This article was written by Dang Zhe(partner) & He Shijia(assistant associate).
On 30 December 2016, the KWM IP litigation team helped Deere & Company and its Chinese subsidiary John Deere (China) Investment Co., Ltd. (“Deere China”) win at first instance of a lawsuit involving trademark infringement and unfair competition. Deere & Company’s three trademarks, “JOHN DEERE” in Classes 7 and 12, and “约翰.迪尔” (“JOHN DEERE” in Chinese characters) in Class 7 were recognized as well-known trademarks by Beijing IP Court in this case. The court ordered the three defendants to cease infringement, make a public statement to eliminate adverse effects, and awarded the plaintiffs RMB 5 million in punitive damages and over RMB 360,000 in reasonable expenses. On 10 January 2017, at a press release for the second anniversary of the Beijing IP Court, the case was selected as a paradigm of “strengthening judicial protection of IPRs”.
Founded in 1837, Deere & Company is one of the largest manufacturers of agricultural machinery in the world. It entered the Chinese market in 1976, established its first Chinese subsidiary, John Deere Jialian Harvester Company Ltd. in 1997, and set up a wholly owned company, Deere China, in 2000. Its registered trademarks, “JOHN DEERE”, “约翰.迪尔”, and “ ” are Deere & Company’s core marks, which have been widely used on agricultural machinery in Class 7, tractors in Class 12 and industrial oil in Class 4. Meanwhile, Deere & Company also owns registered trademarks such as “HY-GARD” and “PLUS-50” in Class 4.
The defendant John Deere (Beijing) Agricultural Machinery Co., Ltd. and the other two are actually controlled by the same person, who not only set up a number of copycat enterprises with the name of “约翰迪尔” in China, but also incorporated in Washington State, USA a shell company named “AMERICAN JOHN DEERE PETROLEUM CHEMICAL INDUSTRY GROUP, INC.” (which had been forbidden permanently by the US Federal Court to use Deere & Company’s trademarks and trade names). The defendants had long claimed to be Chinese subsidiaries of the said shell company. By cooperation, they produced and sold industrial oils in China under trademarks identical with or similar to Deere & Company’s registered trademarks. And one of them even registered “佳联迪尔” (“Jialian Deere” in Chinese characters) as its own trademark on industrial oils in Class 4. Apart from trademarks, the defendants had used company names, domain names and industrial designs imitating Deere & Company’s marks and logos, and engaged in unfair competition by false advertising and defamation, which had caused material damage to Deere & Company. During the litigation, to turn the facts on their heads, they even brazenly filed a lawsuit against Deere & Company for infringement of their “design patent” which was obtained by imitating Deere & Company’s IP. To safeguard their legitimate rights and interests, Deere & Company and Deere China brought this lawsuit before the Beijing IP Court against the three defendants for trademark infringement and unfair competition.
Highlights of this Case
1. It makes it clear that protection for well-known marks is more than “cross-class protection”. Where an ordinary registered trademark imitates a registered well-known trademark on the same or similar products and constitutes trademark infringement, the courts may directly accept and decide the case under Article 13 of PRC Trademark Law.
The law provides stronger protection for well-known trademarks than ordinary trademarks, and this is reflected in Article 13 of PRC Trademark Law. The common understanding of this Article is that it protects an unregistered well-known trademark as if it were an ordinary registered trademark, and it protects a well-known trademark across different classes. In fact, the protection under Article 13 of PRC Trademark Law for well-known trademarks is not limited to that. It is also reflected in Article 11 of Supreme People's Court Interpretation on Several Issues of Applications of Law in the Handling of Civil Disputes Involving the Protection of Well-known Trademarks (“Judicial Interpretation on Well-Known Trademarks”). In practice, any dispute between two registered trademarks should first be submitted to the competent administrative authority for resolution, and the dispute may not be directly accepted by the court. However, according to Article 11 of the Judicial Interpretation on Well-Known Trademarks, where the defendant’s registered trademark violates Article 13 of PRC Trademark Law by copying, imitating or translating the plaintiff’s well-known trademark, and thus constitutes trademark infringement, the court may directly accept and decide the case. But, according to the literal meaning of Article 13 of the Trademark Law, Article 13 provides the registered well-known trademark the “cross-class protection” in a dispute against an ordinary trademark. If a well-known trademark is imitated by an ordinary registered trademark on the same or similar products, does Article 13 of the Trademark Law apply? In other words, is protection for registered well-known trademarks under Article 13 of the Trademark Law limited to “cross-class protection”? The Trademark Law and judicial interpretations do not provide for that exhaustively. This is the main law application issue discussed and answered by the judgment of this case.
