Athors: Tracy Shen, Nancy Qu

Overview:

This case was between a renowned foreign company, Guinness World Records, and a famous domestic company, Chery Automobile, concerning trademark infringement and unfair competition. The case was heard by Foshan Intermediate People's Court, and on appeal, by the Guangdong Higher People's Court. During the trial by the courts at both levels, there were multiple issues involving the determination of joint infringement, criteria for recognizing a generic name, determination of what constitutes trademark use, the concurrent claims of unfair competition and trademark infringement, and conditions for applying punitive damages. Moreover, because both parties involved in this complex case were well-known companies, the case attracted a lot of attention from the media. Chang Tsi & Partners represented Guinness World Records.

Chery Automobile Co., Ltd. (hereinafter referred to as "Chery Automobile"), one of the defendants in the case, is a famous automobile company in China. Without permission from Guinness World Records, the defendant used a multitude of logos which infringed the registered trademarks of Guinness World Records: "吉尼斯" (Ji-Ni-Si; GUINNESS in Chinese), "吉尼斯世界纪录" (GUINNESS WORLD RECORDS in Chinese) and "GUINNESS WORLD RECORDS" (hereinafter collectively referred to as "GWR trademarks") in large-scale commercial activities held in at least 16 cities across China and in promotions on its official website. After receiving a Cease and Desist Letter sent by Guinness World Records, Chery Automobile persisted in its infringing activities. This reflected the defendant's malicious intent to infringe. Chery Automobile's misleading promotional activities also constituted unfair competition.

Chang Tsi & Partners appointed lawyers Nancy Qu and Tracy Shen to represent Guinness World Records. Attorneys Qu and Shen prepared for the litigation and the court trial in respect of this case, including evidence presentation, cross-examination, court session, etc. The first-instance court ultimately supported the claims of Guinness World Records. Subsequently, the defendant filed an appeal with the Guangdong Higher People's Court. Ms. Qu and Ms. Shen, as the attorneys of the plaintiff, continued to work on this case. Because of their comprehensive preparations on the issues, the court of second instance affirmed the original judgment.

The Guangdong Higher People's Court finally ordered Chery Automobile to cease its infringement and eliminate adverse effects, and awarded double the punitive damages of CNY 2.12 million in total to Guinness World Records.

I. Background:

The year of 1954 witnessed the founding of Guinness World Records in the UK. The first edition of Guinness World Records was published in 1955, and from then on, the phrase "Guinness World Records" gradually became a household name, and Guinness World Records became a leader in global record authentication. Through years of marketing and promotion, Guinness World Records and the phrase "Guinness World Records" has enjoyed a strong reputation in the world, including China, and in particular, become famous in the evaluation and publication of records. "吉尼斯 "[1], "吉尼斯世界纪录 "[2] and "GUINNESS WORLD RECORDS" are registered trademarks of Guinness World Records.

Since April 10, 2014, Chery Automobile, without obtaining the approval from Guinness World Records, successively held many large-scale commercial activities entitled "Chery Arrizo Guinness World Records Challengers Tour in China" in at least 16 cities throughout China, released promotional information regarding the activities on the official website of Chery Automobile and other websites, and used a great number of logos such as "吉尼斯" and "GUINNESS WORLD RECORDS" identical to the plaintiff's registered trademarks and enterprise name, and slogans "我是吉尼斯" [3], "挑战吉尼斯"[4] and "挑战吉尼斯中国巡演"[5] for large-scale promotion. These actions created a lot of actual trademark confusion in the market.

In response, Guinness World Records sent a Letter of Notice to Chery Automobile before the planned activities were held. Chery Automobile refused to comply. On the very day when the activities were held, Chang Tsi & Partners sent a cease and desist letter to Chery Automobile, requiring the defendants to cease the infringing acts. In flagrant violation of its legal obligations, the defendants refused to cease such promotional activities and continued to hold such events without communicating or negotiating with Guinness World Records.

Chang Tsi & Partners wrote, three times, to Wuhu City Administration for Industry and Commerce to request a prohibition of the defendants' infringing acts. The defendants still did not cease their infringing acts.

Chery Automobile's actions caused considerable harm to the plaintiff's interests and caused public confusion. Guinness World Records filed a lawsuit against Chery Automobile and its affiliated company, claiming that defendants' actions constituted trademark infringement and unfair competition, and requested the defendants to cease its infringing acts, eliminate all adverse effects and compensate the plaintiff for damages.

Foshan Intermediate People's Court, the court of first instance, supported most of the claims raised by Guinness World Records, and made a decision to determine the defendants' acts as constituting trademark infringement and unfair competition, order Chery Automobile to stop such infringement and eliminate adverse effects, and bear double the punitive damages to compensate Guinness World Records for its economic losses and expenses for the rights protection activities, amounting to CNY 2.12 million. With the judgment of first instance, Chery Company was not satisfied, and thus submitted an appeal to Guangdong Higher People's Court and continued making defense of overall non-infringement.

