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Linda Liu & Partners

 
This case is related to an intellectual property case with respect to the infringement of registered trademark right and unfair competition. Through the analysis of this case, we can learn about the standard of judgment with regard to qualification of litigant, well-known trademark and unfair competition act by Shanghai People’s Court during the judicial procedure. It will be my honor if this case can be of any help to you who may be confronted with similar cases in the future.
 
★Basic information of this case:
 
In 2004, SCHNEIDER ELECTRIC INDUSTRIES SAS (hereinafter referred to as Plaintiff 1), SCHNEIDER ELECTRIC (CHINA) INVESTMENT CO., LTD. (hereinafter referred to as Plaintiff 2) and TIANJIN MERLIN GERIN CO., LTD. (hereinafter referred to as Plaintiff 3) brought action against SHANGHAI MEILAN RILAN ELECTRICAL GROUP CO., LTD. (hereinafter referred to as Defendant) in Shanghai No. 2 Intermediate People’s Court(hereinafter referred to as Court of first instance), alleging the infringement of exclusive right to use registered trademarks and unfair competition. Court of first instance ruled that the act of the Defendant can be considered as unfair competition.
 
Defendant was dissatisfied with (2004) Shanghai No. 2 Intermediate Court Civil No.5 Courtroom(IP) First Instance No. 68 Civil Judgment made by Court of first instance and appealed to Shanghai Higher People’s Court(hereinafter referred to as Court of second instance). On July 30, 2008, Court of second instance heard this case publicly and decided to affirm the original judgment in (2008) Shanghai Higher Court Civil No.3 Courtroom (IP) Final No. 82 Civil Judgment on October 13, 2008.
 
★The issues of this case:
 
The issues of this case mainly focus on three Plaintiffs’ qualification of subject of procedure, Defendant’s act of infringing exclusive right to use registered trademark and Defendant’s act of unfair competition. As regards the judgments of the above-mentioned facts, Court of first instance and Court of second instance held the same opinions.
 
The issue of three Plaintiffs’ Qualification on the subject ofprocedure.
 
Dispute point:
 
Defendant alleged that, the interested relation between these three Plaintiffs is not clear, and that the court’s judgment that these three Plaintiffs bear the right basis for joint litigation because of existing interested relation between the three Plaintiffs lacks of sufficient legal ground. Therefore, these three Plaintiffs shall bring the lawsuit respectively.
 
The decision of the Court:
 
With respect to Plaintiff 1’s qualification in lawsuit, Plaintiff submitted evidences including notarized and legalized commercial registration documents and shareholders’ resolution. As for the fact of corporate existence and alteration of Plaintiff 1, the evidences provided by Defendant were not enough to reverse, so that the legal existence of Plaintiff 1 shall be recognized according to law.
 
Plaintiff 1 has a right to enforce their trademark right according to Chinese Law, because the Plaintiff 1 has an exclusive right to use trademarks “MERLIN GERIN & logo” and “MERLIN GERIN” in China. Further, China and France both belong to Paris Convention on the Protection of Industrial Property.  The Convention prescribes that “the contracting members are bound to assure to nationals of such countries effective protection against unfair competition”. Accordingly, as a French company, Plaintiff 1 is entitled to claim to prevent unfair competition according to Chinese laws.
 Plaintiff 2, a Chinese subsidiary of Plaintiff 1, is the owner of exclusive right to use registered trademark “梅兰日兰” as well as the trademark licensor of registered trademarks of “MERLIN GERIN & logo” and “MERLIN GERIN”.
 
Plaintiff 3 is a joint venture enterprise founded in Tianjin on March 10, 1987 and has investment relation with Plaintiff 1 and Plaintiff 2. The Plaintiff 3 not only has the right to use company name including “梅兰日兰”, but also is the licensee of the above-mentioned three registered trademarks, such as “MERLIN GERIN & logo”, etc.
 
In conclusion, due to the investment and trademark license relations between these three plaintiffs, their rights are related with each other and have common interested relation with the dispute in this case. Thus, it is in conformity with Chinese Procedure Law that these three plaintiffs bring a lawsuit in terms of the infringement of exclusive right to use trademark and the breach of unfair competition. Therefore Defendant’s proposition that three plaintiffs should bring lawsuit separately is untenable.
 
