Johnnie Walker’s Successful Suppression of Trademark Dilution

By Kevin Nie, China IP,[Trademark]

A few days ago, Diageo Brands B.V. (“Diageo”) and Diageo (Shanghai) Overseas Wines Co., Ltd. (“Diageo Shanghai”) v. Xiao Shaoli, Changzhou Bishuang Bio- Tech Co., Ltd. (“Bishuang ”) and Wuxi Yongru Bio- Cosmetic Products Co., Ltd. ( “Yongru ”) for dispute over the infringement upon the exclusive use of the “JOHNNIE WALKER” word mark was concluded by the No. 2 Intermediate People’s Court of Shanghai. In its first-instance judgment, the court held that the acts of the defendants constituted infringement. It enjoined defendants for further infringement, and assessed damages against Bishuang Company and Yongru Company from 120,000 Yuan and Xiao Shaoli for 1,500 Yuan.
 
Johnnie Walker Encounters a Free Rider
In 2009, Diageo and Diageo Shanghai found that Bishuang and Yongru used, on HANZHIYUN skin moisture olive oil and HANZHIYUN pure skin-care olive oil that were manufactured and sold by them, an symbol called “Gentleman Walking Left” with text that was extremely similar to the “JOHNNIE WALKER” word mark of the plaintiffs, and a logo that was nearly identical to the “Walking Gentleman (Right)” design mark of the plaintiffs. Xiao Shaoli sold HANZHIYUN Skin-Moisture Olive Oil at his grocery store in Huangpu District, Shanghai. Thus, the two plaintiffs brought an action against the three defendants in the No. 2 Intermediate People’s Court, seeking injunction and damages against the defendants. After the case was filed on February 20th, 2010, the court convened a collegiate bench, and conducted an open hearing on April 22nd, 2010.
 
The two plaintiffs jointly argued as follows. Diageo owned the exclusive right to the use of the registered word mark “JOHNNIE WALKER” (with the registration No. 28112) and the registered design mark “Walking Gentleman” (with the registration No. 1065228). Moreover, it had granted Diageo Shanghai a general license for the use of these trademarks within the territory of China. These trademarks had been used on Johnnie Walker whiskeys for a long period of time.
 
According to He Fang and Weng Li, attorneys of the two plaintiffs, Johnnie Walker whiskeys were created by John Walker in 1820. The “JOHNNIE WALKER” word mark was registered in 1908. Almost at the same time, a gentleman cartoon figure began to be used in the advertisements for Johnnie Walker whiskeys. The figure wears a hat, a tailcoat and boots, holding a stick in hand, and was walking forward. Thereafter, the “JOHNNIE WALKER” word mark and the gentleman symbol were widely adopted on Johnnie Walker whiskey advertisements throughout the world. After a number of changes, that gentleman symbol became the logos of “Walking Gentleman (Left)” and “Walking Gentleman (Right).”
 
Johnnie Walker whiskeys mainly include Johnnie Walker Black Label, Johnnie Walker Red Label, Johnnie Walker Gold Label, Johnnie Walker Green Label, and Johnnie Walker Blue Label. The plaintiffs’ evidence showed that all these brands used the “JOHNNIE WALKER” word mark and the “Walking Gentleman” design mark. On December 1st, 1954, an advertisement for Johnnie Walker whiskeys was published on the South China Morning Post, which used the “JOHNNIE WALKER” text and a graph similar to the “Walking Gentleman” trademark. In 1979, the former Beijing Food and Oil Import & Export Co., Ltd. began to sell Johnnie Walker Black Label and Johnnie Walker Red Label. In China, since 1958, the “JOHNNIE WALKER” text, the “Walking Gentleman (Right)” logo and the “Walking Gentleman (Left)” logo, either separately or in combination, have been used to register 25 trademarks in six categories. These trademarks are all owned by Diageo.
 