Ⅱ. Difficulties:

First, famous enterprises as the plaintiff and the defendant, respectively, and huge influence. Chery Automobile, as a famous Chinese enterprise, had a great social influence. Facing the Guinness World Records' infringement charge, Chery Automobile showed its opposition to the charge by ignoring the Warning Letter and Lawyer's Letter sent by Guinness World Records and adopting a negative attitude to the administrative complaints made by Guinness World Records. After the judgment of first instance was rendered, Chery lodged an appeal to deny every decision in the original judgment and insist in making defense of non-infringement. At the trial of second instance, the defendants made fierce confrontation and defense with regard to both the recognition of facts and the application of law in connection with the trial of first instance.

Second, enduring efforts into the case. The plaintiff tried many measures to protect its legal rights and had to resort to judicial reviews by the courts at two levels. Since Guinness World Records first sent the Letter of Notice, the case lasted for more than four years until the judgment of second instance, going through processes prior to the prosecution, such as delivery of the Lawyer's Letter and the investigation made by an industrial and commercial organ, and processes after the prosecution, such as the objection to the jurisdiction and the appeal, multiple evidence exchange, the opening of a court session and the trial of second instance by Guangdong Higher People's Court.

Third, complex facts and legal issues involved. The complicated acts involved of the defendants were embodied in that Chery Automobile had held many large-scale commercial activities titled "Chery Arrizo Guinness World Records Challengers Tour in China" in at least 16 cities throughout China, used the infringing logos in many ways on the scene every time, and meanwhile released the promotional information regarding the activities on the official website of Chery Company and other websites. As for the above infringing acts asserted by Guinness World Records, both the plaintiff and the defendants had a fierce debate against each other in the court session, of both first and second instance, centering on fact and legal issues, e.g. whether the acts involved were implemented by Chery Automobile, whether the acts involved constituted the use as trademark, whether the trademarks involved were common names, and whether the acts involved constituted trademark infringement and unfair competition.

Fourth, seeking the court's support in the recognition of punitive damages. During the trial by the courts at two levels, successively, some intense debates, especially about punitive damages, took place between both parties. At the trial of second instance, in particular, both parties stated their own opinion, strong but contradictory to each other, about whether this case was in conformity with the condition for punitive damages. In respect of this, the court of second instance correspondingly gave the rather detailed explanation in the judgment, and finally determined that Chery Automobile mala fide conducted the serious infringements in the case and upheld the punitive damages recognized in the previous judgment.

Ⅲ. Our Litigation Strategies:

For protecting the legitimate rights and interests of the client Guinness World Records to the largest extent, meanwhile in consideration of efficiency, the lawyers from Chang Tsi & Partners first conducted evidence collection by having the relevant webpages and the site of every of the activities involved notarized, and then sought for legal remedies by means of, such as, sending the Lawyer's Letter and requesting the investigation by an industrial and commercial organ prior to prosecution. After the above remedy approaches failed, we suggested that the client should bring a civil lawsuit, and collect sufficient evidence to prove the reputation of "GUINNESS" trademarks, the facts of Chery Automobile's infringements and the number of damages caused by infringement. During the litigation process, according to Chery Automobile's grounds for protest and focus issues in the case, Chang Tsi & Partners formulated the following litigation strategies:

First, confirmation of Chery Automobile as the infringer who committed the infringing acts prosecuted. It was affirmed, through the Chang Tsi attorneys' analysis of the role that Chery Automobile played in the infringing acts prosecuted, that Chery Automobile and Chery Sales Company jointly organized and carried out infringement activities involved in the case in at least 16 cities according to the introduction contents regarding the activities involved on the Chery Automobile's official website, actual conditions of activities involved, and the contract regarding the organization of the activities involved signed by Chery Sales Company and a company not involved in the case.

Second, Chery Automobile's use of the trademarks involved belonging to the use as trademark marking the source of services. Considering the way, purpose and effect of using the trademarks involved by Chery Automobile, as well as other factors, such as the popularity and distinctiveness of the trademark involved, Chang Tsi attorneys set forth, in a detailed manner, that Chery Automobile's use of the trademarks involved should in no way be deemed as descriptive or instructive, but as marking the source as services. In the case, Chery Automobile made defense of that the GUINNESS trademarks were purportedly common names. However, attorneys from Chang Tsi & Partners collected and sorted substantial evidence by carefully analyzing the conditions for identifying common names in the laws and regulations as well as judicial practice so as to prove the distinctiveness and reputation of the GUINNESS trademarks, and make powerful responses to the defendant's defenses of common names at the same time.