Conclusion and suggestion:
 
From the above criteria, we can learn that the co-plaintiffs are obliged to present evidences proving the right relation among themselves, such as the evidence which can prove mutual investment relations, trademark and patent license contracts which can prove the license relations.

2. Whether Defendant’s registration of enterprise name has infringed Plaintiff’s exclusive right to use trademark.
 
Dispute point:
 
On July 5, 1999, Plaintiff 2 filed an application for registration of trademark “梅兰日兰”, and was granted the trademark right under international classification 9 regarding the commodities of “high-low voltage switch tank, electric switch, circuit breaker” on May 21, 2003. Plaintiff 2 and Plaintiff 3 alleged jointly that Defendant’s enterprise name had infringed Plaintiff’s exclusive right to use the registered trademark “梅兰日兰”.
 
The decision of the Court:
 
In March, 1999 when Defendant registered the enterprise name, the trademark “梅兰日兰” has not been granted to Plaintiff 2 by China Trademark Office and the Plaintiff 2 did not have exclusive right to use the registered trademark. Thus, the infringement of registered trademark claimed by Plaintiff 1 and Plaintiff 2 shall not be supported.
 
Conclusion and suggestion:
 
It can be concluded from the decision of the Court that the party must own prior exclusive right to use registered trademark when he or she claims the infringement of trademark. That is to say, it is the basic premise for Plaintiff to obtain the exclusive right to use registered trademark before the occurrence of Defendant’s infringing act. Reflecting such a situation, the enterprises ready to enter into China should apply for registration of crucial marks or trade names of the company on relevant commodities, before entering, or at least at the time of entering, so that they can protect their own intellectual property. Otherwise, once these marks or trade names are previously registered by others in bad faith, a series of evidence must be adduced before the court in order to successfully recover his or her own rights. Nevertheless, there may be a possibility that he or she cannot win the case after a long litigation procedure.
 
Determination of Defendant’s act of unfair competition.
 
(1) Defendant’s act of registering and using the enterprise name
 
Dispute point:
 
Defendant argued that, before the registration of Defendant’s enterprise name, Plaintiff 3’s enterprise name has not been well-known yet and it was deemed to have no exclusive right nationwide. Thus, Defendant’s enterprise name registered in Shanghai is absolutely legitimate. Moreover, the determination by Court of First instance that Defendant has bad faith was devoid of sufficient factual and legal basis.
 
The decision of the Court:
 
➀ Prior use of Plaintiff’s enterprise name
 
In 1987, Plaintiff 3 registered the characters combination of “梅兰日兰”as the enterprise name when Plaintiff 3 established a company in Tianjin. In accordance with relevant provisions of Measures for the Implementation of Administration of Enterprise Name Registration, Plaintiff 3 is deemed to have effective name rights from the date of its establishment. In contrast, Defendant’s enterprise name was approved and registered in March, 1999. Thus, as far as the registration date of the enterprise name “梅兰日兰” is concerned, the name of Plaintiff 3 is registered earlier than that of Defendant.
 
② High recognition of Plaintiff 3’s trade name “梅兰日兰”
 
Plaintiff 3 has been using the characters “梅兰日兰” as the enterprise name since its establishment. Moreover, Plaintiff 2 and Plaintiff 3 have invested a large sum of money in the publicity of the enterprise name of “梅兰日兰”, “MERLIN GERIN & logo” and the trademark of “MERLIN GERIN” over a long period of time. Plaintiff 3’s low voltage electrical products occupied a dominant share of the national market, and also gained numerous honors for their high quality and functionality. As a trademark as well as a enterprise name, the characters combination of “梅兰日兰” has been protected by government agencies, such as administrative authority for industry and commerce, technical supervision bureau, etc. Furthermore, prior to the registration of Defendant’s enterprise name, Plaintiff 3 has released the advertisements via media in Defendant’s registration place, that is Shanghai. In March, 2002 when Defendant’s legal representative was investigated by Shanghai Industry and Commerce Bureau Hongkou Sub-bureau, the Defendant’s legal representative Wenyuan CHEN replied to the question why Defendant used the trademark “MERLIN GERIN” (“梅兰日兰” for its Chinese translation) on its products, “During the establishment of our company, we considered that the brand “梅兰日兰” would be of advantage for the enlargement of market and sales.” That is to say, Defendant should have known that the enterprise name of “梅兰日兰” has been highly recognized. The characters combination of “梅兰日兰” has been well-known among professional community and relevant consumers. It can be concluded that the enterprise name of “梅兰日兰” has  been considered to be well-known trademark when Defendant’s enterprise name was approved and registered in March, 1999.
 
