2010 IP Cases

2011/04/27,China IP,[Comprehensive Reports]

Dispute over “Weichai” Trademark
The parties Weichai Holdings Group Co., Ltd. (Weichai Holdings) and Shandong Weichai Industry and Trade Co., Ltd. (Shandong Weichai) first appeared in court at the end of 2009. Weichai Holdings had listed Shandong Weichai as the second defendant over a trademark infringement and unfair competition before the Weifang Intermediate People’s Court of Shandong Province. Shandong Weichai counterclaimed, requesting the court find Weichai Holdings engaged in unfair competition, and order it to cease using any business name containing "Weichai in Chinese characters" (Weichai). On May 17, 2010, the Trademark Review and Adjudication Board (TRAB) issued a trademark review decision on the two applications for “Weichai” previously filed by Shandong Weichai. It approving both applications and the dispute over the “Weichai” trademark thus broke out immediately.
On October 13, two administrative cases were filed in connection with the trademark “Weichai.” On November 18, the Beijing First Intermediate People’s Court rendered first-instance judgments on both. The court canceled the two TRAB decisions and issued new rulings on the respective cases, declaring that “lubricants, engine oils and diesels are similar products."
On December 7, a High People's Court of Shandong Province ruling ended the provincial dispute between the two parties over the “Weichai” trademark with a default ruling in favor of Weichai Holdings. The first-instance judgment by the Weifang Intermediate People's Court found Shandong Weichai liable for acts of unfair competition. It ordered the company to cease use of “Weichai,” including the “Weichai” trademarks and Weichai in Chinese pinyin. The court not only rejected Shandong Weichai’s counterclaims, it ordered the company to pay Weichai Holdings 500,000 Yuan in damages. Shandong Weichai appealed but failed to appear. In it December 7th ruling, the High People's Court of Shandong Province deemed the failure to appear as a withdrawal. Consequently, the first-instance judgments by Weifang Intermediate People's Court were declared final and binding.
Comment: There were two “Weichais” in the same province and each company had different justifications and historical backgrounds supporting use of the “Weichai” trademark or business name. Was there any intentional infringement when use of the name began? When traced back, it is difficult to determine.
“Jiebaina” Returns to the TRAB
In June 2010, the Beijing High People's Court issued a final ruling in the administrative case involving usage of the word "Jiebaina" in Chinese characters (Jiebaina) as a trademark. It is known as "the first IP case in China's wine industry." The court rejected the appeal by plaintiffs COFCO Limited and other enterprises, and ordered the TRAB to make a new ruling in connection with the dispute over the No. 1748888 "Jiebaina" trademark.
In May 2001, Yantai Changyu Group Co., Ltd. (Yantai Changyu) applied to register the "Jiebaina" trademark. In April 2002, the application was approved under the designated goods including wine, brandy and liquor. However, many wine manufacturers, including COFCO Limited opposed the approval. On July 10, 2002, the Trademark Office cancelled the registered trademark. In the meantime, several wine manufacturers, including COFCO Limited, jointly filed a cancellation application before the TRAB on the ground that "Jiebaina" was a common name of wines, requesting they cancel the "Jiebaina" trademark.
Yantai Changyu requested TRAB review of the Trademark Office decision to cancel the registration. On May 26, 2008, the TRAB ruled in favor of Yantai Changyu. It overruled the Trademark Office decision to cancel the registration of “Jiebaina” and also dismissed the cancellation claims by wine manufacturers and reinstated registration of the name “Jiebaina” for Yantai Changyu in Class 33 for goods such as alcohol (beverage). [The Trademark Office cancelation of the “Jiebaina” trademark can be found in decision No. 187. The TRAB decision overruling the cancelation can be found in decision Shang Ping Zi (2008) No. 05143. The TRAB decision rejecting the cancellation claims by wine manufacturers can be found in decision Shang Ping Zi (2008) No. 05115.
In June 2008, COFCO Limited appealed by filing an administrative lawsuit before the Beijing First Intermediate People’s Court requesting an order canceling the relevant TRAB decisions. On December 30, 2009, the court ordered the TRAB to review decisions over the disputed “Jiebaina” trademark.
COFCO Limited and other plaintiffs the appealed to Beijing High People’s Court who. On June 17, 2010, the court found for the procedural legality of the TRAB decisions over the “Jiebaina” trademark. However, the court ordered the TRAB to dismiss the original decision and review the case on the basis of a substantial volume of evidentiary materials submitted by both parties.
Comment: The case has dragged on for six years, spanning several stages from trademark review to the TRAB decisions. But the "Jiebaina" dispute is far from settled. After 73 years of use, will “Jiebaina” become a common term as over 30 companies flock for the trademark?