Third, recognition of Chery Automobile's acts as serious trademark infringement. The infringing logos prosecuted as used by Chery Automobile in the activities involved were as the same as the distinctive and recognizable part of GUINNESS trademarks, and thus constituted trademark similarity. Chery Automobile's act of using the infringing logos prosecuted would easily cause the relevant public to believe that the challenging projects involved in the activities were participated in or organized by Guinness World Records or were in association with the world records authenticated by the Guinness World Records, thereby leading to confusion or misunderstanding. Therefore, Chery Automobile's acts of using the infringing logos prosecuted in the activities involved and on relevant websites infringed the Guinness World Records' exclusive rights of using the registered trademarks.

Fourth, recognition of Chery Automobile' acts as unfair competition by false publicity. With the misleading slogan "Chery has once created many Guinness World Records. Today, the brand-new Arrizo 7 with its powerful strength will challenge the world again!" used by Chery Automobile on the websites and promotion activities, attorneys of Chang Tsi argued that such use lacked a factual basis, and the acts constituted misleading promotion, thereby causing the relevant public to be misled and believe that the automobile products had ever created a Guinness World Record, so that the products may gain competitive advantages. Also, as a result, Guinness World Records lost the opportunities of authentication service and transaction, and in this case, Chery Automobile's acts indeed constituted unfair competition. The aforesaid claim was supported and determined by the courts at two levels.

Fifth, infringement liability that Chery Automobile shall bear. In the case, besides ceasing infringement and eliminating effects, Chery Automobile shall bear punitive damages. Although it was not an easy task to determine the losses incurred on Guinness World Records and benefits obtained by the defendants due to their infringements, the financial losses incurred on Guinness World Records caused by the infringing acts could be estimated according to the standards for charges for a trademark license in the certification service fees collected by the world records certification service. Chery Automobile in the case continued to commit infringement when knowing the activities were suspected of infringement, and thus showed obvious bad faith in the infringement. In this regard, Chang Tsi & Partners made a request for punitive damages before the court, and further gave a detailed explanation of the elements on punitive damages that the case satisfied during the trial of second instance.

Ⅳ. Result:

The case has been tried by the courts at two levels, both of which determined the fact that the defendants' acts constituted trademark infringement and unfair competition, and ordered Chery Automobile to stop its infringement and eliminate adverse effects, and bear double the punitive damages to pay a compensation of CNY 2.12 million in total to Guinness World Records for the costs in the lawsuit and rights protection activities.

Ⅴ. Typical Significance:

First, a plurality of legal issues on trademark and anti-unfair competition involved in the case. The case relates to important legal issues such as determination of joint infringement, use as trademark, defense of common name, use of trademarks for the descriptive and instructive purpose, concurrency of infringing acts and punitive damages, and Chang Tsi & Partners conducts an in-depth research and summary of the legal issues involved. Furthermore, focus issues in the case, including definition of use as trademark, identification of common names and applicability of punitive damages, in particular, will give great guiding significance to future similar cases concerning trademark infringement and unfair competition.

Second, close social attention to the case. Since Guinness World Records is the leader in the world records field, and Chery Company is a famous Chinese automobile enterprise, they have quite high popularity in China and even the world. The activities involved held by Chery Automobile had a huge influence across the country. The case used to be concerned by media all the while, and reported by both the mainstream media in China and the foreign media. The fair judgment on the case is of great significance to safeguard the legitimate rights and interests of right holders, punish the malicious infringers and create a social environment where the intellectual properties are respected.

Third, the applicability of punitive damages. For a long time, difficulties in and high costs for IP rights protection seriously undermine the confidence and resolution of a right holder to actively protect their rights, and also adversely affect the commercial environment in China. Taking full consideration of Chery Automobile's infringement malice, the courts at two levels both decided the application of punitive damages to the case, such that Chery Automobile paid a heavy price for its malicious infringing acts. The judgment not only marks the success in this individual case, but also manifests the dignity of law to the society, awes potential infringers, and greatly enhances the confidence and resolution of every holder of Intellectual Property Right to actively protect their rights, thereby having a far-reaching influence on the establishment of a favorable commercial environment.

Fourth, professional and fair trial over IP cases. Full of difficulties were present to resolve the legal problems involved in the case, and the plaintiff and the defendants are both famous enterprises at home and abroad, thereby attracting high social attention and having an enormous influence. People's courts, when trying such complex cases concerning IP infringement and unfair competition, manifest a high level of professionalism and show their impartial attitude towards whether domestic or overseas parties. The case demonstrates Chinese courts' attention to IP protection and excellent judgment capability, and also enhances the foreign enterprises' confidence in investment and business activities in China.

[1]"吉尼斯" is a registered trademark and means "Guinness" in Chinese.
[2]"吉尼斯世界纪录" is a trademark and means "Guinness World Records" in Chinese.
[3]"我是吉尼斯" means "I am a Guinness World Records Challenger".
[4]"挑战吉尼斯" means "Guinness World Records Challenger".
[5]"挑战吉尼斯中国巡演" means "Guinness World Records Challenger Tour in China".