Siemens Triumphs over A String of Local Trademark Free Riders
Recently, Hebei High People's Court (Hebei High Court) made a final judgment on a dispute that Siemens AG FWB and Siemens (China) Co., Ltd. sued Hainan Ximenzi Century Electric Co., Ltd. (Hainan Ximenzi) (Note: Ximenzi is the literal Chinese pronunciation of Siemens' Chinese trademark) and Tangshan Lunan Hongtao Home Appliances Distribution Office (Hongtao Distribution Office), Zhejiang Ripu Electric Co., Ltd. (Ripu Company), Cixi Feilong Special Refrigeration Equipment Co., Ltd. (Feilong Company), a person surnamed Ding for trademark infringement and unfair competition. Hebei High Court ordered Hongtao Distribution Office to stop selling the infringing freezer products involved; Hainan Ximenzi, Ripu Company and Feilong Company to stop production and sales of the products involved, and to stop using "Ximenzi Century" and "Hainan Ximenzi Century Electric Co., Ltd." in commercial activities; Hainan Ximenzi to change its trade name which must not contain the same or similar words as "Siemens"; Hainan Ximenzi, Ripu Company, Feilong Company and Ding to jointly indemnify the plaintiff 500,000 yuan in damages and reasonable cost and Hongtao Distribution Office to compensate50,000yuanin damages.
Siemens Company was the trademark holder of No. G683480 "西门子" and No. G637074 "SIEMENS", both of which are eponymous trade names. Hainan Ximenzi engages in the production, processing and sales of household appliances. Ding is the legal representative of the company. Ripu Company mainly manufactures and processes household appliances and accessories. Feilong Company takes care of the manufacturing and sales of refrigeration appliances.
Siemens Company found that Hongtao Distribution Office sold refrigerators marked with "Ximenzi Century" and "Hainan Ximenzi Century Electric Co., Ltd." and "Ximenzi Century" was prominently used in the side of the refrigerator. Hainan Ximenzi authorized Ripu Company to sell refrigerators marking "SIIXMZ" brand. The latter authorized Feilong Company to process and produce refrigerators containing "SIIXMZ" brand. Hongtao Distribution Office purchased "SIIXMZ" refrigerators from Ripu Company. Accordingly, Siemens Company filed a lawsuit at Tangshan Intermediate People's Court (Tangshan Court) on the grounds that Ding and the above four companies infringed on the exclusive rights of their "Siemens" trademarks, which also constituted unfair competition.
The five defendants jointly argued that Ding was the right holder of the No.7267867 "SIIXMZ" trademark, and Siemens had withdrawn from the field of home appliances since September 2014. Therefore, they nether infringed the plaintiff 's trademark rights nor constituted unfair competition.
After hearing, Tangshan Court held that the act of using the word "Siemens" on the products produced and sold by Hainan Ximenzi, Ripu Company and Feilong Company without authorization constituted unfair competition. Although Ding is the owner of the No. 7267867 trademark "SIIXMZ", he was not involved in the production or sales of the alleged infringing product and therefore he should not be liable for compensation. Hongtao Distribution Office submitted evidence to prove that the products sold in the case came from legitimate sources and should not be liable for compensation.
Disgruntled with the trial court's judgment, Siemens Company appealed to Hebei High Court.
Hebei High Court held that Ding, as a businessman in the electrical industry, registered the trademark "西门子" as a trade name, founded Hainan Ximenzi and prominently used the trade name on the alleged infringing products, which had a bad faith to mislead the social public on the source of the products and constituted trademark infringement together with three companies. Hongtao Distribution Office, as a seller of the infringing product involved in the case, also constituted trademark infringement. Considering high reputation of the trademarks in question, multitude of models of alleged infringing products, expansive
sales regions, lengthy time of infringement and apparent bad faith, the damages of 100,000 yuan determined in the first instance is too low and should be corrected. In this connection, Hebei High Court made the above judgment