Unitalen Client CHATEAU LAFITE ROTHSCHILD Won a Trademark Infringement Case and Received 5 Million Yuan in Compensation

February 22, 2022

Case Brief:

CHATEAU LAFITE ROTHSCHILD (Chinese name as "拉菲酒庄") ranks first among the five top wineries in France. Since the 1990s, the wines of CHATEAU LAFITE ROTHSCHILD formally entered the Chinese market. After a long period of publicity and use, the trademark No. 1122916 "LAFITE" and the trademark No. 6186990 "拉菲" (the Chinese name of "LAFITE") of CHATEAU LAFITE ROTHSCHILD have enjoyed a high reputation in the wine industry in China and around the world. The trademark "LAFITE", as a well-known trademark, has been protected in trademark administrative procedures, administrative litigations and civil litigations for many times, and the trademark "拉菲" once was recognized as a well-known trademark and obtained cross-class protection.

The three defendants, without authorization, prominently used the marks "CHATEAU LAFITE", "拉斐水岸" (English name as "CHATEAU LAFITE"), and "拉斐" (English name as LAFITE) on the community gate and supporting facilities of the properties for sale involved in the case and in the WeChat official account and other advertisement activities, on the walls, stair armrests, sand tables, sales brochures, disposable paper cups and the like of the Beijing marketing center of the properties for sale involved in the case, on the official website, and in relevant video ads.

CHATEAU LAFITE ROTHSCHILD believed that the above-mentioned acts of the defendants infringed on its exclusive right to use its registered trademarks and filed a lawsuit with the Beijing Intellectual Property Court. The Beijing Intellectual Property Court found that the infringement was true, and ordered the defendants to stop the infringement and sales, and compensate the plaintiff for economic losses and reasonable expenses totaling 5 million yuan. The Beijing High People's Court upheld the original judgment.

Case analysis:

First, on the issue of whether the name of the properties for sale constitutes trademark use.the defendants in this case held the opinion that the use of the name of the properties for sale was reasonable use to introduce, publicize and indicate the location of the properties for sale. However, in cases such as the "星河湾(Star River)" case no. Min Zhong 102 (2013) heard by the Supreme People's Court and the "大悦城(Joy City)" case no. Jing 73 Min Zhong 798 (2017) heard by the Beijing Intellectual Property Court, the courts all held that the names of properties for sale actually play a role in identification of the properties for sale and are also commercial marks, and that the use of the names of properties for sale is use of trademarks. In addition, based on the case of "百家湖" (Baijia Lake) and the like, Unitalen attorneys discussed the application of "fair use" should include the case where the words or characters contained in the name of properties for sale are the place names in the registered trademarks of others. The alleged infringement acts in this case are not "fair use". Both the first-instance court and the second-instance court supported the claim of Unitalen attorneys, and found that the use of the marks in the name of properties for sale and other places constitute trademark use because the marks had the function of indicating the source of goods or services.

Second, on the cross-class protection of well-known trademarks. In this case, the trademarks claimed by CHATEAU LAFITE ROTHSCHILD were designated for use in goods of "alcoholic beverages" etc. in class 33, while in the alleged infringement acts, the marks were used in the name of properties for sale, the supporting facilities of the community, the marketing place of the properties for sale, and relevant advertisements. In accordance with "A Letter of Reply on How to Determine the Class of "Commercial Residential Building" (Trademark Letter [2003] No. 32) issued by the Trademark Office of the State Administration for Industry and Commerce, the alleged infringement acts should fall within the services of real estate management in class 36 and the services of housing construction and other services in class 37. So this case involves cross-class protection of registered well-known trademarks. During the litigation, Unitalen attorneys explained the damage brought about by the alleged infringement acts to the interests of CHATEAU LAFITE ROTHSCHILD as the owner of the registered well-known trademarks mainly from the two aspects of "confusion" and "dilution".

The court of first instance determined that the alleged infringement acts caused cross-class confusion merely based on factors such as the distinctiveness and popularity of the plaintiff's trademarks, the degree of awareness of the well-known trademarks among the public related to the accused marked goods, the degree of similarity of the marks and the relational degree of the goods, and the specific use of the accused marks. The court of first instance did not comment on whether the alleged infringement acts weakened the distinctiveness of the plaintiff's well-known trademarks and diluted the trademarks.

The court of second instance affirmed that it was appropriate for the court of first instance to determine that the use of the accused marks infringed the exclusive right to use the well-known trademarks of CHATEAU LAFITE ROTHSCHILD from the perspective of "cross-class confusion". Moreover, the court of second instance determined that the alleged infringement acts were sufficient to weaken the distinctiveness of the well-known trademarks on the basis of the prominence and reputation of the well-known trademarks, the degree of overlap of relevant public, the degree of similarity of the marks, and the defendants' emphasis on elements of wine and red wine in the properties for sale, thereby fully supporting the claims of "confusion" and "dilution" of CHATEAU LAFITE ROTHSCHILD.

Third, on the amount of compensation. In order to prove the defendants' possible profits by infringement, on one hand, Unitalen attorneys collected a large amount of evidences, including the query report of Huailai real estate exchange center on the defendants' real estate transaction data (proving that the recorded sales amount of the properties for sale involved in the case reached 3.06 billion yuan), China Real Estate Yearbook (proving that the average profit rate of real estate is about 10%), etc.; on the other hand, they also collected relevant evidences to show that the defendants highlighted the theme of red wine and the "拉菲" wine-like quality of the properties for sale involved in the case, emphasizing that the defendants took advantage of the popularity of CHATEAU LAFITE ROTHSCHILD maliciously in promoting and selling the properties for sale involved in the case.

The court of first instance held that the trademark contribution rate of the infringing marks in the retained profits of the properties for sale involved in this case could not be determined. Therefore, the court appropriately determined the economic losses of 4.80 million yuan and reasonable expenses of 0.20 million yuan based on the reputation of the trademarks claimed by the plaintiff, the subjective malice of the defendants in trading off the reputation of CHATEAU LAFITE ROTHSCHILD's trademarks, the duration of the alleged infringement acts, the promotion function of the sued marks on the sales of the properties for sale involved in the case, the diversity of factors affecting the purchase of commercial housing, etc.

The court of second instance held that since commercial housing is a special commodity, factors such as the location, surrounding environment and supporting facilities, traffic conditions, reputation and strength of the real estate developer, quality of the housing, and the sales price are more decisive for the final purchase of housing by consumers. However, the contribution and role of trademarks in commercial housing sales are usually limited. Certainly, the court of second instance did not deny that some properties for sale have a strong influence on the relevant public after long-term operation, and finally upheld the amount of compensation determined by the court of first instance.

Typical significance:

Compared with previous cases of trademark infringement by names of properties for sale, the highlight of this case is the high compensation amount. The reason why the amount of compensation determined in this case can reach up to 5 million yuan mainly lies in that, while fully weighing up the factors that affect consumers' purchase of commercial housing, the court also took into account the extremely high reputation and popularity of the trademarks "LAFITE" and "拉菲" of CHATEAU LAFITE ROTHSCHILD, and realized that the defendants tried their best to maliciously associate the properties for sale with elements such as France and red wine and that the infringing marks played a certain role in promoting the sales of the properties involved in the case. Accordingly, the court of this case not only took into account the special nature of trademark infringement by the name of properties for sale in this case, but also fully safeguarded the interests of CHATEAU LAFITE ROTHSCHILD as an owner of well-known trademarks. More importantly, the justice policies of cracking down malicious intellectual property infringement, strengthening intellectual property protection, and improving the business environment were shown.