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Chengdu Tongdefu VS. Chongqing Tongdefu and Xiaohua Yu
    Publish time 2019-06-20 11:15    

2019-06-20

Chengdu Tongdefu VS. Chongqing Tongdefu and Xiaohua Yu

【Keywords】  

  

Civil/ Trademark Right Infringement / Unfair Competition/ Long-established Brands/ False Publicity 

  

【Key Points of the Adjudication】  

  

1. When an individual or enterprise without the historical origin of a “long-established brand”registers trademark using the “long-established brand” or trade name similar thereto, and advertises products using the history of the “long-established brand”, it shall be identified as false publicity, and it constitutes unfair competition. 

  

2. When an individual or enterprise with the historical origin of a “long-established brand”registers the “long-established brand” as its trade name or enterprise name without violating the principle of good faith, misleading others, or highlighting the use of such trade name, it does not constitute unfair competition or infringement of the exclusive right to use a registered trademark. 

  

  

【Basic Facts of the Case】  

  

The claimant (and the defendant of the counterclaim) Chengdu TONGDEFU Hechuan Peach Slices Food Co., Ltd. (hereinafter referred to as Chengdu TONGDEFU Company) claims that: Chengdu TONGDEFU Company is the owner of the trademark “同德福TONGDEFU and Logo”. The individually owned business and Chongqing Municipality Hechuan District TONGDEFU Peach Slices Co., Ltd. (hereinafter referred to as Chongqing TONGDEFU Company) successively established by Xiaohua Yu highlighted “TONGDEFU” in the trade name and the outer packaging of peach slices they manufactured, which has infringed the claimant’s exclusive right to use the trademark “同德福TONGDEFU and Logo”, and constituted unfair competition. Therefore, the claimant requested the court to order that Chongqing TONGDEFU Company and Xiaohua Yu should cease the use and cancel the enterprise name with the trade name “TONGDEFU”; cease the infringement of the claimant’s exclusive right to use the trademark, publish a formal apology in the newspaper, eliminate the adverse effects, and compensate the claimant (1) 500,000 yuan for economic and business reputation losses and (2) 5,066.4 yuan for other reasonable expenses. 

  

The defendants (the claimants of the counterclaim) Chongqing TONGDEFU Company and Xiaohua Yu jointly responded to the claim and made a counterclaim that: the predecessor of Chongqing TONGDEFU Company was TONGDEFU Vegetarian Food Store originated in 1898. Although TONGDEFU Vegetarian Food Store ceased production due to public-private partnership, the pass-on of the unique technique from generation to generation was not interrupted. Xiaohua Yu, the fourth-generation successor, inherited the ancestral property, successively registered an individually owned business and a company, and used the enterprise name and trade name in a standardised manner. The registration of Chongqing TONGDEFU Company and Xiaohua Yu was bona fide and does not constitute infringement. Chengdu TONGDEFU Company has no direct historical origin with the long-established brand “TONGDEFU” but it made associated publicity of the trademark “TONGDEFU” and the long-established brand “TONGDEFU” which constitutes false publicity. In addition, Chengdu TONGDEFU Company used the well-established commodity name “TONGDEFU” without approval, which constitutes unfair competition. Therefore, the defendants requested the court to order that Chengdu TONGDEFU Company should cease the false publicity, publish a formal apology in a national newspaper to eliminate adverse effects, and cease the infringement of “TONGDEFU” as a specific name of a famous commodity. 

  

The Court has found that: TONGDEFU Vegetarian Food Store, which started business in 1898, was operated by Hongchun Yu, Fuguang Yu and Yongzuo Yu between 1916 and 1956 for three generations successively. During the 1920s to 1950s, the trade name “TONGDEFU” enjoyed a high reputation. In 1956, due to the public-private partnerships, TONGDEFU Vegetarian Food Store ceased its business. In 1998, Wenjiang Branch of Hechuan Municipality Peach Slices Factory obtained approval to register the No. 1215206 trademark of “TONGDEFU and Logo”, with the “Type 30” approved use, i.e. cakes, peach slices (cake), cocoa products, and artificial coffee. On 7 November 2000, upon approval, the name of the registrant of the abovementioned trademark was changed into Chengdu TONGDEFU Company. The outer packing for various products of Chengdu TONGDEFU Company used the wordings of “long-established brands” and “long-established brand of a hundred years”, and the wordings of “The brief introduction of peach slices of ‘TONGDEFU brand’:‘TONGDEFU brand’ peach slices were invented and produced in Qing Dynasty during the reign of Emperor Qianlong (or in 1840), which are of rich history and culture”. In the website company introduction for Chengdu TONGDEFU Company, the history of TONGDEFU Vegetarian Food Store described written in “Hechuan Literature and History Research Materials (Part II)” was used for the publicity of their Hechuan peach slices of “TONGDEFU” brand.  