The court held that Article 13 of PRC Trademark Law provides “cross-class protection” for well-known trademarks when registration of a trademark is sought, and it is intended to provide stronger protection for well-known trademarks than for ordinary trademarks. Though Article 13 does not expressly provide for the circumstance where an ordinary trademark copies, imitates or translates a well-known trademark registered in China on the same or similar products, considering the legislative intent and natural interpretation of the law, such circumstance is more worthy of protection under Article 13 than the copying, imitating or translating a well-known trademark registered in China on different or dissimilar products. The Supreme People’s Court also confirms in the judgment of an administrative litigation case [(2011) Zhi Xing Zi No. 15] that since Paragraph 2 of Article 13 of PRC Trademark Law is applicable to the trademark registration applications on different or dissimilar products, it is certainly applicable to the trademark registration applications on the same or similar products. Similarly, because under Article 11 of the Judicial Interpretation on Well-Known Trademarks, a court may directly hear any dispute between a registered well-known trademark and an ordinary registered trademark on different or dissimilar products, based on the stronger protection for well-known trademarks, this supports the court’s jurisdiction to handle a dispute between a registered well-known trademark and an ordinary registered trademark on the same or similar products under Article 11. Therefore, the protection under Article 13 of PRC Trademark Law for registered well-known trademarks should not be limited to “cross-class protection”. In respect of a dispute between a registered well-known trademark and an ordinary registered trademark on the same or similar products, the court may accept and decide the case by applying Article 13 of PRC Trademark Law in accordance with Article 11 of the Judicial Interpretation on Well-Known Trademarks.
For the above reasons, when it was found that industrial oils in Class 4 (the designated goods of the defendants’ registered trademark “佳联迪尔”) were similar to agricultural machinery in Class 7 (the designated goods of the plaintiffs’ well-known trademarks No.206346 “JOHN DEERE” and No.7879578 “约翰.迪尔”), as well as tractors in Class 12 (the designated goods of the plaintiffs’ well-known trademark No.206347 “JOHN DEERE”), the court ruled that the defendants’ use of the registered trademark “佳联迪尔” constituted copying, passing-off or translation of the plaintiffs’ well-known trademarks of “JOHN DEERE” and “约翰.迪尔” , and should be prohibited.
2. It confirms the judicial policy to strengthen the protection of IP. In a single case, it found several infringements, recognized three well-known trademarks, applied punitive damages, and admonished the defendant for withholding evidence.
A. Defendants’ wrongdoing constituted several infringements
This is a case involving “comprehensive, multiple-level and in-depth” malicious infringements. The infringements committed by the three defendants and their actual controllers involved trademarks, domain names and trade names. They also engaged in unfair competition by means of false advertising and defamation. The court ruled that the defendants committed several infringements, including trademark infringement and unfair competition, and it moved to fully protect the plaintiffs’ legitimate rights and interests.
B. Recognition of three well-known trademarks in one case
In order to fully protect the plaintiffs’ IP rights, the court recognized three trademarks of Deere & Company as well-known trademarks. The plaintiffs provided substantial evidence to prove the three trademarks in question were well-known, including product sales contracts and invoices, advertising contracts and invoices, financial audit reports, industry awards and certificates, and media coverage etc. The court decided that such evidence was sufficient to prove that the plaintiffs’ trademarks, No.206346 “JOHN DEERE” and No.7879578 “约翰.迪尔” on agricultural machinery in Class 7, and No.206347 “JOHN DEERE” on tractors in Class 12 constituted well-known trademarks.
