China’s Guangzhou Intellectual Property Court on May 13 upheld a decision by the Yuexiu District People’s Court of Guangzhou city relating to Japanese electronics company Seiko Holdings Corp.’s lawsuit against three Chinese companies Guangxi Tianrui Seiko Precision Electronics Co., Ltd. (广西天睿精工精密电子有限公司), Hunan Tianrui Seiko Technology Co., Ltd. (湖南天睿精工科技有限公司), and Guangzhou Qianding Import and Export Trading Co., Ltd. (广州仟鼎进出口贸易有限责任公司), alleging trademark infringement of Chinese Trademark No. 97,127, Chinese Trademark No. 159,371, Chinese Trademark No. 8,016,040, and Chinese Trademark No. 11,347,165 as well as unfair competition. The appellate court ordered the defendants to pay 10 million yuan ($1.5 million) in damages and costs.
Guangxi Tianrui and Hunan Tianrui were incorporated in Wuzhou city, Guangxi province and Zhuzhou city, Hunan province in 2012 and 2016 respectively, with their main business being watchmaking. Guangzhou Qianding was founded as a distributor of goods in Guangzhou city, Guangdong province in 2010. Hunan Tianrui and Guangzhou Qianding are owned by the same two people, with one of them holding a senior management position in Guangxi Tianrui. The defendants incorporated Japan Timerise-Seiko (Hong Kong) Ltd. and Japan Timerise-Seiko Ltd. in Hong Kong and Tokyo in 2011 and 2015 respectively as shell companies to do business.
Tokyo city, Japan-based Seiko Holdings Corp. was founded in 1881 and its Seiko brand enjoys very high value in the watchmaking industry and beyond worldwide. The company manufactures watches, clocks, electronic devices, semiconductors, jewelry, and optical products. It is known for introducing one of the world’s first quartz wrist watches as well as the world’s first quartz watch with a chronograph complication. Records show that the earliest availability of Seiko-branded watches on Chinese markets was as early as in 1895, and the company officially expanded business into China in the late 1970s.
Seiko registered Chinese Trademark Nos. 97,127 and 8,016,040 for “SEIKO” in 1979 and 2011 respectively and Trademark Nos. 159,371 and 11,347,165 for “精工 (pinyin: jing gong; Seiko’s Chinese transliteration)” in 1982 and 2014 respectively, which are all for goods in Class 14 including mainly precious metals and certain goods made of precious metals or coated therewith, as well as jewelry, clocks and watches, and component parts therefor, and will stay valid until around 2030 by way of continuous renewal. The “SEIKO’’ trademark was included in the National Key Protected Trademark List by the Trademark Office of the China National Intellectual Property Administration (CNIPA) in June 2000.
Seiko in October 2018 sued Guangxi Tianrui, Hunan Tianrui, and Guangzhou Qianding in the Yuexiu District People’s Court for manufacturing and selling watches and clocks utilizing JAPAN TIMERISE-SEIKO and TRSEIKO trademarks ripping off its registered trademarks “SEIKO” and “精工” to cause likely consumer confusion and dilute its brand. Seiko also accused the former two defendants of free-riding on Seiko’s goodwill and reputation by including its trademark “精工” in their full Chinese-language company names, or trade names. Guangxi Tianrui argued that it had licensed the two allegedly infringing trademarks “JAPAN TIMERISE-SEIKO” and “TRSEIKO” from Japan Timerise-Seiko Ltd., the Japanese company incorporated by the defendants.
The evidence disclosure and discovery process of the case was complicated due to the alleged presence of such a Japanese licensor, which turned out to be a mere shell company with no practical operation. The accused watches and clocks were substantiated to be manufactured nowhere else but in China.
In determining the damages awarded, the plaintiff submitted the defendants’ tax schedules provided by local taxation administrations and the report on the average profit rate of the Chinese watchmaking industry as references. The defendants refused to meet their burden of proof by providing data relating to unit prices, sales, and net profit of the allegedly infringing products.
The court agreed with the plaintiff’s arguments and ordered the defendants to pay 10 million yuan ($1.5 million) in damages and costs. The court found that the former two defendants’ use of Seiko’s “精工” and “SEIKO” trademarks in their trade names in Chinese and English constituted unfair competition under Article 6 Paragraph 2 of the Anti-Unfair Competition Law of China. The court also found the defendants’ use of their infringing trademarks “JAPAN TIMERISE-SEIKO”, “TRSEIKO”, and “日本天睿精工 (JAPAN TIMERISE-SEIKO’s Chinese translation)” in their showrooms, websites, and corporate display walls constituted unfair competition under Article 58 of the Trademark Law of China.
In the Chinese trademark regime, prominent use of an infringing trademark constitutes trademark infringement, while non-prominent use of an infringing trademark constitutes unfair competition. The defendants were held liable for both trademark infringement and unfair competition.
The defendants appealed the case to the Guangzhou Intellectual Property Court, which in turn upheld the trial court’s ruling on May 13.
The case docket no. is （2021）粤73民终2149号, whose English translation is 2149, second instance (终), civil case (民), (2021) Guangzhou Intellectual Property Court (（2021）粤73).