③ Originality of the characters “梅兰日兰”
 
It is admitted that the trademark “梅兰日兰” has certain originalities, because it is not an ordinary characters combination as the Chinese transliteration of foreign words “MERLIN GERIN”. Under the circumstance that Plaintiff 3 has prior enterprise name right with respect to the characters combination of “梅兰日兰”, Defendant did not submit any evidence which prove that it has legal right and interest on the characters combination of “梅兰日兰”, and also failed to disclose proper grounds for registering and using this enterprise name.
 
④Defendant’s bad faith
 
Although Defendant has known that Plaintiff 3’s characters combination of “梅兰日兰” had great popularity as the competitor in the same business field, Defendant registered the characters combination of “梅兰日兰” as its enterprise name for commercial purpose, which will easily cause confusion or misunderstanding among relevant public. Defendant’s act has violated the doctrine of good faith and public commercial moral, infringed Plaintiff’s legal rights and interests, disturbed fair competition order, and therefore constituted unfair competition to Plaintiff 3.
 
Conclusion and suggestion:
 
Article 2 of Anti-unfair Competition Law of the People’s Republic of China prescribes that “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. ‘Unfair competition’, in this Law, means activities made by managers who damage the others' legal rights and interests, disturb the order of social economy and violate the provisions of this Law.”
 
Article 5.3 of this law prescribes that “Managers should not use the following unfair methods in their business transactions which can damage other competitors: (3) to use the name of other enterprise or personal name and make people confuse this commodity to the other's commodity”.
 
Article 6 of Supreme People’s Court’s Interpretation of Several Issues Relating to Trial of Civil Cases of Unfair Competition prescribes that “the name of an enterprise that has been registered with the competent enterprise registration authority according to law and the name of a foreign enterprise commercially used within the territory of China shall be determined as the ‘name of enterprise’ provided in Article 5(3) of the Anti-unfair Competition Law. The trade name in an enterprise name having certain reputation in the market or known to the relevant public may be determined as an ‘enterprise name’ as provided in Article 5(3) of the Anti-unfair Competition Law.”
 
According to the above provisions of laws, the court held that Plaintiff registered the enterprise name earlier than Defendant did and Plaintiff’s enterprise name has certain reputation in the market and known to the relevant public. Defendant still registered “梅兰日兰” as its enterprise name in bad faith. Thus, Defendant’s act will easily mislead relevant public and violate the doctrine of good faith as well as public commercial moral.
 
As shown in this case, as for the enterprise name registered by others, prior trade name right can be used to protect their own enterprise name through claiming of counterpart’s act of unfair competition, if there is no prior trademark right. In addition, we can learn from the court’s standard of the determination that the following items need to be proved when Plaintiff alleges that Defendant has infringed its enterprise name right:
 
➀Evidence of Plaintiff’s prior rights;
②Evidence which can prove Plaintiff’s enterprise name has reputation;
③Evidence which can prove Plaintiff’s prior enterprise name has originality;
④Evidence which can prove Defendant is malicious;
 
(2) Registration and Usage of the Domain Name by Defendant.

Dispute point:
 
Defendant registered domain name of “Meilanrilan.com.cn” in 1999, and registered websites of “梅兰日兰” and “梅蘭日蘭” in January, 2002. Plaintiff therefore claimed that the registration and the usage of the domain name by Defendant have constituted infringement of Plaintiff’s right. But Defendant rebutted that they hold the trade name right and trademark right with respect to “梅兰日兰” (In 2005, Defendant obtained exclusive right to use trademarks of “梅兰日兰” and “MEILANRILAN” on other classifications), and the registration of the related domain name and website is proper and legitimate and cannot be regarded as malicious registration, and thus does not constitute unfair competition.
 
