This article was written by Mia Qu(partner).
- Plaintiff: China UnionPay
- Defendants: Jinan Daonuo Information and Technology Co., Ltd. & Shandong Yuntai Mingde Information and Technology Co., Ltd.
- Court of Trial (Level): Shanghai Intellectual Property Court (First Instance)
- Nature of Case (Cause of Action): Infringement of the Exclusive Right of Registered Trademark and Unfair Competition
Key Legal Issues
China UnionPay is a bankcard association in China which plays a core and pivotal role in China’s bankcard industry. UnionPay operates an inter-bank transaction settlement system through which the connection and switch between banking systems and acquirers as well as the inter-bank, cross-region and cross-border usages of bankcards issued by associate banks is carried out.
In May 2014, China UnionPay found that a company, Jinan Daonuo Information and Technology Co., Ltd. (“Jinan Daonuo” ) was providing acquiring outsourcing services of acquiring fraudulently using the UnionPay name including:
- counterfeiting UnionPay’s authorisation documents in its operation; and
- using UnionPay’s three-color brand logo, the Chinese and English names of “UnionPay” and the “UnionPay” registered trademark on its POS machines and in the relevant acquiring service.
Jinan Daoduo established many branches and conducted operations in Jinan, Shanghai, Wuhan, Chongqing, Chengdu, Nanjing and other areas. The actual controller of Jinan Daoduo also established Shandong Yuntai Mingde Information and Technology Co., Ltd. (“Yuntai Mingde”) to commit the infringement.
Since the start of the case, King & Wood Mallesons (KWM) was deeply involved in case planning and coordination of specific actions. In July 2014, China UnionPay applied to the administrations for industry and commerce and the police forces in Shanghai, Chongqing, Jinan, Wuhan and other cities for joint law enforcement against Jinan Daoduo and its branches.Jinan Daonuo’s infringement or illegal acts were subsequently investigated and punished in accordance with laws. In December 2014, KWM assisted China UnionPay in filing a lawsuit for trademark infringement and unfair competition with the Shanghai Intellectual Property Court (the “Court”). The Court issued a judgment on 29 September 2016 ordering Jinan Daoduo and Yuntai Mingde to stop the infringement and unfair competition immediately and that they would be liable to pay compensation for China UnionPay’s economic loss and reasonable expense of RMB702,000 on a joint and several basis, and to publish statements on Sina.com, China Finance and other media to eliminate effects. Neither of the parties appealed, and the judgment has since become effective.
Significance and Social Impact
1. The case involved many infringement subjects, various trademarks and complex infringement acts.
- The case involved two infringement subjects and their branches across the country.
- There were up to eight accusations of trademark infringements; up to eleven accusations of infringement acts; and the causes of action included trademark infringement and unfair competition.
- The payment industry involved in the case has its own industry characteristics, and the harm to public interest by such infringement act is concealed.
- In total five sessions and cross-examinations were held with the judgement including 64 pages. The main body of the judgment was roughly over 10 items, and the Court issued the judgment with up to 87 lists of exhibits which were submitted by KWM as the attachments.
- The case was selected as one of the “2016 Top 20 Typical Cases in Shanghai Intellectual Property Court”.
2. The case was used a typical administrative investigation and punishment procedure to fix and collect evidence for IP protection
As many administrative departments in different regions carried out joint law enforcement and conducted spot inspections of the infringement subjects, plenty of evidence of infringement and illegal acts was collected, the infringement subjects were deterrent, and the right holder’s lawful rights and interests were protected. The administrative investigation and punishment procedure in the case was named one of the “2014 Top 10 Shanghai IP Protection Cases”.
3. The case involved bankcard payment and settlement issues in the financial services sector, which were crucial to the finances and data protection of banks, cardholders and merchants.
The case imposed strict punishment on the acts where China UnionPay’s name and brand was used fraudulently without authorization, and clear guidance for the bankcard transaction industry on how to use the UnionPay’s trademark and brand correctly was put in place. Based on its practical significance, the case was named as one of the “2014 Top 10 Typical Cases Involving Consumers and Rights & Interests Infringement” by Shanghai Administration for Industry & Commerce.
4. The case accurately identified the element of trademark infringement, i.e. “the same or similar product or service”.
The Plaintiff China UnionPay is the only bankcard organisation set up by China, and its bankcard transaction services (specifically, payment and settlement) have extremely complex and specific procedures. The infringement subjects were in the upstream payments and settlements sectorthat implemented and promoted the acquiring service, and the accused logo had been widely used in the acquiring service and the goods, transaction documents, promotion materials and other media which were provided by the service. All sectors of bankcard transaction service were investigated thoroughly, and the accused goods and service were identified as of the same or similar category as that approved by the registered trademark.
5. The case applied a new way to identify the joint infringement liabilities to be assumed by two companies without capital relations.
In the case, after Jinan Daonuo received administrative punishment, the actual controller of Jinan Daonuo transferred its equity in the company and established a new company to continue the original business so as to avoid legal liability, but the two companies had no capital relations nor employed the same personnel on the surface. By claiming that joint infringement was constituted and corporate personnel was mixed, the case found a new way to identify the joint liabilities to be assumed by the two companies.