By Ms. Wen Peng, Chofn lawyer and partner
Dear Clients and Friends,
We are pleased to advise you that we have just successfully represented Carlsberg’s subsidiary Lao Brewery Co., Ltd. (“Lao Brewery/the plaintiff”) in an unfair competition case. The case is significant in curbing trademark squatting, production of counterfeit goods, and the abuse of maliciously registered trademarks in China.
- Background
Lao Brewery company, founded in 1973 and based in Vientiane Capital, Lao PDR, has been distributing its beer in China for 16 years. However, a local entity, Laopi, maliciously registered its Beerlao brand, produced nearly identical counterfeit products, and initiated multiple lawsuits and administrative complaints, and recorded the trademark right before the Chinese Customs in bad faith to block the importation of Lao Brewery’s genuine products and disrupted their market presence.
Lao Brewery contacted Chofn to help to protect its rights to the brand in China. Lao Brewery’s brand is well known in the country of its origin and has been represented in the Chinese market for a long time. Lao Brewery could not tolerate the illegal use of their brand by third parties and was eager to protect the brand with all legal strength and determination. On the other hand, the investigation revealed that the three infringing entities had underlying connections in the past. This is by no means the first time the defendants have collaborated to conduct the similar acts. They had also won most of other major cases where they abused their maliciously registered trademarks.
- Breakthrough of the Judgment
1. The trademark owner is held liable despite the registered trademark rights
The defendant Laopi argued that all its acts, including using the mark, filing administrative complaints, initiating lawsuits, and recording trademarks with the Customs, were legitimate exercises of its registered trademark rights. The court nevertheless held that these acts, pursued in bad faith, constituted unfair competition.
2. Manufacturer is held liable despite authorization
The manufacturer Fuxianhu claimed it had undertaken due diligence by relying on its production agreement with Laopi. The court ruled that Fuxianhu should have been aware of the reputation of Lao Brewery’s products and the disputed status of Laopi’s trademarks. Thus, it was held jointly liable for unfair competition.
3. The representing and associated law firm is also held liable for assisting infringement
The law firm representing the owner and manufacturer, who assisted Laopi in trademark filings, Customs enforcement and litigation, argued that it was merely providing professional services. The court found that the firm had known or should have known that Laopi’s trademark activities were illegitimate. Thus, it is was held liable as assisting unfair competition.
- Court Ruling
The court ordered the defendants to :- Stop all unfair competition acts;
- Laopi shall change its company name within 15 days;
- Ban trademark squatting and imitating filings and Customs recordation;
- Grant a total damage of CNY1.5 million (≈$215,000), jointly paid by Fuxianhu (CNY300,000/$43,000) and the law firm (CNY50,000/$7,000);
- Make public announcements to eliminate adverse effects; and
- The defendants shall pay the official fees for litigation and preservation.
Now the ruling is final.
- Significance of the Case
This ruling is groundbreaking in the following aspects:- Bad-faith trademark registrations and abuse of rights can constitute unfair competition, even if the trademark has been officially registered.
- It extends liability to manufacturers and professional service providers who knowingly participate in or facilitate infringing acts.
- The courts are determined to protect legitimate parties, including foreign companies, from systematic and malicious IP infringement in China.
- It spreads a strong signal that abuse of illegal IP rights might attract backfire.
We thank our client for their vital collaboration, which was key to this cross-border IP success, and we remain dedicated to defending our client’s rights with strategic and vigorous advocacy.
