Nanxiang Food Company v. Nanxiang Mantou Shop Unfair Competition First Instance Judgment: Reject the plaintiff's request

The Paper's senior reporter Li Jing

Shanghai two Nanxiang small cage steamed bun "fight", who wins?

On the morning of April 22, 2021, the Yangpu District People's Court of Shanghai Municipality rendered a first-instance judgment on the plaintiff, Shanghai Nanxiang Food Co., Ltd., against the four defendants, Shanghai Yuyuan Nanxiang Mantou Shop Co., Ltd., Shanghai Yuyuan Nanxiang Mantou Shop Co., Ltd., Shanghai Yuyuan Tourism Mall (Group) Co., Ltd., and Shanghai Yuyuan Tourism Mall (Group) Co., Ltd. Nanxiang Mantou Shop Unfair Competition Dispute.

The plaintiffs said that the company has been engaged in the production and sales of "Nanxiang Xiaolong" quick-frozen food since 1988. One of the defendants, Shanghai Yuyuan Nanxiang Mantou Shop Co., Ltd., opened a number of catering stores in Shanghai, including Yuyuan store, which provided catering services including "Nanxiang Xiaolong" food.

The Surging News (www.thepaper.cn) reporter learned from the scene of the trial that the Shanghai Yangpu Court ruled that the plaintiff's alleged acts of unfair competition in this case were not established, and that the four defendants should bear corresponding civil liability, and that there was no factual and legal basis, and the court did not support them, and ruled to reject the plaintiff's litigation claims of Shanghai Nanxiang Food Co., Ltd.

Previously, on September 10, 2020, the case was heard in public at the Yangpu Court in Shanghai. On September 9, 2020, the day before the trial of the case, the defendant sued the plaintiff for trademark infringement and unfair competition disputes at the Pudong New Area People's Court in Shanghai. On the afternoon of April 22, the following case will be pronounced at the Shanghai Pudong Court.

During the trial of this case, the plaintiff and the defendant engaged in a fierce confrontation on the historical inheritance of the "Nanxiang Xiaolong" and whether the defendant used it reasonably.

Plaintiff: The trademark was free-ridden

Nanxiang Xiaolong originated from the "Rihuaxuan" in Nanxiang Town, and later took the Nanxiang Xiaolong made by the "Wujiaguan" in Nanxiang Town as the best, becoming the representative of the authentic Nanxiang Xiaolong in Jiading.

After liberation, through public-private partnership, "Wujiaguan" and other old hotels were merged into "city cooperative hotels" operated by Jiading County Catering Service Company, a subsidiary of Jiading County Supply and Marketing Cooperative. In this process, the recipe and production process of Nanxiang Xiaolong was passed down from "Wujiaguan" to Jiading County Catering Service Company. Jiading County Catering Service Company registered the No. 260205 Nanxiang trademark in 1985, and then opened Shanghai Jiawei Quick-Frozen Food Factory to produce "Nanxiang Xiaolongbao". The No. 260205 Nanxiang trademark was inherited by the plaintiff, so the authentic Nanxiang small cage formula and craftsmanship process owned by it were continuously passed on from Jiading County Catering Service Company to the plaintiff.

The plaintiff argued that the defendant had improperly used the "Nanxiang" logo, the "Nanxiang" trademark held by the plaintiff belonged to the "China Time-honored Brand", the predecessor Shanghai Jiawei Quick-Frozen Food Factory was identified as a Chinese time-honored enterprise, and the "Nanxiang Xiaolong" products produced by the plaintiff had won many awards and were well known. The defendant maliciously used the plaintiff's well-known trade name and enterprise name for a long time to attach and hitchhike the plaintiff.

The plaintiff also argued that the defendant Yuyuan Nanxiang Mantou Shop Company also made it clear to consumers in each store that "in 2014, the production technology of Nanxiang Xiaolong was designated as a national intangible cultural heritage" and "the next cage in the world", etc., and carried out false publicity to deceive consumers.

Accordingly, the four defendants were requested to immediately stop the unfair competition act of infringing on the use of the plaintiff's trade name and enterprise name, immediately stop the false publicity behavior, and jointly publish a statement in the Shanghai Wen Wei Po, Xinmin Evening News and other media, eliminate the impact, and jointly compensate the plaintiff for reasonable expenses such as economic losses totaling 3,000,000 yuan.