Moreover, according to He Fang, Johnnie Walker whiskeys, as a Scotch whiskey brand with the largest sales in the world, are sold to over 180 countries or 120 million bottles a year. Its shares of the global whiskey market and the Chinese whiskey market are 14% and 27% respectively. It was listed as No. 1 whiskey brand by Intangible Business in the world’s most powerful spirits and wine brands in 2006. Since its first recorded prize at an international exhibition in Sidney in 1879, it has won many prizes and honors at international contests.
 
Moreover, the two plaintiffs spent huge amounts of money to advertise Johnnie Walker whiskeys on numerous outdoor media, 2D media, television stations and newspapers and magazines. It was one of the main sponsors of the McLaren Formula 1 team and the first Asian Pacific Golf Tournament. The advertising expenses were 498 million Yuan between July 2004 and June 2007. In recent years, Johnnie Walker whiskeys have been passed off many times. Johnnie Walker Black Label was ever determined to be a well-known product by the Administration for Industry and Commerce of Shanghai and the No. 2 Intermediate People’s Court of Shanghai.
 
The two plaintiffs commented that the above facts proved that Johnnie Walker whiskeys were widely known among the relevant sectors of the public in China. The “JOHNNIE WALKER” word mark and the “Walking Gentleman (Right)” design mark had achieved high awareness in the market, and were well-known marks among the relevant Chinese public.
 
The two plaintiffs argued that their legal rights in the two well-known marks were infringed by the acts of the three defendants. They requested the court to order the three defendants to: (1) immediately stop their infringement upon the exclusive right of the plaintiffs to the use of the registered trademarks—the “JOHNNIE WALKER” word mark and the “Walking Gentleman (Right)” design mark; and (2) jointly pay 500,000 Yuan to the plaintiffs for the economic losses sustained by the plaintiffs as a result of the infringement.
 
During the trial, Bishuang and Yongru jointly argued as follows. The two plaintiffs failed to prove their ownership to the “JOHNNIE WALKER” text and the “Walking Gentleman (Right)” logo, which were not well-known marks. HANZHIYUN Skin-Moisture Olive Oil and HANZHIYUN Pure Skin-Care Olive Oil were skincare cosmetic products. In May 2007, Yongru filed an application at the Trademark Office of the State Administration for Industry and Commerce that the “JOHNNIE WALKER” text be registered as a trademark on cosmetics and others in Category
III. The application was announced in the preliminary examination announcement by the Trademark Office on January 20th, 2010. Thus, the use of the “JOHNNIE WALKER” text on the cosmetic products by Bishuang and Yongru was a normal use of the trademark. Cosmetic products were neither identical with nor similar to whiskeys on which the trademarks of the plaintiffs were approved to be used. The “Gentleman Walking Left” logo was neither the same as, nor approximated to the “Walking Gentleman” design mark. Thus, the use of the “JOHNNIE WALKER” word mark and the “Gentleman Walking Left” logo by the two defendants would not lead to confusion among the relevant public, and did not infringe upon the legal rights of the two plaintiffs. The two defendants requested the court to disaffirm the claims of the plaintiffs. Xiao Shaoli argued that he should not be liable for the infringement on the account that the olive oil he sold came from a legal source.
 
The Key Is Whether the Disputed Trademarks Were Well-Known
The No. 2 Intermediate People’s Court of Shanghai found that Diageo was the exclusive owner of the “JOHNNIE WALKER” word mark and the “Walking Gentleman (Right)” design mark. The “JOHNNIE WALKER” word mark had the registration No. 28112, and was approved to be used on whiskey products in Class 33. It was registered on August 1st, 1958 and after a succession of renewals and assignments, remains from August 1st, 2008 through July 31st, 2018. The “Walking Gentleman (Right)” design mark under registration No. 3917685, was approved to be used on alcoholic products (excluding beer) in Class 33, for a period from November 28th, 2005 through November 27th, 2015. On August 22nd, 2007, the two plaintiffs issued a joint statement that Diageo was the owner of all Johnnie Walker whiskey brands in the world, and enjoyed the rights in the packaging and display and/or commercial design for such brands, including but not limited to trademarks and copyright. Diageo licensed these rights to Diageo Shanghai by non-exclusive licensing. Therefore, the court decided that the registration certificates Nos. 28112 and 3917685 together with the joint statement of the two plaintiffs proved that Diageo was the exclusive owner of the “JOHNNIE WALKER” word mark and the “Walking Gentleman (Right)” design mark, and that Diageo Shanghai was a general licensee of these trademarks. The legal rights of the two plaintiffs in the trademarks are protected by the Trademark Law of the People’s Republic of China.
 
