With the approval from the Trademark Office of the former State Administration for Industry and Commerce of China, the U.S.-based Callaway Golf Company registered No.7683422 trademark "CALLAWAY and its figure" （trademark in question） on goods including hat brims, hats, and hats with a brim.

    In 2017, Zhangjiagang Huaxia Headgear Co., Ltd. （Huaxia） participated in the 121st China Import and Export Fair （a.k.a. Canton Fair）。 Callaway complained to the Fair organizer about Huaxia's infringement, leading to Huaxia's written promise on May 5, 2017, which guaranties 1 million yuan for any sort of future repeated infringements of Callaway's IP rights .

    On May 4, 2018, Huaxia distributed a brochure at the 123rd Canton Fair. "3.1 CUSTOMERS （brands）_SPORTS BRANDS" is printed at the top of page 25 of the brochure. The third icon is the trademark in question. Appeared before and after the trademark in question, there are trademark patterns of many domestic and foreign brands including NEW ERA and Nike. In addition, there is "4.1 CUSTOMERS （brands）_SPORTS BRANDS" in the service column of Huaxia's website. The third icon is the trademark in question. Third party trademarks including NEW ERA, Nike appear again. The Chinese translation of "CUSTOMERS （brands）" is "客户（品牌）", and that of "SPORTS BRANDS" is "体育品牌".

    Callaway claimed that Huaxia had committed trademark infringement, unfair competition, and requested an injunction and monetary damages of 1 million yuan as promised by Huaxia before.

    Huaxia declined both accusations. It argued even there was an infringement, the violation should be deemed very minor and not proportionate to damages of 1 million yuan. Its previously-promised 1 million yuan should be disregarded for consideration of unfair competition claims of the current case.

    The trial court awarded an injunction on Huaxia's use of Callaway's No. 7683422 trademark in its brochures and website, and 1 million yuan in damages but dismissed Callaway's other claims.

    Unwilling to just move on, Huaxia appealed to Guangzhou IP Court. The appellate court held that based on the facts ascertained by the court of first instance, both Huaxia and Callaway were engaged in production and sales of hats and apparels. The two parties competed in the similar scope of business. Huaxia's publicity of relevant false contents in its company brochures and websites was sufficient in causing confusion among the relevant public. Its false publicity act violates the principle of good faith and business ethics, and the accused act is subject to unfair competition clearly provided by the law, which sanctions an injunction and damages. In this connection, Guangzhou IP Court rejected Huaxia's appeal and sided with the trial court.

    Source: China IP News