Typical Case: MICHAEL KORS v.s. Shantou Chenghai Jianfa Handbag Craft Factory

CHANG TSI
Insights

May07
2020

Backgournd

The Petitioner in the case Shantou Chenghai Jianfa Handbag Craft Factory filed an application for registering the trademark to the Trademark Office in 1997, and was allowed to register the trademark in 1999. The trademark is designated to be used on bags and suitcases in Class 18. Respondent in the case MICHAEL KORS (SWITZERLAND) INTERNATIONAL GMBH created the logo  in 2000 according to the initial letters of the corporate name and the principal mark “Michael Kors”, created two logos andin 2007, and subsequently used the logos on bags.

Before filing a lawsuit, the Petitioner elaborately planned a series of acts: e.g. the Petitioner, with the trademark thereof as the right basis, filed an invalidation proceeding against “MK MICHAEL KORS” (registration No.: 3603887; international classification: 18) of MICHAEL KORS, aiming to acquire, from MICHAEL KORS’ defense, the sales revenue information regarding products in the brand of MICHAEL KORS and deem the information as claim basis; meanwhile, the Petitioner, with the trademark as the right basis, carried out an administrative strike and filed a civil action against small-scale shops selling MICHAEL KORS products, and obtained the administrative penalty decision and civil judgment or mediation paper, so as to support the Petitioner’s allegation that both parties’ trademarks constitute confusing similarity.

After making all preparations, the Petitioner filed a lawsuit against MICHAEL KORS and its affiliated company in China, together with other two distributors before Hangzhou Intermediate People’s Court on January 9, 2017 on the grounds that MICHAEL KORS’s use of a series of MK logos infringes the Petitioner’s exclusive rights of its registered trademark, requesting that the Respondent should cease infringement.  After two instance trial, the court made the judgment rejecting all the claims as filed by the Petitioner.

Petitioner was dissatisfied with the results, and initiated the retrial procedure with China Supreme Court. On Mar. 30, 2020, China Supreme Court rejected Jianfa’s retrial application.

Difficulties of the case

 

First, Shantou Jianfa held a trademark   which was allowed to be registered in 1999, and thus the fact that Shantou Jianfa had the prior registered trademark was fully proved. 
Second, the Petitioner made an elaborate plan before litigation, and took the initiative. The Petitioner has long been aware of the MK logo used by MICHAEL KORS, but was not eager to file a lawsuit. Instead, the Petitioner has applied for notarization for many times since 2015. After making an elaborate plan and full preparation, the Petitioner officially filed a lawsuit against MICHAEL KORS before the court, and claimed for a huge amount of damages.
Third, in the second instance judgment, Zhejiang High Court required MICHAEL KORS to pay part of the court fee. The Petitioner uses this fact as a strong ground to claim that the judgment was partially unfavorable to MICHAEL KORS.

