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Fast trademark transfer of multinational brand licensing disputes in litigation

author:CHISPO ATTORNEYS AT

time:2021-11-22

With people’s attention to corporate intellectual property rights, trademarks have become an indispensable asset in business operations. Companies not only need to use their unique advantages to attract the attention of consumers, but they also need to establish themselves in the development of globalization. Disputes involving the authorization of multinational distributors, manufacturers and brand owners have always been a concern of all parties.

The foreign brand authorizes the Chinese to produce and distribute related OEM products and register the relevant trademarks in China. When the partnership breaks down, the ownership of the trademark is actually very clear. Many people have talked about it before, so I won’t repeat it here. . This article mainly shares the Balsam case, through the court's decision to compulsory transfer to make it easier to transfer the ownership of trademark rights.

Timeline:

Russia Balsam Company is an enterprise legal person of the Russian Federation and has successively registered multiple trademarks with graphics and text in the Russian Federation. Balsam company's wine products have won many awards and honors in the Russian Federation.

Chuanfeng Company was registered and established on December 7, 1999. Russian Balsam Company and Chuanfeng Company signed HLSF-168 "Contract" on April 21, 2003 and HLSF-168 signed on April 21, 2003 Supplementary Agreement to Contract No. 2, signed on June 23, 2006, “Supplementary Agreement No. 2 to HLSF-168 Contract Signed on April 21, 2003”, stipulating that Russia's Balsam Company will supply Chuanfeng Company to the two parties. It was agreed to extend the validity of the HLSF-168 contract to December 31, 2006.

Russian Balsam Company and Chuanfeng Company signed the "Cooperation Agreement for the Production of Alcoholic Products in China" (hereinafter referred to as the "Cooperation Agreement") on May 19, 2003, and agreed that the two parties intend to establish a joint venture company in China for production. Russia’s Balsam Company’s products, investment ratios and methods are detailed. Among them, Russia’s Balsam Company’s investment includes complete sets of wine filling equipment, production and preparation equipment, laboratory equipment, transportation tools, trademark use rights and production technology, raw materials (Ukraine) Sulixiang tincture wine puree, honey deer antler wine puree, etc.); both parties must provide various procedures for handling the joint venture; the trial operation of the joint venture is tentatively scheduled for October 2003.

Russia's Balsam Company submitted the Russian version of the "Abolition Agreement" signed on May 26, 2003, but did not provide the Chinese version. Chuanfeng Company and its legal representative, Yao Chuanming, have never signed an agreement that only has the Russian version but not the Chinese version.

On March 16, 2004, Party A’s Russian Balsam Company and Party B’s Chuanfeng Company signed a "Letter of Authorization."

In 2001, 2003, and 2006, the two parties signed three batches of supply contracts, and the Russian side continued to supply wine from 2000 to 2006.

Balsam appeal:

1. Declare that the Chinese version of the "Authorization Letter" is invalid, and at the same time confirm the cancellation of any authorization of the Russian version of the "Authorization Letter" by the Russian Balsam Company to Chuanfeng Company;

2. Confirm that the transfer of registered trademarks between Chuanfeng Company and Suifenhe Balsam Company is invalid;

3. Confirm that the trademark application and registration under the name of Suifenhe Balsam Company belong to the Russian Balsam Company;

4. Chuanfeng Company and Suifenhe Balsam Company will unconditionally assist Russian Balsam Company in transferring the trademark registration and trademark application involved to Russia Balsam Company within 30 days, and will be transferred by Chuanfeng Company and Suifenhe Balsam Company. Bear all related expenses;
5. Confirm that Chuanfeng Company and Suifenhe Balsam Company’s use of the registered trademark involved in the case constitutes a trademark infringement against Russian Balsam Company;

6. Chuanfeng Company and Suifenhe Balsam Company immediately stopped the infringement of the trademark involved in the case;

7. Confirm that Chuanfeng Company and Suifenhe Balsam Company's actions to prevent Russian Balsam Company's related products from entering the Chinese mainland market by means of intellectual property customs filing and initiating trademark infringement litigation constitute trademark infringement;

8. Chuanfeng Company and Suifenhe Balsam Company jointly compensated Russia Balsam Company for economic losses and the reasonable expenditure in this case totaled RMB 500,000.

