“Ronghua” Trademark Infringement Case

Why the protection of unregistered trademark should be based on its influence in its target market

Concerned Parties:

Plaintiff: Foshan Shunde Sushi Ronghua Food Co., Ltd.
Defendant: Dongguan Wing Wah Cake Shop Ltd.

被告商标/ Defendant’s Trademark	原告商标/ Plaintiff’s Trademark
	第533357号商标/TM 第1255171号商标/TM

Case Overview:

Recently, the Beijing High People’s Court has delivered its second instance judgment on the dispute over the trademark infringement between Su Guorong, Foshan Shunde Sushi Ronghua Food Co., Ltd. (plaintiffs in first instance court, hereinafter “ShundeRonghua”) and Dongguan Wing Wah Cake Shop Ltd., Wing Wah Cake Shop Ltd.(defendants in first instance court, hereinafter “HK Wing Wah”). In the judgment, the Court dismisses Wing Wah’s argument that “榮華” (traditional Chinese characters of “荣华”, hereinafter “RONG HUA”) amounts to a name peculiar to well-known goods.This is because the evidence submitted by HK Wing Wah is not sufficient to prove that the sign had well-known status as an unregistered trademark or a name peculiar to well-known goods like mooncakes before Nov. 14, 1989, when Shunde Ronghua’s trademark No. 533357 “荣华” (hereinafter “Rong Hua” for disambiguation) was filed for registration.

For this reason, the Court affirms its lower court’s judgement that HK Wing Wah has infringed upon the trademark “Rong Hua” by using signs containing “RONG HUA” on similar goods such as mooncakes and desserts. On the other hand, the Court lowers the damages from the enormous RMB 15 million (USD 2,400,000) that was granted by the lower court to RMB 3 million (USD 500,000) after considering the nature, the period and the consequences of the infringement in its decision.

Analysis and the Way Forward：

The focal point of this case is how to deal with the conflicts between a previously used but unregistered sign and an officially granted trademark. Those troubles are not unheard of in such a large country like China where the same product names may coexist in different areas. And in judicial practice, conflicts of rights are rising over and over again between similar marks. To give a solution to those conflicts, legislators have amended China’s Trademark Law. Pursuant to Article 59.3 of this law, “Where, before a trademark registrant applies for registration of a trademark, another party has used a trademark that is of certain influence and is identical with or similar to the registered trademark on the same kind of goods or similar goods, the holder of the exclusive right to use the registered trademark shall have no right to prohibit the said party from continued use of the trademark within the original scope of use, however, the holder may require the latter to add a proper mark for distinguishment”. Literally, the provision can be interpreted as: in the event of any conflict, an unregistered mark used before a registered one can only prevail when it is “of a certain influence”. However, it cannot be used beyond where it has been in use. Obviously, what matters most is whether the prior mark is “of a certain influence”.

Although the provision is new, the point is familiar. Therefore, when it comes to determination, we regard it appropriate to draw reference from Article 32 of the Trademark Law: “No applicant for trademark application may infringe upon another person’s existing prior rights, nor may he, by illegitimate means, rush to register a trademark that is already in use by another person and has certain influence”. Considering that, judges and examiners might think they have more discretion when determining what amounts to a trademark “of a certain influence”, and it gives prior trademark users a relief opportunity to support their claim that their goods did not constitute infringement.

Regarding the case at hand, while HK Wing Wah was able to establish substantial use of “RONG HUA” before “Rong Hua” was registered, “certain influence” thereof was not proved due to insufficient evidence. Thus, in this regard, the Court did not support HK Wing Wah’s claim. Trademark owners and users have a big lesson to learn from this case. As China improves its trademark administration system, it is moving from a lopsided protection of registered trademarks to a more holistic approach, giving more attention to prior users. This can reduce lawful but unreasonable judgments on trademark infringement that deprive the genuinely entitled users of their rights. At the same time, right-owners should raise their awareness of how they could use their trademark and invest more into it. What matters most is not the fact that a trademark has been used. It must be used profusely, because it is the key to acquire well-known status by a trademark when it cannot be registered at the time. Meanwhile, relevant evidence of trademark use should be gathered and preserved in advance to help secure a victory in any future dispute.

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