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COMMERCIAL PRESS CO., LTD. V. SINOLINGUA CO., LTD. (2016) J 73 MC No. 277, Beijing Intellectual Property Court

 

Cause of action: Disputes over infringement of trademarks and unfair competition

 

Collegial panel members: Zhang Lingling | Feng Gang | Yang Jie

 

Keywords: dissemination of knowledge, trademark, unfair competition, unregistered wellknown trademark

 

Relevant legal provisions: Law of the People’s Republic of China against Unfair Competition (as published in 1993), articles 5(2) and 20(1) Tort Law of the People’s Republic of China, article 15 Trademark Law of the People’s Republic of China (as amended in 2013), articles 13 and 14

 

Basic facts: Both the claimant, Commercial Press Co., Ltd. (hereinafter “Commercial Press”) and the defendant, Sinolingua Co., Ltd. (hereinafter “Sinolingua”), are publishing agencies. Since 1957, Commercial Press has continuously published the popular version of the Xinhua Dictionary, in its 11th edition at the time of the case; in 2010–15, Commercial Press’s average market share of the dictionary market exceeded 50 percent and, as of 2016, the global distribution of the Xinhua Dictionary exceeded 567 million, for which Guinness World Records lists it as both the “Most Popular Dictionary” and the “Bestselling Book (as revised on a regular basis)”, among other honors.

 

Commercial Press alleged that the acts of Sinolingua in producing and selling its own “Xinhua Dictionary” infringed the unregistered well-known trademark “Xinhua Dictionary” and that Sinolingua’s uses of the “special decoration” of the famous product Xinhua Dictionary (11th edn, Commercial Press) constituted unfair competition. Commercial Press asked the Beijing Intellectual Property Court to order Sinolingua to:

 

(a) immediately stop its infringement of Commercial Press’s trademark rights and its acts of unfair competition;

 

(b) publish statements in the relevant media, including the China Press and Publication TV Broadcast Newspaper, to mitigate the negative effects arising from the infringement; and

 

(c) pay Commercial Press damages for economic losses in the amount of RMB3 million, and for reasonable costs and expenses in the amount of RMB400,000.

 

Sinolingua argued that it had based its product name “Xinhua Dictionary” on the name of a national project that had evolved to become the common name of a dictionary in the public domain and that Commercial Press could not assert rights in the unregistered trademark “Xinhua Dictionary” or to prohibit others from using it appropriately. Sinolingua argued that the design of the Xinhua Dictionary (11th edn, Commercial Press) did not count as “special decoration” under article 5(2) of the Law of the People’s Republic of China against Unfair Competition and that its use of the design would not cause confusion or misunderstanding on the part of the relevant buying public. Sinolingua argued that, by filing a lawsuit aiming to control the common name of the dictionary (that is, “Xinhua Dictionary”), Commercial Press was improperly aiming to eliminate its competition and achieve a monopoly in the dictionary market.

 

The Beijing Intellectual Property Court held that the name “Xinhua Dictionary” has the distinctive features of a trademark and that, upon its use by Commercial Press, it became a wellknown trademark and now constitutes an unregistered well-known trademark. Sinolingua’s reproduction and imitation of that unregistered well-known trademark consequently constituted infringement. The design of Xinhua Dictionary (11th edn, Commercial Press) fell under provisions protecting the special packaging and decoration of famous products, and hence Sinolingua’s use of that special decoration without consent was found to constitute unfair competition. The first-instance court therefore ruled that Sinolingua was to:

 

(a) immediately cease its infringement of the trademark at issue and its acts of unfair competition;

 

(b) publish statements in the relevant media, including the China Press and Publication TV Broadcast Newspaper, to mitigate the negative effects arising from the infringement; and

 

(c) compensate Commercial Press for economic losses in the sum of RMB3 million, and for reasonable costs and expenses of more than RMB270,000.

 

After the court rendered a judgment, the parties reached a settlement on its execution and the judgment came into force.

 

Held: The Beijing Intellectual Property Court delivered its judgment on December 28, 2017, in which it ordered Sinolingua to immediately cease using the unregistered well-known trademark “Xinhua Dictionary” and to immediately cease the unfair competition practices whereby it used in its design the same or similar “special decoration” as appeared on the famous product Xinhua Dictionary (11th edn, Commercial Press), ordered Sinolingua to publish remedial statements in the relevant media and held Sinolingua liable for compensating Commercial Press for its economic loss of RMB3 million, as well as its reasonable costs and expenses in the sum of RMB277,989.20.

