The red thread war: REDLINE succeeds to invalidate preemptive trademark registration

In the decision dated on February 6, 2018, the Trademark Review and Adjudication Board (« TRAB ») invalidated the trademark «REDLINE» No. 8397269 on the ground that it was fraudulently acquired by using a fake business license. This decision marks the first victory for Redline France against the preemptive registration and use of its trademark by a several entities in Mainland China.

Founded in 2004, REDLINE is a Parisian-based haute couture jewelry brand. Inspired by the red string of Jerusalem, the brand is well-known to combine the purity of precious stones and the symbolic value of string, considered to be a lucky charm by many world cultures since the dawn of time. The international renown of the house grows over the years, characterized by prestigious collaborations and the high interest of the consumers who crack for its creativity as well as French craftsmanship and know-how.

The Chinese « REDLINE » trademark was filed by a Chinese individual CHEN Yufeng on June 17, 2010 and granted for registration on July 7, 2011 for the goods of “watches, clocks electronics clocks” in Class 14. On December 6, 2016, the trademark was assigned to the company Shanghai Yiquan Trading CO, Ltd. (上海亿券贸易有限公司).

REDLINE France filed an invalidation against this trademark on December 21, 2016 on the grounds of trademark acquired “by fraud or any other unfair improper means” with deliberately intention to stop Redline France from accessing Chinese market and then take unfair advantage of the good reputation and popularity of REDLINE all around the word by arousing public confusion on the origins of the jewels.

It is worth to highlight that the invalidation was filed after the 5 years’ time limit was passed by. However, according to the Article 44 & 45 of Chinese Trademark Law, the invalidation against prior registered trademarks can be filed after the expiry based on (1) malicious registration of well-known trademark in bad faith or (2) trademark acquired by fraud or any other improper means.

In support of its claims, REDLINE inquired Beijing State Administration of Industry and Commerce about the genuineness of the Individual Business License submitted by CHEN Yufeng at the filing date. It turned out that the company number bearing on the Business License is related to neither company in Mainland China which implies that the disputed REDLINE trademark was registered by fabricating fake business license.

In light of the evidence producing by REDLINE which include among others a statement from the Beijing SAIC certifying that the company registration number as well as the applicant number are not found through their databases thereby such company does not exist, the TRAB deemed the trademark registration was acquired fraudulently and violates principle of honesty and credibility pursuant Article 41.1 of Trademark Law.

Besides the invalidation, REDLINE also undertaken several actions against squatters and counterfeiters in China through take-down campaign on the main online e-commerce platforms, closure of WeChat stores and actions against defamatory articles which qualified these Chinese suppliers as affiliates of Redline.

These unfair behaviors directly impact the reputation as well as the business activity of REDLINE in the Asian market but also worldwide which harm the credibility of the brand, albeit the interest of the trademark and tarnish the public trust especially regarding the authenticity of luxury goods.

This remarkable decision represents a great victory for Redline against the squatting of its trademark in China. The judgment standard applied in this decision is in line with the new trends following by Chinese jurisdictions to enhance the protection of foreign trademarks against brand copycats, bad faith and preemptive trademark registration as emphasized by Mr. Cui Shoudong, the Deputy Director of Trademark Office of SAIC.

We believe that this situation may be viewed as a cautionary tale to any company planning to develop their business in China. The importance of duly protecting their distinctive signs and any other intangible asset must be seen as the first step of the business. And it will be crucial for the business success.

To be continued…

HFG represents REDLINE in this case.