"Shanghai Guanshengyuan" and "Xindu Guanshengyuan" court confrontation! Who is the real owner of "Guansheng Garden"?

This article is reproduced from China Intellectual Property News

China's time-honored brand has a long history and profound heritage, and has formed a good reputation and brand value with products, skills or services passed down from generation to generation. Once a long-established trademark that is well known and recognized by the public is infringed by competitors in the same industry, it is easy to mislead consumers and also brings influence and damage to the original long-established brand. When "Shanghai Guanshengyuan" collides with "Xindu Guanshengyuan", who is the holder of "Guanshengyuan"? Recently, the Shanghai Intellectual Property Court rendered a final judgment on the case, upholding the previous first-instance judgment made by the Shanghai Putuo District People's Court (hereinafter referred to as the Putuo Court), that is, the defendant "Xindu Guanshengyuan" constituted trademark infringement, and the trademark infringement must be stopped and the plaintiff should be compensated for losses of 500,000 yuan.

"Guanshengyuan" caused disputes

In 1918, Mr. Sin Guansheng and four artists from the Shanghai Pear Garden circle founded Guansheng Garden in Shanghai, producing and selling their own candies and preserves. Houguanshengyuan has successively set up branches in Nanjing, Chongqing, Kunming and other places, and the branches in various places belong to the locality, and have no relationship with Shanghai Guanshengyuan for a long time, only the name of Guanshengyuan has been retained. In 1997, the plaintiff, Shanghai Guanshengyuan Food Co., Ltd. (hereinafter referred to as Shanghai Guanshengyuan), was established. In 2000, the Trademark Office of the former State Administration for Industry and Commerce recognized "Guanshengyuan" as a well-known trademark. In 2006, the Ministry of Commerce recognized "GuanshengYuan" as a time-honored brand in China. In 2012, the plaintiff, Shanghai Guanshengyuan, was subjected to a transfer to obtain the "Guanshengyuan" series of trademarks.

On the other hand, in 1991, Chongqing Guanshengyuan Company signed a "Joint Venture Agreement" with the defendant's predecessor, Xindu Ruichunyuan, to establish the Xindu Guanshengyuan Food Associate Factory, which is also mainly engaged in confectionery, confectionery and food processing. One year later, the two sides terminated the Joint Venture Agreement, but Chongqing Guanshengyuan Company agreed that the joint venture would continue to use "Xindu Guanshengyuan" as the enterprise name. In 1994, the factory registered the "new crown" trademark. After reorganization and name change, the defendant began to officially use the current enterprise name "Chengdu Xindu District Guanshengyuan Food Co., Ltd." (hereinafter referred to as Xindu Guanshengyuan) in 2006. In 2012, "New Crown" was recognized as a famous trademark in Chengdu.

Shanghai Guanshengyuan held that the defendant, as a competitor in the same industry, registered "Guanshengyuan" as its own enterprise name under the premise that the plaintiff's "Guanshengyuan" brand name and trademark already had a very high influence, which was likely to cause confusion and misidentification among the relevant public, obvious malice, violation of the principle of good faith, and constitute unfair competition. At the same time, the defendant's prominent use of the words "Xindu Guanshengyuan" and "Produced by Xindu Guanshengyuan" on its products, official websites and WeChat public accounts also constituted trademark infringement, so it submitted the following litigation claims to the court: ordering the defendant to stop infringing the exclusive right to use its registered trademark; stopping the use and cancellation of the website domain name www.xdgsy.com.cn; stopping the unfair competition of using "Guanshengyuan" as the enterprise name, and changing the enterprise name within a certain period of time; and compensating for economic losses and reasonable expenses of 5 million yuan.

