Case on Unfair Competition Dispute between Beijing Wtown Travel Co., Ltd. and Beijing Xiaohao Science and Technology Co., Ltd.

December 18, 2023

Case Brief

Beijing Wtown Travel Co., Ltd. (hereinafter referred to as Beijing Wtown) was incorporated on July 16, 2010 in Miyun District, Beijing. It was established exclusively for the operation of the Beijing Wtown scenic area, which witnessed millions of visits annually from 2014 to 2016, with a total income of hundreds of millions yuan. Beijing Xiaohao Science and Technology Co., Ltd. (hereinafter referred to as Xiaohao) was incorporated on February 12, 2014 in Miyun District, Beijing, and its scope of business at that time included trademark assignment and agency services, etc., the services being subsequently removed with change registration. Xiaohao applied for the registration of the trademarks No. 14073131 and No. 14073132 for "古北水镇" (hereinafter referred to as the involved trademarks) on the alcoholic goods in Class 33 and clothing in Class 25, and then issued a warning letter of infringement to Beijing Wtown and lodged a complaint about trademark infringement with the industrial and commercial administrative department, requesting the Beijing Wtown to stop using the trademark "古北水镇" and the like on the packaging of alcoholic products. The court determined that the involved trademarks of Xiaohao shall be declared invalid on the grounds that they impaired the rights and interests of prior trade name of Beijing Wtown and the like. Beijing Wtown believed that Xiaohao was fully aware of the reputation of the trade name "古北水镇" of Beijing Wtown and of the unregistered trademark, but still committed the acts involved, constituting unfair competition. Therefore, Beijing Wtown filed a suit at the court, requesting that Xiaohao should be ordered to compensate for the economic losses and reasonable expenses totaling 500,000 yuan, and receive other punishment.

The court of first instance held that, prior to February 2014, "古水北镇", as the enterprise name and the trademark used on alcoholic products of Beijing Wtown which was engaged in providing tourism and catering services and the like, had gained certain reputation among the relevant public, and was able to be associated with Beijing Wtown. As an operator likewise located in Miyun District of Beijing and established later, Xiaohao should respect and reasonably avoid the rights and interests and the like of Beijing Wtown in respect of the prior trade name "古水北镇". Considering that Xiaohao's acts of applying for registration of the involved trademarks, issuing a warning letter of infringement and lodging a complaint about infringement had damaged the legitimate rights and interests of Beijing Wtown, violated the principle of honesty and credibility, and violated the provision of Article 2 of the Anti-Unfair Competition Law, constituting unfair competition, it was judged that Xiaohao should compensate Beijing Wtown for the economic loss of 280,000 yuan and the reasonable expenses of 35,000 yuan, and receive other punishment. Xiaohao was dissatisfied and filed an appeal. The judge of second instance rejected the appeal and upheld the original judgment.

Typical Significance

This case is a typical case where the trademarks registered and the complaint lodged in bad faith are determined to constitute unfair competition. In this case, based on the subjective fault of Xiaohao and the fact that the trademark squatted was declared invalid, it was determined that the sued acts constituted unfair competition, which is of positive significance in regulating the acts of trademark registration and use, enhancing the awareness of the correct trademark registration and use of the whole society, focusing on the building of a trusted brand, and helping to create a good business environment.

(Case Source: the Official WeChat Account of the Beijing Higher People's Court)