Defendant: The plaintiff stepped out of the scope of use of the commodity trademark

Nanxiang Xiaolongbao was invented by Huang Mingxian, the heir of "Rihuaxuan" and a Nanxiang person, and later his daughter-in-law's cousin Wu Xiangsheng entered the shop to learn art, and Wu Xiangsheng opened Changxing Lou in the City God Temple, which was later renamed Nanxiang Mantou Shop.

According to relevant industrial and commercial information, before October 2002, Nanxiang Mantou Shop showed that it belonged to Shanghai Yuyuan Mall Old Town God Temple Catering Co., Ltd. (i.e., now Shanghai Old Town God Temple Catering Group Co., Ltd.), and after December 2002, it belonged to Shanghai Yuyuan Tourism Mall Co., Ltd. (i.e., the current defendant Shanghai Yuyuan Tourism Mall (Group) Co., Ltd.), and the defendant Shanghai Yuyuan Nanxiang Mantou Shop Co., Ltd. was a wholly-owned subsidiary of Shanghai Old Town God Temple Catering Group Co., Ltd. Nanxiang Xiaolong "has full historical origins and historical inheritance.

The defendant argued that it was a fair use, and claimed that it respected the demarcation of the respective rights boundaries of the two parties in its long-term operation, only engaged in the operation of "Nanxiang Xiaolong" within the scope of the restaurant, and used words and propaganda such as "Nanxiang", "Nanxiang Xiaolong" and "Nanxiang Xiaolong Steamed Buns" in the restaurant, and moreover, the "Nanxiang" trademark used by the defendant was also assessed as a "Chinese time-honored brand", and there was no need to attach itself to the plaintiff. On the contrary, the plaintiff stepped out of the scope of use of the commodity trademark and continued to open restaurants, triggering disputes between the two parties.

Did the defendant commit acts of unfair competition that caused confusion among consumers?

The Yangpu court in Shanghai held that, first, the defendant did not carry out the act of unfair competition that caused confusion among consumers.

The plaintiffs belonged to the enterprises in Shanghai that had long been engaged in the operation of Nanxiang Xiaolong Food with nanxiang-related marks, and the Nanxiang trademarks related to the operation of the original defendant were all awarded the title of China time-honored brand. At present, the plaintiff claims that the defendant carried out the unfair competition act of using the plaintiff's enterprise name "Nanxiang", which has a certain influence, and the trade names "Nanxiang Xiaolongbao" and "Nanxiang Xiaolongbao" with certain influence without authorization, which actually involves the dispute between the two parties over whether the relevant business marks of Nanxiang have the right to use, and how to demarcate the boundaries when both have the right to use, which needs to be determined by comprehensive history, current status, fairness and other factors.

After trial, the court ascertained that, first, from the perspective of historical origins, the original defendants in this case all recognized that Nanxiang Xiaolong was created by Huang Mingxian of "Rihuaxuan". Relevant historical data show that the original defendant and Nanxiang Xiaolong both have a certain historical relationship.

Second, judging from the state formed by the long-term operation, the Shanghai Jiawei Quick-Frozen Food Factory concerned by the plaintiff has long used the mark related to "Nanxiang" in the field of quick-frozen food commodities to operate. In contrast, since the establishment of Nanxiang Mantou Shop and its predecessor Changxing Building, Nanxiang Mantou Shop has provided catering services related to Nanxiang Xiaolong in Yuyuan Garden and has continued to this day, which is enough to prove that the defendant's relevant Nanxiang Mantou Shop has been operating with the mark related to "Nanxiang" in the field of catering services for a long time.

Third, from the perspective of existing rights, the original defendant obtained or was granted the use of the registered trademark "Nanxiang" in the field of goods and services, and both parties had relevant rights to the "Nanxiang" business mark. The two sides actually coexist in long-term operations. And both parties continue to receive various honors, including "China Time-honored Brand", and have been introduced and reported, which is enough to prove that both sides have a high reputation in their respective business fields. Therefore, from the perspective of fairness, the "Nanxiang" related business logos of both sides still coexist in the market. Fully considering the above-mentioned historical origins, the objective state formed by long-term operation, and the situation of existing rights, the boundaries of rights should be demarcated according to the areas and scope of use of existing rights formed by the original defendants in their respective historical long-term operations. The original defendant should operate in good faith within the boundaries of this right. At present, the plaintiff believes that the Nanxiang Mantou Shop involved in the case constitutes an improper business conduct, and the court believes that it should be judged on whether the defendant's alleged act exceeds the boundaries of the aforementioned rights. First of all, the catering services engaged in by the relevant Nanxiang Mantou Shop involved in the case did not exceed the boundaries of the business field that Nanxiang Mantou Shop had formed for a long time.

