Invalid trademark infringement dispute, Lavande Hotel wins both trials

Compiled from: IP Beijing
 
Recently, the Beijing Intellectual Property Court concluded a trademark infringement dispute case involving "麗枫" and "麓枫", "麗枫酒店" and "麓枫酒店". Can you tell them apart? Does the use of a registered trademark that has been declared invalid constitute trademark infringement?

 
 

Case review
Lavande Comfort Hotel Management (Shenzhen) Co., Ltd. (referred to as Lavande Company) obtained the license to use the registered trademarks No. 12948606 "麗枫" and No. 13628121 "LAVANDE麗枫酒店" graphic and text combination (referred to as the rights trademarks) on September 15, 2015, authorized by 麗枫 Group Co., Ltd. The rights trademarks are registered for use in Class 43 services such as accommodation (hotels, boarding houses).
 
Lifeng Company opened the Lifeng Hotel (Chenzhou Xinglong Pedestrian Street Branch) in Beihu District, Chenzhou City, and prominently used "Lifeng Hotel" and "LAVANDE" on the hotel's exterior walls, signs, etc.
 
Lufeng Hotel in Beihu District, Chenzhou City (referred to as Lufeng Hotel) was approved for establishment on February 3, 2015, originally named Lufeng Hotel in Beihu District, Chenzhou City. On March 21, 2016, Xingzhihui Company registered trademark No. 16203871 "Lufeng Hotel" for services such as lodging, restaurants, and hotels in Class 43 after approval. On March 30, 2016, Lufeng Hotel obtained the trademark usage right for "Lufeng Hotel" through authorization from Xingzhihui Company. On January 8, 2020, Xingzhihui Company transferred the trademark to Lufeng Hotel operator Xu Ai and third party Xu Jun.
 
On June 13, 2020, the National Intellectual Property Administration approved the transfer and issued a "Trademark Transfer Certificate." On May 13, 2021, trademark No. 16203871 "Lufeng Hotel" was declared invalid according to law.
 
Lifeng Company believed that Lufeng Hotel, without permission, used the "Lufeng" mark similar to Lifeng Company's involved trademark in its hotel operations, infringing on Lifeng Company's trademark exclusive rights. Therefore, Lifeng Company sued Lufeng Hotel in court, requesting the court to order Lufeng Hotel to cease infringement and compensate for economic losses of 460,000 yuan and reasonable expenses of 40,000 yuan.
 
After trial, the first-instance court held that Lufeng Hotel prominently used the "Lufeng Hotel" mark on its hotel exterior walls, signs, lobby, and guest room supplies, which was very similar in the first character's shape and identical in the last character to the distinctive text "Lifeng" of the involved trademark, constituting a similar mark. Thus, Lufeng Hotel's involved actions constituted trademark infringement and should bear legal liability for ceasing infringement and compensating for losses. Given that Lufeng Hotel had already ceased the infringing actions, the court ordered Lufeng Hotel to compensate Lifeng Company for economic losses of 200,000 yuan and reasonable expenses of 20,000 yuan. Lufeng Hotel, dissatisfied with the first-instance judgment, appealed to the Beijing Intellectual Property Court, requesting the court to overturn the first-instance judgment.
 
Lufeng Hotel argued that it had acquired the legally registered "Lufeng Hotel" trademark in good faith with low subjective fault, and its involved use was the overall use of "mountain and maple leaf graphic + Lufeng Hotel + LuFeng Hotel" and "mountain and maple leaf graphic + Lufeng Hotel," not the prominent use of the two characters "Lufeng." The usage method significantly differed from the involved trademark "Lifeng," would not cause consumer confusion or misidentification, and Lifeng Company provided no evidence of actual harm. Therefore, the first-instance compensation amount was too high, and holding it liable for damages due to trademark invalidation was also a misapplication of Article 47 of the Trademark Law.
 
 
[1] Court Opinion
Lufeng Hotel provides accommodation services, which are identical to the service categories designated for the trademark rights claimed by Lifeng Company, constituting the same type of service. Lufeng Hotel prominently uses combined logos containing the text "Lufeng Hotel" on its exterior walls, signage, lobby, and guest room supplies, where "Lufeng Hotel" forms the main identifying text of the relevant combined logos, and the distinctiveness of "Lufeng" is clearly higher than that of "Hotel." Therefore, "Lufeng" constitutes the distinctive identifying text of the aforementioned combined logos used by Lufeng Hotel. Compared with the trademark rights, the distinctive identifying text "Lufeng" in the combined logos used by Lufeng Hotel is very similar in the first character's shape and identical in the last character to the distinctive identifying text "Lifeng" of the trademark rights, making it difficult for consumers to clearly distinguish with ordinary attention. Thus, it should be determined that the two constitute similar logos.
 
Therefore, Lufeng Hotel's act of prominently using combined logos containing the text "Lufeng Hotel" on its exterior walls, signage, lobby, and guest room supplies constitutes using logos similar to the trademark rights in the same type of service, which is likely to cause consumer confusion or misidentification regarding the source of the service, infringing on Lifeng Company's exclusive right to use the registered trademark, and should bear corresponding legal liability in accordance with the law.
 
In summary, the Beijing Intellectual Property Court rejected the appeal and upheld the original judgment.
 
 
《 [1] The People's Republic of China Trademark Law
[2] Article 47
A registered trademark declared invalid in accordance with Articles 44 and 45 of this Law shall be announced by the Trademark Office, and the exclusive right to use the registered trademark shall be deemed never to have existed.
 
The decision or ruling to declare a registered trademark invalid shall not have retroactive effect on judgments, rulings, or mediation statements made and executed by people's courts in trademark infringement cases, or on decisions made and executed by administrative departments for industry and commerce in trademark infringement cases, or on trademark transfer or licensing contracts that have been performed prior to the declaration of invalidity. However, losses caused to others by the malicious intent of the trademark registrant shall be compensated.
 
If not returning trademark infringement compensation, trademark transfer fees, or trademark usage fees in accordance with the preceding paragraph clearly violates the principle of fairness, they shall be returned in whole or in part.
 
[1] The author's perspective
A registered trademark that has been declared invalid means that all uses by its registrant during the trademark registration period are not protected by law, and the registrant shall bear corresponding legal liability for losses and consequences caused by such use, which is no different from ordinary trademark infringement. When trademark infringement is established, the court does not need to determine whether the infringer should bear compensation liability based on malicious intent, but when determining the specific amount of compensation, the subjective malicious intent of the infringer must be considered.