The defendant, Xindu Guanshengyuan, argued that, first of all, the defendant did not constitute trademark infringement. The defendant did not use Guanshengyuan as a trademark, and the products were marked with its own trademarks "New Crown" and "Jubilee Place". The "Guanshengyuan" on the outer packaging of the product is also different from the plaintiff's trademark, and the conspicuous position on the outer packaging of the product is marked with its own trademark and manufacturer, which fulfills the strict obligation to inform, and the general public can distinguish the product brand and the producer, which is not easy to cause confusion. For the public, the letter "gsy" in the domain name of the defendant's official website does not have an inevitable correspondence with the "gsy" in the trademark of "Guanshengyuan". Second, the defendant did not constitute unfair competition. The origin of "Guanshengyuan" in the defendant's enterprise name is a joint venture with Chongqing Guanshengyuan, which has been used to this day and is not intentionally attached. The two trademarks under the defendant's name, "New Crown" and "Jubilee Square", have a certain degree of popularity in Sichuan and even in the southwest region, of which the "New Crown" trademark was once recognized as a famous trademark in Chengdu, and in the case of smooth brand development, the defendant enterprise did not need to be famous. In summary, the defendant did not agree with all of the plaintiff's claims.

The Putuo court held that there were two main points of contention in this case: First, whether the defendant's act of registering "Guanshengyuan" as a business name as a business name and using it in a complete and standardized manner constituted unfair competition against the plaintiff. The court held that the defendant's acquisition of the "Guanshengyuan" brand name had its own historical origin and background of the times, the enterprise had a succession relationship with Xindu County Guanshengyuan Food Associate Factory, and its registration and use of the "Guanshengyuan" brand name was earlier than the time when Shanghai Guanshengyuan Company obtained the "Guanshengyuan" brand name, and also before the "Guanshengyuan" trademark was recognized as a well-known trademark and a Chinese time-honored brand. At the same time, it is not uncommon for a traditional time-honored brand to form a coexistence of multiple time-honored business entities under the same lineage due to historical reasons, in this case, each business entity is not malicious, and the right to form a brand name has its legitimacy. The defendant has been operating in the local area for many years, has a certain scale and production capacity, and if the enterprise name is used in a complete and standardized manner, it will not cause confusion and misidentification among the relevant public, so it will not constitute unfair competition.

Second, did the defendant's use of the words "Guanshengyuan", "Xindu Guanshengyuan", "Produced by Xindu Guanshengyuan" and the registration and use of the domain name of "xdgsy.com.cn" constitute an infringement of the plaintiff's exclusive right to use the registered trademark? The court held that the defendant, who was also a competitor in the food industry, should have known that the plaintiff's trademark "Guanshengyuan" had a relatively high reputation, and also knew that the brand name, trademark and packaging of Guanshengyuan should no longer be used after the end of the joint venture cooperation, and should reasonably avoid the use of the relevant logo. However, the defendant did not standardize the use of the enterprise name, and highlighted the words "Xindu Guanshengyuan" and "Xindu Guanshengyuan Production" on the product, official website, and WeChat public account as product promotion. According to the defendant's evidence, its own trademark has a certain degree of popularity, but the popularity of the enterprise name itself is not involved, and from the perspective of the way it actually uses it, including the location of the product's logo, its "New Capital Crown Garden" information is more prominent. Moreover, the "Guanshengyuan" part is presented in different fonts and different sizes, which makes it easier for the relevant public to focus on the three words of "Guanshengyuan", and its behavior is difficult to justify. In this case, "Guanshengyuan" was both a well-known trademark, a time-honored brand name in China, and the name of the plaintiff and its affiliates, and the relevant public, under the condition of general attention, could not distinguish whether the defendant's use method pointed to the enterprise name or the trademark, and this kind of use was likely to cause the relevant public to confuse and misidentify the above logo with the plaintiff's trademark involved in the case, constituting trademark infringement. As for the defendant's registration and use of the "xdgsy.com.cn" domain name, because the pronunciation and meaning of the alphabet "xdgsy" are not unique, it is difficult to determine that there is a correspondence between it and "Guanshengyuan". Moreover, only one of the three trademarks involved in the case claimed by the plaintiff contained the word "G.S.Y", and judging from the reading habits of Chinese consumers, the main identification part of the trademark was still the word "Guanshengyuan" Chinese. It is difficult to determine that "xdgsy" is identical or similar to the three trademarks involved in the case. Therefore, the act of registering the use of the domain name does not constitute trademark infringement.

In summary, the court determined the amount of compensation as appropriate in accordance with law after considering the popularity of the trademark in question, the nature of the infringing act carried out by the defendant, the degree of fault, the duration of the infringement and other infringing circumstances, and ordered the defendant to stop the trademark infringement and compensate the plaintiff for losses of 500,000 yuan.

