China: A new trend of trade mark infringement in the sports industry

Some sports brands have been targeted by infringers using similar marks. Ason Zhang and Andrew Lu of Chang Tsi & Partners discuss recent cases and suggest strategies for combating this.

Trade mark infringement is not a brand new topic to discuss. Article 57 of the Chinese Trademark Law lists several kinds of trade mark infringement. We have seen numerous actions of copying trade marks or using similar marks to mislead consumers. The infringers do not need a thorough plan to conduct these basic types of infringement, and the cost is low.

It has come to our attention that a new trend of trade mark infringement appears in several litigation involving certain famous sports brands. The defendants conducted their infringement through a meticulous plan including registering similar trade marks and utilising the registered trade marks in a non-standard style, as well as copying the plaintiff's copyright, patent, and trade dress. In this article, we would like to address the key points of this "innovative" trade mark infringement, and share some strategy on how to take down this kind of infringement based on our experience of representing our client in a same type of case.

Key points of the new type of trade mark infringement

Register similar trade marks

The infringers' plan starts from registering similar trade marks with the Trademark Office of China. It is a very important step and the purpose is to gain "legitimate appearance" for their future actions. The infringers aim to "legalize" their infringement based on the rights of registered trade marks. To get their application approved by the Trademark Office, they always add some designs on the pre-registered trade marks of famous sport brands, especially target on the brands of shoes. It is not easy for the infringers to get registration; therefore, they file a series of applications and hope some of them could pass the examination of the Trademark Office. More interesting, the infringers also set up a "firewall" by applying the similar trade marks in the name of one entity and then authorising the trade marks to another related entity to conduct further actions. It makes the owners harder to stop their infringement; at least the infringers can stall for some time so that they can gain more illegal interests.

The case, SKECHERS USA II v Spieth Wensky Sports Products Co and Quanzhou Bo Hai Shoe Industry Co, is a great example to analyse the new type of infringement. SKECHERS owns their famous "Skechers" and "S" brands, especially on shoes. It registered several "S" trade marks in Mainland China. The two defendants are related entities and controlled by the same individual. One of them, Quanzhou Bo Hai, registered the "" trade mark with Reg. No. 13306821, and then authorised the other one, Spieth Wensky to use this mark. It can be observed that the "" mark is very similar to SKECHERS' prior "S" trade marks; the differences are the shield background and the three dots in the upper right corner. During the litigation process, Quanzhou Bo Hai assigned this trade mark to Spieth Wensky. It is reasonable to believe that the purpose of Quanzhou Bo Hai registered this trade mark at the first place is to authorise Spieth Wensky to conduct further infringement. More corroborated evidence show that Spieth Wensky also applied to register several trade marks that contain "S" factors during year 2016 to 2017.

In the case that Under Armour v Fujian Tingfeilong Sports Goods Co, the defendant achieves the rights of using the "", "", and "" marks by registering, being assigned or authorised from others. These registrations are all similar to the prior registration of plaintiff's trade mark "". In the case, New Barlun v New Bailun, the defendant's affiliate registered the trade mark "", similar to the plaintiff's "" trade mark and intended to cause confusion in the market.
These trade marks registered by infringers are only their "legitimate appearance" for their future actions. Their real intention is to "legalise" their infringement based on the rights of registered trade marks.

Utilise the registered trade marks in a non-standard way

Article 56 of the Chinese Trademark Law regulates that "[t]he exclusive right to use a registered trademark shall be limited to the trademark registered upon verification and approval and the goods approved to be designated to be covered by the trademark." In accordance with this article, the owner of the registered trade marks shall use their trade marks in the same way proved by the Trademark Office. Any modification that could cause confusion among the consumers shall not be made during the use of the registered trade mark. Moreover, in the Provisions of the Supreme People's Court on Certain Issues Concerning the Trial of Civil Dispute Cases Involving Conflict of a Registered Trademark or Enterprise Name with Any Pre-existing Right, the Supreme Court of China states further regarding this issue.

"If a plaintiff files a lawsuit by alleging that the registered trademark used by another in the designated goods is identical or similar to the plaintiff's pre-existing registered trademark, the relevant people's court shall notify the plaintiff to apply to the relevant administrative authority for settlement. However, if a plaintiff files a lawsuit alleging that another's registered trademark, as beyond the scope of the designated goods or used by means of, among others, changing the distinctive features, split, or, combination of trademarks, is identical or similar to the plaintiff's registered trademark, the relevant people's court shall accept the lawsuit."