  

On 4 January 2002, the sun of Yongzuo Yu, Xiaohua Yu registered an individually owned business, the trade name of which is Hechuan Municipality Long-established brand TONGDEFU Peach Slices Factory, and the scope of business is sales of self-manufactured peach slices and snacks. In 2007, its trade name has changed into Chongqing Municipality Hechuan District TONGDEFU Peach Slices Factory, which was later cancelled. On 6 May 2011, Chongqing TONGDEFU Company was established, the legal representative is Xiaohua Yu, and the scope of business is manufacture of cakes (baked cakes and pastries); such company is the owner of the exclusive right to use the registered trademark for the No. 6626473 trademark (text and logo) of “Fuguang Yu 1898” and the No. 7587928 trademark (text and logo) of “Xiaohua Yu”. Chongqing TONGDEFU Company used the contents introducing the history of TONGDEFU Vegetarian Food Store and the prize winning information thereof such as “ ‘long-established brand and trade name【TONGDEFU】’, ‘invented in the 23rd year during the reign of the Emperor Guangxu (in 1898)’ and ‘of rich history’ ” on the outer packing of its various products; amongst which, after the abovementioned texts of some products, it is marked that “The above text is an excerpt from Hechuan County Journal”; “【TONGDEFU】 has its complimentary address as follows: TONGDEFU is at Hechuan, the name is well-known far away, the business is over a hundred years, it makes peach slices for 4 generations, the quality is high, and the price is cheap; they run business with good faith, they are honest, the trade is fair, and the public is enthusiastic on them”, “Hechuan Peach Slices”, and the wordings of “Chongqing Municipality Hechuan District TONGDEFU Peach Slices Co., Ltd.”.   

  

【Results of the Adjudication】  

  

On 3 July 2013, Chongqing Municipal First Intermediate People’s Court issued the No. 00273 Civil Judgment [(2013) Yu Yi Zhong Fa Min Chu Zi]:  

  

1. Chengdu TONGDEFU Company should immediately cease the false publicity acts involved in this case.  

  

2. Chengdu TONGDEFU Company should publish a statement on its website to eliminate the adverse influence of its false publicity acts on the date of this judgment coming into force and continue for 5 successive days.  

  

3. Dismiss all the claims of Chengdu TONGDEFU Company.  

  

4. Dismiss the other counterclaims of Chongqing TONGDEFU Company and Xiaohua Yu.  

  

After the announcement of the first instance judgment, Chengdu TONGDEFU Company rejected the judgment and lodged an appeal. On 17 December 2013, Chongqing Municipal High Court issued the No. 00292 Civil Judgment [(2013) Yu Gao Fa Min Zhong Zi] to dismiss the appeal and maintain the original judgment.    

  

【Reasons for the Adjudication】 

  

