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June 2012
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Successful Litigation to Stop Third-Party Use of Trademark in Company Name

Chang Tsi recently represented a leading international retailer in a trademark infringement and unfair competition civil lawsuit against a local competitor. The case was heard by Xiamen Intermediate People's Court, which held that the use of a registered trademark in the company name constituted trademark infringement and unfair compensation.

Our client is a world famous Fortune-500 Company focused on retail and it successfully applied for trademark registration of a Chinese version of its house mark in 2004. The international retailer's trademark was successfully registered in summer 2006. In the fall 2006, a Chinese company in Xiamen registered a company name that fully incorporated the famous name and legally registered trademark of the international retailer. The Xiamen company also used the English version of the international retailer's name as its own, including on its business cards. The business scope of the Xiamen Company was in direct conflict with the international retailer.

Although company registration is handles by the Administration of Industry and Commerce (AIC), which also contains the China Trademark Office, the review procedures for a proposed name at the AIC does not examine potential conflict with registered trademarks. During the examination procedure, conflict with previously registered companies with the local AIC, local famous trademarks, and some well-known trademarks are reviewed. Therefore, a registered company name which infringes upon trademark rights can still be registered with the AIC.

Litigation was necessary in this case, because the local AIC was unwilling to require the registered company to change its name. Technically, an administrative complaint can be filed with the local AIC to require the change of a company name that infringes upon a registered trademark. However, in practice, this is typically infeasible, because (1) local AICs do not wish to voluntarily correct its own administrative behavior; (2) local AICs does not have much expertise in dealing with the complex situation of trademark infringement, (3) the AIC complaint procedure regarding infringing company names is not clearly established.

In this case the reputation of the international retailer was also important. The greater the reputation of a trademark, the more likely the court is to determine that there is a likelihood of confusion. For this case, substantial evidence was submitted that clearly established the reputation of the retailer and its status as a leading Fortune-500 Company. Even though the trademark is not recognized in China as well-known, due to the high reputation of the trademark it was still able to obtain enhanced protection. The Court also awarded RMB 30,000 in compensation.

The Court held that the Xiamen company's name will mislead the relevant public regarding the source of services, and therefore was trademark infringement and unfair competition. The Xiamen retailer was ordered to change its company name to rectify its infringement. This case demonstrates that litigation can be an effective remedy to force a company to change its company name if it infringes upon a legally registered trademark.

15th Anniversary of Chang Tsi & Partners --