Moreover, the court found that on May 24th, 2007, Bishuang applied to the Trademark Office for registering the word mark of the “JOHNNIE WALKER” on cosmetic products in Class 3, under application No. 6068626. The application was published in the preliminary examination announcement by the Trademark Office on January 20th, 2010. On September 27th, 2010, an opposition was filed in the Trademark Office by Diageo against application No. 6068626.
 
In the present case, the dispute was centered on the necessity of the well-known mark determination, and whether the “JOHNNIE WALKER” word mark and the “Walking Gentleman (Right)” design mark were well-known.
 
Judge He Yuan of the IP Division of the No. 2 Intermediate People’s Court told our journalist that as the cosmetic products in the case were neither identical with nor similar to the products on which the use of the trademarks of the plaintiffs was approved, whether or not there is infringement should be determined primarily on whether the trademarks of the plaintiffs were well-known. The infringement would be confirmed by the court if the trademarks of the plaintiffs were well-known, if the defendants’ acts led to confusion among the relevant public, and if such acts of the defendants might damage the interests of the registrant (or registrants) of such well-known trademarks.
 
As to whether it was necessary to determine the “JOHNNIE WALKER” word mark as well-known, the court held that the “JOHNNIE WALKER” text on the package for the cosmetic products in the case was identical with the text of the “JOHNNIE WALKER” word mark, but the cosmetic products were neither identical with nor similar to the whiskey products on which the use of the “JOHNNIE WALKER” word mark was approved. Therefore, whether the manufacturing and selling of the cosmetic products by Bishuang and Yongru, and the selling of the cosmetic products by Xiao Shaoli constituted infringement is preconditioned on whether the “JOHNNIE WALKER” word mark was well-known. Therefore, pursuant to Article 13.2 of the Trademark Law and Article 2.1 of the Interpretation of the Supreme People’s Court on a Few Issues in the Application of Laws for the Trial of Civil Disputes over Well-Known Mark Protection (Interpretation), it is necessary to carry out a well-known mark determination for the “JOHNNIE WALKER” word mark.
 
As to whether it was necessary to determine the “Walking Gentleman (Right)” design mark as well-known, the court held that as one of the required elements of trademark infringement, the allegedly infringing mark should be identical with or similar to the claimed trademark. In the present case, the “JOHNNIE WALKER” text and the “Walking Gentleman” symbol were used on the package of the cosmetic products. First, the design was less obvious and distinctive than the text. Second, the comparison between the “Walking Gentleman (Right)” symbol and the “Gentleman Walking Left” symbol showed that the two gentlemen were both wearing a hat and a tailcoat, and holding a stick in hand. But, they were walking to different directions. The gentleman walking left did not wear boots, nor went straight forward. Third, the cosmetic products on which the allegedly infringing mark was used were neither identical with nor similar to the alcoholic products on which the “Walking Gentleman (Right)” design mark was approved to be used. To sum up, the court held that as the “Walking Gentleman (Right)” design mark and the “Gentleman Walking Left” design were neither identical with nor similar to each other, the single use of the “Gentleman Walking Left” design on the cosmetic products would not lead to confusion or misconception among the relevant consumers. The argument of the two plaintiffs that the use of the “Gentleman Walking Left” design on the cosmetic products infringed upon the “Walking Gentleman” trademark can hardly be upheld. Thus, pursuant to Article 3.2 of the Interpretation that “Where the alleged trademark infringement or unfair competition is disaffirmed due to lack of any other required elements of law, the people’s court will not examine whether the trademark concerned is well-known”, the court would not examine whether or not the “Walking Gentleman (Right)” design mark was well-known.
 
