Following the Supreme People''s Court''s issuance of the second-instance civil judgment [Case No.: (2022) Supreme People’s Court No. 313] on the trademark infringement dispute and unfair competition dispute between Nanjing Huaxia Grape Winery Co., Ltd., Nanjing Golden Hope Wine Co., Ltd., Nanjing Lafei Manor Wine Co., Ltd., Shenzhen Jun Teng Wine Co., Ltd. and Chateau Lafite Rothschild, the 12-year tug-of-war between "LAFEI MANOR" and "LAFITE" has finally been settled. This judgment was also rated as one of the top ten intellectual property cases in Chinese courts in 2023.
The LAFITE wine of Chateau Lafite Rothschild (hereinafter referred to as "Chateau Lafite") officially entered the China mainland market in the 1990s. On October 28, 1997, its predecessor registered two wine trademarks, No. 1122916 "LAFITE" and No. 1122917 "CHATEAU LAFITE ROTHSCHILD" in China. Since the 1980s, various Chinese newspapers, periodicals and books have recorded the history of "LAFITE" and "拉菲"(LAFITE in Chinese). After long-term use, they have gained high popularity, and "LAFITE" and "拉菲"(LAFITE in Chinese) have established a solid connection. Since February 2011, there have been many effective judgments confirming that “LAFITE” and "拉菲"(LAFITE in Chinese) have formed a de facto unique corresponding relationship on wine, and the trademarks have multiple well-known trademark recognition records.
Nanjing Golden Hope Wine Co., Ltd. (hereinafter referred to as "Golden Hope Company") applied to the Trademark Office to register the "拉菲庄园" (LAFEI MANOR in Chinese) trademark No. 4578349 on wine in 2005, and obtained the registration in 2007. In 2005, Nanjing Huaxia Grape Winery Co., Ltd. (hereinafter referred to as "Huaxia Company") was established. In 2006, Nanjing Lafei Manor Wine Co., Ltd. (hereinafter referred to as "Lafei Manor Company") was established. The three companies have consistent information in terms of actual controllers and business addresses. The purpose of establishing the latter two companies is to cooperate with Golden Hope Company in establishing a supply and sales system for the allegedly infringing goods. In 2011, "LAFEI MANOR" wine was officially launched on the market. In actual publicity, the infringers leveraged the historical heritage and reputation of Chateau Lafite''s wines to publicize and promote the "LAFEI MANOR" wine. Also in 2011, Chateau Lafite filed a dispute application with the Trademark Review and Adjudication Board against Golden Hope Company’s "拉菲庄园" (LAFEI MANOR in Chinese) trademark, requesting the cancellation of the trademark. Trademark Review and Adjudication Board supported Chateau Lafite. Golden Hope Company was dissatisfied and filed a first-instance lawsuit, but the court of first instance did not support its claim. It appealed and initiated a second instance lawsuit. The Beijing High Court supported its request and changed the first instance judgment to uphold the trademark. Chateau Lafite was dissatisfied with the second-instance judgment and filed a retrial with the Supreme Court. The Supreme Court issued the retrial judgment in 2016 and revoked the second-instance judgment. Thus, the "拉菲庄园" (LAFEI MANOR in Chinese) trademark is deemed to have never been effective and valid. In 2017, Chateau Lafite filed a civil lawsuit for trademark infringement and unfair competition against seven defendants, including Golden Hope Company, Huaxia Company and Lafei Manor Company. The court of first instance held that the seven defendants including Golden Hope Company constituted trademark infringement and unfair competition, ordered them to stop infringement, and applied punitive damages of RMB 79.17 million. Golden Hope Company and others were dissatisfied and filed an appeal. The Supreme Court held in the second instance that in the process of applying for and using the "拉菲庄园" (LAFEI MANOR in Chinese) trademark, Golden Hope Company and others have demonstrated malicious attachment to the "LAFITE" trademark of Chateau Lafite and have not acted in good faith. Their use of the "拉菲庄园" (LAFEI MANOR in Chinese) and "LAFEI MANOR" constitutes trademark infringement. Additionally, by leveraging the historical heritage and reputation of Chateau Lafite''s wines for promotional purposes, they have engaged in false advertising. The malicious intent of Golden Hope Company and others is evident, with serious infringement, prolonged duration, large scale, wide scope, and substantial profits from the infringement. The consequences of this infringement are severe, having caused actual confusion among consumers and damaged the reputation of Chateau Lafite''s wines. Therefore, punitive damages should be applied in accordance with Chateau Lafite''s request.
This case provides a valuable approach to, after the declaration of invalidation, whether an infringement claim can be asserted for the use of a trademark before its invalidation. In response to this case, the Supreme Court stated that the judgment pointed out that if a trademark registrant bears an intention to capitalize on the reputation of others, its trademark use should not be protected. This advocates for business entities to participate in market competition in a manner that is honest and good faith, demonstrating the people''s courts'' strict punishment and determination against "riding on the fame of well-known brands" and "freeloading". During the case hearing, the infringer also argued that their reliance interest during the validity period of the trademark should be protected. However, the Supreme Court clearly stated that only reliance interests in good faith should be protected. If an actor is aware that the basis of their trust is illegal or clearly violates the law and still carries out the corresponding actions, their subjective intent cannot be considered good faith, and their so-called reliance interest should not be protected. The Supreme Court further pointed out that as a peer in the industry, one should reasonably avoid well-known trademarks when registering a trademark. However, Golden Hope Company still proceeded with the registration, which cannot be considered an act of good faith. This fundamentally negates the basis for reliance interest. Therefore, it can be concluded that, after the declaration of invalidation of a trademark, whether an infringement claim can be asserted for the use of the trademark before its invalidation depends on whether there is a reliance interest in good faith. If the trademark registrant has acted in good faith from the registration to the use, without any possible malicious actions, then the registrant''s registration and use constitute a reliance interest in good faith and should be protected, and the court should not deem it as an infringement. Conversely, if the registrant does not avoid well-known trademarks in the same industry during registration, then fundamentally, there is no basis for reliance interest. It is thus feasible to claim trademark infringement for the use before the invalidation of the trademark, demanding compensation for losses from the infringer. If the infringement continues, a demand to cease the infringement can also be made.