Johnnie Walker case: no free ride by John Walker

Source Materials:
First instance judgment: Beijing Intellectual Property Court (2016) Jing-73-Xing-Chu No. 2833 Administrative Judgment
Second instance judgment: Beijing High People’s Court (2017) Jing-Xing-Zhong No. 3828 Administrative Judgment

Concerned Parties:
Appellant (former Defendant): Trademark Review and Adjudication Board of the State Administration for Industry and Commerce (“TRAB”)
Appellee (former Plaintiff): Diageo Brands B.V. (“Diageo”)
Third Party: Yiwu San Dou Apparel Co., Ltd. (“San Dou”)

Lawyers:
Bob Zhang, Shanghai HongFangLaw associate
Mia Li, Shanghai HongFangLaw associate

Case Overview:

Recently, the Beijing High People’s Court has delivered a final judgment in favor of HFL’s client Diageo on the administrative trademark dispute, affirming the lower court’s judgment and dismissing the TRAB’s appeal. During the proceedings, Diageo’s trademark “JOHNNIE WALKER” has been determined as a well-known trademark, based on which the freeriding “JOHN WALKER” mark owned by the third party San Dou was invalidated.

Originated from Scotland in 1820, JOHNNIE WALKER represents a series of classic blended whisky. Existing evidence shows that the brand has become widely known by the Chinese consumers with affection and appreciation in the past 40 years since its debut in China in the 1970s. As early as 1958, Diageo had already filed application for registration of “JOHNNIE WALKER” designated on whisky. As for the disputed trademark “JOHN WALKER” (No. 9760890 in Class 30), it was filed on July 25, 2011 by the third party and been granted registration on September 21, 2012. It is designated on the goods of “coffee; tea; candy; chocolate; non-medical nutrient” etc.

Court’s opinions:
The administrative lawsuit filed by Diageo with the Beijing Intellectual Property Court was preceded by opposition, opposition review and invalidation announcement. Enormous evidence from such procedures was submitted. After examination, the lower and higher courts both decided in their judgments to repeal the TRAB’s previous decision against Diageo.

The courts hold that:
The evidence submitted by Diageo, including proof of the cited trademark’s fame among the relevant public, its long-term use, expansive promotion in the Chinese mainland, and previous protection as a well-known trademark. All show that the JOHNNIE WALKER whisky is highly renowned around the globe, including China, thus making it possible to determine the trademark to be well known on the product;

The disputed trademark and the cited trademark are the same in their major distinguishing parts; “Coffee; tea; candy; chocolate” and whisky as an alcohol respectively designated under the disputed and cited trademarks are relevant to some degree in their target consumers and sales channels.

The registration and use of the disputed trademark have improperly capitalized on the cited trademark’s fame. It is prone to cause confusion among the relevant public and is likely to impair the reputation of the well-known trademark and other rights and interests concerned of the trademark owner.

The third party has violated Article 44.1 of the Trademark Law as a great many of its 180 trademark registrations in Chinese or English in different classes are identical or similar to existing foreign brands. Those include the disputed trademark rip-off of Diageo’s well-known trademark. As an enterprise in apparel and toys, the disputed registration designated on candy etc. is not reasonable, neither are its other trademarks obtained obviously not for substantial use in business. On such behavior, the third party made no explanation in either the administrative stages or proceedings.

In summary, the courts hold that 1) the trademark “JOHNNIE WALKER” designated on “whisky” etc. in Class 33 has become well known after years of expansive use and promotion. 2) The disputed trademark “JOHN WALKER” on “coffee; tea; candy” etc. constitutes copying and imitation of the determined well-known trademark, which may damage its reputation and its rights holder’s rights and interests concerned. 3) The third party’s behavior constitutes registration “by other improper means” by obtaining marks that are identical or similar to preceding brands across multiple classes. Based on the above, the disputed trademark shall be invalidated for violating Article 13.3 and Article 44.1 of the Trademark Law by copying and imitating the cited well-known trademark

HFL’s Comments:
The case is a significant one as it has taken on all resorts available in administrative procedures for trademark rights determination, including opposition, opposition review, invalidation announcement, as well as first and second instance administrative trials.

I. On cross-class protection of a registered well-known trademark:
In this case, the court declared the disputed trademark invalid with the well-known status of “JOHNNIE WALKER” that had been affirmed on whisky products. However, copying and imitating a well-known trademark is not necessarily a silver bullet to knock out an infringing mark because cross-class protection does not apply to every case, but to what involves relevance between the designated goods or services, as in this case where “coffee;tea; candy; chocolate” and whisky are deemed relevant. Both in the category of foods and beverages, the goods see their sales channels and target consumers overlap. For this reason, if the disputed trademark highly similar to the well-known cited trademark is used on its designated goods, it tends to cause confusion and mistake.

To determine a well-known trademark, how strong the case is and how much it is worth doing so naturally are factors to be considered. Confusion that may arise rise, i.e. the degree of similarity also weights significantly and it depends on the relevance between the designated goods or services. Standards for deciding on similarity differ between the courts and the Trademark Office/TRAB in this case. The latter seems to uphold the Table for Differentiating Similar Goods and Services in a more prudent manner.

II. Application of Article 44.1 of the Trademark Law:
Article 44.1 of the Trademark Law provides that, “A registered trademark shall be declared invalid by the Trademark Office if it is in violation of Article 10, Article 11 or Article 12 of this Law, or its registration is obtained by deceptive or other improper means. Other entities or individuals may request the Trademark Review and Adjudication Board to declare such registered trademark invalid.” For the purpose of this law, registration obtained by “other improper means” refers to disruption of trademark registration order, damage to public interests, misappropriation of public resources etc.

In this case, the third party who owns multiple trademarks in different classes that are highly similar or identical to others’ well-known registered trademarks is supposed to be aware of those existing rights. However, such rights, including those of the disputed trademark, have been ignored and damaged in the third party’s bad-faith registration, causing confusion in the market. If such behavior goes unpunished, the free-riding tricks that undermine the market’s health will be encouraged while hard-working operators who establish their businesses by law will lose their faith. This will distort the market by hurting the public interest and social resources. Hence, the third party’s conduct counts as an improper means according to Article 44.1 of the Trademark Law and the disputed trademark should be invalidated.

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