Court backs LVMH in its fight against trademark squatter

China

Louis Vuitton Moët Hennessy (LVMH) has obtained a victory against a trademark squatter before the Beijing Number 1 Intermediate Court. 

In April 2002 a Hong Kong company applied to register the trademark LVMH for products such as rice cookers. The Trademark Office gave preliminary approval and published the mark for opposition in September 2003.

LVMH timely opposed the application, but the Trademark Office ruled in favour of the registrant. LVMH continued the fight, but it was not until 2010 that the Trademark Review and Appeal Board (TRAB) affirmed the Trademark Office’s decision. The TRAB ruled that the registrant’s mark was not similar to LVMH's mark, and LVMH failed to prove that its LVMH mark was a well-known trademark under the Chinese laws.

LVMH brought a lawsuit before the Beijing Number 1 Intermediate Court, requesting that the latter review the TRAB’s decision. 

In February 2012 the court ruled in favour of LVMH. The court held that the parties' marks were identical because the term 'LVMH' has no inherent meaning and the font was identical. The court further ruled that the goods covered by the marks were similar and, therefore, there was a likelihood of confusion. The court vacated the TRAB's decision and asked the TRAB to reconsider the case. It is widely expected that the TRAB will cancel the trademark application.

This case illustrates that the Chinese courts are tightening the net around trademark squatters. In the past, brand owners have encountered substantial difficulties in preventing the registration of their marks by squatters if:

  • the brand owners' marks are not recognised as well-known trademarks; or
  • there is no “clear” evidence of “bad faith” under the stringent evidentiary threshold set forth by the Chinese legislation.  

In light of the Beijing Number 1 Intermediate Court's decision in the LVMH case, as well as other recent decisions, it appears that the Chinese courts are more willing to protect the interests of brand owners in their fight against trademark squatters. Following a Supreme People’s Court opinion released in December 2011, the Supreme Court’s IP Tribunal sent a strong message that the IP judges should take a progressive approach to stop trademark-squatting activities. The opinion implied that, even if the registered mark has not been recognised as a “well-known trademark”, or in absence of solid evidence of bad faith, the courts may still evaluate the similarity between the squatter’s and the brand owner’s mark to determine whether there is a likelihood of confusion. This approach, if properly carried out by the courts at the lower levels, would relieve some brand owners of the burden of fighting against trademark squatting. 

However, not all brand owners will benefit from this approach. Almost at the same time as the LVMH decision was issued, Hermes lost its bid to cancel the Chinese counterpart of the HERMES mark ('Ai Ma Shi' in traditional Chinese characters - a transliteration of 'Hermes'). Reportedly, the court was unable to find a basis to rule that the squatter’s mark was similar to those Chinese marks, if any, that Hermes had registered. The dilemma faced by Hermes shows that the Chinese courts must still find ways to deal with bad-faith issues in trademark-squatting cases.

He Jing, ZY Partners, Beijing

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