[Keywords] Civil/Trademark Infringement Dispute/Registered Trademark/Same Kind of Goods/General Public/Attention

Even if the infringer has used the mark prior to the rights holder’s lawful acquisition of exclusive rights to a registered trademark,

Ongoing infringing acts also constitute an infringement of the exclusive right to use a registered trademark and cannot exempt one from liability for damages.

【Key Points of the Ruling】 Whether the rights holder enjoys exclusive rights to a registered trademark shall be determined by whether the trademark administrative authority has granted registration. The plaintiff has registered trademarks No. 15887773 and No. 18172664 in China, both of which are currently valid. As the rights holder, the plaintiff enjoys exclusive rights to these registered trademarks for goods such as clothing, shoes, and hats, and these rights should be protected under Chinese law. Although the defendant argued that its sales of sports pants featuring the disputed design began before the plaintiff’s trademarks were registered, the defendant’s continued infringing acts after the plaintiff had legally obtained exclusive rights to the trademarks in this case still constitute an infringement upon the plaintiff’s registered trademark rights and cannot exempt it from liability for damages.

【Factual Background】 Since the 1960s, a certain limited liability company has been using the “Three Stripes” trademark. The company became well-known among Chinese consumers starting in 1978, when China began broadcasting live coverage of the FIFA World Cup held in Argentina. The company entered the Chinese market in the 1970s and immediately started producing, promoting, and selling sportswear bearing the “Three Stripes” trademark. The company has registered the “Three Stripes” trademark in numerous countries worldwide. Although its registration in mainland China was relatively late, it has nonetheless established an extremely high reputation and solid brand recognition there. On December 9, 2014, the company filed an application with the National Trademark Office and obtained trademark right No. 15887773 on September 28, 2017. Additionally, on October 28, 2015, the company filed another application with the National Trademark Office and received trademark right No. 18172664 on February 14, 2017.

In 2018, a certain limited company (Adidas AG) discovered that an online store named “Certain Flagship Store” on Tmall was selling trousers featuring the “three-stripe” trademark on the hems. Consequently, the company entrusted its agent, under the supervision of notary office staff, to purchase and notarize the infringing goods. Based on the enterprise name indicated on the accompanying certificate of conformity attached to the infringing goods, Adidas AG filed a lawsuit with the Shenyang Intermediate People’s Court in Liaoning Province on June 7, 2018, requesting that the defendant, Shenyang Certain Clothing Co., Ltd., be ordered by law to cease the infringement, pay damages in the amount of 200,000 yuan, and cover reasonable expenses totaling 50,000 yuan.

On August 20, 2018, the Intermediate People's Court of Shenyang City, Liaoning Province, held a public trial. The plaintiff, [Company Name] Co., Ltd., was represented by its litigation agent, Wang; the defendant, Shenyang [Company Name] Clothing Co., Ltd., was represented by its legal representative, who appeared in court to participate in the proceedings.

The defendant, Shenyang [Company Name] Clothing Co., Ltd., argued: “The pants were purchased from the Wai Market, but the brand is mine. I had already started selling infringing goods in 2014, while the plaintiff’s trademark was only approved for registration in 2017. I was unaware that my products constituted infringement. Before selling the pants, I checked online and found that the three-stripe design was not registered.”

The parties submitted evidence in accordance with the law in support of their claims, and the court organized an exchange of evidence and cross-examination among the parties. The plaintiff, [Company Name] Co., Ltd., submitted 29 pieces of evidence in support of its claims. The defendant, Shenyang [Company Name] Clothing Co., Ltd., raised no objection to any of the plaintiff’s evidence and acknowledged that the trousers were purchased from the defendant; however, it argued that its actions did not constitute infringement. The defendant submitted four pieces of evidence: Evidence No. 1—a news article from a Quanzhou website—demonstrating that the plaintiff’s trademark was not registered; Evidence No. 2—an administrative ruling by the Supreme People’s Court proving that the three-stripe design is not registrable in China; Evidence No. 3—a pair of trousers had been on sale since September 18, 2014; after the plaintiff filed the lawsuit, the defendant immediately removed the product from sale; and Evidence No. 4—a chat log from Taobao customer service, documenting the product’s initial sales date and the time it was removed from shelves. The plaintiff disputed the authenticity of Evidence Nos. 1, 3, and 4, arguing that Evidence No. 2 was not relevant to the trademark at issue in this case. The court made the following findings regarding the evidence submitted by both parties: Whether the plaintiff enjoys exclusive rights to the registered trademark shall be determined by whether the trademark authority has granted registration. In this case, the court will make a comprehensive determination as to whether the defendant has committed infringement based on all the evidence in the case. As for the evidence to which neither party raised objections, this court hereby confirms such evidence and includes it in the case file as supporting documentation.