The decision of the Court:
 
The action that Defendant has registered the characters combination of “梅兰日兰” as the trade name of its enterprise name constitutes unfair competition to Plaintiff 3. Accordingly, it is not a proper ground that the Defendant can use the trade name of “梅兰日兰” in the enterprise name based on the fact that they have registered and used the related domain name or website name. Although the registration certificates of trademarks “梅兰日兰” and “MEILANRILAN” submitted by Defendant are in fact valid, Defendant’s registered trademarks “梅兰日兰” and “MEILANRILAN” do not belong to the same or similar product classification at issue in this case, and as early as December, 20005, Defendant gained the registration of its trademarks. While Defendant has registered the domain name of “Meilanrilan.com.cn” in 1999 and registered websites of “梅兰日兰” and “梅蘭日蘭” in January, 2002, definitely the registrations are all earlier than the time when Defendant acquired the exclusive right to use the registered trademarks of “梅兰日兰” and “MEILANRILAN”, thus Defendant has the exclusive right to use the registered trademark of “梅兰日兰”. However, the contention that the Defendant can register and use the related domain name and websites name lacks of factual and legal basis.
 
It is apparent that “MEILANRILAN” which makes up a main part of the domain name “Meilanrilan.com.cn” registered by Defendant is the Chinese phonetic of “梅兰日兰”. The characters of the website “梅兰日兰” are the same as that of the characters combination of “梅兰日兰”. The website of “梅蘭日蘭” is the same as characters combination of “梅兰日兰” in terms of the pronunciation and meaning, except that the website of “梅蘭日蘭” uses traditional Chinese characters. The trade name of “梅兰日兰” which Plaintiff 3 has prior right has been already well-recognized. Defendant doesn’t have any legal right with respect to the characters combination of “梅兰日兰”, and further without submitting any reasonable proof, the registration of the above domain name and website name by the Defendant will obviously confuse and mislead the relevant public on the products of Defendant and Plaintiff 3. In that sense, the Defendant has apparently damaged Plaintiff 3’s legal rights and interests, so that Defendant’s act of registering the above domain name and websites name has constituted unfair competition to Plaintiff 3.
 
 
Conclusion and suggestion:
 
Article 4 of the Interpretation of the Supreme People’s Court on Application of Laws in the Trial of Civil Disputes Over Domain Names of Computer Network prescribes that: “when trying cases of dispute over domain name of computer network, the people’s court shall come to the conclusion that the acts of the defendant of registering or using the domain name, etc. constitute infringement or unfair competition if the following conditions are met:
 
(1)the civil rights and interests that the plaintiff asked for protection are legal and valid;
 
(2) the domain name or the main part of the domain name of the defendant has constituted duplication, imitation, translation or transliteration of the well-known trademark of the plaintiff; or is the same as or similar to the registered trademark of the plaintiff so that the public may take it for the registered trademark of the plaintiff by mistake;
 
(3) the defendant doesn’t enjoy rights or interests of the said domain name or its main part, either does he have proper reasons to register or use that domain name; and
 
(4)the defendant is registering or using that domain name with malice.”
 
According to the above provisions, Plaintiff needs to adduce the following evidences when claiming of right in domain name dispute cases: ① evidence which can prove that the plaintiff’s prior right is legal and valid; ②evidence which can prove that the domain name or the main part of the domain name of the defendant has constituted duplication, imitation, translation or transliteration of the well-known trademark of the plaintiff; or is the same as or similar to the registered trademark of the plaintiff so that the public may take it for the registered trademark of the plaintiff by mistake; ③evidence which can prove that the defendant has malice. With respect to malice, Article 5 of this Interpretation prescribes that: “if the defendant’s act complies with one of the following circumstances, the People’s court shall determine that the defendant has malice:
 
(1)registering the well-known trademark of others as domain name for commercial purposes;
 
(2)registering or using the domain name which is the same as or similar to the registered trademark or domain name of the plaintiff for commercial purposes, intentionally causing confusion with the products, services provided by the plaintiff or with the website of the plaintiff, and misleading the network users to visit his website or other online sites;
 
(3)having offered to sell or rent that domain name for high price or to transfer it by other means to get improper profits;
 
(4)having not used or having not prepared to use the domain name after registration, and intentionally preventing the right owner from registering that domain name; and
 
(5)other circumstances of malice.”
 
