WANG Suiyong

v. Shenzhen Ellassay Fashion Co., Ltd. and

Hangzhou Intime Century Department Store Co., Ltd., A Trademark Infringement Dispute

Guiding Case No. 82

(Discussed and Passed by the Adjudication Committee of the Supreme People’s Court

Released on March 6, 2017)

CHINA GUIDING CASES PROJECT

English Guiding Case (EGC82)

September 14, 2018 Edition∗

∗ The citation of this translation of this Guiding Case is: 《王碎永诉深圳歌力思服饰股份有限公司、杭州

银泰世纪百货有限公司侵害商标权纠纷案》 (WANG Suiyong v. Shenzhen Ellassay Fashion Co., Ltd. and Hangzhou Intime Century Department Store Co., Ltd., A Trademark Infringement Dispute), STANFORD LAW SCHOOL CHINA GUIDING CASES PROJECT, English Guiding Case (EGC82), September 14, 2018 Edition, http://cgc.law.stanford.edu/guiding-cases/guiding-case-82. The original, Chinese version of this case is available at 《中国法院网》(WWW.CHINACOURT.ORG), http://www.chinacourt.org/article/detail/2017/03/id/2574902.shtml. See also 《最高人民法院关于发布第 16 批指导性案例的通知》 (Notice of the Supreme People’s Court on the Release of the 16th Batch of Guiding Cases), issued on and effective as of Mar. 6, 2017, http://www.chinacourt.org/law/detail/2017/03/id/149260.shtml.

This document was primarily prepared by Sean Webb and Dr. Mei Gechlik; it was finalized by Sean Webb, Dimitri Phillips, and Dr. Mei Gechlik. Minor editing, such as splitting long paragraphs, adding a few words included in square brackets, and boldfacing the headings, was done to make the piece more comprehensible to readers; all footnotes, unless otherwise noted, have been added by the China Guiding Cases Project. The following text is otherwise a direct translation of the original text released by the Supreme People’s Court.

Keywords

Civil Trademark Infringement Good Faith Abuse of Rights

Main Points of the Adjudication

Where a party violates the principle of good faith, adversely affects the legal rights and interests of others, disrupts the fair competition order of the market, maliciously obtains and exercises trademark rights, and claims that others have infringed on his1 rights, a people’s court should, on the grounds that [these acts] constitute an abuse of rights, decide not to support [the party’s] litigation requests.

Related Legal Rule(s)

Article 13 of the Civil Procedure Law of the People’s Republic of China2

Article 52 of the Trademark Law of the People’s Republic of China3

Basic Facts of the Case

Shenzhen Gelisi Garments Industrial Co., Ltd.4 was established on June 8, 1999. On December 18, 2008, the company obtained the “Ge Li Si” trademark No. 1348583 by assignment. The trademark had been approved for use with Type No. 25 (clothing etc.) commodities and for registration in December 1999. On November 19, 2009, the trademark was approved for renewal registration and the validity period is from December 28, 2009, to December 27, 2019.

Shenzhen Gelisi Garments Industrial Co., Ltd. is also the registrant of the “ELLASSAY” trademark No. 4225104. The commodities approved for use with the trademark are Type No. 18 ((animal) skin; wallets; travel bags; folders (leather); leather belts; fur; umbrellas; canes;

1 The term “his” as used here is a gender-neutral term that may refer to “she” or “it”. 2 《中华人民共和国民事诉讼法》 (Civil Procedure Law of the People’s Republic of China), passed on, issued on, and effective as of Apr. 9, 1991, amended three times, most recently on June 27, 2017, effective as of July 1, 2017, http://www.npc.gov.cn/npc/xinwen/2017-06/29/content_2024892.htm. The 2017 amendment did not change the numbering of the provisions cited from the legislation. 3 《中华人民共和国商标法》 (Trademark Law of the People’s Republic of China), passed and issued on Aug. 23, 1982, effective as of Mar. 1, 1983, amended three times, most recently on Aug. 30, 2013, effective as of May 1, 2014, http://www.gov.cn/jrzg/2013-08/30/content_2478110.htm. 4 The name “深圳歌力思服装实业有限公司” is translated herein as “Shenzhen Gelisi Garments Industrial Co., Ltd.” in accordance with the translation used on a webpage of the Ministry of Commerce of the People’s Republic of China, at http://ccn.mofcom.gov.cn/194098.