Based on the statements of the parties and the evidence examined and confirmed, the court finds the following facts:

The plaintiff is duly registered and enjoys exclusive rights to the trademark at issue. The plaintiff has extensively used and promoted this trademark, giving it a high level of public recognition. On March 9, 2018, the plaintiff’s authorized agent applied to the Beijing Dongfang Notary Office for evidence preservation. Under the supervision of a notary public, the agent conducted notarization of online purchases, acquired infringing goods, and had them sealed and preserved. According to the business registration records of Shenyang [Company Name] Garment Co., Ltd., the company was established on January 8, 2014, with a business scope encompassing the sale of clothing, apparel, footwear, and headwear.

After trial, the court held that: The plaintiff has legally registered and enjoys exclusive rights to the trademark in question. The defendant’s products bear a mark identical to the trademark at issue, which, judged by the average consumer’s level of attention, is likely to be mistaken for the same trademark. Thus, the defendant’s use of a mark identical to the registered trademark on the same type of goods constitutes an infringement. Although the defendant argued that its sales of sports pants featuring the disputed design began before the plaintiff’s trademark was registered, the defendant’s continued infringing acts after the plaintiff had already obtained legal exclusive rights to the registered trademark in this case still constitute an infringement of the plaintiff’s exclusive rights and cannot exempt the defendant from liability for damages.

【Judgment】 1. From the date on which this judgment becomes effective, the defendant, Shenyang [Company Name] Garment Co., Ltd., shall immediately cease infringing upon the exclusive rights to the registered trademarks No. 15887773 and No. 18172664 owned by the plaintiff, [Company Name] Limited (Adidas AG). 2. Within ten days from the date on which this judgment becomes effective, the defendant, Shenyang [Company Name] Garment Co., Ltd., shall compensate the plaintiff, [Company Name] Limited (Adidas AG), for economic losses and reasonable expenses incurred in stopping the infringement, totaling RMB 30,000. 3. The case filing fee of RMB 5,050 shall be borne by the defendant.

【Reasoning of the Court】 The plaintiff is a company duly registered in the Federal Republic of Germany. The plaintiff has registered trademarks No. 15887773 and No. 18172664 in China, both of which are currently valid. As the rights holder, the plaintiff enjoys exclusive rights to these registered trademarks for goods such as clothing, shoes, and hats, and these rights are entitled to protection under Chinese law. Upon comparison during the trial, it was found that the two pairs of sports pants purchased by the plaintiff under notarized evidence each feature three parallel white stripes of identical width along the outer side seam—strips that closely resemble the plaintiff’s registered trademarks No. 15887773 and No. 18172664. Both sets of stripes consist of three parallel vertical stripes, and the colors of these stripes contrast noticeably with the background color of the pants. Based on the attention typically paid by the general public, such markings would easily be mistaken for the plaintiff’s registered trademarks, constituting use of a trademark identical to the registered trademark on the same type of goods. Although the defendant argued that at the time it began selling the sports pants featuring the disputed pattern, the plaintiff’s trademarks had not yet been registered, the defendant’s continued infringing acts after the plaintiff had legally obtained exclusive rights to the registered trademarks in this case still constitute an infringement upon the plaintiff’s exclusive rights to its registered trademarks and cannot absolve the defendant of its liability for damages.

[Relevant Statutes] Article 57 and Article 63 of the Trademark Law of the People’s Republic of China; Article 50 of the Law of the People’s Republic of China on the Application of Laws to Foreign-related Civil Relations; Articles 10, Paragraphs 1 and 2 of Article 16, Article 17, and Paragraph 1 of Article 21 of the Supreme People’s Court’s Interpretations on Several Issues Concerning the Application of Law in the Trial of Trademark Civil Dispute Cases.

[Lawyer’s Perspective] As the representing counsel, our purpose in safeguarding the legitimate rights of trademark holders is to protect the establishment and maintenance of goodwill under normal business operations, uphold market order, and safeguard consumer interests. Based on the Trademark Law and relevant judicial interpretations, for trademarks that have already established strong goodwill and clearly serve the function of source identification—even if their registration dates are relatively recent—we should, in accordance with the law, provide them with full and adequate protection.