First Case in China Penalising Bad Faith Trade Mark Registration
The Fujian Higher People’s Court issued a judgment on 27 September 2021 awarding Emerson Electric Co (“Emerson”), a US company damages in the amount of RMB1.6 million payable by the defendants (two affiliated Xiamen companies, the main shareholder of the Xiamen companies and the trade mark agent) in China for having registered Emerson’s trade marks in bad faith as an act of unfair competition.
Emerson is the owner of the brand name “InSinkErator 爱适易”.
Two affiliated Xiamen companies have been found registering “InSinkErator” and “爱适易” and a number of other well known brand names as trade marks in China since around 2010. Having considered all the relevant factors and circumstances, the Court ruled that the trade mark registrations the Xiamen companies acquired or attempted to acquire have exceeded the normal needs for its commercial activities and disturbed the business activities and interest of Emerson. Such acts have caused unfair competition in the market in violation of Article 2 of the PRC Anti-Unfair Competition Law. The main shareholder of the Xiamen companies and the trade mark agent representing the Xiamen companies were also held liable for facilitating the unlawful act of unfair competition.
Many brand owners before this case had inevitably spent huge effort and millions of legal costs to re-claim their trade mark rights in China without expecting any award of damages. This case has set an encouraging precedent for brand owners to look up to and materialized the PRC Government’s initiative and determination to better safeguard the legitimate trade mark rights of brand owners.