difficulty of the case.

Wehighlightedthe following points in the documentssubmittedtotheCourt: 1) WyethLLC’strademark“WYETH” together with its Chinese equivalent possess high originality and distinctiveness. They havewideinfluenceandhighreputationonmaternalandinfantfoods in the marketplace. 2) Theapplicantofthedisputed markshasnointentionofusingthemandhoardsalargenumber of other marks whichisdevoidoflegitimacy. 3) GWfullycopiedandimitatedWyethLLCanddeliberatelycommunicatedfalseinformation to consumers. 4) There is a specific relationship between GW, Mr. Guoji LU, and Wyeth (China) Limited. GW’ssupplementaryapplicationsforthe “Wyeth” and “Wyeth in Chinese” marks laterisacontinuationoftheaforesaidLu’spreemptiveapplications, is out ofmore obvious badfaith. 5) Thecontention of a case involving trademark rights authorization and confirmation is whether the mark should be granted registration or not. In light of new and sufficient evidence submittedbyWyethLLCtestifyingpreemptiveregistrationofthedisputed marksinbadfaith, theTRABshouldinvalidate thedisputed markspursuanttoArticle41.1oftheTrademarkLaw.

We endeavored our every effort and won the case in the end. We are delighted to settle the headache issue which had beset our client WYETH LLC for 16 years.During this process, we also witnessed the great progress that China has made in recent years in combating bad faith trademark applications.

1.    China adopts “first-to-file” principle for its trademark registration system. Be the first to file a trademark application in China, even before you have a business plan for the Chinese market, not only on goods/services of your main interest, but also on some peripheral goods/services.

2.    Engage a professional Law Firm with local knowledge and international insight. The law firm should not be too obedient and mechanically follow your instructions. An excellent law firm should demonstrate its foresight and expertise, dare to provide its own valuable opinions and solutions.

3.    If your brand has already encountered trademark squatting in China, take appropriate measures to clear the obstacle and file a subsequent trademark application for registration of your own trademark. Do not give up. Attend every legal proceeding. You will have the best winning chances.

Mr. Zhenkun Fu, Senior Partner; Trademark & Litigation Attorney

Zhenkun is a leading intellectual property law practitioner with more than 15 years’ experience in prosecuting trademark and patent infringement, unfair competition, and anti-counterfeiting cases. His work with Fortune 500 companies has resulted in the recovery of millions of dollars in damages. As a leading IP litigator, having managed thousands of lawsuits, Zhenkun’s groundwork and strategic insight, coupled with his exceptional relationships with AIC, BQS and PSB at national and local levels, makes him a key leader in intellectual property enforcement in China.

Maggie is a partner of Corner Stone & Partners, a member of INTA Bulletins Committee. She has been practicing intellectual property law in China for over ten years. Maggie represents many international companies in trademark matters including strategy, prosecution, contested proceedings, licensing, well-known status, and disputes. Her practice also includes copyright and domain name registration and enforcement. Due to her deep knowledge and creative problem-solving approach, Maggie helps her clients develop and implement holistic and legally grounded intellectual property strategies in China.

 Beijing Higher People’s Court recently issued a final ruling in our favor on the case of administrative dispute over invalidation of the mark “Wyeth” involving Wyeth LLC, Guangzhou Wyeth BB Mother-Infant Products Co., Ltd. (“Guangzhou Wyeth”), and the Trademark Review and Adjudication Board under the SAIC (“TRAB”), which was handled by Corner Stone & Partners. The court held in its No. (2017)  BJAF487 Ruling that the mark at issue contravened the provision in Article 41.1 of the Trademark Law 2001 of PRC, “the registration of a trademark was acquired by other improper means”, and thus should be invalidated.

Background of the Case

Wyeth LLC is one of the manufacturers which manufacture the finest infant food products in the world. It began to sell Wyeth infant milk powder products in Mainland China as early as in the 1980s. With Wyeth LLC’s continuous use and extensive promotions, the marks “Wyeth” and “Wyeth in Chinese characters” in series have had high visibility and wide influence among the relevant public in China.

In May 2001, an enterprise by the name of Bowu Trading Store at Dongfeng Township, Zhongshan City (“Bowu”) applied for registration of the marks “Wyeth” and “Wyeth in Chinese characters” in quantity in relation to infant goods in several classes. Wyeth LLC raised opposition to these marks and review of opposition, and instituted administrative proceedings on review of opposition, but none was upheld. Wyeth LLC filed an application for dispute over the mark at issue the moment it was formally registered. The legal process for the case lasted for 16 years, from examination, first instance, second instance, re-examination by the TRAB, to another first instance and second instance. During the period, the mark at issue was assigned to Lu
Guoji, Wyeth (China) Limited (Hong Kong), and Guangzhou Wyeth successively.

