By King & Wood Mallesons’ Healthcare Group
Guangdong JDB Beverage Company Limited (“JDB”) filed a lawsuit against Wong Lo Kat in Chongqing’s First Intermediate People’s Court (the “Court”), alleging that Wong Lo Kat’s advertisement slogan of “a bottle of Wanglaoji takes the fear of Shànghuǒ (i.e. excessive internal heat a cause of disease in Chinese perspective) away”, constitutes unfair competition. Although this case involved an advertisement slogan, it was heard in the court according to the Anti-unfair Competition Law rather than the Copyright and Trademark Laws, creating a novel cause of action.
KWM lawyers represented Wong Lo Kat in the first instance and made submissions on the validity of the use of such advertisement slogan by Wong Lo Kat based on the legislative purpose of the Anti-unfair Competition Law. We won this case for our client by obtaining a judgment of refusing all of the JDB’s claims entered with the first-instance court.
In its judgment, the Court recognized that the advertisement slogan of “a bottle of Wanglaoji takes the fear of Shànghuǒ away” is a direct statement of specific herbal beverages’ function to prevent internal heat, which in itself has no inherent distinction or significance. Nevertheless, through continued, frequent and extensive use by JDB for years, the advertisement slogan in question develops a second meaning which should be safeguarded by the protection under the Anti-unfair Competition Law.
Although it is the general principle under PRC intellectual property law that the designer and the user of a product shall own the rights, there are exceptions to this principle. When determining the interest ownership of a mark, along with taking creation, design and use of such mark into consideration, a comprehensive evaluation shall be made on the basis of the purpose of designing such mark and the actual benefit derived from using such mark, as well as other relevant factors.
As held by the Court, “[f]or the purpose of this case, despite the fact that the advertisement slogan involved in this case was created and used by the plaintiff, the advertisement slogan is tailor made for positioning and promoting the Wanglaoji branded herbal beverage products, and is an important method to promote and enhance the brand image of Wanglaoji.” The advertisement slogan in question, namely “*** takes the fear of Shànghuǒ away”, is an orientation statement of the product function whereas “a bottle of Wanglaoji” is the targeted product, both of which constitute a complete and indispensable description of the product. After cessation of JDB’s use of the trademark “Wanglaoji”, Wong Lo Kat, as the legal user of such trademark, is entitled to the legal interests and benefits of the advertisement slogan involved in this case that was tailor made for the brand “Wanglaoji” and has been an undivided part of such brand. Wong Lo Kat’s continued use of the advertisement slogan obviously aims at further maintaining or enhancing its original brand image with no bearing of subjective malice such as “hitchhiking”, harming others to obtain personal benefits or extorting by trick or by force. Thus, use of the advertisement slogan in question does not involve illegitimacy. The first-instance court ultimately rejected all of JDB’s claims.
Subsequent to the trademark dispute over “Wanglaoji” and between Wong Lo Kat and JDB, another case related to renamed advertisement between the parties arose, this case became another notable anti-unfair competition lawsuit. The first-instance court judgment has made thorough analysis and reasoning with regards to unfair competition behaviors of the advertisement slogan from its origination and specified clearly the legal interests being protected by the Anti-unfair Competition Law and application of this law.