handbags; shopping bags). The registered validity period is from April 14, 2008, to April 13, 2018. On November 4, 2011, Shenzhen Gelisi Garments Industrial Co., Ltd. was renamed Shenzhen Ellassay Fashion Co., Ltd.5 (hereinafter referred to as “Ellassay Company”, i.e., the defendant of the first-instance [adjudication] in this case). On March 1, 2012, the aforementioned registrant of the “Ge Li Si” trademark was correspondingly changed to Ellassay Company.

In June 2011, WANG Suiyong, the plaintiff of the first-instance [adjudication], applied to register the “Ge Li Si” trademark No. 7925873. The commodities approved for use with the trademark are Type No. 18 (wallets, handbags, etc.). On July 7, 2004, WANG Suiyong also applied to register the “Ge Li Si and graphic” trademark No. 4157840. Because, subsequently, the High People’s Court of Beijing Municipality rendered a second-instance judgment on April 2, 2014, determining that the [“Ge Li Si and graphic”] trademark had adversely affected the rights of a shop name in prior [use enjoyed by] Shenzhen Ellassay Investment Management Co., Ltd.,6 an associated enterprise of Ellassay Company, it is not to be approved for registration.

Beginning in September 2011, WANG Suiyong purchased, through notary procedures, bags bearing hangtags with the words “Chinese name of the brand: Ge Li Si; English name of the brand: ELLASSAY” at “ELLASSAY” counters in Hangzhou, Nanjing, Shanghai, Fuzhou, and other places. On March 7, 2012, WANG Suiyong brought suit on the grounds that the acts of producing and selling the above-mentioned bags by Ellassay Company and Hangzhou Intime Century Department Store Co., Ltd.7 (hereinafter referred to as “Hangzhou Intime Company”) constituted infringement of the “Ge Li Si” trademark and the “Ge Li Si and graphic” trademark rights owned by WANG Suiyong.

Results of the Adjudication

On February 1, 2013, the Intermediate People’s Court of Hangzhou Municipality[, Zhejiang Province,] rendered the (2012) Zhe Hang Zhi Chu Zi No. 362 Civil Judgment,8 opining that the acts of producing and selling the allegedly infringing commodities by Ellassay Company and Hangzhou Intime Company had infringed on WANG Suiyong’s exclusive rights to use [his] registered trademarks. [The court, therefore,] decided that Ellassay Company and Hangzhou Intime Company [had to] bear [liability for] ceasing the infringing acts, paying WANG Suiyong 5 The name “深圳歌力思服饰股份有限公司” is translated here as “Shenzhen Ellassay Fashion Co., Ltd.” in accordance with the translation used on the company’s English website, at http://www.ellassay.com/en/main.htm (under the tab labelled “contact”). 6 The name “歌力思投资管理有限公司” is translated here as “Shenzhen Ellassay Investment Management Co., Ltd.” with reference to the translation used in Shenzhen Ellassay Fashion Co., Ltd.’s profile, at http://www.4-traders.com/SHENZHEN-ELLASSAY-FASHION-23672771/company. 7 The name “杭州银泰世纪百货有限公司” is translated herein as “Hangzhou Intime Century Department Store Co., Ltd.” in accordance with the English name appearing for it in the document available at http://www.intime.com.cn/intime/front/investttnews/detail_en.html?id=17088. 8 The judgment has not been found and may have been excluded from publication.

RMB 100,000 as compensation for economic losses and reasonable expenses [incurred], and eliminating the effects [of their acts]. Not accepting [the judgment], Ellassay Company appealed. On June 7, 2013, the High People’s Court of Zhejiang Province rendered the (2013) Zhe Zhi Zhong Zi No. 222 Civil Judgment,9 rejecting the appeal and upholding the original judgment.

