InkSinkErator is the first case in China where trademark hoarding was found to be unfair competition and the defendants were liable for damages and a permanent injunction. This judgment increases the costs and legal risks for trademark squatters.
Before this case, many brand owners had spent millions in legal fees and spent a lot of time filing oppositions and invalidations to stop these trademark hoarders. They did not expect any damage awards from Courts.
This case sets a precedent that is positive for brand owners. The deterrent effect of the decision is also encouraging for those who wish to protect their rights.
This case confirms that the trademark agency and the legal representatives of infringers are also liable for acts of trademark hoarding. It should deter trademark agencies and legal representatives from working together to hoard trademarks.
Emerson Electric registered “In-Sink-Erator” trademark in various product classes. In China, these trademarks are well-known for their food waste disposal systems and instant hot water purification system.
Since 2010, two affiliated Xiamen companies have applied for and registered trademarks that are identical or similar with “InSinkErator”, and a variety of other well-known brands names. Emerson Electric has filed oppositions against these trademarks. During the opposition proceedings, the China National Intellectual Property Administration (CNIPA) considered Xiamen firms as trademark hoarders in decisions.
Then Emerson Electric filed a civil lawsuit in court, claiming the Xiamen company’s trademark registrations were malicious and both Xiamen companies and their trademark agency shall be liable for compenstation in civil litigations.
After considering all relevant factors, the Court ruled the trademark registrations that Xiamen Companies acquired or tried to acquire exceeded its normal commercial needs. Emerson Electric had to incur significant costs in order to protect its rights due the mass trademark registrations by Xiamen. This also affected Emerson Electric ’s normal business activities. Xiamen companies actions of hoarding marks were malicious and constituted unfair competition.
The main shareholder of Xiamen companies, as well as the trademark agency that represents the Xiamen Companies in trademark applications were held liable for unlawful act of unfair competitiveness.
Emerson Electric was awarded RMB1.6million ($250,000) in damages for losses and expenses incurred to stop the infringement.
