China’s Beijing High People’s Court on January 10 upheld a lower court ruling in favor of SPC Investment Co., Ltd. (艾丝碧西投资有限公司), South Korean food company SPC Group’s Chinese unit, in a lawsuit lodged by it against Chinese company Beijing Baris Baguette Management Co., Ltd. (北京芭黎贝甜企业管理有限公司) and its founder Jin Guangchun for infringing its trademarks Paris Baguette and its Chinese transliteration 巴黎贝甜 (in pinyin: Ba Li Bei Tian).
Seoul-based SPC Group, founded in 1945, is one of the oldest brands in the confectionery and bakery industry in South Korea. The company has SPL and SPC Capital among others as subsidiary companies to broaden its business scope with overseas establishments. Paris Baguette is one of the group’s market-leading franchise brands. Established in 1988, Paris Baguette grew into the No. 1 bakery in South Korea in 2004 and has expanded into China, the U.S., Vietnam, Singapore, and France. The first China-based Paris Baguette-branded bakery was opened in Shanghai municipality in 2004. According to the complaint, the number of Paris Baguette-branded bakeries in China reached 231, registering an average annual sales of 785 million yuan ($120 million) in the most recent 5 years, as of March 2018.
SPC Group began to file applications for registration of the trademarks Paris Baguette and its Chinese transliteration 巴黎贝甜 with the Trademark Office of the China National Intellectual Property (CNIPA) in 2004 and all applications had been rejected or objected to until September 13, 2021 on the grounds that Paris, as part of the trademark, is a famous city name, is ineligible for registration according to the provision of Article 10 of the Trademark Law of the People’s Republic of China provides that the geographical names of administrative divisions at or above the county level and foreign geographical names well-known to the public shall not be used as trademarks.
Jin Guangchun founded Beijing Baris Baguette Management Co., Ltd. in 2015. The company filed applications for registration of the trademark 芭黎贝甜 and its English transliteration Baris Baguette in 2014, which were granted in 2015. SPC and Baris Baguette’s English trademarks were very similar merely with the first letters of their first constituent words being different and their Chinese trademarks were also extremely close with their first constituent characters even being exactly the same in pronunciation and their writing and meaning being different.
The complaint said Baris Baguette began to advertise its franchising opportunities in the name of Paris Baguette and sued SPC Investment Co., Ltd., which was established in Beijing municipality in 2012, and some of its business partners such as Uni-President Enterprises Corporation, Meituan, and Dazhong Dianping which were famous food companies themselves, for infringing its trademarks in 2017. Baris Baguette registered about 100 trademarks similar to Paris Baguette without rendering any of them into substantive commerce use before offering their assignment to SPC for exorbitant prices.
SPC filed a lawsuit with the Beijing Intellectual Property for trademark infringement and unfair competition in 2018, seeking 10 million yuan ($1.6 million) in damages. Baris Baguette’s cited the fact that Paris Baguette and its Chinese transliteration were unregistered trademarks in China at the time as the defense. The trial court held that Paris Baguette had become a well-known brand in factual terms in China and Baris Baguette’s bad-faith trademark squatting was improper, awarding the plaintiff 1.5 million yuan ($240,000). Baris Baguette appealed the case to the Beijing High People’s Court and the appellate court upheld the lower court ruling in January.
There have been two camps in the world when it comes to trademark system. Some countries, such as the U.S. and Canada, follow the first-to-use trademark system, under which marks that are actually used in commerce first are assigned trademark rights and given priority in their territory of use. Most countries, such as China and European Union countries, follow the first-to-file trademark system, under which applicants that are first to file or apply for registration of their marks are assigned trademark rights and given priority over others, regardless of actual use of the marks by applicants or existence of prior users of the same marks in commerce. Despite this, China has become steadily more inclined to protect well-known names and brands in practice.
The case docket no. is （2021）京民终438号, whose English transliteration is 438, second instance (终), civil case (民), (2021) Beijing High People’s Court (（2021）京).