Conflict of rights between well-known trademarks and registered trademarks— Mead Johnson & Company, LLC. v. Guangzhou Shiyan Trading Co., Ltd. et al.[1]
The boundary of protection for the exclusive right to use a registered trademark is closely related to the extent of the relevant public’s knowledge about it. It is generally believed that the higher the reputation of a trademark, the broader the scope of rights of such trademark. As such, the PRC law provides cross-class protection for well-known trademarks. In a well- known trademark infringement dispute, whether the trademark used by the defendant has been approved for registration does not necessarily affect the determination as to whether the alleged act constitutes an infringement. If the registered trademark used is a reproduction, an imitation or a translation of a well-known trademark, it is still possible to constitute an infringement. In Mead Johnson & Company, LLC. (“Mead Johnson”) v. Guangzhou Shiyan Trading Co., Ltd. (“Shiyan”), Komar Cosmetics (Guangzhou) Co., Ltd. (“Komar”) et. al., it is the first time for a PRC court to recognize a registered trademark of a famous dairy brand as a well-known trademark in a trademark infringement dispute in the baby dairy industry. King & Wood Mallesons (“KWM”) Intellectual Property team represented Mead Johnson in this case, and secured favorable judgments in both the first and second instances. This typical and pioneering case has a great impact on the brand and trademark protection of domestic and foreign well-known dairy brands in the baby dairy industry in China.
I. Basic facts of the case
As a renowned multinational manufacturer of nutrition products, Mead Johnson has obtained and maintained the trademark “美贊臣” with registration No. 1728465 (the “Registered Trademark”) in China since 2002. The Registered Trademark is approved to be used for Class 5 goods, including powdered milk and food for babies.
Mead Johnson found that Shiyan, Komar and Li Kana manufactured and sold infant and baby bath and body care products labeled with “美贊臣.” The trademark “ 美贊臣” was used in the outer package, brochures and advertisements of their products as well as in online promotions. The words “Made under the authorization of Mead Johnson & Company, LLC.” (“美国美赞臣有限公司授权监制”) were even marked on their products.
Mead Johnson filed a trademark infringement lawsuit with Guangzhou Intermediate People’s Court in August 2013 on the grounds of cross-class protection for its well-known trademark. The court of first instance held that the evidence produced by Mead Johnson was sufficient to prove that the Registered Trademark was a well-known trademark in Class 5 goods—powdered milk for babies. Thus, the court determined that Shiyan, Komar and Li Kana infringed on the Registered Trademark and bore respective civil liabilities. The court ordered the three co-defendants to immediately cease the infringing acts and pay Mead Johnson civil damages for their infringements. Despite Shiyan and Komar’s efforts to appeal to Guangdong High People’s Court, the second instance court affirmed the first instance decision. After the second instance, Shiyan filed a petition to the Supreme People’s Court (the “SPC”) for retrial, which was later rejected by the SPC.
II. Case adjudication
(I) Was the Registered Trademark a well-known trademark?
In the case, Mead Johnson produced evidence in respect of advertisements, press releases, market share, operating profits, relevant honors and charitable donations to prove that the Registered Trademark was a well-known trademark. The evidence showed that Mead Johnson had carried out extensive advertising campaigns for its products and brand. Consumers were exposed to relevant information about Mead Johnson and its trademarks and products via major media channels such as TV, Internet, newspapers and magazines. Moreover, Mead Johnson had participated in a number of charitable donations, and was listed as one of the Top 10 Best-selling
Brands in Food Industry. The foregoing evidence had established that Mead Johnson enjoyed a high reputation among the relevant public. The research report by Nielsen Company (Guangzhou) Ltd. proved that the Registered Trademark had a certain market share, which echoed such facts established by the foregoing evidence.
Shiyan and Komar argued that the Registered Trademark was not recognized as a well-known trademark in the previous trademark administrative proceedings, while the court of first instance so determined because it applied lower standards than those in the administrative proceedings. The court of second instance, however, held that previous administrative proceedings and subsequent civil proceedings were deemed as two sets of independent proceedings, and the applicable standards in determining well-known trademarks in administrative proceedings had no precedential effect on subsequent civil disputes. Although the Registered Trademark had not been recognized as a well-known trademark in the previous administrative proceedings, it should be a separate question whether it would be so recognized in the subsequent civil dispute. In this case, the evidence provided by Mead Johnson was sufficient to establish that the Registered Trademark was a well-known trademark in Class 5 goods—powdered milk for babies.
