Kirwin Lee & Daniel Chew
As part of a larger effort to reduce carbon emission in a country which has been the world’s largest automotive market since 2009, the Chinese government has turned to electric vehicles as one of the solutions and has been encouraging consumers to consider the more environmentally friendly alternative to conventionally fuelled vehicles.
It is therefore unsurprising that China has now become an important market for Elon Musk, co-founder and CEO at Tesla. Tesla – an American electric vehicle manufacturer and energy storage company based in Palo Alto, California – has established its presence in China since 2013 and has been improving efforts to woo Chinese drivers.
These days it is not uncommon to see Tesla’s showrooms in major Chinese cities crowded with potential buyers and earlier this year the company confirmed its revenue in China amounted to $1 billion in 2016.
On the Intellectual Property (IP) front there has also been some good news for Tesla in China. Recently, the Beijing IP Court issued a ruling in favour of Tesla against the decision of the Trade Mark Review and Adjudication Board (TRAB) to maintain a third party registration of a disputed trade mark.
In 2012, Beijing Huarui Kaisheng Trading Company (‘Huarui Kaisheng’) applied for the registration of the ‘Tesla’ trade mark with the China Trade Mark Office (CTMO). The goods designated in the application include optical apparatus and instruments, vehicle batteries, ignition batteries, high tension batteries, and battery chargers. The trade mark was successfully registered on 14th April 2014.
The following day, Tesla filed an invalidation claim before the TRAB on the grounds that Huarui Kaisheng’s ‘Tesla’ registered mark is similar to Tesla’s prior registered trade mark, and it had been registered in bad faith with malicious intention to imitate. According to the CTMO register, Tesla’s prior mark ‘TESLA’ covers goods such as electric vehicle engines, battery powered and high performance sports cars, and electric vehicles. The TRAB dismissed the application for invalidation on the ground that Tesla’s claim was unsubstantiated due in part to the different goods and maintained Huarui Kaisheng’s ‘Tesla’ mark.
Tesla then appealed against the TRAB’s ruling before the Beijing IP Court. During the trial, Tesla submitted evidence such as academic textbooks, national standards, and industry practice in order to demonstrate that batteries (for vehicles) and electric vehicles are closely related. Tesla alleged that the relevant public would think there is a specific connection between the two identical trade marks and there is, as a result, a likelihood of consumers being confused as to the sources of the goods. The Court agreed with Tesla that batteries are an important part of electric vehicles and are often sold with the vehicles. The Court further noted that consumers would expect to replace the battery with an authentic one from the manufacturer of the electric vehicle. Accordingly, the Court cancelled the TRAB decision and ordered it to make a new decision regarding the disputed trade mark.
This case helps to debunk the myth that courts in China tend to decide in favour of local companies. On the contrary, the case demonstrates that courts in China are becoming increasingly reasonable and fair in resolving IP disputes especially when foreign companies are involved. A lot of effort has been made to make IP right owners more comfortable in bringing a dispute, even when it is against a Chinese corporation.
A similar trade mark victory in China emerged earlier this year by US sports apparel company Under Armour against its Chinese copycat Uncle Martian.
The story began when Uncle Martian debuted in June last year by Chinese sportswear manufacturer Tingfei Long Sporting Goods, who have had a long history of manufacturing off-brand trainers. Tingfei Long, who are based in Fujian, made an aggressive move in April 2016 to capitalise on its better-known competitor’s success by releasing a number of photos of their goods on Weibo (think China’s own version of Twitter) bearing a ‘UM’ logo looking eerily similar to Under Armour’s ‘UA’ logo. Tingfei Long initially denied allegations that its logo bears an uncanny resemblance to that of Under Armour, but later made brazen insinuations to a connection with the Baltimore-based sportswear company by posting crudely doctored photos of Under Armour’s products. As a matter of course, Under Armour filed a massive trade mark infringement lawsuit against Tingfei Long in June 2016 seeking 100 M RMB (over £11 million) in damages, and obtained a preliminary injunction in its favour in November 2016.
Subsequently, the Fujian People’s Higher Court issued a permanent injunction on 19th June 2017, ordering Tingfei Long to stop using the ‘Uncle Martian’ trade mark, destroying all their infringing products, to pay approximately £230,000 in damages, and publish a statement to “eliminate the adverse effect” of its infringement.
Based on this and the Tesla case, it appears Chinese courts are becoming increasingly willing to provide preliminary injunctive relief to Western companies, provided that meaningful and incontestable evidence is presented when filing a request for the injunction.
The Under Armour case also demonstrates that Chinese courts outside the IP centres of Beijing, Shanghai and Shenzhen are starting to hand down rulings that are consistent with their top-tier counterparts. This is reassuring and encouraging for many foreign companies who wish to enforce their IP rights against defendants based in less well-known jurisdictions in the country, such as Fujian.
Finally, both decisions highlight to any company with an interest in the Chinese market the importance of registering IP rights in the country, since the key to both Tesla and Under Armour’s success essentially stems from the fact they already had trade mark registration securely in place before pursuing legal action, rather than solely relying on repute as a foreign brand.
About the authors: Kirwin Lee, is a UK and European Patent Attorney at Haseltine Lake. Kirwin joined the Electronics and Communications team at Haseltine Lake in 2017 as a UK and European patent attorney, having previously worked in another leading intellectual property firm based in London. She specialises mainly in the areas of consumer electronics, medical devices, software, automotive electronics, and aerospace engineering.
Being fluent in both Mandarin and Cantonese, Kirwin regularly visits Asia and in particular China to visit clients. She has authored a number of articles on the topic of intellectual property practice in China and she is always happy to communicate with clients in Chinese.
Kirwin is a Fellow of the Chartered Institute of Patent Attorneys and a member of the European Patent Institute.
Daniel Chew, is a Partner at Haseltine Lake. Daniel graduated with an honours degree in Electronics and Electrical Engineering from the University of Surrey, with final year specialisation in radio frequency and telecommunications. He stayed on to obtain his PhD in mobile and satellite communications. During this time, he published a number of research papers in journals and international conferences. He is also an inventor on a granted US patent.
Daniel entered the patent profession in 2004, and prior to joining Haseltine Lake, he trained and worked in a number of firms of Patent Attorneys in London.
Daniel is the lead partner of Haseltine Lake’s China group, and he is a frequent visitor to Asia with particular focus on clients in China, Taiwan and the wider South East Asia region. He is a fluent Mandarin speaker.
Daniel is a member of the Institution of Engineering and Technology (IET) and the International Trade Mark Association (INTA).