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Zhong Lun Successfully Defends the Right Holder of “Erguang Wonton (耳光馄饨)” Against Trademark Squatting
Zhong Lun Successfully Defends the Right Holder of “Erguang Wonton (耳光馄饨)” Against Trademark Squatting
The brand “Erguang Wonton (耳光馄饨)" was created by Pan siblings in 1997 and became a Shanghai-based hit in a few years. But the Pan siblings did not apply for registering it as a trademark, even when the rights and interests associated with the brand were inherited by Shanghai Erguang Catering Management Co., Ltd. (“Shanghai Erguang") in 2016. To their surprise, Aiush Investment Holding Co., Ltd. (“Aiush") preemptively registered “Erguang (耳光)" series trademarks and licensed a myriad of restaurants in Shanghai and other cities to operate under the name of “Erguang Wonton (耳光馄饨)" . The market has since seen two restaurant chains going with the same business name of “Erguang Wonton (耳光馄饨)", causing consumers to confuse one chain for another. Shanghai Erguang had no choice but to file an unfair competition lawsuit, claiming that defendants’ use of the registered trademark “Erguang (耳光)" and misleading publicity stunts constituted unfair competition. The case was heard before the Xuhui District People’s Court of Shanghai, which ruled in favor of the plaintiff. The Shanghai Intellectual Property Court affirmed the ruling of the trial court.
This is a typical case involving conflict of intellectual property rights. On one hand, the plaintiff enjoys the rights and interests related to the famous brand “Erguang Wonton (耳光馄饨)", but on the other, the defendants have the exclusive right to the registered trademark “Erguang (耳光)". The trial court did not require the parties to resolve the conflict through the trademark administrative procedure first, but rather went on with the civil proceedings, in which Zhong Lun lawyers collected substantial evidence to prove that the defendants’ preemptive registration and subsequent use of the trademark “Erguang (耳光)" had both violated the principle of good faith. In this way, the plaintiff’s rights and interests were directly protected in the civil litigation.
This case is also a prime example of piercing the corporate veil and directly holding the shareholder personally liable for infringement. The plaintiff listed Mr. Wang, who was the shareholder of both Aiush and Shanghai Zaigao Catering Management Co., Ltd. (“Zaigao"), as a co-defendant in this case. The court ultimately found that Mr. Wang had abused his control over Aiush and Zaigao to conduct unfair competition and should be personally liable for damages and other liabilities.
The case, represented by Zhong Lun partner Yuanchao Ma and associate Xiaowei Shen , has been selected by the Supreme People’s Court of the PRC as one of the 2021 Top Ten IPR Cases & Top Fifty Typical IPR Cases of the PRC and announced by the High People’s Court of Shanghai as one of the 2021 Model Cases of Shanghai Courts for Strengthening Intellectual Property Protection.