Not accepting [the judgment], both Ellassay Company and WANG Suiyong applied to the Supreme People’s Court for a retrial.10 The Supreme People’s Court ruled to bring [the case] up [to the Supreme People’s Court] for adjudication11 and, on August 14, 2014, rendered the (2014) Min Ti Zi No. 24 Civil Judgment,12 revoking the first-instance and the second-instance judgments and rejecting all of the litigation requests [made by] WANG Suiyong.

Reasons for the Adjudication

In the effective judgment, the court opined:13 the principle of good faith is a fundamental standard to which all participants in market activities should adhere. It encourages and supports the accumulation of social wealth and the creation of social values through honest labor. It protects property rights and interests formed on this basis as well as the freedom and right to control, for legal and proper purposes, these property rights and interests. [The principle of good faith] also requires people to pay attention to [their] credibility and honesty in market activities and—on the premise that legal rights and interests of others, social and public interests, and the order of the market are not adversely affected—to pursue their own rights and interests.

9 The judgment has not been found and may have been excluded from publication. 10 《中华人民共和国民事诉讼法》 (Civil Procedure Law of the People’s Republic of China), supra note 2, Article 199: “A party which deems that an effective judgment or ruling is erroneous may file a petition for retrial with the people's court at the next higher level; and if the parties on one side are numerous or the parties on both sides are citizens, the parties may file a petition for retrial with the original trial people's court. Where a party files a petition for retrial, the execution of the judgment or ruling shall not be discontinued.” (“第一百九十九条 当事人对已经发生法律效力的判决、裁定，认为有错误的，可以向上一级人民法院申请再审；当事人一方人数众多或者当事人双方为公民的案件，也可以向原审人民法院申请再审。当事人申请再审的，不停止判决、裁定的执行。”) 11 The expression in the original text “提审” (“bring [a case] up [to an upper-level court] for adjudication”) refers to Article 13 Paragraph 2 of the Organic Law of the People’s Courts of the People’s Republic of China, which provides, inter alia: if the Supreme People’s Court finds an error in a judgment or ruling rendered by a lower-level court and the judgment or ruling has already come into effect, the Supreme People’s Court has the authority to adjudicate the case itself or to direct the lower-level court to conduct a retrial. See 《中华人民共和国人民法院组

织法》 (Organic Law of the People’s Courts of the People’s Republic of China), passed on July 1, 1979, issued on July 5, 1979, effective as of Jan. 1, 1980, amended three times, most recently on Oct. 31, 2006, effective as of July 1, 2007, http://www.npc.gov.cn/wxzl/gongbao/2006-12/05/content_5354938.htm. 12 The judgment has not been found and may have been excluded from publication. 13 The original text does not specify which court opined. Given the context, this should be the Supreme People’s Court.

The principle of good faith should also be adhered to in civil litigation activities.14 [The

principle] ensures that the parties have the rights to exercise and dispose of, within the scope provided by law, their civil rights and litigation rights.15 In addition, [the principle] also requires parties, on the premise that rights and interests of others and social and public interests are not adversely affected, to exercise their own rights and interests with good intentions and prudence. Any act that violates the purpose and spirit of the law, that is [carried out] for the purpose of adversely affecting the proper rights and interests of others, and that [results in] a malicious acquisition and exercise of rights and a disruption of the fair competition order of the market, is an abuse of rights. Claims for rights related to [that act] should not be protected or supported by law.

As of [the date of the judgment],16 the “Ge Li Si and graphic” trademark No. 4157840 had not been approved for registration. WANG Suiyong had no right to rely on this [trademark] to bring suit against others for trademark infringement.

On the issue of whether the acts of Ellassay Company and Hangzhou Intime Company infringed on the rights of WANG Suiyong’s “Ge Li Si” trademark No. 7925873

First, Ellassay Company has the legal basis of “prior rights”. Ellassay Company and its associated enterprise first used “Ge Li Si” as an enterprise shop name in 1996. They first obtained the exclusive right to use the “Ge Li Si” registered trademark on [Type No. 25] (clothing etc.) commodities in 1999. After long-term use and extensive publicity, “Ge Li Si”, as an enterprise shop name and a registered trademark, already has a relatively high degree of being known in the market. With respect to these business identifiers, Ellassay Company enjoys legal prior rights.

