Recently a case argued by the DaWo IP team was published as a “Leading Case” by the Shanghai IP Court, to serve as a guide to the courts jurisprudence in similar cases. In the case as hand DaWo defended our client EURODIA from an unjustified accusation of trademark infringement brought before the court.
01 Basic Facts
Our client Eurodia Industrie SAS (“Eurodia”) had been sued by an individual for infringement of his registered trademark of “
” (“Disputed Trademark”) which he applied for in 2005. The claimant asked for compensation in the amount of RMB 1 million for the illegitimate use of his registered trademark.
Eurodia is a French company engaging in the business of electro-dialysis of fluids for more than 30 years. It registered the trademark of “
” in Europe as early as 2002 and had started doing business with its partners in China no later than 2004.
Upon our research, we learned that besides the Disputed Trademark, the claimant had applied for almost 100 trademarks in China since 2005. Most of these trademarks were actually owned by other foreign companies active in different business sectors, such as art exhibition, cargo transportation, warehousing, automobile, chemical equipment, legal consultancy, etc.
We were able to assist our client to collect historic records providing evidence which attested to the fact that the “
” trademark had in fact been used and had gained reputation in China before 2005, i.e., before the claimant filed his application for registration of the Disputed Trademark. On this basis we argued that, notwithstanding the prior registration by the claimant, our client was the actual owner of the Disputed Trademark which had been registered by the Claimant in bad faith, and which he had never intended to use.
02 Court Ruling
The Court ruled to dismiss all of claimant’s claims.
The Court affirmed that a trademark application shall be filed for the purpose of use. Anyone who files trademark application without intention to use it, or for other unjustified purposes, should be considered as violating the Principle of Honesty and Good Faith. It is an abuse of trademark rights for any trademark registrant to initiate the trademark infringement lawsuit based on the trademark which is applied in bad faith.
This Court decision and the fact that the Court decided to make it a “leading case” confirms the firm determination of Courts around the country to counter trademark squatters and defend legitimate trademark owners against unjustified civil lawsuits or administrative actions initiated by such trademark squatters.
Over the years that we have been assisting our clients with such actions, we have witnessed the progressive affirmation by the Courts of the principle (enshrined in the China Trademark Law in 2019) that trademarks must be filed with the true intention to use them and that bad faith registrations must be combatted. Meanwhile, we are also seeing some local Administration for Market Regulation (AMR) imposing fines or other administrative penalties on those companies frequently engaged in trademark squatting practices. We can only hope that more such actions will eventually lead to the eradication of this bad faith practice.
Be that as it may, China remains a “first-to-file country”. Therefore, it remains important to have your trademark registered first, before starting your business in China. Even regardless of trademark squatters, this may save you from some unnecessary troubles later on.