To kick start 2023, we have gathered our firm’s top 5 intellectual property cases in 2022, and we would like to share with you our successful cases and the hottest issues in the previous year.
We represent one of the world’s oldest luxury cosmetics and skincare houses against its major competitor in a major unfair competition case in Mainland China, where we have successfully stopped the competitor from using similar visual imaginary in the promotional materials in their competing products. The counterparty had adopted promotional materials consisting of design elements in arrangements that are very similar to our client’s promotional materials used on its own iconic product of the same kind, which has been adored by the Chinese consumers over the last decade.
The Anti-Unfair Competition Law specifically provides that the act of copying of product names, product designs or product packaging with certain degree of influence in Mainland China, which causes confusion to the public, constitutes unfair competition. However, this case concerns the copying of promotional materials, which do not fall within the situations expressly stipulated in the relevant Article 6. We strategically relied on Article 2 of the Law, though even more abstract, is a general provision prohibiting all acts that may adversely affect interests of others and provided extra flexibility to the Court to rule in our favour.
Since the claim brought under this Law is not based on any registered rights, in practice, it is even more onerous on the petitioner to prove that they do have a prior right which forms the legal basis to invoke protection under the said Law. As such, one of the keys to establish and prevail this claim was extensive evidence collection to establish the fame, not only for the client’s brand, but more specifically on our client’s promotional materials and elements thereof. To this end, we assisted our client in conducting national library searches and extensive internet searches to collect evidence of prior use and reputation. We also advised our client to have its graphic designer and creative director to give testimonies in relation to the creative process and uniqueness of our client’s promotional materials, which played an important role in showing the originality of our client’s promotional materials.
The Shanghai Pudong People’s Court held that the counterparty’s copying of our client’s promotional materials constituted unfair competition. The Court awarded monetary compensations to our client and ordered the counterparty to publish public announcements to clear the negative impact. We have successfully protected the uniqueness of our client’s visual imagery which has become core to the product’s commercial identity through years of promotional materials, other than by use of the trademark, and prevented other parties from using similar visuals to promote competing products.
A European brand got into a dire situation in which its house marks in China were fraudulently assigned to another party. The counterparty is an individual who previously negotiated an acquisition with client’s China arm. After the deal fell through due to numerous breaches by the counterparty, the counterparty forged our client’s signature on some assignment documents and sought to fraudulently transfer more than 80 of our client’s registered trademarks in Mainland China, including its house marks, to her own name. The counterparty also relied on dubious authorization letters with fraudulent signatures to try to open stores in major e-commerce platforms in China with the client’s brand, and filed various marks copying the client’s.
We devised and executed strategies to successfully stop the counterparty’s fraudulent transfer in China via administrative litigations, criminal actions, and administrative measures before the CNIPA. We filed multiple administrative litigation suits before the Beijing Intellectual Property Court to nullify the assignments. We reported the fraud to the police to exert further pressure on the counterparty. We issued formal complaint with the CNIPA exposing the counterparty’s fraud and our actions taken against them. Eventually, we successfully suspended the approval of the unauthorized assignments of our client’s marks. We also stopped the counterparty from opening stores in e-commerce platforms and their new applications copying client’s marks.
We identified a shadow company incorporated in Hong Kong adopting a name that fully incorporates our client’s English and Chinese name, and filed more than 20 trademarks in Mainland China that are similar to the client’s house mark in the main class 3 and other relevant classes to perpetuate their free-riding acts. The shadow company had been selling lipsticks that knockoff our client’s iconic lipstick line on Chinese e-commerce platforms. In fact, it is common for infringers to incorporate shadow companies in Hong Kong and adopt names (in both English and Chinese) that are similar to famous brand names, to create the illusion of association with such brands, and then file bad faith trademark applications or sell counterfeits or knockoff products under such tradenames/trademarks in Mainland China, causing consumer confusion.
We successfully obtained an order from the Hong Kong Companies Registry to compel the shadow company to change both its Chinese and English names. Furthermore, we filed trademark invalidation against the shadow company’s trademark registrations in Mainland China emphasizing the grounds of bad faith. The Hong Kong Companies Registry’s decision together with the fact that the applicant filed many marks similar to our client in related classes were prime evidence establishing bad faith on the part of the shadow company.
The biggest takeaway from this successful case is that, the threats posed by shadow companies incorporated in Hong Kong can be much more easily overcome with early detection and taking advantage of the company name complaint before the Companies Registry to compel the shadow company to change its name. Such complaint must be filed within 1 year from the company’s incorporation/adoption of such name. The favourable decisions from the Hong Kong Companies Registry can also be utilized as evidence of bad faith in other actions taken against the same target or even its associated parties in the same squatter syndicate in Mainland China. In fact, we assist many of our clients to identify shadow companies incorporated in Hong Kong by conducting regular company searches to catch and kill such shadow companies in the most cost-effective way possible at an early stage to minimize their damage to our clients’ brands.
We manage the greater China trademark portfolio of the world's largest private non-profit educational testing and assessment organization. Due to the high fame of the client, they have been a target in numerous bad faith trademark squatting throughout the years. Amongst many favourable decisions we obtained for the client, in particular, we succeeded in having the CNIPA to recognize the well-known status of the client’s Chinese name in opposition proceedings for the first time this year.
Under the current practice, obtaining the recognition of well-known status by the CNIPA is no mean feat, especially in opposition proceedings for a Chinese name of a foreign brand. Through our advice on evidence collection, we successfully convinced the CNIPA to recognize the well-known status of the client’s Chinese marks, and rejected the counterparty’s applications covering services such as “news agency services” and “personal background investigations” in classes 38 and 45 respectively, which are otherwise less relevant to the client’s educational services. Such recognition of well-known status will be of tremendous help in preventing third parties from freeriding the client’s fame and reputation in trademark applications and infringement actions going forward.
We act for one of the world’s largest oil companies against an infringer in the Greater China region. Our client discovered that a Chinese car washing machine company has been operating a social media account and posted images of a car washing machine in a petrol station in China displaying the client’s mark. Through our investigation, it was revealed that the entire design and decoration of the petrol station was highly similar to our client’s and that our client’s mark was prominently displayed in the petrol station.
Enforcement actions were taken based on trademark/copyright infringement and unfair competition against both the car washing company and the petrol station owner. Consequently, the car washing machine company took down the infringing promotional materials consisting of our client’s mark on their social media platforms and online platforms. On the other hand, the petrol station claimed that it is authorized by the client’s distributor in Mainland China. Through our further investigation, we successfully obtained clear photographs of the products sold in the Chinese petrol station to allow the client to verify the authenticity of the products for further action based on breach of distribution agreement, intellectual property infringement and unfair competition in Mainland China. We also successfully opposed the pre-emptive application filed by the client’s distributor in Mainland China.
While the impact caused by Covid has cleared up throughout the last year, from time to time travel restrictions and Covid-related work arrangements still affect brand owners’ onsite investigations against infringement activities within Mainland China. However, with our local expertise and extensive experience in dealing with infringers across the region, we are able to overcome different hurdles and devise effective strategies, allowing us to continue to deliver successful outcomes against infringers for our clients.
© Vivien Chan & Co., Newsletter issue 01, January 2023
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Vivien Chan & Co. is a full-service law practice with offices in Hong Kong (1985) and Beijing (1993). We are consistently recognized as a premier law firm for and in Greater China. With over 35 years of doing business in Greater China, our Hong Kong and China teams have an in-depth understanding and knowledge of the legal culture and market dynamics.