1st civil decision on misuse of trademark registration system

The court decision in BRITA GMBH v. a Shanghai company [case no. (2017) hu 0112 minchu 26614)] issued by a Shanghai district court in September 2020, is the first civil decision in China where the defendant was found unfair competition by filing bad faith trademark applications, oppositions, and invalidations against the plaintiff.

The defendant was ordered to cease infringement, pay 2.8 million RMB as damages and make public apology for committing trademark infringement, false advertising and the above noted misuse of trademark registration system.

This case is groundbreaking and the hot topic of these two days. For some companies who are plagued by bad faith applications / oppositions / invalidations, there is the chance for them to stop the bad faith applications and recover their attorney fees by filing a civil court action.

Below is the summary of the case.

Plaintiff:

BRITA GMBH, a Germany company which:

1. Owns multiple registrations over “BRITA” in English and Chinese version in Class 11, covering goods such as water treatment system, water filters, etc.

2. Spent lots of attorney fees and time on combating bad faith applications, oppositions, and invalidations filed by the defendant.

Defendant:

A Shanghai Company which:

1. Sells water filters using marks confusingly similar marks with BRITA’s registrations;

2. Misrepresents itself as BRITA GMBH’s partner on social media; and

3. Filed 21 BRITA marks or its derivatives since 2012. Some applications were rejected by CNIPA. Some were approved for registration and BRITA GMBH initiated invalidation proceedings against them and subsequent court appeals which cost 8 years in total to conclude. Opposed 6 trademark applications BRITA GMBH filed by citing its bad faith applications as prior marks. All its bad faith oppositions were rejected by CNIPA.

Court decision:

In addition to finding trademark infringing and false adverting, the court also finds that the defendant"s acts of filing bad faith applications and oppositions are misuse of trademark registration system. Its above act have disturbed the plaintiff’s normal business operation, and its sole purpose of filing these bad faith applications/oppositions is to facilitate its trademark infringements. Such act has disrupted the market order and harmed the plaintiff’s legal interests, hence, amount to unfair competition.

When deciding the damage amount, the court has taken into account the sales record of the infringing goods and the attorney fees the plaintiff incurred in combating the bad faith applications/oppositions/invalidations and in filing the civil case. Besides, the defendant was ordered to publish its public apology on designated newspapers.

This first case has opened the gate to civil court for brand owners experiencing similar situations in China. Although it remains to be seen whether other China courts will reach similar decisions in similar cases, and whether the injunction order in the civil decision can actually prevent the defendant from filing more bad faith applications in the future, the relatively high compensation amount and public apology will cause the defendant and similar trademark squatters to think twice before continue to misuse trademark registration system in the future.