Kangrui successful in Unfair Competition lawsuit
date: 2019-11-25

“From a distinguished line of goods, boasting the quality that is a hallmark of German manufacturing”- Courts find advertisement slogan constituted Unfair Competition.

    Recently, the trademark infringement and unfair competition case involving Sata Co., Ltd. (hereinafter referred to as Sata Co.) represented by Kangrui ( Kangxin’s legal department) v. Taizhou Sata Pneumatic Tools Co., Ltd. (hereinafter referred to as Taizhou Co.) was decided in favor of Sata Co.

    The Intermediate People's Court found that the trademark infringement of Taizhou Co. had been established, and that the use of Sata Co. font sizes, advertisement slogan "From a distinguished line of goods, boasting the quality of German manufacturing" and other advertisement material constituted unfair competition. At present, the defendant (Taizhou Co.) has complied with the judgment, ceased infringing behavior, changed the name of the company and fulfilled their compensation obligation. Sata Co. and Kangrui are extremely pleased that the case has been brought to a successful conclusion with this decision.

    In the given case the defendants, Taizhou Co., had tried their upmost to hide any infringing behavior.  Owing to this, it was quite a challenge to collect sufficient evidence that would be seen to constitute infringement before proceeding with the lawsuit. Sata are known across the globe for their spray guns, and it owns the rights to "Sata" and "SATA" trademarks, which are approved for use in spray guns and related products.

    Evidence was first required to prove that the defendant was operating in the spray gun industry; this point will be discussed in more detail further on. Following this the case focused on the company name being used by the defendant, namely, Taizhou Sata Pneumatic Co., Ltd. The prosecution successfully arguing that the use of “Sata” had been directly copied from Sata Co., Ltd and their established Chinese trademark. Furthermore, it was found that the use of “pneumatic” by Taizhou Co., indicated a strong correlation with spray guns, owing to it being a pneumatic tool. It could therefore be found that it was highly likely Taizhou Co. could be selling spray guns. If Taizhou Co., did in fact sell such spray guns, then it would without doubt lead to consumers being confused.

    However, in the previous investigation, we were unable to identify any advertisements indicating the sale of spray guns by Taizhou Co. On further investigation, we found that Tiazhou Co. were using "Sata" in their advertisement brochures along with the slogan "From a distinguished line of goods, boasting the quality that is a hallmark of German manufacturing”. Unfortunately, the brochures only displayed products used in butter manufacturing, and did not list any spray gun products.  We noted that the name "SATA" was highlighted on the salesperson's business card, and the business card is not clearly marked so as distinguish Taizhou Co. from Sata Co.

    Finally, after carrying out yet more investigations on the ground, specifically when investigating a factory belonging to Taizhou Co., we were able to discover spray guns were in fact being manufactured by the defendants. Our investigators on the ground collected sufficient evidence to establish Taizhou Co. were producing spray guns and were packaging them so as to appear that they were products manufactured by Sata.Co., and specifically attempting to copy the design and packaging of the SataJet 4000, a top selling model of Sata Co.

    Following this, our investigation team purchased several such spray guns from the defendant Taizhou Co, having them notarized as fixed evidence.

    Despite the initial difficulties encountered in this case, our on the ground team of investigators were successful with thorough, in-depth investigations leading to the discovery of a wealth of evidence that could be submitted the court and which proved crucial in gaining this successful decision in favor of our client Sata Co.   

    The court found that Taizhou Sata Pneumatic Company use of “Sata” and “SATA” constituted trademark infringement, and unfair competition. The court held that the defendant engaged in the manufacturing and sale of pneumatic tools and accessories and spray guns that overlapped with the plaintiff's business and constituted a competitive relationship. The plaintiff’s “Sata” font number was registered first, and the trademark is now widely recognizable through long-term publicity and use, thus further strengthening the plaintiff’s case. As the plaintiff’s competitor, the defendant should know the popularity and good reputation of the plaintiff’s “Sata” brand name. Despite this, the defendant proceeded to use “Sata” for their own company’s name, and register it for use in the same industry, which would undoubtedly lead to confusion.

    The court was unanimous in its decision, stating that the public could easily be mistaken through this behavior. The defendant was found to have registered “Sata” in bad faith, violating the principle of honesty as a market operator, and damaging the legitimate rights and interests of the plaintiff, the defendant’s behavior thus constituting unfair competition. Furthermore, the defendant Taizhou Sata Pneumatic Co., Ltd., was found to have used the advertisement slogan “From a distinguished line of goods, boasting the quality that is a hallmark of German manufacturing” in its business activities, despite the fact that it could not provide any evidence that their products were designed or manufactured in Germany. Owing to this contradiction, it was found that use of this slogan would mislead consumers as to the origin of their products, and was ultimately taken as yet further reasoning by the court in coming to their decision in favor of Kangrui and Sata Co.