Unitalen Client VOV Owned by LG Defended Its Rights Successfully by Winning an Unfair Competition Case in China

November 22, 2022

Case Brief:

VOV Cosmetics, a subsidiary of Korean LG Household & Health Care, entered the Chinese mainland market in 2001 and has been widely loved by Chinese consumers after a prolonged period of commercial promotion and use.

From June 2013, Korean VOV had developed cooperation withGuangzhou Lidu Cosmetics Co., Ltd.(hereinafter referred to as "Guangzhou Lidu") in mainland China. Guangzhou Lidu acted as the sole selling agent of Korean VOV in China, sold genuine VOV cosmetics imported from Korea, and agreed not to manufacture or sell any counterfeit VOV cosmetics. Shanghai WeiouweiCosmetics Co., Ltd. (hereinafter referred to as "Shanghai Weiouwei") also participated in the cooperation and signed the agreement as one party. In December 2017, the cooperation relationship between Korean VOV, Guangzhou Lidu and Shanghai Weiouwei was terminated. Shanghai Weiouwei, in collusion with CEJE (registered in the British Virgin Islands), the person not involved in the case, implemented a series of acts of trademark squatting and infringement around thecosmetics brands "VOV" and "图片"—the CEJE Company registered a large number of series trademarks containing "VOV" approved for use on goods of "cosmetics" in Class 3preemptively or served as the transferee of such trademarks and then licensed Shanghai Weiouwei to use them on cosmetics. Shanghai Weiouwei promoted and sold cosmetics ofbrands "VOV" and "图片" in the Tmall flagship store, Jingdong flagship store, WeChat official account and other platforms of VOV.These cosmetics brands were owned by Shanghai Weiouwei and produced in China. In addition, the shareholders and actual controllers of Guangzhou Lidu, Shanghai Weiouwei and CEJE were closely related to each other.

In 2020, the Korean LG Group entrustedUnitalen Attorney at Law to file a civil lawsuit with the Xuhui District Court in Shanghai. After the first instance judgment was given, the case was appealed to the Shanghai Intellectual Property Court, which rendered a final judgment in October 2022. Both of the courts determined that Shanghai Weiouwei and Guangzhou Benqu E-commerce Co., Ltd. (hereinafter referred to as "Guangzhou Benqu") (the operator of "VOV Weiouwei Official Flagship Store" on the Tmall platform), without the permission of the right holder, used the word "VOV" (includingthe word in the form of "图片") in the promotional contents, product names and store names on websites such as the official website andthe Tmall store, and Sina Weibo, and used the word "VOV" in the domain names, and that such actspertained to acts of unfair competition by unauthorized use of a well-known trade name. The contents"Brand introduction: VOV was founded in Korea in the summer of 1998. In the past ten years, with the sales volumes of several categories ofproducts exceeding 100 million, VOV has stunned the whole country, built up its position in the industry and become one of the top three makeup brands in Korea", "40th anniversary fashion makeup brand of Korean LG Group" and "Korean VOV Weiouwei Makeup (China) Official Weibo"used on the websites were likely to confuse the relevant public and constitutedmisleading propaganda. Shanghai Weiouwei attempted to defend itself in this case with the trademarks that CEJE had registered preemptively. However, the court upheld Unitalen's claimand determined that before VOV cosmetics entered the Chinese market in 2001 and gained popularity, Shanghai Weiouwei and CEJE did not own a legally valid registered trademark, and thatthe defense Shanghai Weiouwei made based on the registered trademarks could not be tenable. It was ruled that Shanghai Weiouwei and Guangzhou Benqu should cease the acts of infringement, compensate VOV for the losses, and publish a statement on the home pages of their official websites, official weibo accounts and the Tmall flagship store to eliminate the ill effects.

Typical Significance:

This case is exemplaryin two aspects. On the one hand, one of the keys to success in this case lies in how to choose the optimal right basisfrom severalplausible ones tomake the optimal litigation plan and achieve the best litigation effect. On the other hand, the root cause of the dispute in this case is that the trademark layout of the right holder is lagging. In the case where the trademarks have been registered preemptively by others successively, the key to winning the case ishow togain the initiative usinglegalmeans in cooperation with administrative means.