In addition, Shiyan submitted to the court the Statement on Trademark License issued by a third party named Zhu Kongxue (the “Third Party”) in 2013 in an effort to show that the Third Party applied for registration of the trademark “美赞臣” in Class 3 in 2005 with application No. 4967542 and agreed to license the trademark to Shiyan. Based on such Statement, Shiyan argued that its use of the allegedly infringing logo of “美贊臣” was a legitimate use of Third Party’s trademark “美赞臣.” In accordance with Article 11 of the Interpretations of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Civil Disputes Involving Well- known Trademark Protection (the “Interpretations on Well-known Trademarks”), in order to determine whether the Registered Trademark was a well-known trademark, the application date (i.e. 28 October 2005) of the “美赞臣” (in simplified Chinese) trademark applied by the Third Party for registration should therefore be considered as the point in time. However, most of the evidence on trade- mark popularity produced by Mead Johnson was to prove what happened after 2005. In light of the above, the SPC affirmed that it was appropriate for the courts of first and second instance to determine whether the Registered Trademark was well-known based on the time when the infringement occurred and the relevant facts of the case.
(II) Did the alleged act constitute trademark infringement?
The Registered Trademark involved in this case was widely advertised and used for a long time by Mead Johnson, and was widely known to the public with high reputation.
The use of “美贊臣” by Shiyan and Komar on the allegedly infringing products was sufficient to leave the relevant public with a false impression that “美贊臣” of Shiyanand Komar was in close connection with the Registered Trademark of Mead Johnson. Such false impression misled the relevant public and damaged the interests of Mead Johnson. Thus, the use of “ 美 贊 臣 ” by Shiyan and Komar constituted trademark infringement.
Shiyan and Komar argued that their use of “ 美 贊 臣 ” was a legitimate use of the Third Party’s registered trademark “ 美 贊 臣 ” and therefore did not constitute trademark infringement. The court of second instance held that the trademark applied by the Third Party had not been approved for registration and thus the Third Party did not enjoy the exclusive right to use the trademark. Even if his trademark had been registered upon approval, it did not automatically render the alleged infringement non-infringing upon the well-known trademark of “美贊臣” in this case if the alleged infringement predated the registration date of the Third Party’s trademark. The allegation of Shiyan and Komar could not be supported due to lack of factual and legal basis. The SPC ruled that whether the trademark licensed by the Third Party to Shiyan was registered or not would not affect the lower court’s analysis and decision regarding the infringement claim.
(III) Was the amount of compensation awarded reasonable?
Komar alleged that in view of the penalty awarded under the administrative decision by the administration for industry and commerce in Guangzhou and the processing contract between Shiyan and Komar, the profits gained by it from the commissioned processing were far less than the amount of compensation awarded in the judgment of first instance.
The court of second instance held that the local authority’s penalty awarded underthe administrative decision and the processing contract proved that Shiyan and Komar had manufactured the infringing products, but such evidence failed to prove that the manufacturing activities of Komar were limited to the transaction contemplated in the processing contract only.
Since (i) it was difficult to calculate the actual profits gained by Shiyan and Komar or the losses suffered by Mead Johnson from the infringement, and (ii) Mead Johnson expressly requested the court to determine the compensation amount as appropriate, the court, taking into account (a) the Registered Trademark being a well-known trademark, (b) the subjective malice of Shiyan and Komar, and (c) the nature and circumstance of their infringement, awarded RMB 700,000 in total in compensation and reasonable costs of right protection.
III. Case analysis
(I) Principles for recognition of well-known trademarks
Article 14 of the Trademark Law revised in 2013 specifies that the Trademark Office, the Trademark Review and Adjudication Board and the people’s court may recognize whether a trademark is well-known in their respective proceedings. In addition, Article 14 articulates specific factors to be considered for recognition of well-known trademarks. Obviously, the recognition system of well-known trademarks in China avails both administrative and judicial protections. A trademark infringement litigation differs from an objection to trademark registration or a trademark dispute in the review and adjudication proceedings; rather, they are different in nature and independent of each other. Courts and administrative authorities have the power to make independent judgments and review relevant facts on a case by case basis regarding whether a trademark is well-known in the respective judicial and administrative proceedings.