Key point:

During the retrial, the Supreme Court believed that the focus of the dispute between the parties in this case was:

1) The question of whether the Chinese version of the "Power of Attorney" is valid;

2) The relevance of the "Abolition Agreement" to this case and whether it should be appraised;

3) Whether the trademark involved should be returned to Balsam Company in Russia;

4) Whether the alleged infringement of Chuanfeng Company constitutes an infringement of the trademark right of Russia Balsam Company.

Court opinion:

The Chinese version of the "Power of Attorney" is the expression of the intention of Russia's Balsam Company to unilaterally authorize Chuanfeng Company, and the counterpart of the unilateral civil legal act is Chuanfeng Company. When the Russian Balsam Company signs and seals the authorization letter, the authorization is established without the need for Chuanfeng Company to give consent. Russia Balsam Company can change or revoke its authorization at any time, but it should notify Chuanfeng Company.

Although the content of the Chinese translation of the Russian version of the "Power of Attorney" is not exactly the same as the content of the Chinese version of the "Power of Attorney", there is no essential difference between the two in terms of the purpose of signing the power of attorney and the content of authorizing Chuanfeng to use the trademark. Russian Balsam Company, Chuanfeng Company and Suifenhe Balsam Company respectively submitted different Chinese translations of the Russian version of the "Power of Attorney" during the retrial of this case, and none of them changed the Russian Balsam Company's signing of the Chinese and Russian versions of the " The purpose of the Power of Attorney and the expression of the intention to authorize Chuanfeng to use the trademark will not affect the court's determination of the validity of the Chinese version of the Power of Attorney. Secondly, the Russian Balsam company has civil capacity. It has signed and affixed the official seal on the Chinese version of the "Power of Attorney". The company has no evidence to prove that its intention is not true, and the content of the Chinese version of the "Power of Attorney" does not violate The mandatory provisions of laws and administrative regulations do not violate public order and good customs. Therefore, Russia's Balsam Company's claim that the Chinese version of the "Power of Attorney" is not an expression of its true meaning, should be invalidated or revoked, lacks factual and legal basis.

The content of the "Authorization Letter" of the Chinese version of the "Cooperation Agreement" that Russia Balsam Company has not actually fulfilled by the two parties is that the Russian Balsam Company authorized Chuanfeng Company to register and use the trademark involved in the case in China, and the "Cooperation Agreement" The Sino-Russian Balsam Company’s agreement to invest in the joint venture company with the right to use the trademark is different. The fact that the two parties have signed the "Abolition Agreement" does not prove whether the Chinese version of the "Authorization Letter" is the true meaning of the Russian Balsam Company. In the case of confirmation, the Russian Balsam Company does not need to submit evidence to prove the fact that the agreement has not been fulfilled.

The purpose of signing the "Letter of Authorization" is to ensure the performance of the sales and purchase contract between Russia Balsam Company and Chuanfeng Company. Judging from the content signed in the Chinese version of the "Authorization Letter", Russian Balsam Company is based on the sale and purchase contract relationship between it and Chuanfeng Company, that is, Chuanfeng Company is the distributor of Russian Balsam Company's related alcohol products in China. In order to better sell its products, Chuanfeng Company was granted the registration and use of its registered trademark. The signing purpose of the "Power of Attorney" and the content of the authorization have made it clear that the trademark right in the case originally belonged to the Russian Balsam Company. It was necessary to authorize Chuanfeng Company to use its trademark in order to sell the tiger head series wine produced by the company. Once the sale and purchase relationship between the two parties is terminated, Russia's Balsam Company will no longer supply goods, and Chuanfeng Company, as a distributor, cannot organize the production of Tiger Head wine in the name of Russian Balsam Company on its own. termination. All parties in this case recognized the fact that Russian Balsam Company ceased to supply Chuanfeng Company after December 31, 2006. Therefore, Russian Balsam Company claimed that Chuanfeng Company should return the trademark involved in the case.