Our litigation strategies

Upon our careful analysis, we believed that the focus issue of the case lied in whether the prosecuted logo used by the Respondent was similar to the Petitioner’s registered trademark, and particularly whether the actual use thereof constituted confusion.  According to the above focus, we have formulated the following litigation strategies:
First, analyses and comparisons were made to the trademarks to prove that the prosecuted logo and the logo involved in the case did not constitute identical or similar trademarks. To this end, we presented a lot of evidence and made argument from the following aspects: 1. in accordance with pertinent regulations by the competent trademark department in China, the two-letter combination “MK” lacks distinctiveness, and thus cannot be registered as a trademark, and even cannot be monopolized; 2. a host of trademarks based on the “MK” combination were coexistent on the same categories; 3. an elaborate comparison was made to both parties’ logos involved one by one from the aspects of overall visual effects, elements, creative inspiration, and the like; 4. rejection was submitted to the trademark office to prove that the trademark office similarly believed that both parties’ logos involved did not constitute similarity. Second, analyses were made to the likelihood of confusion and actual confusion caused by the coexistence of both parties’ logos involved in the case to prove that the coexistence of both parties’ logos involved in the case would not lead to confusion among relevant public. To this end, Chang Tsi & Partners presented a lot of evidence and made argument in terms of the following aspects: 1. a lot of investigation and notarization were conducted to prove that the Petitioner’s trademark   enjoyed quite a low reputation in China, and relevant products thereof were mainly used for export; 2. the evidence submitted by the Petitioner was analyzed to find out a great number of facts proving that the Petitioner’s relevant MK bag and suitcase products were mainly used for export, but were not for continuous use, by means of which, the fact that the trademarks thereof were not continuously used and enjoyed a low reputation was proved; 3. the main trademark of MICHAEL KORS is “MICHAEL KORS”, and MICHAEL KORS’ use of the MK logo is quite cautious and modest; 4. both parties’ logos involved in the case were elaborately compared one by one in terms of the brand awareness, market positioning, sale prices, sales volumes, distribution channels and other aspects; 5. it was asserted and emphasized that the fact that the relevant public would pay high attention when purchasing the commodities involved (i.e. lady handbag) according to the consumption customs; 6. The trademark confusion market was investigated by authorizing a standard and authoritative market investigation company so as to obtain evidence regarding the actual confusion caused by coexistence of both parties’ logos involved in the case.
Third, a lot of evidence was presented in terms of the global registration of MICHAEL KORS’ MK logo to prove MICHAEL KORS’ use of the MK logo out of consideration of its global strategy consistency, its use completely accorded with the universal rules of sales and operation of a luxury brand, complied with the market habit, and thus was completely a bona fide use.
Fourth, the Petitioner’s use of the trademark and the Petitioner’s aim for filing a lawsuit were analyzed to prove that the Petitioner filed the lawsuit based on obvious malice. To this end, we have presented a lot of evidence and made argument in the following aspects: 1. the Petitioner well knew that MICHAEL KORS’ MK logo enjoyed a high reputation, but still applied for trademarks  and wholly identical to the MK logo on the same categories; 2. a great amount of investigation was conducted to prove that the Petitioner used a great number of infringing logos that plagiarize the MK logo on bag and suitcase products; 3. by means of a great amount of investigation and evidence collection, it is proved that the Petitioner committed violent plagiarism of MICHAEL KORS’ bag design in terms of corresponding design.

Typical significance of the case

First, this is a typical case where a small Chinese company filed a lawsuit against a transnational company in terms of trademark infringement and claimed for a huge amount of damages. MICHAEL KORS’ MK logo as a distinctive business logo thereof has been used synchronously and consistently around the globe for many years, and has established a close correlation with the brand MICHAEL KORS. If the MICHAEL KORS’ act of using the MK log is identified as infringement, MICHAEL KORS shall pay a huge amount of damages, and its future business development in China will also suffer from a huge impact. Therefore, the case is a major battle with no way to retreat for MICHAEL KORS. Chang Tsi & Partners effectively safeguards the client’s commercial interests, and realizes the client’s maximum interests.
Second, the Supreme Court analyzed Petitioner’s irregular use of its registration. The court held that Petitioner although enjoys registration, the sales volume and brand influence is very limited, and it used its registration in a misleading way and was chasing for market confusion. 
Third, the court thoroughly analyzed MICHAEL KORS’s use of disputed marks. The court affirmed MICHAEL KORS’s use of disputed marks aboard started in 2008, and such use continued after entering into the China Market. With the accumulation of fame and influence, MICHAEL KORS has owned its royal customers. So, MICHAEL KORS has no intention to take advantage of Petitioner’s registration, to mislead the relevant public, or to squeeze Petitioner’s market share. 
Fourth, the court made reasonable judgment on trademark inherent distinctiveness and fair protection of trademarks with less distinctiveness. Due to the weak distinctiveness of Petitioner’s registration, it is hard to cause confusion with disputed marks, especially when Petitioner’s products are mainly for export with different target consumers with those of MICHAEL KORS.  

Michael Fu
Trademark prosecution / Patent prosecution
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