Yamaha wins big in China

The Supreme People's Court of China has awarded Yamaha Motor Corporation Rmb8.3 million (approximately $1.1 million) in an action for infringement of its registered trademarks YAMAHA and FUTURE.

Zhejiang Huatian Industrial Company Limited (Zhejiang Huatian) and its distributors Taizhou Huatian Motorcycle Marketing Limited (Taizhou Huatian) and Taizhou Jiaji Motorcycle Marketing Limited (Taizhou Jiaji) manufactured and sold motorcycles featuring the name 日本YAMAHA株式会社 (Japan Yamaha Corporation). Some of the products also featured the mark FUTURE. The companies claimed to have a licence from a Japanese company called 日本雅马哈株式会社 (Japan Ya Ma Ha Corporation) allowing them to use that company's name in relation to their motorcycles. All three Chinese companies and the Japanese company were controlled by or connected to an individual named Li Shu Tong.

After obtaining a default judgment against the Japanese company in Japan, Yamaha
brought an action in China.

The Jiangsu Higher People's Court held that the use of the FUTURE mark was clearly infringing. It also found that the prominence of the name Yamaha (in larger font) in the name Japan Yamaha Corporation on Zhejiang Huatian's motorcycles, packaging and advertising materials constituted infringement of the registered trademark YAMAHA.The court pointed out that 日本YAMAHA株式会社 was not registered in China nor Japan (the name of the Japanese company being 日本雅马哈株式会社). It also rejected the argument that this name was merely a company name and not serving as a trademark. Lastly, the court established that the defendants' connection with Japan Ya Ma Ha Corporation through Li showed their intent to encroach upon Yamaha's rights.

The court appointed an auditor to assess the defendants' profits because the defendants had refused to provide their company financial information. The auditor found that Zhejiang Huatian had manufactured 2,113 infringing motorcycles, but that it had incurred a loss. The defendants therefore argued that statutory damages at a maximum of Rmb500,000 should be applied as the profits could not be ascertained. However, the court reasoned that as Zhejiang Huatian might have transferred the profits to its affiliated companies, the auditor's estimation of the loss suffered by Zhejiang Huatian, which was based on incomplete financial information, should be disregarded.

Instead, the court accepted the calculation of profits submitted by Yamaha which was based on the average unit ascertained in a separate administrative action relating to infringing motorcycles that were identical to Zhejiang Huatian's infringing models. The court also ordered the two distributors to contribute to part of the damages according to their respective involvement in the infringement, and to issue a public apology to Yamaha in a motorcycle magazine.

The Supreme People's Court upheld the lower court's decision on appeal.

This decision sends out a very clear message that unauthorized use of foreign company names incorporating famous trademarks to camouflage infringement activities in China will no longer be tolerated and the courts are ready to impose high penalties to curb the same.

Yvonne Chua and Grace Wong, Wilkinson & Grist, Hong Kong