Whether a trademark is wellknown is an issue of fact and should be determined on a case by case basis following the principle of passive recognition. Whether a trademark is “well-known” has legal significance only under the circumstances of conflict. In response to different disputes from those adjudicated by the State Administration for Industry and Commerce, courts examine different sets of evidence, and the judicial decision on whether a trademark is well-known may of course vary. The fact that a trademark has not been previously recognized as a “wellknown trademark” does not mean that it cannot be recognized and protected as a well- known trademark in the future judicial or administrative proceedings. In this case, the establishment of the Registered Trademark as a well-known trademark was the factual premise for the trial of the case, and is of vital importance to the outcome of the case. However, there was a fact that was relatively unfavorable to Mead Johnson. In the previous rulings made by the Trademark Review and Adjudication Board and the Trademark Office, the Registered Trademark was not recognized as a well-known trademark due to insufficiency of evidentiary support.
During the pre-litigation preparation, KWM IP team assisted Mead Johnson in collecting evidence on the reputation of the Registered Trademark from all aspects and examined the facts that Mead Johnson advertised the Registered Trademark through newspaper, the Internet, outdoor advertising and other channels. In addition, the team collected data on the market share, sales volume, profits and taxes, and sales regions of the powdered milk products for babies labeled with “美贊臣,” sorting out abundant evidence on the popularity and market reputation of those products. During
the litigation, KWM, on behalf of Mead Johnson, submitted evidence in various aspects such as advertising, media coverage, market share, operating profits, relevanthonors, charitable donations and market research reports, setting out sufficient factualbasis to prove that the Registered Trademark enjoyed a high reputation and popularity among the public, especially the relevant public.
Although the Registered Trademark was not recognized as a well-known trademark in the previous administrative proceedings, in the litigation, at the request of Mead Johnson, the courts of first and second instance rendered the case-specific judgments after examining the evidence produced by Mead Johnson. Both courts recognized that the Registered Trademark was a well-known trademark and rendered cross-class protection. These judgments do not contradict the ruling of the Trademark Office and the Trademark Review and Adjudication Board, and conform to the regulations on judicial protection for well-known trademarks.
(II) Point in time for recognition of a trademark’s well-known status
The boundary of protection for the exclusive right to use a registered trademark is closely related to the extent of relevant public’s knowledge about it. It is generally believed that the higher the reputation of a trademark, the broader the scope of rights of such trademark. For this reason, the PRC law provides cross-class protection for well-known trademarks. However, the popularity of the trademark is not stable or permanent, and will change with the actual use of the trademark from time to time. Therefore, recognition of a well-known trademark is an issue of fact. In a trademark infringement case, only if the time when the infringement occurred is taken as the point of time for determination on the popularity of the trademark, can it be possible to accurately identify the scope of the rights in the trademark and decide whether the defendant’s act infringes on the plaintiff’s rights in the trademark.
Article 5 of the Interpretations on Wellknown Trademarks provides that if a party claims that a trademark is well-known, it bears the burden to produce the following evidence based on the specific circumstances of the case to prove that the trademark has been well-known when the alleged trademark infringement or unfair competition occurred... This Article makes it clear that, in a civil case involving infringement on the exclusive right to use a registered trademark, the time for the court to determine whether a trademark is well-known shall be the time when the alleged infringement occurs. In this case, the alleged infringement took place in 2013; therefore, the point in time for the court to determine whether the Registered Trademark constitutes a well-known trademark should be 2013.
Article 11 of the Interpretations on Well-known Trademarks provides that if the registered trademark used by the defendant violates Article 13 of the Trademark Law by reproducing, imitating or translating the well-known trademark of the plaintiff, which constitutes trademark infringement, the people’s court shall, at the request of the plaintiff, enjoin the defendant from using the respective trademark; provided, however, that the people’s court shall not uphold the plaintiff’s request if the registered trademark of the defendant is under any of the following circumstances: ...
