Pre-trial and preliminary injunctions: the Under Armour case

China
  • The Supreme People’s Court has ruled in favour of US company Under Armour in its dispute with a Chinese sportswear manufacturer
  • The People’s Higher Court of Fujian Province had granted a preliminary injunction in 2016, which is extremely rare in IP cases
  • This update provides an analysis of pre-trial and preliminary injunctive relief as an underused remedy in Chinese IP litigation

 

Pre-trial and preliminary injunctive relief are powerful remedies, which allow IP rights owners to bring an infringement to an end at the earliest opportunity. The recent case of Under Armour v Fujian Ting Fei Long Sports Products Co Ltd provides an example of how the Chinese courts are willing to grant preliminary injunctive relief. Nevertheless, this update delves deeper into recent statistics to examine why IP owners very rarely request these types of remedy or why the Chinese courts might be inclined to reject applications for pre-trial or preliminary injunctions.  

Background

Since Under Armour entered the Mainland China market in 2010, its brand profile and footprint have grown considerably to include approximately 600 stores throughout Mainland China. However, success breeds imitation, as evidenced by Under Armour’s dispute with Fujian Ting Fei Long Sports Products Co Ltd (‘Ting Fei Long’), a Chinese sportswear manufacturer, which decided to launch its own Uncle Martian(安可马汀)brand of sportswear in 2016, to great fanfare.

Due to the similarities between Under Armour’s core mark and the UNCLE MARTIAN mark, on 27 June 2016 Under Armour filed a civil complaint against Ting Fei Long, requesting a preliminary injunction and claiming Rmb100 million for trademark infringement and unfair competition.

Decisions

The People’s Higher Court of Fujian Province granted a preliminary injunction on 2 November 2016, requiring that Ting Fei Long cease use of the UNCLE MARTIAN trademark. Notably, this is one of the very few preliminary injunctions granted by the Fujian courts in IP cases.

The People’s Higher Court later decided in favour of Under Armour - on 19 June 2017 - and ordered Ting Fei Long to:

  • publish a statement to “eliminate the adverse effect” of its infringement; and
  • pay Under Armour Rmb2,000,000 (approximately $300,000) in compensation. 

An appeal filed by Ting Fei Long was recently rejected by the Supreme People’s Court, and the People’s Higher Court’s decision was upheld.

Analysis of pre-trial and preliminary injunctive relief as an underused remedy in Chinese IP litigation

While trademark infringement and unfair competition cases are quite common in China, the use of pre-trial and preliminary injunctions is rare relative to the number of IP infringement cases heard by the Chinese courts each year.  

For example, in 2018, from which the authors were able to obtain the most recent available statistics concerning the acceptance and grant of pre-trial and preliminary injunctions, there were only 177 applications for pre-trial or preliminary injunctions filed with the Chinese courts (at all levels throughout the country) in IP cases. During the same year, Chinese courts concluded 288,000 first-instance cases relating to IP rights; therefore, the number of civil IP cases in 2018 which involved a request for a pre-trial or preliminary injunction amounted to less than 0.06% of all IP cases decided that year.

Despite the low frequency at which pre-trial or preliminary injunctive relief is sought in IP cases, after an application for pre-trial or preliminary injunctive relief is accepted by a Chinese court, it is almost certain that the court will grant either a pre-trial injunction or a preliminary injunction. For example, referring to statistics available from 2018, out of the 177 pre-trial or preliminary injunctions requested, 171 requests were granted, which represents a 97% acceptance rate.

Given this very high success rate, it is surprising how rarely these remedies are associated with civil IP disputes. Various theories have been put forward as to why the number of requests for pre-trial and preliminary injunctions is so low.

Some commentators have suggested that the Chinese courts are wary of granting these types of remedy, as they may be abused or used inequitably; for example, a pre-trial or preliminary injunction may be used to gain leverage over an opponent in settlement negotiations. Others have suggested that the Chinese courts have set the threshold for accepting an application for a pre-trial or preliminary injunction too high, by requesting extensive evidence of “irreparable harm” (one of the key factors used by the Chinese courts in this respect). 

Despite the above explanations for the low number of IP cases that include a request for pre-trial or preliminary injunctive relief, and bearing in mind that this list is far from exhaustive, the only plausible explanation for such low number is either that IP owners, in general, do not request pre-trial or preliminary injunctive relief, or that the Chinese courts are reluctant to accept applications for these types of remedy.

Nevertheless, reflecting on the above-mentioned statistics, 2018 was a record year for the number of applications for pre-trial and preliminary injunctions, and is comparable to the total number of pre-trial injunctions and preliminary injunctions granted between 2013 and 2017 (which amounted to 232: 157 pre-trial injunctions and 75 preliminary injunctions).

Thus, while more data is needed with respect to pre-trial and preliminary injunctions to form a more predictive model on the treatment of such applications by the Chinese courts, for the time being, it remains to be seen whether more IP owners will file requests for pre-trial or preliminary injunctions with the Chinese courts, and whether there will be a greater willingness on the part of the Chinese courts to accept such applications.

David He, Yaqi Zhai and George Chan, Simmons & Simmons

Unlock unlimited access to all WTR content