When a foreign brand enters the Chinese market at the beginning, in order to facilitate Chinese consumers' memory, the foreign brand owner usually creates a Chinese version brand name together with their foreign brand name. If the foreign brand has a general agent in China, the creation of Chinese version brand is usually in the charge of the agent, based on a good cooperative relationship.The Chinese trademark will be registered in the chinese agnet’s name. Under this situation,if the agency relationship is terminated, and there is no agreement between two parties regarding the Chinese brand’s ownership, can the owner of the foreign brand continue to use the Chinese brand? Can the foreign company authorize other agents to continue using it?  In the “阳光超人” trademark infringement case, Beijing Intellectual Property Court and Beijng Higher People's Court gave a positive answer to this question.

    Case Facts

    From March 2005 to November 2014, Hangzhou Qinlv Hi-Tech Co., Ltd. (hereinafter referred to as the “Hangzhou Qinlv Company”) is the general agent of storchenmuhle child safety seat of RECARO Company in China. During the period of agency, Hangzhou Qinlv Company opened the "official flagship store of STM" on Jingdong platform to sell child safety seats. One of the product sub brands is SOLAR. Hangzhou Qinlv Company introduced the product as "Sidimu STM children car safety seat “阳光超人” imported from Germany" in its website.

    In November 2014, Hangzhou Qinlv Company and RECARO Company terminated the general agency relationship.

    On November 24, 2014, Hangzhou Qinlv Company applied for registration of "阳光超人" trademark in class 12 "child safety chair (for vehicle)" and obtained No.15779283 trademark registration certificate of "阳光超人 " on January 21, 2016. And then Hangzhou Qinlv Company used the trademark on the child safety seats which not produced by RECARO Company.

    Shenzhen Xiwei Import and Export Co., Ltd. (hereinafter referred to as the “Shenzhen Xiwei Company”) is authorized by RECARO Company to be the general agent of storchenmuhle child safety seat in China, and is fully responsible for the exclusive sales and service of the whole line of products. Shenzhen Xiwei Company opened the "storchenmuhle flagship store" on Jingdong platform. The product description on the child safety seat sales webpage is: "German STM 阳光超人 original imported child safety seats for automobiles...", and "阳光超人" is marked in the webpage picture of commodity promotion. There is no Chinese on the package and the product itself of the imported child safety seat. And boxes of physical goods carry stickers with the words "阳光超人" printed by the Shenzhen Xiwei Company.

    Parties’ Argument

    Hangzhou Qinlv company believes that "阳光超人" is its original creation and they enjoys corresponding rights and interests. During the period of cooperation with RECARO Company, the samples, products and packages provided by RECARO Company did not have the word "阳光超人". After import, Hangzhou Qinlv Company took Chinese names for different types of child safety seats, including "阳光超人", and pasted them on the outer packaging of the products with labels. Therefore, "阳光超人" is not created and used according to the instructions of RECARO Company, but designed by Hangzhou Qinlv Company. Hangzhou Qinlv Company owns the ownership of the “阳光超人” mark, applies for registration as a trademark, and enjoys the exclusive right of registered trademark. Hangzhou Qinlv Company held that the use of "阳光超人" on children's safety seats by Shenzhen Xiwei Company is trademark infringing behavior. Hangzhou Qinlv Company sued Shenzhen Xiwei Company and Jingdong to Beijing Xicheng District People's Court, requesting the two defendants to stop the infringement and to jointly compensate the economic loss of CNY 500,000 and reasonable expenses.

    Shenzhen Xiwei Company claimed that they did not constitute infringement. RECARO Company has used the "阳光超人" logo before the registration of the trademark “阳光超人”. Shenzhen Xiwei Company naturally obtains the above-mentioned right based on the business continuity and agency relationship by authorization. The use of "阳光超人" logo by Shenzhen Xiwei Company will not cause consumers’ confusion. In addition, Hangzhou Qinlv Company violates the principle of good faith by continuing to use and register "阳光超人" logo after the agency relationship with RECARO Company is terminated.

    The Court’s Opinions

    The court of first instance held that RECARO Company has the prior right on "阳光超人" trademark, but Shenzhen Xiwei Company has no prior right to use "阳光超人", which constitutes trademark infringement.

    Reasons:

    From March 2005 to November 2014, Hangzhou Qinlv Company used "阳光超人" on behalf of RECARO's STM child safety seat. The consumer connected the STM child car safety seats with the German original imported 阳光超人products, so the products bearing阳光超人 is equivalent to the STM child car safety seats. Therefore, when Hangzhou Qinlv Company is selling child safety seats on behalf of RECARO Company, the use of 阳光超人 in product description is the use behavior in the sense of trademark. The "阳光超人" has the remarkable characteristic of distinguishing between the sources of services goods.