In this case, Defendant failed to prove that there was proper and legal ground that they could register and use the related domain name and website. Further the trade name which Plaintiff has prior right is well recognized by the public, while Defendant’s registration of these domain name and website will confuse and mislead the relevant public on the products of Defendant and Plaintiff. Therefore, Defendant has damaged Plaintiff 3’s legal rights and interests, so that Defendant’s act of registering the above domain name and website has constituted unfair competition to Plaintiff 3.
 
(3) Defendant’s false publicity action
 
Dispute point:
 
After the establishment of Defendant enterprise, Defendant’s legal representative and business manager of the enterprise have registered “HONGKONG MEILAN RILAN ELECTRICAL CO., LTD.” and “FRENCH SCHNEIDER ELECTRIC GROUP CO., LTD.” in Hong Kong respectively. Defendant publicized on its website that the Defendant and “HONGKONG MEILAN RILAN ELECTRICAL CO., LTD.” are joint venture enterprise, and the Defendant also produced and released the advertising by the name of “Shanghai-Hong Kong joint venture”. Defendant alleged that the registration of company in Hong Kong is a kind of dormant investment, which does not constitute the act of unfair competition of false publicity.
 
The decision of the Court:
 
Though Defendant’s legal representative and business manager of the enterprise have registered “HONGKONG MEILAN RILAN ELECTRICAL CO., LTD.” and “FRENCH SCHNEIDER ELECTRIC GROUP CO., LTD.” in Hong Kong respectively, the above two companies apparently have no relation with three plaintiffs. The fact is that Defendant which is clearly Chinese domestic company has publicized on its website that “HONGKONG MEILAN RILAN ELECTRICAL CO., LTD.” is a joint venture enterprise and Defendant also produced and released the advertising by the name of “Shanghai-Hong Kong joint venture”. Defendant’s release of the above false information belongs to the false publicity misleading the public, which is obviously malicious. It is recognized that such action will easily mislead relevant public and unfairly brings the Defendant competitive advantages. The above Defendant’s act has also constituted unfair competition act to Plaintiff 3. Further there is insufficient evidence against Defendant’s assertion that its registration of company in Hong Kong belongs to dormant investment. Moreover, even if Defendant’s assertion of dormant investment is tenable, the above Defendant’s acts still violates the doctrine of good faith as well as public commercial moral, thus constitutes unfair competition.
 
Conclusion and suggestion:
 
Article 9 of the Anti-unfair Competition Law prescribes that: “ a business operator may not，by advertisement or any other means，make false or misleading publicity of their commodities as to their quality，ingredients， functions，usage，producers，duration of validity or origin.”
 
According to the above provisions, in this case, the People’s court determined that the publicity which produced and released by Defendant under the name of “Shanghai-Hong Kong joint venture” belongs to false publicity and thus constitutes unfair competition. However, the court did not determine the legitimacy of the above-mentioned two Hong Kong companies alleged by Plaintiff. This is because Chinese mainland and Hong Kong are governed by different legal systems respectively. Although Defendant’s obviously malicious registration of company in Hong Kong aims to mislead relevant public and unfairly brings the Defendant competitive advantages, Defendant registered the company according to Hong Kong’s laws and its registration procedure did not violate Hong Kong’s corporate law. Therefore, the court in Chinese mainland did not determine with respect to the issue of the legitimacy of both companies.
 
Nowadays, the law offenders in Chinese mainland are always registering famous brands or trademarks of other companies in Hong Kong as their company names in order to use of them in Chinese mainland. Apparently such actions may confuse and mislead the consumers in Chinese mainland. Unfortunately the free-ride of the famous brands seems to be a growing trend.
 
