Bad faith registrations, such as trademark squatting or trademark imitation, often cause great trouble to the business activities of the actual trademark owner. The out coming of a recent case in China may provide a new possibility of rights protection for trademark owners who are troubled by bad faith registrations.
On September 27, 2021, the High People’s Court of Fujian Province in the second instance process upheld the ruling of the Intermediate People’s Court of Xiamen City of Fujian Province regarding the case Emerson Electric Co. vs. Xiamen Water Spirit/Xiamen Haina Baichuan/WANG/Xiamen Xingjun IP. The High People’s Court determined that the defendants’ trademark squatting constituted unfair competition, and ruled the defendants to stop the infringement immediately, compensate Emerson for losses of 1.6 million RMB, and publish statement in nationally publicized media to neutralize the impact.
Emerson Electric Co. is an operator for food waste disposer, and the owner of the trademarks “InSinkErator”, “爱适易” etc. From 2010 to 2019, the defendant WANG, through his companies Xiamen Water Spirit and Xiamen Haina Baichuan, applied and registered 48 trademarks that were identical or similar to “InSinkErator” and “爱适易” in various Classes. In order to protect its legitimate rights and interests, Emerson has carried out administrative procedures against the trademark squatting by means of trademark objection or trademark invalidation etc., which costed a lot of efforts and expenses. However, the relevant administrative ruling failed to prevent the defendants from continuing the infringement, Emerson therefore brought the lawsuit to the civil court.
This case is the first case in China in which trademark squatting without actual usage of the bad faith trademarks was determined as conduction of unfair competition. Further, this case also clarified the legal responsibility of all parties involved in the bad faith registration. Not only the direct infringing party, in this case the two companies that filed application of trademark registration, but also the actual controller of the companies and the trademark agency that assisted bad faith registration must bear the corresponding infringement liabilities. The expenses incurred by the trademark owner in safeguarding its legal rights and interests in administrative procedures are also taken into account as one of the factors in determining the amount of compensation. This case could be seen as a useful exploration by the People's Court in the field of civil litigation in handling trademark squatting or bad faith registration.
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