The Suzhou Intermediate Court concluded a first instance unfair competition dispute between the plaintiff, the French National Cognac Industry Office ("Cognac Industry Office"), and the defendants Ford Motor (China) Co., Ltd. ("Ford China"), Changan Ford Motor Co., Ltd. ("Changan Ford"), and Suzhou Tianchi Xinjia Automobile Sales & Service Co., Ltd. ("Tianchi"). The Suzhou Intermediate Court found that Ford China, Changan Ford shall immediately stop using "Cognac in Chinese" and "COGNAC," geographical indications, as the name of color of its cars. Changan Ford shall immediately stop sales said cars. The defendants shall compensate the plaintiff for RMB2 million (USD 274,145) in economic loss and reasonable expenses. The Jiangsu High Court recently concluded the second instance trial that rejected the appeal and affirmed the Suzhou Intermediate Court's decision.
The Court found that Ford China, Changan Ford named four models of its cars in three styles as "Special COGNAC version" that used "CONGAC" prominently and has cognac brown interiors. Moreover, large amount of promotional materials used various explanations and comparisons to highlight the differences in these special version cars compared to regular version in order to enhance the style and taste of the cars involved in the case.
In China's color regulations, "COGNAC" is not included and cognac brown is also not a generic name that's commonly used. Under the circumstances that Cognac, as a geographical indicator, is highly famous, Ford China and Changan Ford, as a worldwide car manufacturer, could not possibly be unaware of its fame. Multinational companies like Ford China and Changan Ford shall bear higher intellectual property awareness than other regular businesses. It shall apply stringent considerations when naming its car models and avoid infringing other's legal interests. However, instead of fulfilling its reasonable duty of care, Ford China and Changan Ford established a specific relationship with the Cognac geographical indication through various improper methods, which caused confusion and misunderstanding among the relevant public.
The relevant public of Cognac includes high-end consumers, which has certain overlap with car consumers of Ford China and Changan Ford. Their actions were enough to mislead the relevant public and make the relevant public mistakenly believe that the four models of cars in three styles have some specific connection with the Cognac Industry Office and were launched in cooperation with the Cognac Industry Office. Although Cognac as a geographical indication mainly refers to a type of wine, under the trend of diversified development of modern industries, cross-border cooperation and mixed operations are becoming more and more common, Ford China and Changan Ford's use of "Cognac in Chinese" and "COGNAC" can easily cause confusion among the relevant public. Their behavior was clearly an act of improper use of the goodwill of "Cognac" that was confusing enough to cause people to mistake it for Cognac related goods or has a specific connection with Cognac, the location, and constituted unfair competition.
In particular, it should be pointed out that the reason why Ford China and Changan Ford's involvement in the case constituted unfair competition is that there is another important interest balance to prevent the risk of generalization of the "Cognac" geographical indication. Even if the acts of Ford China and Changan Ford would not cause confusion and misunderstanding among the relevant public, since Ford China and Changan Ford are part of a worldwide automobile manufacturer that has a large number of consumer groups. Their use of the "Cognac" geographical indication in the naming of automobile products and interior colors would cause the relevant public include additional meanings to the original understanding of "Cognac" as the geographical indication of the special origin of a type of brandy wine. Such use by Ford China and Changan Ford will definitely weaken its original meaning as the special origin of a type of brandy wine, and exposed "Cognac" to become a generic name. Ford China and Changan Ford's acts enhanced the possibility of revocation of Cognac as a geographic indicator, which undoubtedly damage the long term promotion, marketing, and operating of "Cognac" as a geographic indicator by the Cognac Industry Office. Consider the above, the court made a negative evaluation of the behaviors of Ford China and Changan Ford in order to provide legal guidance to the behavior of other market players.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.