 

Reasoning: In judging the case, the Beijing Intellectual Property Court held that the critical questions were:

 

I. whether the name “Xinhua Dictionary” constitutes an unregistered well-known trademark and, if so, whether Sinolingua’s alleged conduct constituted an infringement;

 

II. whether the design of Xinhua Dictionary (11th edn, Commercial Press) constitutes special packaging and decoration of a famous product under the law, and, if so, whether Sinolingua’s alleged behavior constitutes unfair competition; and

 

III. if these infringements were confirmed, what legal liabilities Sinolingua should bear.

 

I. Whether the name “Xinhua Dictionary” constitutes an unregistered well-known trademark and, if so, whether Sinolingua’s alleged conduct constitutes an infringement

 

(a) The Court held that the name “Xinhua Dictionary” constitutes an unregistered well-known trademark. First, “Xinhua Dictionary” has the distinctive features of a trademark. Distinctiveness is a basic attribute that enables a mark to be considered as a trademark. Only marks with distinctive characteristics can be used to distinguish the source of goods and can consequently be registered or protected as trademarks. In this case, “Xinhua Dictionary” has both a specific historical origin and an identifiable evolution. It also has a long-term unique provider and an objectively successful market position. As a product name, “Xinhua Dictionary” maintains the mixed attributes of product and brand, and it has stable recognition among relevant consumers. It is used to indicate both the meaning and the source of the goods, and it has the distinctive characteristics of a trademark. In this case, pursuant to the precedents established in prior civil judgments – (2011) MTZ No. 55 and (2013) MSZ No. 371 – it was confirmed that “Xinhua Dictionary” has the distinctive characteristics of a trademark and can play a role in identifying the source of goods.

 

Secondly, the Court consequently held that “Xinhua Dictionary” constitutes an unregistered well-known trademark. Judging from the extent of knowledge that the relevant public has of the name “Xinhua Dictionary”, the mark is widely known to the relevant public across the whole country. Based on the length of time for which Commercial Press has been using the name “Xinhua Dictionary”, the sales volumes it achieves and the extremely extensive reach of those sales, hundreds of millions of copies of its Xinhua Dictionary have been sold across the whole country in the past 60 years. Based also on the duration, intensity and geographic coverage of the efforts that Commercial Press has devoted to promoting Xinhua Dictionary, the product (and its name) has gained wide influence and high visibility. It can therefore be concluded that “Xinhua Dictionary” constitutes an unregistered well-known trademark.

 

Finally, Commercial Press can assert its right to the unregistered well-known trademark in the name of “Xinhua Dictionary”. While, at the time when the alleged infringing acts took place, the mark “Xinhua Dictionary” had not been approved for trademark registration, the extent of its familiarity among the relevant public is such that “Xinhua Dictionary” should be protected as an unregistered trademark under the Trademark Law of the People’s Republic of China. Such protection not only honors the power of the mark to identify its source and the extent of the goodwill accumulated as a result of Commercial Press’s efforts in marketing its Xinhua Dictionary, but also imposes on Commercial Press the legal obligation of and social liability for assuring product quality. Protecting the rights of the unregistered trademark holder in this way will not jeopardize the spreading of knowledge; rather, to maintain the good brand reputation of “Xinhua Dictionary”, Commercial Press will pay more attention to continuous improvement when publishing and distributing dictionaries marked as such, and will thereby facilitate the extensive spreading of correct knowledge.

 

 (b) The Court held that Sinolingua’s reproduction and imitation of the unregistered well-known trademark “Xinhua Dictionary” in which Commercial Press holds the right is likely to cause confusion, and hence constitute trademark infringement. The products on which Commercial Press and Sinolingua each used the name “Xinhua Dictionary” are dictionaries under Class 16 of the International Classification of Goods and Services for the Purposes of the Registration of Marks (hereinafter the “Nice Classification”), and are identical products. Sinolingua used a completely identical mark to the unregistered wellknown trademark “Xinhua Dictionary” in which Commercial Press has rights when publishing its own dictionary, which action constituted using the unregistered well-known trademark by way of reproduction. According to documented evidence, Sinolingua’s use of the mark “Xinhua Dictionary” in its published dictionary products under Class 16 has caused confusion and misunderstanding among consumers attempting to buy and use the dictionary, Sinolingua’s published Xinhua Dictionary being readily confused with that published by Commercial Press. In applying the “Xinhua Dictionary” mark to dictionaries under Class 16, Sinolingua’s action therefore constitutes reproduction of a well-known trademark, not registered in China, on the same products as that to which it otherwise applies and is a breach of article 13(2) of the Trademark Law.

