From Michael Jordan to New Balance: The Latest Trends in Chinese Trademark Litigation

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After virtually a decade of litigation, Michael Jordan received a tough battle in opposition to Qiaodan Sports activities Co., Ltd. China. In a call dated March 26, 2020, the Supreme Individuals’s Courtroom of China (“SPC”) overturned the decrease courts’ selections and dominated in favor of the NBA legend in one of many invalidation proceedings over a trademark registration for “Qiaodan”– a generally acknowledged phonetic translation for the identify “Jordan” – together with a design that depicted a basketball participant in midair making an attempt a layup, which Qiaodan Sports activities had held since 2007 to be used in reference to its manufacturing, advertising and marketing, and sale of clothes.

The primary points earlier than the Chinese language courtroom was whether or not the registration and use of the disputed trademark infringed upon Michael Jordan’s rights in his identify and his portrait, each of which predated Qiaodan’s 2007 registration, as protected by Article 31 of the Trademark Regulation of China, and whether or not, because of this, the registration needs to be invalidated. 

In its March resolution, the SPC held that regardless of the decrease courts’ selections in opposition to Jordan (largely on the premise that “Qiaodan” is a standard surname with none “absolute” or “sole” corresponding relationship with Michael Jordan), the “Qiaodan” identify has acquired a excessive stage of fame and status in China, and that Chinese language customers are accustomed to referring to Michael Jordan by the transliteration of Qiaodan. Due to the robust, corresponding relationship between “Qiaodan” and Michael Jordan, the courtroom held that the registration and use of the disputed trademark by the Fujian-headquartered firm infringed Jordan’s rights, as it’s more likely to trigger confusion among the many consuming public, if it has not performed so already.  

Not like the decrease courts, the SPC was persuaded by the substantial quantity of proof submitted by Jordan’s counsel, together with over 200 newspaper articles, and greater than 1,000 articles in sports activities and academic magazines, in addition to numerous books, which used the Chinese language transliteration for Jordan to confer with Michael Jordan. 

Counsel for Jordan additionally submitted two highly-favorable investigation reviews, which confirmed that 85 % of the interviewees – particularly, residents in Beijing, Shanghai, Guangzhou, Chengdu and Changshu – mentioned “Michael Jordan” was the very first thing that might come to their thoughts when “Qiaodan” was talked about, versus simply 15 %, who mentioned “Qiaodan Sports activities.” Additional, when requested whether or not they believed that Michael Jordan and Qiaodan Sports activities had been affiliated, almost 70 % mentioned sure. Much more considerably, over 90 % of the interviewees who had purchased the merchandise of Qiaodan Sports activities revealed that they believed the merchandise of Qiaodan Sports activities had been associated to Michael Jordan.

With such proof in thoughts, the SPC – which is the best courtroom in China – discovered that the usage of the “Qiaodan” mark by Qiaodan Sports activities quantities to trademark infringement, and ordered the China Nationwide Mental Property Administration to re-examine the invalidation proceedings involving the mark at problem.  

The highly-anticipated resolution is undoubtedly a win for celebrities and model homeowners who want to depend on prior identify rights to defend in opposition to infringements in China, the place the trademark system typically operates on a first-to-file (and never a first-to-use) foundation in the case of amassing rights, save for updates to the legislation to incorporate dangerous religion submitting recourse for model homeowners and people, which were focused by such infringement. 

Of explicit observe needs to be the truth that in relation to the proving of prior identify rights by Jordan, the SPC adopted a extra relaxed method of requiring solely a “secure” (versus “absolute” or “sole”) corresponding relationship between the identify in dispute and the particular person claiming to have the prior rights.  It needs to be famous that apart from the articles submitted, the outcomes of the events’ shopper research performed an essential position in persuading the SPC to simply accept the “secure” corresponding relationship between Michael Jordan and “Qiaodan.” As such, this judgment serves for instance as to how – precisely – correct survey/investigation needs to be performed.