It clearly shows that if the owner of the registered trade marks utilise its mark in a non-standard way, by changing the distinctive features, split, or, the combination of trade marks, such use could be deemed as using a new, unregistered mark. In case this new mark is identical or similar to another's registered trade marks, a trade mark infringement lawsuit can be filed and the court shall accept it. The purpose of the infringers utilising their registered trade marks is to cause confusion among consumers, take advantages of the reputation of these famous brands, and gain illegal interests.

In the case, SKECHERS USA II v Spieth Wensky Sports Products Co and Quanzhou Bo Hai Shoe Industry Co, the defendant intentionally hid the shield background and the three dots on their registered trade mark, by coloring these two parts in the same way of the uppers of the shoes. The result is if a customer pays normal attention when looking at the defendant's shoes, the customer can only notice the "S" mark without the other two parts of the registered trade mark. This "S" mark being noticed is confusingly similar to SKECHERS' prior trade marks. The customers will believe the defendant's shoes have a certain relationship with the plaintiff, even believing the shoes are actually Skechers brand. This is how the infringers take advantages of famous brands and gain their illegal interest. The second instance court supported the plaintiff's argument and held that the defendant constitutes trade mark infringement.

In the case that Under Armour v Fujian Tingfeilong Sports Goods Co, the defendant also dilutes the background of the "" trade mark, makes it confusingly similar to the plaintiff's "" trade mark to conduct its infringing actions. In the case, New Barlun v New Bailun, the defendant diluted the stars in the backgrounds with the same color tricks and only left the "N" mark. The court held that this new mark is confusingly similar to the plaintiff's "" and the defendant constitutes trade mark infringement.
Why targeting these brands? We believe it is because these brands are all in the sport industry. In addition, they all have famous trade marks that consist of a single English character, such as "S" and "N", which could be copied easily. The defendants in these cases all have ties, more or less, with a certain area in Fujian Province. This area is notorious for counterfeiting shoes of well-known brands. We believe this is a recent trend of infringement in the shoes industry and worth the attention of international sport brands.

Copy copyright, patent, and trade dress as well

The above two steps are not all the infringers have done. Some notorious infringers believe those are not enough. Except abusing their registered trade marks in a confusing way, they also copy other rights owned by the international brands, such as copyright, patent, and trade dress, to make the customers more confused.

The defendant of the SKECHERS' case, Spieth Wensky, does not only conduct trade mark infringement, but also copies SKECHERS' trade dress of its "D'LITES"shoes, and copyright of "" and "". Further, the legal representative of the defendant even applied for the design patent, using one of the most famous styles of SKECHERS' shoes. In addition, the defendant falsely advertises that its brand established in UK in 1945, and try to become an "international" brand to cause more confusion among the customers.

Strategy for stopping the innovative trade mark infringement

Take off the "legitimate appearance", focus on the actually used mark

Firstly, the right owners should pay more attention to the applications of the trade marks that are similar to their prior trade marks and could cause confusion among the customers. Necessary actions should be conducted against these new applications such as filing opposition. These actions will stop the infringer in their first stage of infringement and could effectively avoid further moves of the infringer.

Secondly, once the right owners find this new type of infringement, they should immediately take actions against the infringement. The actions must focus on the actual use of the mark, and should not pay much attention on the trade marks registered by the infringer. Through providing sufficient evidence to prove the mark actually used by the infringer is not the registered trade mark, the right owners can take off the "legitimate appearance" and strongly defend their prior trade mark rights.

Defend your rights in all aspects

As we have mentioned, trade mark is not the only rights that the infringers will copy. Therefore, to be more sufficient, in addition to arguing trade mark infringement, the owners should also include other rights that being infringed. These rights will support each other, and together they will show the bad faith of the infringers.

Determination

Determination is also a very significant factor of your defending actions. Recently, China has paid much more attention to protecting intellectual property rights than before. The old types of trade mark infringement have been strongly hit. Under this circumstance, the infringers has innovated their infringement to a new level. Their meticulous plan could cause a huge obstacle when the rights owners launch their defending actions. For instance, the court rejected all of SKECHERS' complaints in the first instance. However, the determination of SKECHERS makes them persistent and finally win the whole case in the second instance.