Michelin tire dealer cannot use MICHELIN mark on signboard without authorisation

China

The Changchun Intermediate People's Court has held that a tire dealer cannot use the MICHELIN trademark on its signboard without the trademark owner’s authorisation, even if it sells authentic Michelin tires.

Michelin is a world leader in the field of tires and is the owner in China of the following trademarks, which are registered in respect of tires and other goods:

  • MICHELIN;
  • MICHELIN in Chinese characters; and
  • the Bibendum device.

In 2010 Michelin discovered that a company called Jilin Fu Long Tire Co Ltd was using the trademark MICHELIN (in Chinese characters) in a prominent manner on its signboard.

Fu Long was selling various brands of tires, including (authentic) Michelin tires, but was not authorised by Michelin to exclusively represent and distribute Michelin products.

Considering that such prominent use of its trademark was likely to give the impression to consumers that Fu Long was an official distributor of Michelin tires, Michelin sued Fu Long before the Changchun Intermediate People's Court on the grounds of trademark infringement.

The court held that Fu Long’s prominent use of the MICHELIN mark on its signboard without Michelin’s authorisation amounted to “causing other types of damage to a registered trademark right”, as stipulated in Article 52.5.1 of the Trademark Law and, therefore, constituted trademark infringement. In a judgment dated March 14 2013, the court ordered the defendant to withdraw the infringing sign and pay compensation to Michelin.

In deciding that the defendant was committing an act of infringement, the court stated that:

  • the defendant sought to take advantage of the reputation and goodwill of Michelin; and
  • use of the MICHELIN trademark on the defendant's shop sign, even though the defendant was not an authorised Michelin dealer, was likely to cause confusion and misidentification among the relevant public, and caused damage to Michelin's trademark.

In particular, the court explained that a trademark, when applied to commodities and services, indicates the relationship between these commodities/services and their provider. Such relationship not only shows the source of these commodities/services, but also helps consumers make a reasonable judgment on the quality of the commodities/services based on the goodwill of the proprietor. The Trademark Law protects registered trademarks by preventing not only the direct use of words, graphic elements, letters and figures registered as trademarks, or the combination of these elements, but also the creation of associations with the trademarks. Therefore, any behaviour which may result in confusion or misunderstanding on the part of consumers will be considered infringing. Fu Long’s use of the registered trademark MICHELIN caused the relevant public to believe that Fu Long’s shop was an authorised shop or was part of a chain of shops offering professional Michelin services. Based on the reputation of the registered MICHELIN mark and the goodwill of the trademark owner, consumers would mistakenly trust the products and services offered by Fu Long; in contrast, Michelin’s registered trademark was damaged, which amounted to infringement under Article 52.5 of the law.

Commodity dealers often use the trademark of the product they sell on their signboard; this behaviour is particularly prevalent among tire dealers or repair shops - but do they have the right to do so if they are not authorised dealers?

The answer is not obvious, because - after all - they are selling genuine products that have been acquired legally. The dealers might thus claim that they are entitled to inform customers on their shop front that they will be able to purchase authentic products bearing the mark(s) shown outside the premises.

In 1995 the State Administration of Industry and Commerce (SAIC) issued a Notice Concerning the Prohibition of the Unauthorised Use of Another's Registered Trademark by Auto Parts Stores and Auto Repair Sites" (Gong Shang Biao Zi [1995] No 195), which stated as follows:

"Some local auto parts store and auto repair sites, without the authorisation of the trademark holder, use the registered trademarks - either word or device - of automobile manufacturers such as Mercedes-Benz or Jeep on their signboards in a prominent position. The act of using the registered trademarks of others for commercial purpose causes consumers to believe that the shop operators have a link with the trademark holders, consciously or unconsciously, which violates the exclusive rights of the trademark holders."

The notice was later abolished because the SAIC, as an administrative agency, has no power of judicial interpretation. However, the 'legislative intent' of the SAIC shown in the notice is well grounded, and was probably taken into account by the court in this case.

Michelin has filed a series of lawsuits across the country. The Changchun Intermediate Court is the first one to recognise that the unauthorised use of a registered trademark on a signboard constitutes an infringement, and this decision will hopefully provide guidance to other courts in similar cases. It can be seen in the Changchun Intermediate Court's judgment that the key issue is to identify the relationship between the user of the trademark and the trademark holder. Only those having authorisation from the trademark holder have the right to use the trademark on their signboard. Those who do not have authorisation cannot use the trademark on their signboard in order to establish a connection with the trademark holder.

Du Binbin, Wan Hui Da Law Firm & Intellectual Property Agency, Beijing

Wan Hui Da acted for Michelin in this case

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