(2) when the defendant applied for registration, the trademark of the plaintiff was not well-known. By citing Article 11 of the Interpretations on Well-known Trademarks, the co-defendant argued that the point in time in determining whether the Registered Trademark was well-known should be the time when the application was filed for registration in respect of the trademark which the co-defendant was authorized to use. Article 11 in fact addresses the conflict of rights in registered trademarks. If both the plaintiff and the defendant hold a legitimate and valid registered trademark and there is a conflict of rights in the use of such trademarks, the court shall also consider the popularity of the plaintiff’s trademark at the time when the defendant applied for registration of the trademark in order to determine the legality of the defendant’s registration and use of such trademark. As such, Article 11 should apply only if, at the time of the litigation, the defendant is using a trademark having been approved for registration. In this case, the trademark “美赞臣” that the defendant claimed had not yet been approved for registration; therefore, Article 11 shall not apply.
(III) Conflict of rights between well-known trademarks and registered trademarks
In practice, conflicts of rights between registered trademarks are common. In this regard, Paragraph 2 of Article 1 of the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Civil Dispute Cases Involving Conflicts Between Registered Trademarks or Enterprise Names and Prior Rights provides that where a plaintiff initiates a lawsuit on the grounds that the registered trademark used by other parties on approved goods is identical or similar to the plaintiff’s prior registered trademark, the people’s court shall inform the plaintiff t o settle the dispute through the relevant administrative procedures in accordance with the third paragraph of Article 111 of the Civil Procedure Law of the People’s Republic of China. Under this Article, if a conflict of rights arises between two registered trademarks, such conflict does not fall under the jurisdiction of the court; rather, the parties shall resolve such conflict via trademark invalidation proceedings.
Considering greater protection should be provided for well-known trademarks than for ordinary trademarks, the law sets forth exceptions to the conflict of rightsinvolving well-known trademarks. Article 13 of the Trademark Law provides that where a mark is a reproduction, imitation or translation of a third-party’s well-known trademark that has not been registered in China i n respect of identical or similar goods, which may cause public confusion, the mark shall not be granted for registration and shall be prohibited from using. Where a mark is a reproduction, imitation, or translation of a third-party’s well-known trademark that has been registered in China in respect of different or dissimilar goods, which may cause public confusion and damage to the interests of the registrant of the well-known trademark, the mark shall not be granted for registration and shall be prohibited from using. Article 11 of the Interpretations on Well-known Trademarks provides that if the registered trademark used by the defendant violates Article 13 of the Trademark Law by reproducing, imitating or translating the well-known trademark of the plaintiff, which constitutes trademark infringement, the people’s court shall, at the request of the plaintiff, enjoin the defendant from using the trademark… According to such provisions, any subsequent trademark that infringes upon the well-known trademark shall be not only “refused to register” but also “prohibited from using.” For the conflict of rights between a well-known trademark and a registered trademark, the owner of the well-known trademark may not only request invalidation of the later registered trademark through the trademark invalidation proceedings, but also directly file a lawsuit requesting the court to enjoin the defendant from using the registered trademark.
In this case, the key argument raised by the defendant was that its use of the alleged logo was the legitimate use of a registered trademark of the Third Party. In response to this argument, KWM IP team conducted a comprehensive review of the facts of the case and relevant evidence, and pointed out one detail that the defendant attempted to confuse the court. That is, the trademark the co-defendant actually used was the same as Mead Johnson’s Registered Trademark “美贊臣” in which the character “ 贊 ” is the traditional Chinese form of the simplified Chinese character “ 赞” in the so-called trademark of “美赞臣” registered by the Third Party. In addition, the court found out that the trademark of the Third Party had not yet been approved for registration. In the decision of the court of second instance, the court further pointed out that even if the trademark had been registered upon approval, the alleged infringement did not necessarily constitute non-infringement.
In light of the above, in a well-known trademark infringement dispute, whether the trademark used by the defendant is approved for registration does not necessarily affect the determination as to whether the alleged act constitutes an infringement.the registered trademark used is a reproduction, an imitation or a translation of a wellknown trademark of the plaintiff, the use may still constitute an infringement and shall be enjoined.
This is the first case in which a PRC court recognized a registered trademark of a famous dairy brand as a well-known trademark in a trademark infringement dispute in the baby dairy industry. The case has a great impact on the brand and trademark protection of domestic and foreign well-known dairy brands in the baby dairy industry in China. On behalf of Mead Johnson, KWM IP team developed a systematic litigation strategy after a thorough study. By collecting and sorting out a large amount of evidence from all possible aspects, the team identified the decisive detail and pertinently targeted upon the defendant’s arguments, and helped Mead Johnson achieve a favorable decision.
King & Wood Mallesons represented Mead Johnson & Company, LLC. in the case.
