Lacoste triumphs Over Cartelo in Trademark Infringement in China

The dispute between Lacoste and Cartelo over the iconic crocodile logo has reached a significant milestone with the final ruling by the Beijing Higher People’s Court. 

According to the judgment, Lacoste’s crocodile trademark has achieved well-known status as early as 2006, and the Cartelo’s use of the crocodile trademark, which has clear intentions of malice and caused confusion in the retail market, constituted infringement upon the legitimate rights and interests of the trademark owned by Lacoste. 

As a result, Cartelo was ordered to cease all infringing activities and awarding Lacoste a substantial compensation of RMB 14.8 million, plus reasonable expenses of 250,000 RMB, bringing the total compensation to RMB 15.05 million (approximately USD 2.08 million).

Background

The main difference between the two parties’ trademarks is the direction the crocodile logos face.

The Lacoste trademark was registered in France in 1933 and in China in 1980. Cartelo was established in Singapore in 1947 and expanded into the Chinese market in 1993. The trademark dispute over the crocodile logo in China between the two parties has been a long-lasting battle. In 1983, Lacoste and Cartelo reached a settlement agreeing to coexist in Taiwan, Singapore, Indonesia, Malaysia and Brunei.

In China, the disputed trademark, which contains the crocodile device and Chinese characters, was approved for registration in 2010 despite of Lacoste’s efforts in opposing the application. A retrial application was filed by Lacoste and the final judgement was announced recently.

In this final judgement, the court found that Lacoste's trademark had achieved well-known status well before the disputed trademarks owned by Cartelo were registered. 

The similarity between the two parties’ marks was likely to cause confusion among consumers. The court also determined that Cartelo's use of a similar crocodile logo on goods in Class 25 and Class 18 constituted trademark infringement, emphasizing that the only notable difference between the two parties’ marks was the direction the crocodile was facing, which was insufficient to prevent confusion. 

The compensation amount, which was calculated based on sales data, profit margins, and the trademark's contribution to product value, has been upheld in this judgement. With regard to the overseas settlement agreement between Lacoste and Cartelo, the court clarified that this agreement did not extend to continental China and thus could not be the basis for coexistence in China.

Takeaways

For Lacoste, the decision not only safeguards its iconic brand but also reinforces its long-standing market position in China, reaffirming that well-established brands have both the right and the means to defend their market position against unfair competition and infringement. 

Furthermore, the substantial compensation serves as a deterrent against future infringement. In a statement, Lacoste said that the ruling “not only effectively protected the legitimate rights and interests of Lacoste but also demonstrated the firm determination of Chinese judicial authorities to protect intellectual property rights.”

The case also highlights the importance for companies to continuously monitor the market for potential infringements to effectively protect their brand and market share. Thorough legal preparation is essential, as the territorial nature of trademark rights means that agreements and legal standings in one region may not apply in another, and companies must navigate these complexities with care.