Sotheby’s wins rare victory over Chinese auction house

The Beijing Second Intermediate People's Court has ordered Sichuan Sufubi Auction Co Ltd to cease all use of marks that are identical or similar to the trademarks 苏富比 and SOTHEBY'S.

Sotheby's, which was established in 1744 in London, is one of the two largest auction houses in the world. It owns the registration for SOTHEBY'S as a trademark and/or service mark in China and many other countries. The Chinese phonetic equivalent of 'Sotheby's' ('苏富比', pronounced 'sufubi'), which Sotheby's has been using in China, is not registered in that country.

In July 2007 Sotheby's started proceedings against Sichuan Sufubi in the Beijing Second Intermediate People's Court, alleging trademark infringement and unfair competition. On December 19 2007 the court ruled in favour of Sotheby's on both claims.

With regard to the trademark infringement claim, the court had to determine whether:

• the unregistered mark 苏富比 is well known in China; and
  
  
• Sichuan Sufubi infringed Sotheby's registered and unregistered marks.

With regard to the unfair competition claim, the court had to decide the following issues:

• whether Sotheby's and Sichuan Sufubi were in competition within the same industry; and
  
  
• if so, whether the acts of Sichuan Sufubi constituted unfair competition.

The court held as follows:

• Sotheby's unregistered mark 苏富比 has become a well-known trade name through use and promotion since 1988.
  
  
• Sichuan Sufubi infringed Sotheby's unregistered mark by using marks that are identical or similar to 苏富比 in its business activities and in advertising without authorization. Sichuan Sufubi also infringed Sotheby's exclusive rights in the SOTHEBY'S trademark by using the name Sotheby's in one of its auction events. Such acts created confusion and misled the public into believing that a relationship existed between Sotheby's and Sichuan Sufubi.
  
  
• Sotheby's was in competition with Sichuan Sufubi within the same industry as it ran and promoted its auction business in China.
  
  
• Sichuan Sufubi carried out a number of misleading acts and used marks that were identical or similar to 苏富比, which constituted unfair competition.

Therefore, the court ordered Sichuan Sufubi to cease using marks that are identical or similar to 苏富比 and SOTHEBY'S, and to remove all misleading content from its website and promotional materials. Sichuan Sufubi was also ordered to pay Sotheby's Rmb110,000 in costs and to publish an apology in a Chinese newspaper, Guangming Daily. The decision has been appealed to the Beijing Higher People's Court.

In March 2007 Sotheby's had also filed suit in Hong Kong against three companies related to Sichuan Sufubi (which had the term 'sufubi' in their company names) for trademark infringement and passing off. These companies promoted Sichuan Sufubi's Chinese business in Hong Kong. In May 2007 Sotheby's obtained a default judgment against the three companies, including an order directing that they change their names. The Hong Kong judgment was among the supporting evidence relied on by Sotheby's in the Beijing court and was expressly acknowledged in the Chinese decision.

Kenny Wong, JSM, Hong Kong