 Red Bull Annoyed by “Gadflies”
Since 2005, a variety of bottled beverage products in iron or plastic cans prominently bearing the Red Bull symbols have occasionally popped-up in many provincial markets throughout China. Examples include Red Bull vitamin nutrition drinks, Red Bull nutrition beverages and Red Bull vitamin coffee drinks. After nearly five years of continuous evolution, over 150 administrative penalty decisions and judicial rulings over trademark infringement or unfair competition, these gadflies, which were shelved side by side with genuine Red Bull in shops and supermarkets in many third and fourth tier cities in China, were brought to a dead stop on September 26, 2010.  
The rulings came from two levels of Beijing courts. The first was support from the administrative lawsuit filed by Red Bull to cancel the disputed No. 800816 Red Bull and graphic registered trademark in the name of Wei Tingjian. The second was the TRAB review decision regarding reexamination of the No. 390 decision by Shang Ping Zi (2008) No. 05523. Both have combined to remove the legal force of the registered trademark Red Bull and graphic No. 800816 in Class 30 under the international classification with the designated goods of non-medical nutrient drinks, which were thought to be a legal way to make use of the glamour of the Red Bull name by the copycatting Red Bull products.
Previously Red Bull had engaged in extensive nationwide activities to protect its rights as a response to the existence of these many gadflies. Because of the existence of the No. 800816 Red Bull and graphic trademark, Wei Tingjian had filed lawsuits against Red Bull over trademark infringement before various municipal people's courts at the province level, alleging that the original Red Bull vitamin energy drinks had infringed his exclusive rights to use No. 800816 Red Bull and graphic trademark by the use of Red Bull trademark. Despite his efforts, no effective rulings had found any acts of trademark infringement on the part of Red Bull in any of these cases.
Comment: Copycatting has always been a thorny issue in China. In some second and third tier cities, copycatting brands such as the shampoos “Yikalu” and “Haifeizi” (both in Chinese characters) are often seen, which has brought much trouble to enterprises.
Disputes over Distinction of Three-Dimensional Trademarks
In trademark cases in 2010, the three-dimensional trademark cases were particularly notable.
On March 8, the TRAB reviewed a decision not to approve the registration of the bottle-shaped three-dimensional trademark No. 3330291, filed by the beverage giant Coca-Cola Company in October 2002, in Class 32 in respect of non-alcoholic beverages and other goods, ruling that the trademark failed to identify the sources of the goods and thus lacked the necessary distinctive features of a trademark.
Aside from Coca-Cola, Nestle Products Co., Ltd., using the territorial extension of international trademark registration, obtained registration in China of the bottle-shaped three-dimensional trademark No. G650537. But Kaiping Weishida Seasonings Co., Ltd. filed an application to cancel the registration on the ground that the trademark was a packaging commonly used in China’s seasoning industry, lacked distinctive features, and that the exclusive use by Nestle would damage the interests of the whole seasoning industry. On July 19, the TRAB ruled that the trademark had obtained distinctive features as a trademark through the long-term use by Nestle.

Famous chocolate maker Ferrero has also encountered such disputes. Kaiping Tastychoco Foodstuff Co., Ltd. had applied to cancel its three-dimensional trademark No. G783985. Coincidentally, the TRAB disapproved their application for trademark registration of No. G783985 trademark on the grounds that it lacked of distinctiveness. In November 2007, Beijing Intermediate People’s Court ruled that the trademark has obtained distinction as a unique packaging of Ferrero. The case had triggered discussions among the domestic trademark industry over the standard of registration and protection of three-dimensional trademarks. Later, the TRAB issued a new decision and approved the registration of the trademark. This time, the cancellation application of Kaiping Tastychoco Foodstuff Co., Ltd. was also on based on the trademark’s lack of distinction. But this time the TRAB ruled that the trademark had obtained distinction and rejected the objection raised by Kaiping Tastychoco Foodstuff Co., Ltd.
Comment: Since the introduction of protection of three-dimensional trademarks in the revised Trademark Law in 2001, the number of three-dimensional trademarks which have been approved for registration has been very small, and China has not been fully prepared for the protection of three-dimensional trademarks.
Sale of counterfeit products by 15 individuals
Dongguan Intermediate People's Court of Guangdong Province found that starting from April 2005, the defendants, Huang Conglin and Ding Ping, had rented warehouses in Humen Town, Dongguan, and hired the accomplices to provide storage, transit, contact, booking and declaration services for others in the exportation of counterfeit cigarettes and shipped the cigarettes to the United Kingdom, other countries and regions. The accomplices were Luo Xiang, Che Shuxian, Chen Zhongwu, Su Jianglong, Chen Bingzhu, Chen Zhangming and Che Haoxian. The counterfeit cigarettes involved six foreign brands, such as BENSON & HEDGES, and domestic brands, such as Furongwang.