Second, Ellassay Company’s acts of using [the registered trademark] in this case were based on legal rights and both the ways of using [the registered trademark] and the nature of the acts were proper. Looking at the places of sale, Ellassay Company’s acts of displaying and selling the allegedly infringing commodities were both carried out at the Ellassay counters of Hangzhou Intime Company. By displaying Ellassay Company’s “ELLASSAY” trademark, the counters clearly indicated the supplier of the allegedly infringing commodities. Under the circumstances that Ellassay Company’s business identifiers, such as [its] shop name and trademark, had already had a relatively high degree of being known in the market, while WANG Suiyong could not adduce evidence to prove that his “Ge Li Si” trademark also had a degree of

14 The language used here is similar to Article 13(1) of the Civil Procedure Law: “The principle of good faith should be followed in civil litigation.” (“民事诉讼应当遵循诚实信用原则。”) See 《中华人民共和国民事诉讼法》 (Civil Procedure Law of the People’s Republic of China), supra note 2. 15 The language used here is similar to Article 13(2) of the Civil Procedure Law: “The parties have the rights to dispose of, within the scope provided by law, their civil rights and litigation rights.” (“当事人有权在法律规定的范围内处分自己的民事权利和诉讼权利。”). See id. 16 The original text reads “迄今为止” (“as of now”), but is translated here as “as of [the date of the judgment]”.

being known in the market, Ellassay Company’s acts of selling the allegedly infringing commodities at its counters would not cause ordinary consumers to misidentify the commodities as belonging to WANG Suiyong. Looking at Ellassay Company’s specific ways of using [the trademark], both the external packaging of the allegedly infringing commodities and the notable parts inside the commodities were clearly labeled with the “ELLASSAY” trademark. [The company] only used the words “Chinese name of the brand: Ge Li Si” on the hangtags of the commodities. Because “Ge Li Si” is Ellassay Company’s enterprise shop name and has a mutual reference relationship with the “ELLASSAY” trademark, Ellassay Company’s use of the words “Ge Li Si” on the hangtags of the allegedly infringing commodities to refer to the producer of the commodities was not obviously inappropriate. [Ellassay Company] did not have the subjective intent to piggyback on the degree of being known of WANG Suiyong’s “Ge Li Si” trademark, nor did it create obstacles for ordinary consumers to correctly distinguish the origin of the allegedly infringing commodities. On this basis, Hangzhou Intime Company’s acts of selling the allegedly infringing commodities were not prohibited by law.

Finally, WANG Suiyong’s acts of obtaining and exercising the “Ge Li Si” trademark rights could hardly be called proper. Composed of the Chinese characters “Ge Li Si”, the “Ge Li Si” trademark has completely the same textual composition as that of Ellassay Company’s enterprise shop name in prior use and of the “Ge Li Si” trademark in prior registration. “Ge Li Si” is itself a made-up term without inherent meaning and has a relatively strong, inherently distinctive quality. Judging by common sense, in the absence of contact or knowledge, the possibility of having similar registrations resulting from coincidence is relatively low. WANG Suiyong is a business operator of commodities whose [target] geographical [area] is close [to that of Ellassay Company’s commodities] and whose scope of business is quite closely related [to that of Ellassay Company]. The possibility of him being completely unaware of the “Ge Li Si” shop name and trademark was relatively low. [Despite] the above-mentioned circumstances, WANG Suiyong still applied to register the “Ge Li Si” trademark [for use] on commodities, including handbags and wallets. His acts could hardly be called proper. WANG Suiyong’s use of a trademark right not obtained with good intentions to bring an infringement of rights lawsuit against Ellassay Company’s acts of proper use [of its trademark] constituted an abuse of rights.

(Adjudication personnel of the effective judgment: WANG Yanfang, ZHU Li, and TONG Shu)