As to whether the “JOHNNIE WALKER” word mark was indeed a well-known mark, the court held that pursuant to Article 14 of the Trademark Law and Articles 4 and 5 of the Interpretation, whether the “JOHNNIE WALKER” word mark was well-known at the time of the alleged trademark infringement or unfair competition should be determined by taking into account the entire picture, including the market share, the sales territory, and the profit and tax contribution of the products on which such trademark was used; the duration of the use of the trademark; the ways, duration, extent, money invested and territory of public or promotional activities for the trademark; and the history of the protection of the trademark as a well-known mark. Thus, the court examined the “JOHNNIE WALKER” word mark from multiple perspectives, including its market share, usage, publicity and goodwill.
 
In the present case, the plaintiffs provided evidence that: (1) the Jonnie Walker whiskeys marked by the “JOHNNIE WALKER” word mark had a high share of the whiskey market of China; (2) the “JOHNNIE WALKER” word mark, which was registered in 1958, had been used up to date and had been used in China for over 50 years; (3) in China, the Johnnie Walker whiskeys marked by the “JOHNNIE WALKER” word mark was advertised as early as in 1954, and the expenses for their advertisements and promotions amounted to nearly 800 million Yuan between 2004 and 2009; (4) the Johnnie Walker whiskeys marked by the “JOHNNIE WALKER” word mark won many prizes from various contests, and the “JOHNNIE WALKER” word mark were included into the 100 most powerful brands in the world; and (5) Johnnie Walker Black Label marked by the “JOHNNIE WALKER” word mark was ever recognized by administrative and judicial authorities as well-known products many times, which indicated that the “JOHNNIE WALKER” word mark had been very popular among the relevant consumers. The above facts, which were mutually corroborative, sufficiently proved that the “JOHNNIE WALKER” word mark had been widely known among the relevant public in China, before Bishuang applied for the “JOHNNIE WALKER” text as a trademark on cosmetic products in Category III. To sum up, pursuant to Article 14 of the Trademark Law, and Articles 4 and 5 of the Interpretation, the court decided that the “JOHNNIE WALKER” word mark was a well-known mark.
 
After the trial, the court held that the “JOHNNIE WALKER” word mark, which was highly distinctive and widely known among the relevant public in China, was a well-known mark; as Xiao Shaoli sold both alcoholic drinks and cosmetics at his Lisheng Grocery, this indicated that the relevant public for alcoholic drinks and the relevant public for cosmetics coincided with each other; the purpose of using the “JOHNNIE WALKER” text by Bishuang and Yongru, as expressly stated by the two defendants, was to improve the grade of their products. As the “JOHNNIE WALKER” word mark had been well-known before Bishuang applied for the “JOHNNIE WALKER” word mark on cosmetic products and others in Category III, the use of the “JOHNNIE WALKER” text by Bishuang and Yongru on the cosmetic products was intended to ride on the popularity of the “JOHNNIE WALKER” word mark of the plaintiffs; and the use of the “JOHNNIE WALKER” text on the cosmetic products by Changzhu Bishuang and Yongru was sufficient to confuse the relevant public so that they will develop a misconception about the source of the products marked by the “JOHNNIE WALKER” text, and a belief in any specific relationship between the cosmetic products of the defendants and the “JOHNNIE WALKER” word mark of the plaintiffs.
 
Thus, the court decided that the use of the “JOHNNIE WALKER” text by Bishuang and Yongru on their cosmetic products was an act to reproduce the well-known “JOHNNIE WALKER” word mark already registered in China. The act would mislead the relevant public, and possibly infringe the interests of the owner of the well-known mark. Bishuang and Yongru should be liable in civil law for stopping the infringement and compensating for losses sustained by the plaintiffs as a result of such infringement. Moreover, Xiao Shaoli, as an operator of retail business, should have known about the popularity of the “JOHNNIE WALKER” word mark. However, his failure of due care led to the sale of the infringing HANZHIYUN Skin-Moisture Olive Oil. Thus, he should be liable for compensating for the economic loss sustained by the plaintiffs. In light of the above, the court rendered its first-instance judgment on May 20th, 2011. Reportedly, none of the defendants appealed during their term of appeal.
 