The court’s valid judgment considers that: The individually owned business Xiaohua Yu and Chongqing TONGDEFU Company have a similar scope of business with Chengdu TONGDEFU Company, and they are of competition relationship; their trade name includes the three Chinese characters “TONGDEFU”, which is the same as the text part of the registered trademark “TONGDEFU and Logo” of Chengdu TONGDEFU Company, thus it constitutes similar trademark. Whether the registration of trade names constitutes unfair competition mainly depends on whether the behaviour violates the principle of good faith. The evidences provided by Chengdu TONGDEFU Company were insufficient to prove that “TONGDEFU and Logo” trademark is fairly well-known; even if others register and use “TONGDEFU” in a standardised manner, it will not mislead the public; therefore, it is not established that Xiaohua Yu had a malicious “free-rider” intention to register “TONGDEFU” as the trade name of the individually owned business. Furthermore, during the 1920s to 1950s, the trade name “TONGDEFU” enjoyed a high reputation. TONGDEFU Vegetarian Food Store was operated by Hongchun Yu, Fuguang Yu and Yongzuo Yu for three generations successively. Especially, during the operation of Fuguang Yu, the peach slices produced by TONGDEFU Vegetarian Food Store gained great reputation. Xiaohua Yu is the grandchild of Fuguang Yu, and the son of Yongzuo Yu, therefore, it is reasonable for Xiaohua Yu to register “TONGDEFU” as the trade name of the individually owned business, based on the fame obtained by the trade name of TONGDEFU Vegetarian Food Store and as an immediate family member of the operators of TONGDEFU Vegetarian Food Store. The registration of the trade name of the individually owned business by Xiaohua Yu was bona fide, which does not violate the principle of good faith, and should not constitute unfair competition. Based on the business continuity, the behaviours thereof to change the trade name of the individually owned business and to change the registered name of the Chongqing TONGDEFU Company do not constitute unfair competition either. 


From the outer packing of the products of Chongqing TONGDEFU Company, Chongqing TONGDEFU Company used the corporate full name, which is marked at front bottom of the outer packing; the three characters “TONGDEFU” are located within the corporate full name, which are consistent with the whole name; it did not use them in a prominent manner by an abbreviated form, nor did it use them prominently by different font, size and colour compared with other parts of the texts. Therefore, the marking of corporate name by Chongqing TONGDEFU Company on the product outer packing is standardised behavior, which should not constitute “prominent use of trade name”, and should not constitute infringement of trademark rights. As for the marking of “TONGDEFU Poem of Praise” by Chongqing TONGDEFU Company, the four Chinese characters “同德福颂” (which means “TONGDEFU Poem of Praise”) are slightly bigger compared with the whole poem (the poem of 36 Chinese characters), but they form an integral visually. The specific content of the poem was altered from a similar poem used on the product outer packing by TONGDEFU Vegetarian Food Store recorded in historical materials, aiming at introducing the history and business philosophy of the trade mark “TONGDEFU”, rather than using the three Chinese characters of “TONGDEFU” in a prominent manner. Further, the product outer packing of Chongqing TONGDEFU Company uses various commercial marks, in which, the collective trademark “Hechuan Peach Slices” is particularly prominent, and its own trademark is also obvious. In the meantime, the geographical indications and Chongqing’s intangible cultural heritage are also marked. Compared with these marks, the “TONGDEFU Poem of Praise” and the specific content thereof are only ordinary descriptive texts, which are obviously not trademarks in the form, and are not prominent enough either. Objectively, they cannot mislead the consumers on the product origin, and cannot replace trademarks. Therefore, the behavior of marking “TONGDEFU Poem of Praise” by Chongqing TONGDEFU Company does not constitute “the prominent use” within the meaning of trademark rights and does not constitute infringement of trademark rights.  

  

The part of history and honour for peach slices of “TONGDEFU brand” included on the website of Chengdu TONGDEFU Company are consistent with those of TONGDEFU Vegetarian Food Store in historical records; the origin of the historical materials is marked on the website too; but the connection between the Company and TONGDEFU Vegetarian Food Store is not proved by evidences. Furthermore, Chengdu TONGDEFU Company marked on its product outer packing the wordings that it is an “old brand of over a hundred years”, “long-established brand”, and “the peach slices were invented in Qing Dynasty during the reign of Emperor Qianlong”, but the time of registration of trademark “TONGDEFU and Logo” was 1998; and, Chengdu TONGDEFU Company did not provide evidences to prove the basis for the abovementioned marking behaviours. The abovementioned behavior of Chengdu TONGDEFU Company is inconsistent with facts, may mislead the consumers to misunderstand the origin and history of the brand and its relationship with TONGDEFU Vegetarian Food Store, may gain competitive advantages, and thus constitutes false publicity. It should bear the appropriate civil responsibilities to cease infringement and eliminate adverse effects.