Secondly, the "Nanxiang" related products provided by the relevant Nanxiang Mantou Shop involved in the case were provided in the form of freshly made and sold in the restaurant, not in the form of quick-frozen food, so they did not exceed the boundaries of the use field that Nanxiang Mantou Shop had formed for a long time, and did not exceed the scope of the fair use of the service trademark.

In the environment related to the Nanxiang Mantou Shop involved in the case, the consumer would not mistakenly believe that there was a specific connection between the above dishes and the plaintiff engaged in the business of quick-frozen food and its business, thus causing confusion.

Overall, the relevant Nanxiang Mantou shop involved in the case used the "Nanxiang" related mark in its restaurant, which did not exceed the boundary of the use field that Nanxiang Mantou Shop had formed for a long time.

In summary, the court did not support the plaintiff's relevant claims.

Did the defendant carry out false propaganda?

The Yangpu court in Shanghai held that there was a certain historical relationship between the Nanxiang Mantou Shop and the Nanxiang Cage involved in the case, and there was a inheritance relationship with the Nanxiang Cage. As for the "tianxia one cage" promoted by the Nanxiang mantou shop involved in the case, from the meaning of the term, it can be understood as "the first small cage in the world", and although the absolutized term does not comply with the provisions of the relevant advertising law, it has not yet constituted false propaganda in the sense of the Anti-Unfair Competition Law.

Regarding the statement that "nanxiang xiaolong steamed buns that have not eaten the City God Temple are equivalent to not having been to Shanghai" advertised by the Nanxiang Mantou Shop involved in the case, the defendant submitted a number of consumer comments, and indeed there were statements such as "must eat food when coming to Shanghai", "going to the City God Temple, Nanxiang Xiaolong steamed bun is what I must eat", "I must eat when I come to Shanghai", so the relevant publicity descriptions are not groundless and do not constitute false propaganda. Regarding the "2014 Nanxiang Xiaolong Steamed Bun Making Technique was designated as a National Intangible Cultural Heritage" promoted by the Nanxiang Mantou Shop involved in the case, in 2014, Jiading District and Huangpu District jointly declared the Nanxiang Xiaolong Steamed Bun Making Technique as national and intangible cultural heritage and was evaluated, so the information promoted by the defendant had a factual basis and was not false information. The content of the relevant declaration materials also refers to the Nanxiang Mantou Shop of the City God Temple, so the publicity of the shops involved in the case about intangible cultural heritage is difficult to constitute false publicity.

Regarding the publicity involved in the words "Century-old Nanxiang Mantou Shop as the Originator of Xiaolong" in Nanxiang Mantou Shop, based on the historical relationship between Wu Xiangsheng, the founder of Nanxiang Mantou Shop, and Huang Mingxian, the creator of Nanxiang Xiaolong ,"Rihuaxuan" (Huang Mingxian is the cousin of Wu Xiangsheng's daughter-in-law and an apprentice of "Rihuaxuan"), although the word "originator" is an absolute expression and may not conform to the relevant advertising laws, it has not yet constituted false propaganda in the sense of the Anti-Unfair Competition Law.

The court held that, in summary, on the whole, the plaintiff's alleged conduct did not constitute false publicity, so the court did not support the plaintiff's relevant claims. In summary, none of the acts of unfair competition claimed by the plaintiff in this case were established, and the court did not support the plaintiff's claim that the four defendants bore the corresponding civil liability, and there was no factual or legal basis. The court ruled to reject the plaintiff's litigation claims of Shanghai Nanxiang Food Co., Ltd., and the case acceptance fee of 30,800 yuan was borne by the plaintiff.

Editor-in-Charge: Gao Wen

Proofreader: Liu Wei