According to the judge He Yuan, this was the third case of well-known mark determination by Shanghai courts, after the Safeguard case and the Starbucks case. It was also the first of such cases after the Interpretation was issued.
 
The lawyer He Fang China IP that in the past few years, the judicial determination of well-known marks was overly and unduly misused, so that fraudulent practices and various disputes were often witnessed. Some of these cases were reported by the media, leading to a strong protest from the entire society. For the purpose of regulating the judicial determination of well-known marks in the trial of well-known mark related civil disputes, the Supreme People’s Court issued the Interpretation, by which it takes back the determining power of grassroot courts and requires that after it determines a well-known mark, an intermediate court must report its decision to the high court of its province, autonomous region or municipality for review, and to the Supreme People’s Court for filing. Since the issuance of the Interpretation, courts at all levels tightened their judicial determination of well-known marks, and the judges became very cautious about such cases. Therefore, the court’s decision in the present case was very typical and demonstrative.
 
Global IP Management Strategy of Diageo
The intellectual property counsel of Diageo North Asia region, Cindy Zhen, told China IP that headquartered in London, Diageo has set up more than 100 branches in the world. As an international famous enterprise, Diageo has long been focused on its brand image globally. It believes that brand is the core for the survival and development of the enterprise. Through many years, it has established a mature system for the establishment, development and protection of its brands by using a unified global IP management strategy. The strategy mainly includes the following:
 
i. Global systematic management of IP files. Diageo has established an intellectual property archive, which is charged to dedicated persons, well-developed, updated continuously and accessible to intellectual property counsels in the world at any time. All information on the period, extension, transfer, alteration and licensing of intellectual property can be searched and updated in time.
 
ii. IP clauses in contracts. All contracts must contain intellectual property clauses. In particular, detailed clauses are provided on the provision and usage of trademarks, the supervision for products or services, the intellectual property ownership, the settlement of disputes, the bearing of default liability, the disposal of intellectual property upon expiration or termination of contracts, the sale period for any remaining goods, and the disposal of any remaining trademark.
 
iii. Emphasis on brand reputation and caution about IP licensing. All intellectual property licenses must be approved by a chief officer or a legal counsel that is responsible for global brand management and versed in the spirit of the brand concerned. Diageo rejects any licensing requirement, however profitable it is, that may run counter to the brand spirit or bring risks to the brand reputation.
 
iv. Strict control of IP use. Diageo attaches much importance to protecting the reputation of its brands and the exclusive use of its intellectual property. In particular, it requires all the people of Diageo to take the duty to maintain the brand reputation. All promotional materials and marketing activities, in whatever ways or forms, must be approved by intellectual property counsels.
 
v. Focus on obtaining IP and not infringing the IP of others. T here is a systematic close channel of communication between intellectual property counsels, the technology and brand innovation department and the marketing department. The participation and examination by intellectual property counsels is present at every stage to extend an existing brand or create a new brand. Intellectual property counsels ensure that Diageo obtains appropriate and reasonable rights timely.
 
Regarding the main difficulties for Diageo in the present case, Cindy Zhen said that the biggest difficulty was the huge amount of work in collecting evidence and the insufficient hands to do the job. Diageo is a vast global company, and its different brands are owned by its different local branches. In the event of infringement, in order to prove that the related branches are within Diageo system, the competent authority would require licensing documents to be provided by such branches, which often costs much time. Thus, sometimes, the best opportunity to collect evidence may be missed.
(Translated by Ren Qingtao)

Member Message


Only our members can leave a message,so please register or login.

International IP Firms
Inquiry and Assessment

Article Search

Keywords:

People watch

Online Survey

In your opinion, which is the most important factor that influences IP pledge loan evaluation?

Control over several core technologies for one product by different right owners
Stability of ownership of the pledge
Ownership and effectiveness of the pledge