China: Unitalen Safeguarded Time-honored Brand In Trademark Infringement & Unfair Competition Case

Main Facts

Wu Liangcai Optical Co., Ltd. of Shanghai Sanlian (Group) Co., Ltd. ("Wu Liangcai", one of the joint "Plaintiffs") has a history tracing back to 1719 and opened a branch store in Nanjing in 1947. Since 1989, the plaintiffs registered a number of 吴良材 (Wu Liangcai in Chinese) marks and obtained well-known mark recognition in 2004.

Nanjing Wu Liangcai Co., Ltd. (the Defendant) was established in 1979, using the same Chinese 吴良材 in its company name. In 2015, the Plaintiffs discovered that the Defendant and its branches used business names and logos containing 吴良材 in their business operations, and massively developed franchising business by using the business name 吴良材, along with declarations to the public such as that Defendant was developed from the Nanjing branch of the Plaintiffs. The Plaintiffs brought a civil action against the Defendant for trademark infringement and unfair competition, requesting that the defendant should cease the use of "Wu Liangcai" as business name as well as all the infringement activities, and compensate for the economic loss of 3 million yuan and eliminate impact.

Court Judgement

Shanghai Huangpu District Court held that, as the Defendant and Wu Liangcai's Nanjing Branch established in 1947 did have certain historical connection, and the Defendant registered the business name earlier than the Plaintiffs' trademark registration, the Defendant's registration and use of 吴良材 in its business name does not constitute unfair competition. However, in the absence of evidence proving the Defendant's business name had gained popularity and influence beyond the region of Nanjing City, the Defendant's activities of opening a large number of branches outside of Nanjing city, developing franchisees and authorizing the use of business name containing 吴良材constituted trademark infringement and unfair competition. The court hence decided that the Defendant and all its branches shall stop registering and using business names with 吴良材 outside of Nanjing City, and that the Defendant shall compensate the Plaintiffs' economic losses of RMB 2.6 million (nearly 0.4 million US dollar) and take measures to eliminate the impact. The Defendant's appeal to the higher court was dismissed.

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