In order to solve such kind of problem completely, the owner of famous brand or trademark have to take administrative or judicial means to cancel the enterprise name of law offenders in Hong Kong.
 
Others
 
(1) Determination of well-known trademark.
 
Dispute point:
 
Plaintiff alleged that there were dispute between Plaintiff’s trademark and Defendant’s enterprise name and trade name as well as domain name dispute, and that Plaintiff requested to recognize the registered trademarks of “梅兰日兰”, “MERLIN GERIN & logo” and “MERLIN GERIN” as well-known trademarks.
 
The decision of the Court:
 
Although Plaintiff asserted that the characters mark of “梅兰日兰”
was well-known trademark, the Plaintiff failed to meet the burden of proving that it had made use of “梅兰日兰” as a trademark before Defendant’s registration of its enterprise name, thus Plaintiff’s application for the determination of well-known trademark lacks of basic factual ground.
 
2. Although Plaintiff alleged that there were dispute between Plaintiff’s trademark and Defendant’s enterprise name and trade name as well as domain name dispute, this case involves the usage of enterprise name or trade name on the same commodity. With respect to the protection of domain name, Plaintiff can also obtain the protection according to relevant provisions of laws. The protection can also be obtained even if there is no determination of well-known trademark. Thus, under the specific circumstance of this case, it is not necessary to determine whether the registered trademarks of “MERLIN GERIN& logo” and “MERLIN GERIN” are well-known trademarks.
 
Conclusion and suggestion:
 
Article 22 of the Interpretation of the Supreme People’s Court on Application of Laws in the Trial of Civil Disputes over Trademark prescribes that: “where a people's court is trying a trademark dispute case， it may，at the request of a party and in accordance with the actual circumstances of the case， make a determination in accordance with law as to whether the registered trademark in question is well-known.”
 
Article 14 of the Trademark Law prescribes that: “the following factors shall be considered in determining whether or not a trademark is a well-known one:
 
(1) The degree of public recognition in its trading areas;
 
(2)   The duration in which it has been in use;
 
(3)   The duration and extent of the advertisement of the trademark, and the geographical areas the advertisement has covered;
 
(4)   The records of protection the trademark has been recognized as well-known trademark; and
 
(5)   Other factors serving to make the trademark well- known.
 
In this case, with respect to the reason why the trademark of “梅兰日兰” can not be determined as a well-known trademark, Plaintiff 2 filed an application for the registration of trademark “梅兰日兰” in July, 1999 and obtained the registration in May, 2003. That is to say, before Defendant’s registration of enterprise name in March, 1999, Plaintiff only made use of the characters combination of “梅兰日兰” as its enterprise name instead of its trademark, which did not comply with the provisions on the determination of well-known trademark in the Trademark Law. It can be concluded that firstly Plaintiff needs to prove that it has used this mark as a trademark, when you request to approve it as the well-known trademark. At the same time, Plaintiff further needs to prove the degree of public recognition in its trading areas; the duration in which it has been in use; the duration and extent of the advertisement, and the geographical areas the advertising has covered; the records of protection the trademark has been recognized as well-known trademark and other factors serving to make the trademark well- known.
 
With regard to Defendant’s act of using Plaintiff’s trademark “MERLIN GERIN” as its domain name, Article 6 of Interpretation of the Supreme People’s Court on Application of Laws in the Trial of Civil Disputes Over Domain Names of Computer Network prescribes that “where a people's court is trying a domain name dispute case，it may，at the request of a party and in accordance with the actual circumstances of the case，make a determination in accordance with law as to whether the registered trademark in question is well-known.”
 
In this case, the ground which the People’s court determined that Defendant’s act had constituted unfair competition is that the main part of domain name “Meilanrilan.com.cn” registered by Defendant as well as the website “梅兰日兰” has infringed Plaintiff 3’s prior enterprise name right which enjoys great popularity. That is to say, Defendant’s act can be rectified according to the Anti-unfair Competition Law, there is not existing any kind of circumstance that the protection cannot be obtained even if there is no determination of well-known trademark. Thus, it is not necessary to determine whether the registered trademarks of “MERLIN GERIN& logo” and “MERLIN GERIN” are well-known trademarks.
 