As the distributor of Russian BalsamCompany in China, Chuanfeng Company used the trademark involved in the case and sold the above-mentioned products after accepting the supply of Tiger Head series wine from RussianBalsamCompany, which has a legal basis. Both the Chinese and Russian versions of the "Authorization Letter" did not specify the time limit for the Russian Balsam Company to authorize Chuanfeng Company to use the trademark involved in the case. Although the Russian Balsam Company filed an administrative procedure for invalidation of the trademark registered by Chuanfeng Company on March 2, 2007, the Russian Balsam Company did not notify Chuanfeng Company to authorize it before filing the lawsuit in December 2014. The registration period for the trademark involved in the case expired, and Chuanfeng Company and Suifenhe Balsam Company did not claim to return the trademark rights involved. Therefore, the use of the trademark in question by Chuanfeng Company before receiving a copy of the complaint from Russia Balsam Company does not constitute an infringement of the case involved. Russian Balsam Company did not submit evidence that Chuanfeng Company and Suifenhe Balsam Company separately organized the production and sale of Hutou series wine in the name of the company. Therefore, Chuanfeng Company and Suifenhe Balsam Company received Russian Balsam The alleged infringement before the copy of the Zam Company’s complaint does not constitute an infringement of the trademark rights of the Russian Balsam Company involved in the case. This court does not support the relevant litigation request of Russia's Balsam Company.

Final Result:

Suifenhe Chuanfeng Economic and Trade Co., Ltd. and Suifenhe Balsam Wine Co., Ltd. assisted in the transfer of all the trademarks involved in the case to Balsam Open Joint-Stock Company in Ussuriysk, Russia within 30 days from the effective date of this judgment. Bear all costs and dismiss other claims of Balsam OJSC in Ussuriysk, Russia.

Classical meaning:

1. The first case in China where a court forced the transfer of trademark rights.

2. Clarified the judgment rules that foreign companies authorize Chinese sellers to apply for trademark registration in China and have the right to return to the Chinese side to register trademarks after the partnership breaks down, which is of instructive significance.

Summary:

This case provides a new idea for the right holder to confirm the right: through the forced transfer at the court level, the trademark ownership can be directly transferred to the right holder.

If similar disputes have occurred before, the licensor usually needs to apply for trademark invalidation first, and then re-apply for the trademark. This process is not only time-consuming and laborious, but may also risk not being authorized due to different procedures.

Another point involved in this case is the handling method when Article 15 of the Trademark Law exceeds the five-year time limit.

Article 15 of the Trademark Law stipulates a five-year time limit. If the five-year period expires and it is no longer possible to maintain its own trademark rights through Article 15 and disputes between the distributor and the brand party is involved, this case provides new ways and ideas for the brand party to protect its own rights.

At the same time, this case also focuses on the matters that the dealer should pay attention to when signing the contract at the beginning.

In this case, even if the reputation of the brand locally or even in China is entirely manufactured and maintained by the distributor, the ownership of the trademark itself belongs to the brand owner. Therefore, in the initial signing of the contract, the issue of trademark ownership should be clearly stipulated, so as to avoid the loss of the bidding money in the later stage.

Going back to this case, although our country is not a case law country, and our law currently does not have such a provision, this case is a case that lasted for five years and was finally retrial by the Supreme People's Court. Therefore, we think it has guiding value. In addition, we believe that this is advancement in the field of intellectual property rights, which can save a lot of time and energy for right holders, and is also conducive to faster case closure.