Our investigations revealed that Lu Guoji was the focal point for Bowu’s applying for the aforesaid marks “Wyeth” and “Wyeth in Chinese characters”. Moreover, Lu Guoji applied for some dozens of marks personally, including “Nao Bai Jin in Chinese characters” and “DETTOL” as well as “San Mei Yi Di in Chinese characters” and “JAPANASONIC” similar to “Mei Di in Chinese characters” and “Panasonic” respectively.

Acquiring a lot of marks like “Wyeth” and “Wyeth in Chinese characters” including that at issue in the case by way of assignment, Guangzhou Wyeth used them for maternal and infant goods strongly related to infant foods to fully imitate Wyeth LLC’s products and trade dresses and deliberately communicate misleading information. In addition, Guangzhou Wyeth has filed applications for marks which contain the words/characters of “Wyeth” or “Wyeth in Chinese characters” and the device of “cartoon lion”.

Main Message in the Ruling

1. Whether the mark at issue contravened the provision in Article 41.1 of the Trademark Law 2001, “the registration of a trademark was acquired by other improper means”.

The appellate court held the following: The evidence produced by Wyeth LLC is sufficient to demonstrate that the marks “Wyeth” and “Wyeth in Chinese characters” it used and registered in relation to infant foods had had wide influence among the relevant public in China prior to the date of application for registration of the mark at issue and the original applicant of the mark and Guangzhou Wyeth should be aware of the fact. Lu Guoji, the original applicant of the mark at issue, has applied for quite a few marks of “Wyeth” and “Wyeth in Chinese characters” with respect to infant goods in Classes 3, 10, and 16. Considering that the word “Wyeth” and its corresponding Chinese “Wyeth in Chinese characters” are not common terms, Lu’s act cannot be believed to be in good faith. In addition, Lu has applied for some dozens of marks in many classes, including “Nao Bai Jin in Chinese characters” and “DETTOL”, which are others’ prior trademarks with considerable visibility, and there is no evidence for his intention to use them. Therefore, Lu’s act to apply for a large number of marks including that at issue in the case is an act of hoarding marks obviously in bad faith. His act is devoid of legitimacy in trademark registration and disrupts the trademark registration order, constituting the circumstances where provision in Article 41.1 of the Trademark Law 2001 applies, “the registration of a trademark was acquired by other improper means”. Meanwhile, Guangzhou Wyeth, after acquiring a lot of marks like “Wyeth” and “Wyeth in Chinese characters” including that at issue in the case by way of assignment, used them for daily consumables such as maternal and infant goods to fully imitate Wyeth LLC’s products and trade dresses and deliberately communicate misleading information. This act is obviously in bad faith and should be prohibited.

2. Whether the TRAB’s No. 473 Decision in re-examination was against the principle of “non bis in idem”.

The appellate court held the following: The court held in its No. (2014) HA(I)F3603 Ruling that while Wyeth LLC argued the mark at issue did not comply with the provision in Article 41.1 of the Trademark Law 2001, it could advance this argument once again in the dispute procedure when it produced different evidence and the TRAB should examine whether this argument was justified. The TRAB’s No. 473 Decision in re-examination was made in accordance with the court’s above final ruling. The TRAB’s act was, in essence, the execution of a valid ruling and it was not against the principle of “non bis in idem”. Guangzhou Wyeth’s appeal is unjustified and the court does not uphold it.

Corner Stone & Partners’ Work on the Case

The legal team at Corner Stone & Partners (“Corner Stone team”) began to represent Wyeth LLC in the case of dispute over the mark at issue in 2011. The TRAB upheld Wyeth LLC’s request and cancelled the registration of the mark at issue on the grounds of the new evidence and pursuant to Article 10.1.8 of the Trademark Law 2001. However, as the court and the TRAB differed in law application, the first instance ruling reversed the above decision after Guangzhou Wyeth brought the case to court.

