"CHOW LO FOOK Jewelry" Sued "Zhou Liu Fu Jewelry" for Infringement of Reputation Right and Discrediting due to the Alleging of "Fake Brand", and Zhou Liu Fu Jewelry Won a Series of Cases

June 28, 2022

Case brief:

In July 2021, HK ZHOU LIU FU Gold Diamond Jewelry Group Co., Limited and HK CHOW LO FOOK Jewelry Int'l Group Limited ("ZHOU LIU FU Jewelry company" and "CHOW LO FOOK Jewelry") filed a counter-compensation against the malicious lawsuit and an unfair competition lawsuit against Zhou Liu Fu Jewelry Co., Ltd. ("Zhou Liu Fu Jewelry") with Shenzhen Luohu Court, arguing that Zhou Liu Fu Jeweler’s industrial and commercial complaints and multiple lawsuits with the people's courts in many places in the country against ZHOU LIU FU Jewelry company and its dealers belonged to malicious lawsuits, which also constituted unfair competition under Article 2 of the Law Against Unfair Competition. During the first-instance trial, after the two parties debated on the four elements of malicious lawsuit, the other party voluntarily gave up the counter-compensation against the malicious lawsuit, and only retained the cause of action for unfair competition lawsuit. Later, the two parties debated about "whether the prosecution behavior violated the principle of good faith and recognized business ethics". At the same time, after we pointed out that the other party's evidence had been altered in respect of the date and other information, the other party deeply felt it would lose the lawsuit, and withdrew the lawsuit in December, 2021. This case involves the accurate understanding and application of adjudication rules for IP malicious lawsuit and unfair competition.

In August 2021, CHOW LO FOOK Jewelry and its dealers filed a lawsuit against Zhou Liu Fu Jewelry with Shenzhen Luohu Court for dispute on infringement of reputation rights, arguing that Zhou Liu Fu Jeweler’s act of entrusting the law firm to send a lawyer's letter to its dealers, and the propaganda containing "boycott fake brands", "a store of HK CHOW LO FOOK Jewelry was fined 1.4 million yuan for infringement" and "HK CHOW LO FOOK Jeweler’s free ride of the popularity of the well-known brand Zhou Liu Fu Jewelry to confuse the public and was denounced by many parties and was deeply involved in a lawsuit" and other words infringed its reputation right. Unitalen lawyers provided evidence and reasoned in detail from various aspects. In the end, Shenzhen Luohu Court determined that Zhou Liu Fu Jeweler’s letter was within the reasonable scope of rights protection. The content of the propaganda was based on the content of the administrative penalty decision, civil ruling or civil judgment, and was not a fictitious or fabricated fact. Therefore, the behavior of Zhou Liu Fu Jewelry was not an insult or defamation, and did not constitute an infringement of the right of reputation. After the first-instance judgment was made, the other party filed an appeal and then withdrew.

In December 2021, CHOW LO FOOK Jewelry and its dealer Xindu District Di Zun Jewelry Store filed a discrediting dispute with Chengdu Intermediate Court against Zhou Liu Fu Jewelry and Jin Ai Jewelry Store, arguing that in July 2021, the dealer of Zhou Liu Fu Jewelry Jin Ai Jewelry Store broadcast on the LED screen of the storefront signboard "to believe the genuine Zhou Liu Fu here, and boycott the fake CHOW LO FOOK of a certain company in Hong Kong", and "no after-sales, no warranty, no notarization, self-employed", which constituted the discrediting. Unitalen lawyers, after careful research and judgment, formulated a counterclaim strategy, and filed a counterclaim in February 2022, accusing that CHOW LO FOOK Jewelry and its dealer Xindu District Di Zun Jewelry Store used "Boycott any fake brand Zhou Liu Fu without ? mark Authentic Hong Kong brand ? National authentication ? Trustworthy" and "I don't know what to do but giving some gifts. Zhou X Fu is not the official brand of HK CHOW LO FOOK Jewelry Int'l Group Limited. Please look for the brand endorsed by Cai Shaofen!" priorly in their promotional slogans in April 2021, which constituted the discrediting. The two parties engaged in a fierce confrontation in the court hearing around the four elements of discrediting, based on the evidences and facts. In the end, the court determined that the propaganda of Xindu District Di Zun Jewelry Store pointed to its competitor Zhou Liu Fu Jewelry, and the content it published was fabricated, disseminated false or misleading information, and the purpose of the propaganda was to spread the information that Jin Ai Jewelry Store sold products of unofficial "CHOW LO FOOK" brand, to make consumers have a bad impression and influenced their decision-making. The brand image and value of Zhou Liu Fu were damaged and degraded. Therefore, CHOW LO FOOK Jewelery's act of claiming that Zhou Liu Fu Jewelery was a "fake CHOW LO FOOK" constituted discrediting. In the judgment, the court confirmed that CHOW LO FOOK Jewelery and its multiple dealers infringed the exclusive rights of Zhou Liu Fu Jewelery's registered trademarks No. 7519198 and No. 13062591 for "Zhou Liu Fu" due to the irregular use of the trademark of Zhou Liu Fu. Thus, it is not without fact that Jin Ai jewelry store used the words "fake Zhou Liu Fu" in its promotional slogan to allege CHOW LO FOOK Jewelery. In this case, "self-employment" is a fact, "no notarization" does not refer to any specific practical meaning, and the propaganda slogan cannot produce any positive or negative effect. Nevertheless, the court still held that the advertisement of "no after-sales, no warranty" was misleading to some extent. Finally, the court comprehensively considered the actual situation of both parties and ruled that Xindu District Di Zun Jewelry Store shall compensate for the economic loss of Xindu District Jin Ai Jewelry Store.

Typical Significance:

This series of cases typically shows how the defendant can effectively defend or take the initiative in the case. The typical significance is mainly reflected in two aspects: on the one hand, the accurate understanding and application of the constituent elements of legal rules such as malicious lawsuit, unfair competition, reputation right infringement and discrediting; on the other hand, the reasonable formulation of litigation strategies, that is, how to take the initiative to use counterclaims in the accused cases to achieve the effect of reversing the positions of the host and the guest, thus winning in the confrontation of the case.