Dispute over Trademark Infringement and Unfair Competition between AkzoNobel and Doulax

[Source Materials]
First instance judgment: Jiangsu Nanjing Intermediate People’s Court (2016) Su-01-Min-Chu No. 584 Civil Judgment.
Second instance judgment: Jiangsu High People’s Court (2017) Su-Min-Zhong No. 211 Civil Judgment.

[Concerned Parties]
Appellant (former Defendant): Doulax Pipes Technology (Suzhou) Co., Ltd.(“Doulax”)
Appellee (former Plaintiff): Akzo Nobel Coatings International B.V. (“AkzoNobel”)

AkzoNobel	Doulax

[Case Overview]
In the practice of administrative trials concerning trademark rights, it is not uncommon for the Trademark Review and Adjudication Board (“TRAB”) and the Beijing Intellectual Property Court to determine goods to be similar even if they are in different classes, according to the guiding Table for Differentiating Similar Goods and Services. However in the scenario of civil disputes, the courts seldomly delivers such precedents, one of which is the case to be studied here.

Resorting to civil proceedings, we Hongfu Law Firm assisted AkzoNobel to win over the court which supported our argument on the similarity between paints and pipes, taps, valves etc.. While they respectively fall in Class 2, Class 11 and Class 17, we sufficiently established the relevance between the goods in terms of their function, usage, and sales channels. The court also determined AkzoNobel’s trademark “Duo Le Shi” (“DULUX” in Chinese, exploited by Doulax) as a considerably well-known trademark. The finding was and will be favorable to prove free rides on AkzoNobel’s reputation. “Duo LeShi/DULUX” paints are signature coating products of AkzoNobel. Consistent operation and marketing for years in China have grown the brand into a household name. In the course of this process, “DULUX” has been recognized as a well-known trademark by the China Trademark Office, so has its Chinese equivalent “Duo Le Shi” been recognized in administrative procedures multiple times.

[Court’s Opinions]
The first instance court held that, although paints and coatings designated under “Duo Le Shi” in Class 2 and pipes, valves etc. sold by Doulax are of different classes of goods, their usage, sales channels and target consumers largely overlap. The general consumers therefore are prone to draw connections and harbor confusions between them. To be specific, Doulax’s products bearing “Duo Le Shi” are likely to be directly or indirectly attributed to AkzoNobel. For this reason, the goods were determined as similar goods for the purpose of the Trademark Law by the court. Thus, Doulax’s using “Duo Le Shi” on its products, packages, brochures, business cards and web pages constitutes trademark infringement for the confusion caused to the relevant consumers. Doulax was ordered to immediately cease the infringement, pay RMB 500,000 in damages to AkzoNobel, and eliminate the adverse effects it had caused.

Regarding the company’s name, the first instance court held that Doulax has unreasonably used and registered “Duo Le Shi”, quite a visible and reputable trademark of AkzonNobel in the market, as its trade name alone or combined with other elements in its business operation, suffices to cause confusion and even mistake in the companies’ relationship. The relevant consumers might be misled to reckon that Doulax is licensed by or affiliated with AkzoNobel, which will unfairly give strength to the former due to the latter’s renowned trademarks, reputation and competitiveness. In this way, Doulax’s conduct will inevitably impair AkzoNobel’s legal and legitimate rights by breaching good faith and business ethics required in market activities, therefore disrupting the social and economic order. Therefore, the first instance court determined that such behavior of Doulax constitutes unfair competition and ordered it to change its name in good time. Doulax was unsatisfied and filed appeal, followed by the higher court’s affirmation of the first instance judgment and dismissal of the appellant’s pleading.

[HFL’s Comments]

• The Table for Differentiating Similar Goods and Services serves as a reference rather than a decisive standard for determining similar goods. In practice, more weight is given to the market’s status based on a comprehensive analysis of the goods’ function, usage, departments, sales channels, target consumers etc. Thus, goods of distinct classes can still be determined as similar goods for the purpose of the Trademark Law as long as the relevant consumers plausibly find them relevant and their sources confusing based on general knowledge and common sense of transactions.
• Regarding the registration and marked use of other’s trademark with considerable fame as trade name, Article 58 of the Trademark Law prescribes that, “Whoever constitutes unfair competition by using a registered trademark or an unregistered well-known trademark of another party as the trade name in its enterprise name to mislead the public shall be dealt in accordance with the Anti-unfair Competition Law of the People’s Republic of China.” The situation, though not specified in the Anti-unfair Competition Law, is generally governed by its Article 2, “Managers shall abide by the principle of voluntariness, equality, impartiality, honesty and good faith, and also adhere to public commercial moral in their business transactions.” However the courts tend to be precautious when invoking the fundamental provision. They instead have developed more applicable standards and measures, such as referring to how intensely a registered trademark is well-known and distinct, when the trademark rights were generated, when the ensuing trade name was registered, how likely confusion or mistake arises etc. The issue of trade name use and registration is further regulated in the revised Anti-unfair Competition Law, “Where a trade name registered by an operator violates Article 6 of this law, the operator shall change the registration in time; before the change is made, the trade name shall be substituted for the operator’s Unified Social Credit Code by the registering administration.”

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