Toyota v. Geely: IP Infringement Case Comment
He Fang, Rouse & Co. International (Shanghai)
The case is the first lawsuit involving a foreign auto-manufacturing giant since China’s debut to the WTO. The litigation, in which Japanese Toyota sued Chinese car manufacturer Geely, based in Zhejiang Province, for trademark infringement and unfair competition, has reached a judgment for first instance in late November 2003. The Beijing No. 2 Intermediate People’s Court rejected Toyota’s claim, which asked for damages of 14 million yuan ( US$1.7 million) from Geely – one of China’s major economy car producers. The first instance judgment said the logo of Geely Group’s Merry ( the model name of an economy car produced by the company ) is obviously different from that of Toyota, and thus cannot cause any confusion. The judgment also ruled that although some exaggerated words had been used in Geely’s advertisement, the threshold of unfair competition required by Chinese law had not been reached. Toyota can appeal to the Beijing High People’s Court within a month if the company wants to dispute the verdict.
This case has given important guideline in legal practice to enforce the current law and judicial interpretation, although not binding, for Chinese trademark infringement litigation if the judgment is not overruled by a higher court in potential appealing litigation.
1. The standard on the similarity of trademarks.
The most arguable point of this judgment, especially disagreed by many trademark attorneys, is the standard on the similarity of trademark. According to Article 52 of PRC Trademark Law, to use a trademark that is identical with or similar to a registered trademark in respect of the same or similar goods without the authorization of the proprietor of the registered trademark is deemed to trademark infringement. Apparently the disputed marks are not identical, however, whether are these two marks similar? What is the standard of similarity according to PRC laws?
Confusion or potential confusion is not a requirement for infringement if Article 52 of Trademark Law, “ A person infringes the exclusive right to use a registered trademark if he:(1)uses a trademark that is identical with or similar to a registered trademark in relation to identical or similar goods without the consent of the owner of the registered trademark…”, is literally explained. This is quite different from legislations of many other jurisdictions, which require confusion or potential confusion. Section 10(2) of British Trademark Act 1994 stipulates that A person infringes a registered trade mark if he uses in the course of trade a sign where-(b) the sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark . Similar confusion requirement also can be found in legislations of USA , Germany and France . However, from this judgment, we can clearly reach the conclusion that the similarity determination under PRC laws and regulations logically demand the “confusion”, as ruled by the judges.
It should be noted that the judicial interpretation is also a type of sources of laws in Chinese jurisdiction. The judgment clearly adopts the judicial interpretation on guidelines for trademark civil litigation cases issued by the Supreme Court. The Clause 9 of the Interpretation indicates that the “similar” in Article 52 of the Trademark Law requires confusion of origin or connection in “related public” between the claimed mark and the registered trademark. Clause 10 further indicates that the “normal attention of related public” is also a standard for deciding on the similarity of the trademarks. The judgment also cited the definition of “related public” as “consumers related or traders who have close relationships with the goods or service bearing the trademark” from other judicial interpretation”. The judgment reached a quite logical decision that the “related public” in this case will have good knowledge and recognition to ascertain the different bands of automobiles because they are high-price commodities. If a customer buys an automobile, he will thoroughly consider brand, performance, price and maker. So he can easily tell the Geely’s mark from Toyota’s.
2. Existing problems and recommendation of legislation
There is some reason that many trademark attorneys disagreed with the judgment. In Chinese legal practice, if similar disputed marks collide in a trademark opposition procedure before the Trade Office, chances will be above average for the prior mark owner to stop the late mark from registering. Many “visually similar” marks lost their opposition. Theoretically, the standard of similarity shall be same between the administrative and judicial organs. The examining officers of Trademark Office or trademark attorneys some time argue that the denying reason for a visually similar mark is that the mark may lead to potential confusion among related pubic for a prior registered trademark. However, the decisions are tended to be subjectively made from the views of experts, rather than views of the related public. Objectively, many factors which shall be considered in trademark enforcement procedure are not available at that stage or even overlooked in the opposition for the application process. Nevertheless, some decisions of the Trademark Office can be a binding source for local AIC enforcement because the dual protection system for trademark in China. This directly leads to uncertainty and conflict of the results of some cases decided by different organs.
Additionally, some arguments are raised that the judicial interpretation of the Supreme Court gives a limiting standard on similarity, which does not exist in the Trademark Law. It can be inferred from such arguments that the Supreme Court shall not give some new limitation that does not appear in the Trademark Law at all.
Nevertheless, the purpose of the legislation seems to adopt the confusion requirement for trademark infringement. It is highly recommended that the “likely confusion” requirement be added in Article 52 of the Trademark Law. This clearer clause will made it easy for common non-professional public to understand the Article 52 of the Trademark Law. Additionally, the clarification of the Article 52 of the Trademark Law will prevent the local AIC or court from abusing their power in cases on visually similar but unlikely confused trademarks.