It can be noted from this case that, the standard of determining well-known trademark via judicial ways becomes increasingly severe. If the Starbucks case which the Shanghai Higher Court determined the trademark as a well-known trademark in 2005 would be tried in recent days, just like this case, it is very likely that the Starbucks trademark may not be determined as a well-known trademark because of a lack of necessary conditions for determination of well-known trademark. In summary, the parties must prove that their trademark is well-known, and in addition, they have to pay their attention to explain the necessity of determining well-known trademark.
 
(2) The relationship between the infringement litigation and the compensation agreement signed during the administrative anti-counterfeit action.
 
Dispute point:
 
In 2001, Defendant used the characters combination of “梅兰日兰 MERLIN GERIN” on its Qualified Certificate of Products.
 
The administrative organ of commerce and industry made a raid operation against the defendant’s action and determined that Defendant had infringed Plaintiff 1’s exclusive right to use the registered trademark. Accordingly, Defendant and Plaintiff have signed an agreement on compensation for the damage, but Defendant failed to execute this agreement. In this infringement lawsuit, Plaintiff 1 also submitted assertion complaint against Defendant’s infringing act described above.
 
The decision of the Court:
 
In 2001，Defendant used the characters combination of “梅兰日兰 MERLIN GERIN” on its Qualified Certificate of Products. The administrative organ of commerce and industry made a raid operation against the defendant’s action and determined that Defendant had infringed Plaintiff 1’s exclusive right to use the registered trademark. Accordingly, Defendant signed an agreement of compensation for the damage with Plaintiff 1 on this infringing action, and thus both parties have reached a settlement. As a result, it was decided that the court will not hear any more with respect to the civil responsibility which Defendant shall burden in terms of its infringing action. As for Plaintiff 1’s complaint that Defendant failed to execute the above agreement, the court decided that there might be different measure that Plaintiff 1 can claim.
 
Conclusion and suggestion:
 
The Trademark Law Article 53 prescribes that: “where any party has committed any of such acts to infringe the exclusive right to use a registered trademark as provided for in Article 52 of this Law, and a dispute arises, it shall be settled through consultation by the interested parties; Where the parties are not willing to consult with each other or where the consultation fails, the trademark registrant or any interested party may institute legal proceedings in the people's court, or request the administrative authority of industry and commerce for actions. When handling the matters, the administrative authority of industry and commerce considers that the infringement is established, it may order the infringer to stop the infringing act immediately, confiscate and destroy the infringing goods and the tools directly used in producing the infringing goods, or falsely reproducing the representations of the registered trademark, or impose a fine. If the infringer is not satisfied with the order, he may, within fifteen days from the date receipt of the notification of the order, institute legal proceedings in people's court in accordance with provisions of the Administrative Procedure Law of the People's Republic of China. If, within the said time limit, such proceedings are not instituted and order is not complied with, the administrative authority of industry and commerce may approach the people's court for compulsory execution. The said authority handling the matter may, upon the request of the parties, mediate in the amount of compensation for the damage caused by the infringement of exclusive right to use a registered trademark. If the mediation fails, the parties may institute legal proceedings in the people's court in accordance with the Civil Procedure Law of the People's Republic of China.
 
In accordance with the above stipulations, the administrative authority of industry and commerce handling the matter may, upon the request of the parties, may mediate in the amount of compensation for the damage caused by the infringement of exclusive right to use a registered trademark. Thus, it is apparent that the administrative authority cannot force the infringer to pay damages during the administrative investigation and have only to mediate in the compensation for the damage. If the parties cannot reach to the agreement on compensation for the damage, the parties may file a lawsuit of compensation for the damage with the people’s court which has jurisdiction over the case. The decision of this case shows that the party shall not file a lawsuit of compensation for the damage separately if they have reached to the agreement on the compensation for the damage, and the court will not accept the complaint even if the lawsuit is instituted. As for the agreement on the compensation for the damage which has not been executed, the parties may file a lawsuit over the breach of contract in accordance with the Contract Law for requesting the counterpart to execute the agreement.
 

（2009）