Bad faith is considered in fighting against sophisticated infringer: Levi Strauss v. Company A and C

Jul 15,2019

It is not uncommon to find sophisticated trademark infringer also owns his/her/its trademark confusingly similar to brand owner’s mark. In trademark infringement litigations, alleged infringer’s mark may sometimes be used as a defense against infringement allegation. The alleged infringer may argue that he/she/it is just exploiting his/her/its own trademark right in a legal way instead of infringing brand owner’s trademark. In these cases, the infringer’s mark forms an additional obstacle to brand owner’s enforcement endeavor. 

However, in the recent 2nd instance case of Levi Strauss v. Company A and Company B, Guangzhou IP Court dismissed such defense based on the principle of good faith. 

Levi Strauss & Co. (Hereinafter referred as Levi Strauss) owns the following trademark:

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Levi Strauss filed a lawsuit against Company A and Company B for trademark infringement. 

Before starting the litigation, Levi Strauss succeeded in collecting evidence of Company A’s use of mark

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(in red) on its shop sign, its jean products inside the shop and on the name card. Levi Strauss also collected evidence of Company B’s use of the mark

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(in red) on jean products shown on its web page.

Company A and its shareholder are the owners of the following trademark:

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(black and white) in class 25 and class 35.

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(black and white) in class 35.

The Latin word part of the alleged infringer’s registered trademarks are “LI WEI’ SHI”. The pronunciation of the mark “LI WEI’ SHI” is identical to Levi Strauss’ Chinese trademark ” 李維氏” (No. 237339 registered in 1985, pronounced as “LI WEI SHI”) . 

In the 1st instance and 2nd instance proceedings, Company A argued that its marks were registered in 2017 and it has right to use its own registered mark on the designated goods.

However, Guangzhou IP Court found that Company A abused the exclusive right to use the trademark and therefore Company A’s act of using its trademark should not be protected and supported by the Law on the following grounds: 

1. Color of the mark used by Company A is similar to Levi Strauss’trademark. According to China trademark practice, trademark owner can freely use the mark in any color if color of the mark is not claimed in registration. Company A’s mark is registered without claiming specific color and it has complete freedom to choose among different colors. However, it decided to use the mark with the background design in red which is essentially the same as the color of Levi Strauss’registered trademark. 

2. Bad faith is obvious. The undercover investigator of Levi Strauss recorded the conversation of the staff in Company A’s shop. In the transcript of the conversation, the staff said to the undercover investigator, “Our brand (LI WEI’ SHI) is very good. Many people buy our product just because of the brand “LI WEI’ SHI” (Its pronunciation is identical to Chinese pronunciation of the brand “Levi Strauss”). “Levi Strauss” is an American brand. This American company (Levi Strauss) has filed some lawsuit against us but these cases are of touch ball cases. They have been fighting with us in three rounds of litigations. Our brand upset them a lot.” In the conversation, it is sufficiently indicative that Company A purposely used the same color as Levi Strauss to take advantage of the trademark reputation of Levi Strauss. 

Therefore, it is found by the Court that although Company A owns the trademark

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, it does not duly exploit the exclusive right to use the trademark in good faith. Based on the principle of fair, good faith and protection of prior right, Company A’ abuse of exclusive right of trademark should not be protected and supported by the Law. Company A’s defense was decided to be dismissed by the court. 

The Court continued to make decision on the infringement. When determining whether two marks are similar marks, comparison of these two marks should be performed by relevant public with average level of attention.

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In this case, for the mark used by Company A, the Chinese word part is relatively small compared to the Latin word part and the background design. The Chinese character is small to the extent that it requires careful observation to clearly identify the words. Therefore, for this mark, red background design and the Latin word part “LI WEI’ SHI” should be the distinctive portions of the mark while the Chinese word part is not a distinctive part. As discussed above, the red background design of the mark used by Company A is substantially the same as Levi Strauss’ trademark. What’s more, the pronunciation of the Latin word part “LI WEI SHI” is highly similar to the pronunciation of Levi’s Strauss’ Chinese trademark “李維氏” (pronounced as “LI WEI SHI” in Chinese). Considering the high reputation of the mark, the combination of the red background design and the Latin word part“LI WEI’ SHI” is likely to cause confusion among relevant public and make the relevant public mistakenly believe that company A’s mark is connected to Levi Strauss or its products. Therefore, the defendant's act of using the trademark on its product, name card and shop sign constitutes infringement of Levi Strauss’trademark right. 

In the infringement case where the alleged infringer defends itself with its own confusingly similar trademark, argument and evidence of bad faith of the alleged infringer in using its registered trademark may be a useful weapon to defeat such defense.