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China IP magaziine

TAITAILE ADMINISTRATIVE PENALTY DISPUTE

发布时间:2018-05-23

Trial Docket: (2016) Zhe 0106 XingChu No. 86
Appellate Docket: (2017) Zhe 01 XingZhong No. 1
Zhejiang Province
[Headnotes]
When one registered trademark's component is identical with or similar to another's registered trademark, to be used on or in connection with the same or similar goods or services, it must comprehensively take into consideration of manner of use, business custom, necessity of use, and reputation of the offended mark, to determine whether use of such component alone would be reasonable. If the reasonableness is eliminated, trademark infringement shall be determined.
[Synopsis]
Plaintiff: Zhejiang Shaoxing Jiuxianghong Vineyard Co., Ltd.
Defendant: Zhejiang Shaoxing Administration for Market Supervision & Management and Zhejiang Administration for Industry & Commerce
Third Parties: Shaoxing Taitaile Food Ltd. and Nestle S.A.
On October 21, 2015, defendant Shaoxing Administration for Market Supervision & Management (the Administration) issued a citation, ShaoShiJianPaoZi (2015) No. 56, for administrative penalty against plaintiff, holding: plaintiff's use of a trademark in connection with cooking wine series product is identical with the distinctive word portion of the marks and registered for food flavorings in class 30; cooking wine, monosodium glutamate, chicken essence, and other food flavorings are all listed in the same category of national standard – food flavorings (GBT20903-2007); meanwhile, the Taitaile series cooking wines and the food flavorings of chicken essence of the third party Nestle are closely connected in terms of function, use, distribution channels, and consuming public, and are therefore similar goods. Nestle's registered trademark "太太乐" for "chicken essence (food flavorings) was recognized in April, 2009 as a well known mark by the Trademark Office, enjoying considerable reputation among the public. Plaintiff Jiuxianghong's use of the trademark  in connection with the similar goods of cooking wines without permission from Nestle is an act of trademark infringement of the exclusive rights, as prescribed under the Trademark Law of People's Republic of China, Article 57(2), "Using a trademark that is similar to a registered trademark in connection with the same goods, or that is identical with or similar to a registered trademark in connection with the same or similar goods, without the authorization of the owner of the registered trademark, which may cause public confusion." Plaintiff's sale of the packaging material for the 太太乐cooking wine series products is an infringing act as prescribed under Trademark Law, Article 57(3), "Selling goods that violate the exclusive right to use a registered trademark." In accordance with Trademark Law provisions under Article 60(2), "Upon determining that trademark infringement has taken place, the administrative authority for industry and commerce shall order the infringer to cease its infringing activity immediately, confiscate and destroy the infringing goods, and any instruments mainly used to manufacture the infringing goods and counterfeit registered trademark. If the amount of illegal earnings is greater than RMB 50,000, a fine up to 5 times the amount of the illicit earnings may be imposed; if there is no illicit business revenue, or the total amount of illicit business revenue is less than RMB 50,000, a fine up to RMB 250,000 may be imposed …," the Administration decided to order an immediate cease the infringing activity, and decided to impose a fine of 90 thousand yuan against plaintiff Jiuxianghong.
Plaintiff Jiuxianghong was not satisfied with the above penalty, and petitioned with Zhejiang Administration for Industry & Commerce for reconsideration on December 17, 2015. Defendant Zhejiang Administration on March 14, 2016 made an Administrative Decision on Reconsideration, ZheGongShangFu [2015] No. 42, to affirm.
The third party Taitaile Company is the registrant of Reg. No. 3198511 for "太太乐and Design' designating goods (class 33), mint julep, aperitif, wine, yellow rice wine, alcoholic liquid, fruit wine (alcoholic), spirit, rice wine, cooking wine, alcoholic beverage (except beer), with expiration date of June 20, 2023. On January 1, 2014, Taitaile issued a Letter of Authorization to plaintiff Jiuxianghong to manufacture the 太太乐series cooking wine, effective from January 1, 2014 through December 30, 2015.
Trademark Reg. No. 1506180 for is owned by the third party Nestle, designating goods in class 30 for good ingredients (food flavorings), food flavorings, soy sauce, vinegar, monosodium glutamate, pepper powder, garlic sauce, instant noodle, rice, flour, with expiration date of January 13, 2021.
Trademark Reg. No. 843154 for is owned by the third party Nestle, designating goods in class 30 for food flavorings such as mustard, monosodium glutamate, sauce, paste, etc., with expiration of date of May 27, 2016.
The third party Taitaile Company filed a trademark application for on November 8, 2010 in class 33. The State Administration for Industry & Commerce, the Trademark Review & Adjudication Board in review of opposition found the mark to be sufficiently close to and registered trademarks, and refused registration.

Plaintiff Jiuxianghon contended that its use of the 太太乐marking on cooking wines is derived from the distinctive portion of trademark Reg.No. 3198511 for "太太乐and Design." Its use did not alter the trademark's distinctive portion, and should be considered use of Reg. No. 3198511 for "太太乐and Design." Plaintiff Jiuxianghong was asked by third party Taitaile to manufacture the cooking wine product, which was sold entirely to Taitaile, for which the only gain was the processing cost. For this reason, plaintiff Jiuxianghong was not the actual manufacturer or seller, and its use was not trademark use. Therefore it requested withdrawal of the penalty, and the Reconsideration Decision. The court decided, according to Articles 69 and 79 of the Administrative Procedure Law of People's Republic of China, to dismiss the complaint of plaintiff Jiuxianghong.
[Judge's Comment  ]

This administrative case of intellectual property dispute is conducted in a "three-in-one" mode by the intellectual property division of the court. Worth noting in this case is, one, whether plaintiff Jiuxianghong's use a portion of a registered trademark on its product is justified, which involved an issue of boundary of the registered trademark's right, and trademark fair use. Two, in a product processing relationship, how should liability of infringement be allocated between the entrustor and the entrustee. Plaintiff considered the marking is derived from the word portion of (太太乐and Design), a fair use, and its manufacture of the infringing product was under entrustment from third party Taitaile, does not render it a manufacturer and seller in trademark sense. The legal issue in this dispute is a typical one. For plaintiff's contention of fair use, it must be concluded from the perspective of trademark use, in conjunction with business custom, the necessity of use, and the third party's reputation, that the use of cannot be justified.