The values were high. From December 2005 to June 2008, the estimated value of counterfeit cigarettes transported by the accused were as follows: Huang Conglin and Ding Ping 618,786 Yuan; Luo Xiang, Chen Zhongwu, Che Shuxian and Su Jianglong 149,169,286 Yuan; Chen Bingzhu 11,916,016 Yuan; Chen Zhangming 8,780,866 Yuan; Che Haoxian 769,716 Yuan. Those transported by other people were valued at several hundred thousand to over ten million.
The sentences were also high. Dongguan Intermediate People's Court held that each accused had committed the crime of sales of counterfeit products, and the accused Huang Conglin was sentenced to 15 years and fined 5 million Yuan; Ding Ping 15 years in prison with a fine of 2 million Yuan; the other accused were sentenced to one year and six months to ten years with fines ranging from 20,000 to 700,000 Yuan. Huang Conglin and others 8 appealed, however the Guangdong Provincial High People's Court upheld the previous ruling.
Comment: In China, criminal penalties against counterfeiters are considered most effective. Companies generally believe that effective criminal penalties against counterfeiters will have a great impact on counterfeiters and effectively deter infringements.
Infringement of Trade Secrets by Hori Yutaka
In October 1994, Japan’s Mikuni Corporation and Sichuan Xiguang Industry (Group) Co., Ltd. jointly set up the Sino-foreign joint venture Chengdu Mikuni Hongguang Machinery & Electronics Co., Ltd. (“Chengdu Mikuni”) to produce and sell secondary air valves and other products. The timeline of events are as follows:
From May 21, 1999 to September 1, 2004, Chengdu Mikuni employees included Hori Yutaka, a Japanese citizen, who was the general manager; Zhou Yong, worked in the technology department; Liu Fagang worked in the production departments and Shen Qian, served as a translator. The parties had access to the relevant drawings which constituted trade secrets.
In September 2004, before Hori Yutaka was transferred back to Japan, he negotiated with Lei Jianping to establishment a company to be named Jiangmen Kemei Electrical and Mechanical Co., Ltd. (Kemei).
Between September to December in 2004, Shen Qian, Zhou Yong, Liu Fagang each left employment at Chengdu Mikuni and engaged in the preparations of the incorporation of Kemei. After Kemei was incorporated, each was awarded a position at the new company.
In May 2005, Kemei began to produce and sell secondary air valves. At the same time, Hori Yutaka sent copies of the technical drawings of secondary air valves obtained during his tenure in Chengdu Mikuni to Kemei. He also asked Liu Fagang, through Shen Qian, to mail photos of the secondary air valves and the relevant parts and accessories to Kemei. The photo had been taken secretly from Chengdu Mikuni without permission. Based on the drawings, Kemei produced and sold 841,084 AV01-type secondary air valves.
Chengdu Intermediate People's Court found Hori Yutaka, Lei Jianping, Zhou Yong, Liu Fagang, Shen Qian had stolen, disclosed, used trade secrets in their possession and found them guilty of infringement of trade secrets. Damages to Chengdu Mikuni were estimated at a substantial 23,550,352 Yuan.
Hori Yutaka was sentenced to 2.5 years in prison and fined 500,000 Yuan. Lei Jianping, Zhou Yong and Liu Fagang were sentenced to serve two years in prison with three-year suspension and fined 400,000 Yuan. Shen Qia was given one year in prison and fined 100,000 Yuan. Hori Yutaka and the other accused appealed and Sichuan High People's Court upheld the ruling of the intermediate court.
Comment: In 2009, the "Rio Tinto" case over infringement of trade secrets caused quite a stir. In 2010, China's first regulation on trade secret protection was promulgated to ensure the safety of core businesses and the technical information of enterprises in a more effective manner.
Copyright Infringement by Wang Jiahao
Changshu People's Court of Jiangsu Province found that starting March 2008, the accused Wang Jiahao, without authorization, set up the music network "Go Listening" (www.7t7t.com) to provide trial listening to music. The musical works included unauthorized use of 677 copyrighted songs from Universal Music Ltd., and Warner Music Taiwan Ltd., parties to the International Federation of Phonographic Industry. From March to June 2009, Wang Jiahao embedded advertisements in the website and earned 1,283,705 Yuan in advertising fees.
The Changshu People's Court found that Wang Jiahao, without authorization from the copyright holders, uploaded copyrighted musical works onto the website for trial listening by the Internet users for commercial purposes, that the circumstances were serious and Wang had committed the crime of copyright infringement. Considering that Wang Jiahao had confessed and showed repentance, the court sentenced Wang to six months in prison with one year suspension and fined Wang 15,000 Yuan. Proceeds the crime will also be recovered.
Comment: Pirated music on the Internet has pushed the recording industry to the abyss. From the lawsuit filed by four major international record labels against Baidu to the loud outcries of famous musicians, people have all seen the serious injuries arising from the online piracy.