C. Application of punitive damages, and admonition of the defendants for obstructing the provision of evidence
This is another typical case where the Beijing IP Court has granted punitive damages based on the circumstances and according to the allocation and determination rules of burden of proof with respect to infringement damages under Article 63 of PRC Trademark Law. The plaintiffs claimed that damages should be determined based on the profits of the defendants from the infringements, and punitive damages should be granted. The total amount of damages claimed by the plaintiffs was RMB 5 million. In this regard, the collegiate bench gave both parties a full opportunity to provide evidence. The plaintiffs provided full evidence through various available channels of collecting proof, and submitted the basic data and computation logic for the amount claimed. However, the defendants refused to submit the accounting books and documents relating to the infringements during the trial, and the court explained to the defendants many times the burden of evidence under Article 63 of PRC Trademark law, but the defendants still failed to provide the accounting books and documents. The court decided that the defendants withheld and concealed sales evidence adverse to them, and this constituted obstruction of proof of damages. In its decision the court took into account that the defendants committed infringements in various ways, there were many infringing trademarks involved, the infringements were comprehensive and also involved unfair competition, and, particularly, the infringements continued after an administrative penalty was imposed, the circumstances were severe, and the intent was malicious. Consequently the court fully supported the plaintiffs’ claim for damages of RMB 5 million, and the reasonable expenses of over RMB 360,000, after verifying and adjusting the plaintiffs’ computation formula, and admonishing the obstruction of proof of damages by the defendants.
This case was handled by the team of Judge Zhang Lingling of the Beijing IP Court. Since the infringements were complex and the amount of evidence was large, the collegiate bench arranged for the parties to present and examine the evidence on a number of occasions. The court provided a full opportunity to both parties to provide proof of evidence, and patiently and carefully sorted out the evidence and investigated the facts. This first instance decision is over 70 pages long, and sets out the detailed investigation of the facts, and a sound analysis of relevant legal issues. The decision cracks down powerfully on a malicious long term passing off which behavior is hated by the business community. It represents the determination of Chinese judiciary to “strengthen the protection of IP firmly”, and boosts the morale and confidence of lawful operators in the market.
The KWM partners in charge for this case were Zhu Nongfan and Dang Zhe of the IP team, and Dang Zhe and Zhang Jiaqi represented the plaintiffs in the court.
Article 1 Para2 of the Supreme People's Court Provisions on Several Issues in the Handling of Civil Disputes over Registered Trademarks, Business Names and Prior Rights provides that if a plaintiff in a lawsuit claims that a registered trademark used on an approved product is identical with or similar to his prior registered trademark, the people’s court should notify the plaintiff to seek resolution at the competent administrative authority under Article 111 (3) of the Civil Procedure Law. However, if the plaintiff claims that a registered trademark used beyond the approved scope of product, or by changing its distinctive characteristics, or by division or combination, and the trademark is thus identical with or similar to his registered trademark, the people’s court should accept the case. This judicial interpretation became effective on March 1, 2008.
Article 11 of the Supreme People's Court Interpretation on Several Law Application Issues in the Handling of Civil Disputes Involving the Protection of Well-known Trademarks provides that if the defendant’s registered trademark violates Article 13 of PRC Trademark Law by copying, imitating or translating the plaintiff’s well-known trademark, and constitutes trademark infringement, the people’s court should prohibit the defendant from using such trademark as requested by the plaintiff, provided that the people’s court will not support the plaintiff’s claim if the defendant’s registered trademark if: (1) the period for applying for cancellation of a registered trademark under Article 41 Para. 2 of PRC Trademark Law has expired; (2) the plaintiff’s trademark is not well known when the defendant applies for registration. The judicial interpretation became effective on May 1, 2009.