    On January 21, 2016, Hangzhou Qinlv Company obtained the trademark registration certificate of No.15779283 "阳光超人", and used it on the child safety seat products which are not produced by RECARO Company. And "阳光超人" has had a certain impact in the continuous use process of nearly ten years. Therefore, it can be concluded that the use of "阳光超人" in RECARO's child safety seat products is earlier than the use by Hangzhou Qinlv Company.

    Shenzhen Xiwei Company is authorized by RECARO Company to act as the general agent of storchenmuhle STM child safety seat in China, but Shenzhen Xiwei Company has not proved that RECARO Company authorized it to use "阳光超人" as the name or trademark of storchenmuhle STM child safety seat.. So Shenzhen Xiwei Company should stop using "阳光超人". The court of first instance ordered Shenzhen Xiwei Company to stop the infringement immediately, compensate for the economic loss of CNY 100,000 and reasonable expense.

    Both Hangzhou Qinlv Company and Shenzhen Xiwei Company appealed to Beijing Intellectual Property Court against the first instance judgment.

    In the procedure of the second instance, Hangzhou Qinlv Company provided a judgment to prove that Hangzhou Qinlv Company was responsible for the promotion of "阳光超人" during the cooperation period with RECARO Company, and RECARO Company has no priority right. Shenzhen Xiwei Company submitted the Explanation on Shenzhen Xiwei Import and Export Co., Ltd. has the right to use "阳光超人" logo issued by RECARO Company to prove that Shenzhen Xiwei Company is authorized by RECARO Company to use the "阳光超人" logo.

    The court of second instance held that the chinese word "阳光超人” points to RECARO Company instead of Hangzhou Qinlv Company. Shenzhen Xiwei Company's use of "阳光超人" is authorized by RECARO Company which does not constitute infringement.

    The court of second instance made a detailed analysis based on the indication function, value orientation and interest formation of the logo, and concluded that "阳光超人" is an unregistered trademark having certain influence which belongs to RECARO Company. The court of second instance held that the product source of "阳光超人" not only pointed to RECARO, but also carried the good quality and reputation of "made in Germany", forming the unique interests attached to the logo, which also originated from the products of RECARO Company. To determine the ownership of the original benefits generated by the use of a certain logo, we should not examine who created the label itself, but what kind of goods that consumers associate the logo with. Then we can determine that the ownership of the corresponding logo interests. In this case, during the duration of the agency relationship between both parties, the cognition of "阳光超人" by relevant consumers is related to RECARO Company and its products. Hangzhou Qinlv Company claims that it is the original creator of “阳光超人”, and takes it as the reason to enjoy the trademark rights and interests. This claim has no legal basis, and the court does not accept it.

    Therefore, the court of second instance revoked the judgment of the first instance and rejected all the claims of Hangzhou Qinlv Company.

    Hangzhou Qinlv Company applied to Higher People's Court of Beijing. The Higher People's Court of Beijing confirmed the view of the judgment of the second instance and rejected the retrial application of Hangzhou Qinlv Company.

    Short Comment

    The case involves two layers of relationship:

    First, Between the original trademark owner and the agent who attached the Chinese brand name to promote, publicize and use, who has the right to own or use the Chinese brand?  Although Hangzhou Qinlv Company has played an important role in the selection, use and promotion of the "阳光超人" trademark, and is the owner of the registered trademark, but the court made the final determination that the RECARO also has the right to use "阳光超人" .Because the court held that the main factor of trademark right attribution is not who is the creator, but the source of the interests attached to the trademark and the cognition of consumers. This shows that the essence of trademark is only the source identification of goods or services, and the source of interest in the trademark is consumers' cognition of the goods or services associated with it.

    Second,How to solve the conflict of interest between prier user which has been used for ten years but not registered and the owner of registered trademark? In this case, although the court held that "阳光超人" is an unregistered trademark having certain influence which belongs to RECARO Company, it also commented on how to use the logo:that is Shenzhen Xiwei Company using the logo authorized by RECARO shoud be the same way as Hangzhou Qinlv Company as an agent before. This indicates that the use of 阳光超人 by RECARO or its agents is limited to the original scope of use. If it is beyond the original scope of use, there is still a risk of violating the registered trademark right of “阳光超人” of Hangzhou Qinlv Company. However, RECARO Company has the right to use 阳光超人 logo for specific goods due to its prior use, and Hangzhou Qinlv Company has the right to use the same trademark for similar products due to its registration. Is there likelyf to cause confusion for consumers? From the Angle of perfecting market order, we should make reasonable arrangement for the conflict of rights between them.

    [i] Please refer to the second trial Case No. (2017) Jing 73 Minzhong 1992, and the retrial case No. (2018) Jing Minshen 3688