The Dust of “Kaixin001.Com” Settles
On October 26, 2010, after over 18 months of legal wrangling, the first court decision was reached over the "genuine and counterfeit Kaixin.com." Oak Pacific Interactive was ordered to cease use of the name of “Kaixin,” but it was allowed to use the domain name of “Kaixin.com.” It was also ordered to pay kaixin001.com 400,000 Yuan compensation. Kaixin001.com’s claims for 10 million Yuan in compensation and public apologies were not awarded by the court.
In March 2008, Kaixin001.com went online and quickly dominated the white-collar office workers market with the introduction of products such as "Friends for Sale" and "Parking Wars." On October 14, 2008, Oak Pacific Interactive launched another “kaixin” type website through the acquired kaixin.com, which had exactly the same name, and almost identical services, site layout and page layout with Kaixin001.
In May 2009, Kaixinren InfoTech Co., Ltd., the operator of Kaixin001.com, sued Oak Pacific Interactive over unfair competition on the ground that the latter copycatted the name of kaixin001.com and claimed 10 million Yuan in compensation.
In October 2009 the case was first heard. Oak Pacific Interactive raised an objection over jurisdiction. Then after 8 months of review of the objection, Beijing Second Intermediate People’s Court heard the case on June 30, and entered the mediation stage.
The court found for Kaixin001.com, ruling that the use of the name of “Kaixin” on the website kaixin.com operated by Oak Pacific Interactive constituted unfair competition. Violations included using the particular name of the popular social networking website run by Kaixinren InfoTech Co., Ltd. in the competing market. Oak Pacific Interactive was ordered to bear the civil liabilities of ceasing the infringement and paying compensation.
Comment: Plagiarism has been a chronic illness on China's Internet. Some said the compensation was insufficient, but at least there was compensation. The judgment of the case can be regarded as an industry leading historical benchmark. The industry tolerates competition, but in a fair manner.
Successful Rights Protection by Yunnan Medicine “Tongshu Capsules”
 At the end of 2010, the case over allegations of patent infringement upon "Tongshu capsules" came to and end. Yunnan Institute of Materia Medica (“YIMM”), the maker of "Tongshu capsules," sued a Jiangsu enterprise for patent infringement for selling a similar product named “Tongshu tablets.” YIMM initially won before the Kunming Intermediate People's Court and the ruling was upheld on appeal before the High People's Court of Yunnan Province.
As YIMM tried hard to promote its "Tongshu capsules," the Jiangsu enterprise produced and sold "Tongshu tablets" which had exactly the same recipe ingredients as the patented "Tongshu capsules," causing huge losses to YIMM. In March 2009, YIMM filed a lawsuit before Kunming Intermediate People's Court which found for YIMM. In August, Kunming Intermediate People's Court ordered the defendant to stop production and sale of the infringing "Tongshu tablets" and pay YIMM compensation for economic losses. The defendant appealed to the High People's Court of Yunnan Province which upheld the first-instance ruling in 2010. In this case, YIMM made use of its the legal weapons and successfully protected its rights, becoming a exemplary case in the Yunnan pharmacy industry. 
Comment: Should the protection involved in the process of drugs’ R & D be claimed in term of patent or in term of business secret? These complicated and professional dilemmas not only bother enterprises but also the supervision department.
First Copyright Case in Connection with Blog Posts
In October 2010, Li Qiang, a taxi driver in Inner Mongolia, brought famous diving coach Yu Fen to court, alleging plagiarism in Yu Fen’s blogs. After hearings, the Haidian court found for infringement by Yu Fen and ordered her to pay Li Qiang 1,800 in compensation. The case was the first copyright dispute in connection with blog posts.
Li Qiang claimed that he published an article on Sohu blog titled Western Philosophy Is Science, Eastern Thought Is Religion, and Yu Fen visited his blog many times and posted comments on the article. Later Li found that Yu used a whole paragraph of his article in her blog article How to Break the Bottleneck of Difficulty and Stability, and Continue to Lead the World Diving, without indicating in any manner the author and source of the citation. Li alleged that Yu infringed his copyright and requested 7,000 Yuan in compensation. Yu claimed that Li’s article and her article were published on public blogs and therefore the citation belonged to fair use and did not constitute infringement.
The court held that the blog was a new form of network communication, but blog posts were also subject to protection and regulation of the Copyright Law, therefore, Yu committed infringement. The court ruled to order Yu to cease use of Li’s article, publish an apology on the website and pay Li 1,800 Yuan in compensation.
Comment: With the popularity of the Internet, blogs and micro-blogs have become platforms for the general public to publish their articles and express their comments on any events. Copyright issues arising there from have also become a focus of the future.
(Translated by Wang Hongjun)

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