In the face of failure in the first instance, the Corner Stone team sorted through and summarized all the evidence and grounds in every procedure related to the mark at issue and then fixed the direction of the action “to fully prove the mark at issue was registered preemptively in bad faith and Guangzhou Wyeth is exploiting name brands”. The following were highlighted in the appeal to Beijing Higher People’s Court: 1) Wyeth LLC’s trademarks “Wyeth” and “Wyeth in Chinese characters” with direct correspondence are distinctive and have wide influence and high visibility on the market of maternal and infant foods. 2) The applicant of the mark at issue has no intention of using it and hoards a large number of marks in addition, which is devoid of legitimacy in trademark registration. 3) Guangzhou Wyeth is fully copying and imitating Wyeth LLC and deliberately communicates misleading, false information, obviously in bad faith. 4) There is a specific relationship between Guangzhou Wyeth, Lu Guoji, and Wyeth (China) Limited. Guangzhou Wyeth’s follow-up application for the marks “Wyeth” and “Wyeth in Chinese characters” is a continuation of the aforesaid Lu’s preemptive action, more obviously in bad faith. 5) With new evidence provided, this is not the circumstances where the principle of “non bis in idem” applies. 6) The opposite party has assigned the mark at issue between a natural person, a Hong Kong company, and a domestic company. Their essential intention in doing so is to evade the law, but the nature of preemptive trademark registration in bad faith can by no means be changed. In light of new evidence given by Wyeth LLC and efficient evidence pointing to preemptive registration of the mark at issue in bad faith, the TRAB should make the decision to cancel the mark at issue pursuant to Article 41.1 of the Trademark Law.

The appellate court accepted the Corner Stone team’s argument, holding that, in light of available evidence supporting the mark at issue contravened Article 41.1 of the Trademark Law, the TRAB may cancel the mark on the grounds. Under the direction of the appellate court’s ruling, the TRAB made the decision in re-examination that the mark at issue contravened the provision in Article 41.1 of the Trademark Law 2001, “the registration of a trademark was acquired by other improper means”, and invalidated the mark. Dissatisfied with this decision, Guangzhou Wyeth brought the case to Beijing Intellectual Property Court, and, after the court upheld the decision, lodged an appeal to Beijing Higher People’s Court. During the two instances, the Corner Stone team refined and supplemented relevant evidence and arguments and collected the judicial policies and cases concerning “Stop Preemptive Trademark Registration” in recent years to submit to the court.

It is a seven-year process from the Corner Stone team beginning to handle the case to winning the final ruling. The time span is long, the evidence is enormous, and the focus of the case is also the difficulties in theory and practice of trademark matters, which increases the level of difficulty of the case. However, the Corner Stone team works to serve the client well at all times and spares no effort in the case to win it in the end. With the case, we deeply feel China’s great advancement in IP protection. The ruling on this case adequately reflects the judicial guidance from Beijing Intellectual Property Court and Beijing Higher People’s Court as to “Make the best of the Trademark Law and intensify the efforts to stop preemptive trademark registration in bad faith, exploitation of name brands, and other improper acts”.

 Mr. Zhenkun Fu and Ms. Brenda Zhao from Corner Stone & Partners give an analysis of Unfair Competition case: Reusch GMBH v. Shijiazhuang Marsnow Outdoor Commerce & Trade Co., Ltd.

 The right to a business name is the right a company has to use its registered name by law. A business name is a distinctive name which a company has by law to distinguish it from others in its operations. Its main function is to indicate the provider of goods or services and avoid confusion among consumers and the public over the goods or services provided by a company. A business name, as the carrier of the company’s goodwill, represents the image of the company. Preventing misuse of business names, goodwill dilution, and prohibiting unfair competition are an integral part of competition legislation in all countries and are an important part of IP protection in China.

 However, as the basic principle of business name registration in China is “registration at different levels and administration on different territories”, for legal protection of a business name right the right holder should provide evidence that the business name is famous on the market and well-known to the relevant public. When a case concerning a business name right is heard at court, the right will also be subject to certain restrictions on business scopes and the court will also consider whether confusion will be caused among the relevant public.

 Comparatively speaking, since foreign business names are not registered in China – and foreign business names in foreign languages are little known to Chinese consumers– it is more difficult to secure protection for their business name right. Here we analyze a case which was lost at first instance and won at second instance to see how protection was secured for the right to a foreign business name where the defendant did not use it prominently.

The circumstances of the case

Reusch GMBH (“Reusch”), the plaintiff, is a German company established in 1934. The word “REUSCH” is both Reusch’s business name and its registered trademark. Reusch has a more than 80-year history of production of protective gear in sports. Skiing gloves and goalkeeper’s gloves are its core products. Reusch owns two “REUSCH” registered trademarks in China.