Shanghai Guanshengyuan appealed against the first-instance judgment, holding that the court of first instance held that the appellee's acquisition of the "Guanshengyuan" brand name had its historical origin and background of the times, did not have malicious intent, and had a certain scale and production capacity, had legitimacy, and was unclear in its determination of facts and erroneous application of law. However, the Shanghai Intellectual Property Court rejected his appeal in its final judgment. At present, the judgment has entered into force.

Balance the stakes

"Guanshengyuan", as a well-known national brand and the representative of Chinese time-honored brands, inherits Chinese traditional culture, and is also the carrier of the history of the Chinese nation, with great cohesion and appeal, and the protection of Chinese time-honored brands is the proper meaning of intellectual property protection. However, in practice, it is not uncommon for a traditional long-established brand to form a coexistence of multiple long-established business entities under the same lineage due to historical reasons. In this case, each business entity does not have malicious intent, the right to form a trade name has its legitimacy, and the complete and standardized use of the enterprise name does not constitute unfair competition. At the same time, it is also necessary to take into account the balance of interests between the protection of the exclusive right to use a registered trademark and respect for the inheritance of Chinese time-honored brands. When the exclusive right to use the trademark of "Guanshengyuan" has been clearly enjoyed by one business entity, if other business entities consciously highlight the use of relevant words, it is obviously difficult to say that it is justified, which constitutes trademark infringement.

"This case is a trademark infringement and unfair competition dispute case caused by a Time-honored Brand of China, and the difference between it and the ordinary cases of this type is that it must not only give strong legal protection to the Time-honored Brand of China, but also respect its historical heritage and background of the times, and balance the interests between the two." Li Xia, the presiding judge of the case, said in an interview with China Intellectual Property News that it would be more difficult to try the case according to the traditional thinking of infringement cases, especially the defense that the use of the complete specification of the defendant's enterprise name did not constitute unfair competition was even more difficult. The defendant in this case obtained the name of "Guanshengyuan" with its historical origin and background of the times, and subjectively did not imitate or attach malicious intent, and if it could use its corporate name in a complete and standardized manner, it belonged to the category of fair use; while if it consciously highlighted the use of the relevant words, there was subjective malice, constituting trademark infringement. Trademark infringement and unfair dispute cases are often not black and white, and there are many factors to consider, the most important thing in this case is the characterization of the case, not the amount of compensation. Such judicial adjudication results provide a new way of thinking for the protection of Chinese time-honored brands, and have an exemplary guiding effect.

Regarding the judgment of the case, Ruan Kaixin, associate professor of the School of Intellectual Property Rights of East China University of Political Science and Law, said in an interview with this reporter that the judgment opinion of the case conforms to the long-standing precedent rules of China's judicial practice on cases of conflict of rights of long-established brands. Conflicts over the rights of long-established brands have occurred many times in China, such as the "Zhang Xiaoquan case", "Jiang Youji case", "Tong Defu case", "Hongjitang case", etc., and the judgments of these cases all allow bona fide operators based on historical inheritance to standardize the use of old brands. In the case of attaching distinguishing marks, the coexistence of good faith trademarks will not lead to confusion among consumers. Such long-established series of judgments do not contradict the basic principles of trademark law. In the Daningtang case, which was decided by the Supreme People's Court in 2017, it reaffirmed the bona fide coexistence of trademarks and trade names in a special historical context. Of course, business operators with historical heritage cannot borrow the name of the old brand and maliciously attach the long-established goodwill of other operators, and exceeding the reasonable norms of the use of the old brand may still lead to tort liability.

"The long-established conflict of rights case also reflects the importance of the trademark registration system." Ruan Kaixin believes that the emergence of these long-established disputes is partly due to the lack of a trademark publicity system at that time, and the lack of a way for commercial marks to publicize public trust, which leads to the separation of the rights subjects of time-honored brands, and then the ownership dispute. Disputes over the conflict of rights of long-established brands are problems left over from history, and in view of the fact that China's trademark law system has been established and is becoming more and more perfect, it is believed that such disputes will become less and less frequent.

(Reporter Hou Wei Correspondent Chen Hui)