New Steadiness v. New Barlun 

In a separate case, the Shanghai Pudong Individuals’s Courtroom (“PPC”) just lately issued a call in favor of New Steadiness in its unfair competitors lawsuit in opposition to New Barlun Co Ltd., ordering the Chinese language athletic firm to pay the Boston, Massachusetts-based sportswear large damages of RMB 10.eight million ($1.5 million) in reference to its unauthorized use of the stylized letter “N” on its footwear. The PPC’s April 2020 resolution – which introduced an finish to New Steadiness’s 16-year battle in opposition to the copycat model that had loved vital success by imitating New Steadiness’s stylized “N” emblem – adopted from years of losses for New Steadiness within the type of opposition and invalidation proceedings in opposition to the registration of the mark by New Barlun. 

Because it seems, New Barlun efficiently obtained a trademark registration for a lookalike mark lengthy earlier than New Steadiness, thereby, highlighting one of many extra frequent techniques employed by trademark infringing events: the registration and use of marks which can be virtually similar to international manufacturers’ marks with a slight modification with the intention to keep away from dealing with any objection throughout the registration course of. 

On this case, New Steadiness efficiently argued that apart from its rights within the “N” emblem, itself, it had amassed commerce costume rights within the placement of its signature “N” on each side of its sneakers because of its repeated and constant use of the mark and its explicit placement on its footwear since 2001, which was earlier than the applying of the lookalike mark by New Barlun, resulting in its win based mostly on unfair competitors.

In siding with New Steadiness, the PPC held that New Steadiness’s commerce costume rights, that are civil rights, and its trademark rights, that are obtained by way of administrative procedures, are separate forms of mental property with completely different scopes and durations of safety. As such, no matter whether or not New Barlun had obtained a registration for the “N” mark, it was utilizing the mark within the precise format on its footwear, and thus, gave rise to merited claims of commerce costume infringement/unfair competitors by New Steadiness. 

A key takeaway right here is that along with pursuing trademark infringement actions, model homeowners ought to take into account asserting unfair competitors claims, as that may seemingly trigger the courtroom shall be extra prepared to have in mind all related components, as an alternative of merely ruling on the premise of the existence of a trademark registration.

What Manufacturers Have to Know

Taken collectively, these two instances are in keeping with bigger tendencies exhibited by Chinese language courts in recent times, such has seen them train their discretion and award damages above the statutory limits and/or exhibit growing willingness to guard non-native model homeowners’ rights in China after exhibiting vital choice for native entities.

As World Trademark Evaluate beforehand asserted, damages awards in civil trademark infringement instances are inclined to quantity to “the precise losses that the plaintiff suffers because of this” of the infringement, and in instances wherein “precise losses can’t be ascertained, damages could also be calculated based mostly on any illicit income that the defendant earns from the trademark infringement.” Even with that in thoughts, based mostly on “a number of judicial interpretations and judicial opinions,” and relying on whether or not “the trademark infringement is malicious and ends in critical damages,” courts might go (and have gone) “past the statutory Rmb3 million [$429,565] restrict and grant considerably increased damages if supporting proof is offered,” which is exactly what occurred within the New Steadiness case.

This development goes again to 2015 when the Beijing Mental Property Courtroom awarded its first-ever most statutory harm underneath China’s trademark legislation in favor of luxurious outwear maker Moncler in its trademark infringement and unfair competitors combat in opposition to a local Chinese language attire firm.

Furthermore, it’s price noting in reference to each instances that non-native rights holders in search of to stomp out infringement of their marks in China might depend on current rights different these supplied by trademark legislation as grounds for litigation, and are inspired to construct their instances by producing a major quantity of proof, together with detailed and controlled investigations and surveys with notarization (as we observe that courts are extra inclined to simply accept them as proof) to ascertain secondary which means. 

These instances are seemingly simply two of a rising pool of litigation that may see Western model homeowners efficiently claiming rights of their logos in China from infringing events and trademark squatters.  

Ken Hung is a Companion of Vivien Chan & Co. 

Vivian Chan is the founding and senior companion of Vivien Chan & Co., a Better China legislation agency with workplaces in Hong Kong and Beijing. (Edits/additions courtesy of TFL)

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