Shijiazhuang Marsnow Outdoor Commerce & Trade Co., Ltd. (“Marsnow”), the defendant, is a company that manufactures and sells outdoor sportswear. Through investigation, Reusch found that some of Marsnow’s skiing gloves were suspected of infringement. These products attached several tags, the front of one of which bore strikingly Marsnow’s registered trademark “Marsnow” and a line of small words “Reusch GmbH Eichendorfstr.5.72666 Neckartailfingen” (see the picture below). The expression “Reusch GmbH” is Reusch’s German name in lower case and Eichendorfstr.5.72666 Neckartailfingen is Reusch’s former place of business.

 Then Reusch sued Marsnow before Shijiazhuang Intermediate People’s Court for trademark infringement and unfair competition.

The court rulings at first and second instances

The Court, in the first instance, held that Marsnow’s act to print the words “Reusch GmbH Eichendorfstr.5.72666 Neckartailfingen” on the lower part of the tag of Marsnow’s skiing gloves did not constitute the use of a trademark in the sense of the Trademark Law of PRC and would not be liable to cause confusion with the registered trademark REUSCH among consumers. This meant, therefore, they did not constitute an infringement of the registered trademark REUSCH. As for Reusch’s claim that Marsnow’s use of the plaintiff ’s business name in foreign language constitutes unfair competition, the court in the first instance dismissed it on the grounds that the business name in foreign language was not registered in China, was little known, and was not liable to cause confusion among consumers. Dissatisfied, Reusch appealed to Hebei Provincial High People’s Court.

 The Court, in the second instance, held the following: Marsnow’s use of the words “Reusch GmbH” on the tag of its products is liable to mislead consumers who have special needs for Reusch’s goods into associating its goods with Reusch. Because Marsnow could not justify the use of Reusch’s business name, it tried to make its goods confused with Reusch’s in bad faith. In accordance with Article 5 of the Anti-Unfair Competition Law of PRC, which says that “A business operator shall not harm his competitors in market transactions by resorting to any of the following unfair means: (3) using without authorization the name of another enterprise or person, thereby leading people to mistake their commodities for those of the said enterprise or person,” Marsnow’s act aforesaid constituted unfair competition. The court ordered that the defendant stop its infringing act and pay the plaintiff CNY 77,600 (USD 12,000) in damages.

Our strategy for the second instance

We represented the plaintiff to concentrate on unfair competition at the second instance.

 Article 5 of the Anti-Unfair Competition Law of PRC provides that a business operator shall not harm his competitors in market transactions by resorting to any of the following unfair means: (3) using without authorization the name of another enterprise or person, thereby leading people to mistake their commodities for those of the said enterprise or person.

 For the protection of foreign business names, Interpretations of the Supreme People’s Court of PRC about Some Problems with Application of Laws to Unfair Competition Cases sets out the condition of “commercial use”. Article 7 of the Interpretations specifies “the commercial use on the territory of China, including use of the name, packaging and decoration peculiar to well-known commodities or use of the name of other companies or persons for commodities, commodity packaging and commodity exchange documents, or in advertisements, exhibitions and other commercial activities”, further defining commercial use.

 As far as this case is concerned, although Reusch is not registered in China, evidence demonstrates that it has operated in China since early 1990s and its skiing gloves and goalkeeper’s gloves are well-known to a certain extent in China. Therefore, Reusch’s business name in foreign language is in alignment with the provisions for business name in the Anti-Unfair Competition Law of PRC.

 There is some difference in specification of the extent of commercial use between Article 5.3 of the Anti-Unfair Competition Law of PRC “using without authorization the name of another enterprise or person, thereby leading people to mistake their commodities for those of the said enterprise or person” and Article 48 of the Trademark Law of PRC “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 commercial use is a kind of “prominent use” according to the Trademark Law of PRC, while the Anti-Unfair Competition Law of PRC does not have this stipulation, that is to say, the Anti-Unfair Competition Law of PRC specifies smaller extent of commercial use of the name of others without authorization than the use of a trademark.

 To sum up, the court ruling it the second instance stated that“Marsnow’s use of the words ‘Reusch GmbH’ on the tag of its products is liable to mislead consumers who have special needs for Reusch’s goods into associating its goods with Reusch and Marsnow’s act constitute unfair competition” is correct because however slight Marsnow’s illegal use is, its act is liable to mislead those consumers who have special needs for Reusch’s goods, like Reusch GmbH fans, into believing that Marsnow is associated somehow with Reusch.

Note:

The First Instance File No. (2016)Ji01MinChu708

The Second Instance File No. (2017)JiMinZhong267