Facts
Guangzhou Hongfu Real Estate
Co Ltd is the owner of registered Trademarks 1946396 (September 28 2002) and
1948763 (September 21 2003) comprising combination trademarks STAR RIVER in
Chinese characters and device, to be used respectively for the services of
"real estate rental, real estate management" in Class 36 and "architecture"
in Class 37.
Hongfu assigned the
trademarks to Guangzhou Star River Industrial Development Co Ltd, which
licensed Hongfu to use the trademarks – enabling Hongfu to bring infringement
actions in its own name. Hongfu and its affiliated companies developed several
Star River real estate projects in Guangzhou, Beijing, Shanghai and other
cities, and won many awards.
In 2000 Jiangsu Weifu Group
Construction & Development Co Ltd launched various real estate projects
using the names 'Star River Garden', 'Star Garden' and 'Star Scenery Garden' in
Nantong – a city in Jiangsu Province. The names of the apartment blocks were
approved by the Municipal Civil Affairs Bureau of Nantong.
Star River Co and Hongfu
sued Weifu on the grounds of trademark infringement and unfair competition.
The Nantong City
Intermediate People's Court ruled that Weifu's use of 'Star River Garden' as
the name of its apartment blocks did not constitute trademark infringement,
since it did not mislead consumers as to the developer of the buildings. The first-instance
court further found that – since Weifu had not intended to free ride and had
not caused misidentification among consumers – Weifu's use of 'Star River
Garden' did not constitute an act of unfair competition. The court therefore
dismissed the claims.
Star River Co and Hongfu
appealed to the High People's Court of Jiangsu Province, which upheld the
first-instance judgment.
Star River Co and Hongfu
then filed a retrial application to the Supreme People's Court.
The Supreme People's Court
determined that Weifu's use of 'Star River Garden' as the name of its apartment
blocks was likely to cause confusion and misidentification among the relevant
public, due to its similarity to the cited marks, which constituted
infringement. Consequently, the court overruled the first and second-instance
judgments, concluding that Weifu must not use 'Star River' as the name of
buildings yet to be developed and sold, and must compensate Star River Co and
Hongfu Rmb50,000 for their economic loss.
The case attracted a lot of
attention, since it involved the protection of trademarks registered for real
estate sale services and liability after a court had found infringement. In the
retrial, the Supreme People's Court clarified that when an IP right such as a
trademark conflicts with a property right, whether the parties should be
ordered to stop using the trademark should be based on the principle of good
faith and by taking into account the public interest. The court considered the
fact that the name of Weifu's apartment blocks had been approved by the local
civil affairs agency. In addition, residents had been living in the complex for
many years and there was no evidence to prove whether they knew, upon initial
purchase, that the name of the building infringed the cited trademarks.
Terminating all use of 'Star River' would have created imbalance between the
interests of the trademark owner and those of the public or residents. As a
result, the court did not order a complete prohibition against use of 'Star
River Garden', but ruled that buildings yet to be developed and sold must not
use the name. The verdict protected the trademark owner's interests to the
extent allowed by the law, while minimising the harm against the public
interest – highlighting the significance of the judicial guidance.
The fact that the infringing
products were apartment blocks, with each unit sold individually, created an
unusual situation where the final product (the apartment) did not bear the
infringed trademark and where the buyer may have been unaware that infringement
had been committed. Knowledge of the exact claims submitted by the
plaintiffs is essential to assess the significance of this decision. If the
plaintiffs requested that the first and second-instance courts affirm the
existence of infringement, order the cessation of the infringement and
compensate the damages caused, the court's decision did as requested and it was
not necessary to rule further. However, if the plaintiffs requested that the
courts order the modification of all existing buildings' names, the court's
dismissal of the plaintiff's claims may be questioned. Unlike the Patent Law,
the Trademark Law contains no reference to the public interest. On the
contrary, it is in the interest of consumers not to be confused by an act of
infringement, which could happen if the owner of one of the infringing
apartments decides to resell.
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