 

II. Whether the design of Xinhua Dictionary (11th edn, Commercial Press) constitutes special packaging and decoration of a famous product under the law, and, if so, whether Sinolingua’s alleged behavior constituted unfair competition

 

 (a) The Court held that the design of Xinhua Dictionary (11th edn, Commercial Press) constitutes special packaging and decoration of a famous product. First, the Court confirmed that Xinhua Dictionary (11th edition, Commercial Press) is a famous product. Since its first publication and distribution in June 2011 up to the time at which the allegedly infringing behaviors occurred, Xinhua Dictionary has been widely published and distributed across the whole country, and has obtained ever-greater popularity. On the basis of Commercial Press’s national publicity and marketing efforts, and the series of honors and important awards won by Xinhua Dictionary, the product published by Commercial Press can be confirmed to be a famous product.

 

 

 

Secondly, the design of Xinhua Dictionary (11th edn, Commercial Press) can be deemed to be “special decoration” under article 5(2) of the Law of the People’s Republic of China against Unfair Competition(as published in 1993). Its design comprises a unique arrangement and combination of elements unrelated to the product’s functionalities, forming an overall image that can distinguish it from other publishers’ similar products. Because of Commercial Press’s long-term promotion and use of this “special decoration”, the design allows the relevant public to identify the product’s source; the words, image and colors used in the design, and their specific arrangement and combination, play a role in identifying and distinguishing the specific source of the product as Commercial Press. Therefore, the decoration of Xinhua Dictionary (11th edn, Commercial Press) can be defined as “special decoration” as protected under article 5(2).

 

 (b) The Court held that Sinolingua’s uses of the “special decoration” of Xinhua Dictionary (11th edn, Commercial Press) without consent constitutes an act of unfair competition. Commercial Press provided the above images of the two competing products.

 

Sinolingua published its allegedly infringing product after Commercial Press published its Xinhua Dictionary (11th edn) and, as can be seen, the two are similar in terms of cover design, including the title and edition text, the graphic used, and the color and character of the spine. The design of Sinolingua’s allegedly infringing product is so similar to that published by Commercial Press in terms of fonts, graphic design, color matching, layout and other overall visual effects that the average consumer paying a standard level of attention might easily be misled into thinking that the source of the two is the same. Indeed, according to documented evidence, the allegedly infringing product has already created confusion among the relevant consumers in the market. Sinolingua’s use of the “special decoration” of the famous product Xinhua Dictionary (11th edn, Commercial Press) without consent therefore constitutes an act of unfair competition under article 5(2) of the Law of the People’s Republic of China against Unfair Competition.

 

III. If these infringements were confirmed, what legal liabilities Sinolingua should bear

 

The Court ruled that Sinolingua should immediately cease infringement and publish statements to mitigate the negative effects of its actions, that full support should be given to the claims of Commercial Press for damages of RMB3 million, and that, in addition, Commercial Press should be compensated some RMB277,989.20 for reasonable costs and expenses incurred.

 

First, in relation to the infringements of which Sinolingua was found guilty, the Court ordered it to immediately cease using the unregistered well-known trademark “Xinhua Dictionary” and prohibited it from using marks identical with or similar to “Xinhua Dictionary” on any dictionary products falling within Class 16 of the Nice Classification. The Court also ordered Sinolingua to immediately cease using any design identical with or similar to the “special decoration” of the famous product Xinhua Dictionary (11th edn, Commercial Press) and to publish statements in relevant media to eliminate the negative effects of its infringement on Commercial Press.

 

Secondly, in calculating the economic impact on Commercial Press of Sinolingua’s alleged infringements, the Court cited statistical information relating to the printing of some of the allegedly infringing dictionaries, as recorded by the Beijing Municipal Bureau of Press, Publication, Radio, Film and Television, the annual average return on net assets for publishing enterprises listed in the mainland in 2014 and the sales revenue of Sinolingua across the whole country, taking into account the nature and intention of its alleged infringements. The Court determined the damages due in the case to be 1.5 times the amount calculated according to these factors, in accordance with article 63(1) of the Trademark Law.

 

The specific calculation is as follows. During the period from September 30, 2012, to September 30, 2016, Sinolingua profited from publishing the allegedly infringing dictionary in the sum of RMB20,310,160 × 11.29% = RMB2,293,017.064. That amount multiplied by 1.5 would exceed the Commercial Press’s claims for compensation of RMB3 million and hence the Court supported in full its claim for compensation of RMB3 million.

 

Finally, Commercial Press claimed compensation of RMB400,000 for reasonable costs and expenses, and provided some evidence of such expenses incurred during the legal proceedings. Taking into consideration the relevance and necessity of those expenses within the case, the Court assessed reasonable expenses of RMB277,989.20, based on receipts submitted, and rejected the excess amount.