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January 2018
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Chang Tsi & Partners won the “MK logo” trademark infringement lawsuit on behalf of the client, and Hangzhou Intermediate People’s Court rejected all the claims raised by the plaintiff Shantou Jianfa in the first instance

Chang Tsi & Partners successfully defended Michael Kors in a trademark infringement lawsuit brought by a third party, wherein the Hangzhou Intermediate People’s Court rejected all the claims raised by the plaintiff for infringement of the MK logo. This is a significant victory as the mark had been registered by the third party and Michael Kors has been accused of trademark infringement for using the MK logo.

Recently, Hangzhou Intermediate People’s Court made a first instance judgment in a trademark infringement case initiated by Shantou Chenghai Jianfa Handbag Craft Factory (hereinafter referred to as “the plaintiff”) against Michael Kors Trading (Shanghai) Co., Ltd. (“Defendant 1”), Michael Kors (Switzerland) International GmbH (“Defendant 2”), Zhejiang Intime Department Store Inc. (“Defendant 3”), and Beijing JD Century Trading Co. Ltd. (“Defendant 4”), and rejected all the claims raised by the plaintiff Shantou Jianfa. The first instance proceedings of this case, where the amount of damages (CNY 95 Million) claimed is the highest in the history of trademark infringement cases, has been concluded in favor of Michael Kors.

Chang Tsi & Partners, on behalf of Michael Kors, responded to the lawsuit, and filed a lawsuit separately before the same court against Shantou Chenghai Jianfa Handbag Craft Factory regarding its acts of trademark infringement and unfair competition, which is still pending at Hangzhou Intermediate People’s Court.

 

About the brand “MICHAEL KORS”


Michael Kors is a world-famous designer in luxury accessories and apparel. He founded a company in his name in 1981 and officially launched the brand MICHAEL KORS. Over the last 30 years, MICHAEL KORS has become a globally well-known luxury brand and currently enjoys a high reputation in China. According to the 2014 China Luxury Market Research released by Bain & Company, the brand MICHAEL KORS ranks in second place among “attractive emerging luxury brands.”

 

Background of the case

In 1997, Shantou Chenghai Jianfa Handbag Craft Factory (hereinafter referred to as “Shantou Jianfa”) filed an application to register the trademark in Class 18, which was granted in 1999 for goods including various bag related goods. The client Michael Kors (Switzerland) International GmbH ( hereinafter referred to as “Michael Kors”) created the logo in 2000 based on the initial letters of its trade name and house mark “MICHAEL KORS”, and created two logos and (hereinafter collectively referred to as “MK logos”) in 2007, and subsequently used the logos on bags.When this case was initiated, Michael Kors had not been granted registration of the MK logos (as above) on bags in Class 18.

 

Before initiating this case, Shantou Jianfa embarked on a series of premeditated actions, such as initiating an invalidity action against the registration of “MK MICHAEL KORS” (Registration No.: 3603887; Int. Class: 18) owned by Michael Kors based on its prior registration of the mark , so as to acquire from Michael Kors’ defense to the invalidity action information on sales revenue for its branded products. This information was subsequently used as the basis for calculation of damages claimed in the lawsuit.

Shantou Jianfa also conducted multiple administrative raid actions, and filed civil lawsuits against several retail stores selling MICHAEL KORS products.

 

After taking the above actions, Shantou Jianfa filed a lawsuit against Michael Kors, its subsidiaries, and two retailers before Hangzhou Intermediate People's Court, on the ground that the use of a series of MK logos infringed upon its exclusive rights to the registered trademark . Shantou Jianfa demanded that the defendants cease infringement, and claimed CNY 95 million in damages. Please refer to the below chart for a comparison of the marks in question.

 

Difficulties of the case


Complexity: The complexity of the case is reflected below:

First, Shantou Jianfa owned the registration of the trademark  , which was granted in 1999. The MK logo by Michael Kors was created and put into actual use subsequent to that date, in 2000. Therefore, the commonly used defenses based on prior usage and rights would not apply to this case.

Second, Shantou Jianfa was aware of the MK logo used by Michael Kors for a long time, but it did not rush to file a lawsuit. Instead, Shantou Jianfa brought an invalidity action for the purpose of obtaining sales information, and used such sales information as a basis to seek damages of CNY 95 million in a civil lawsuit. In short, this was a premeditated and predatory action by Shangtou Jianfa.

Third, the plaintiff conducted extensive research in choosing a competent court for the case. Since one of the important allegations in the case was reverse confusion, Shantou Jianfa chose Hangzhou Intermediate High People’s Court as it believed that the court would support its claim for reverse confusion.

➤ Importance: Michael Kors’ MK logo has been widely used around the world for many years, and through such use the marks have become synonymous with the brand MICHAEL KORS. If use of the MK logos was recognized as infringement, Michael Kors would not only be liable for a huge amount of damages, but also its future operations in China would also be impacted severely. Therefore, the case(s) were a key battle for Michael Kors.

 

Highlights of the case

➤ Chang Tsi & Partners successfully convinced the court that the coexistence of the MK logos used by Michael Kors and Shantou Jianfa’s trademark would not cause confusion among the relevant public. We did this by presenting a lot of evidence to show the differences between the trademarks, distinctiveness and reputation of corresponding trademarks, degree of attention of the relevant public, evidence of actual confusion, the actual and bona fide use of the infringing logos, etc.

Evidence of the absence of actual confusion was obtained by entrusting a company to conduct a market survey regarding confusion of the respective marks. This expert report was eventually accepted by the court.

The evidence provided by Shantou Jianfa was carefully analyzed and was used to rebut its claims.

➤ One of the subsidiaries of Michael Kors filed a separation litigation against Shantou Jianfa before the same court, to seek damages for trademark infringement and unfair competition, so as to prove the plaintiff’s bad faith for filing the lawsuit in this case.

Meanwhile, Michael Kors filed a civil action against Shantou Jianfa’s infringing actions, requesting Shantou Jianfa to bear corresponding legal responsibilities.

 

Result of the case


All claims raised by Shantou Jianfa were rejected.

 

Significance and impact of the case


➤ This is a typical case where a small Chinese company filed a lawsuit against a multinational company in terms of trademark infringement and claimed for a huge amount of damages. Due to our diligence, we effectively secured the client's commercial interests and maximized the client's legitimate rights.

➤ It can be seen from the whole trial process that the People’s Courts have increasingly improved their capability for handling complex IP infringement cases. Their rapid and fair judgment demonstrates the ability of the court to render equitable judgments in an efficient manner.

➤ The fair outcome of the case reflects the Chinese government’s good image of paying special attention to IP protection. China will further improve the system and mechanism, and laws and regulations for IP protection, thereby providing more powerful and effective protection for investors and right holders.

➤ The fair trial of the case will certainly enhance foreign companies’ confidence in investment in China. It is our belief that a good legal environment will protect the economic development in China.

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