Supreme People's Court upheld 79m rmb compensation to Chateau Lafite Rothschild

The long-lasting trademark disputes between prestigious French wine estate Chateau Lafite Rothschild (Rothschild) and Chinese companies Nanjing Golden Hope Wine Co., Ltd. (Golden Hope), Nanjing Manor Lafei Wine Co., Ltd. etc., have finally been concluded. 

The China Supreme Court (SPC) upheld the trademark infringement and unfair competition disputes among them and supported the ruling that Gold Hope shall immediately stop the illegal acts and compensate Rothschild RMB 79.17 million (approximately USD 18 million) as economic losses and reasonable expenses.

During the first instance, Rothchild argued that Golden Hope and its associated companies use the trademarks of Lafei Manor and Chateau Lafite in Chinese characters on their product packaging, advertising, promotional materials, etc., which have infringed upon its trademarks rights and damaged the reputation of its well-known trademarks. Also, the defendants’ forged information regarding the origin of wines has constituted unfair competition.

The Intermediate Court ruled that Golden Hope and six other defendants have committed trademark infringement and unfair competition by improperly exploiting others' competitive advantages, causing serious damage to the interests of Rothschild and disrupting the fair market competition order. They were ordered to immediately cease the infringement and compensate Rothschild for the plaintiff’s financial losses.

The case was then appealed to Beijing High People’s Court and reviewed by the SPC. The key issues were whether Golden Hope’s use of the accused marks constitutes trademark infringement and un-fair competition, and whether the calculation of damages is proper.

In the disputed mark ‘Manor Lafei in Chinese’, the distinctive part is ‘Lafei in Chinese’. Rothschild’s prior mark also features ‘Lafite’ as the distinctive identifying part. ‘Lafei in Chinese’ and ‘Lafite’ share identical initial letters and they’re similar in terms of letter composition and pronunciation. Through years of use and promotion, ‘Lafei in Chinese’ and ‘Lafite’ have formed a stable corresponding relationship and are widely recognized by Chinese wine consumers. Therefore, the two parties’ marks constituted similar marks used on similar goods, which could easily cause confusion among the relevant public. Furthermore, Manor Lafei’s registration of ‘Manor Lafei in Chinese’ as its trade name could also cause misunderstanding among the consumers. Its advertising materials take advantage of the popularity of Lafite wines as well as the corresponding relationship between ‘Lafei in Chinese’ and ‘Lafite’ trademark, which constitutes unfair competition and damages the interest of Rothchild.

This case demonstrates that, when determining whether two marks are similar, in addition to the overall similarity judgement, other elements, such as the marks’ distinctiveness, popularity, relevance, designated goods and the potential confusion are all taken into consideration.

It also reminds us that, when foreign brands entering into the China market, it is crucial to understand that every product and brand is known by a Chinese name by the local consumers. Foreign trademarks can be transliterated into multiple versions in Chinese language, and sometime brand owners may not be fully aware of them all (such as the ‘nicknames’ of their brands widely used on social media but not officially registered or recognized as the related trademarks in Chinese version).

The China market is complex with (sometimes) aggressive trademark environment, and consequences could be expensive and time-consuming. It is therefore recommended to decide one’s Chinese name, especially when it comes to Chinese transliterations, be consistent of the use in all commercial and marketing efforts and have it properly registered when engaging the China market.