Apple loses trademark infringement claim against Chinese leather goods company

A Beijing court ruled in April 2016 in favor of a Chinese phone case producer in a trademark conflict with Apple, Inc. of the United States. Apple filed a trademark infringement claim against a Chinese company Xintong Tiandi Technology Co. (“XTT”) for using their IPHONE trademark for Class 18 leather goods and wallets such as this:

iphone

Although Apple probably disagrees, the result is an expected one when the plain facts are considered, all of which go directly to the central legal concept in trademark law: likelihood of confusion. The Beijing court’s analysis was much like the analysis that would have been undertaken in the US and the EU trademarks systems, where I practice trademark law. Here are the key facts:

  • October 18, 2002 – Apple applied for its Chinese IPHONE trademark for Class 9 computer hardware and software. In trademark law, the date of application is the first date an owner can claim rights.
  • January 9, 2007 – Apple first announces the iPhone mobile phone officially.
  • June 29, 2007 – Apple released the first iPhone mobile phone in the United States.
  • September 29, 2007 – XTT applied for a Chinese IPHONE trademark in Class 18 for leather goods and wallets.
  • October 2009 – Apple first released the iPhone mobile phone in China.

Generally a trademark owner has the exclusive right to use its trademark for the goods/services it has listed in the trademark registration. In Apple’s case, it was for computer software and hardware, which has no relation to the Chinese IPHONE trademark registration which listed leather goods and wallets. After all, one typically does not go wallet shopping in an electronics store.

However, Apple did not make a classic trademark claim and instead argued that the well-known status of the IPHONE trademark gives them extra protection, allowing them to stop use of the IPHONE trademark on leather goods and wallets too, even though Apple did not have a trademark registration for those goods.

The concept of “well-known”, “famous marks”, and/or “reputable marks” law is that trademark owners who have invested enormous amounts of resources into a brand, which has led to the mark becoming well-known or famous, deserve an extra layer of protection. The theory is that the extra protection is for protecting that extra investment. Practically, it means that owners of famous marks may stop the use of trademarks even for goods/services unrelated to the goods/services in the trademark registration if it can be shown that that usage would take unfair advantage of the famous mark, or if it would somehow tarnish or blur the reputation of that famous mark.

The Chinese courts did not accept Apple’s argument because the key date in the case was the date XTT applied for their IPHONE trademark, and on September 29, 2007, Apple’s IPHONE trademark was not yet famous in China and therefore Apple would not be allowed to benefit from any famous marks doctrine. Trademark owners can only benefit from that doctrine after the mark has become famous, and almost all the evidence Apple provided about the famousness of its trademark was dated after XTT applied for its IPHONE mark.

The lesson learned here, as well as the other Apple trademark losses in China such as the $60 million it paid in an IPAD dispute, is that careful due diligence is necessary in the early stages of brand planning and management.

For more information, please refer to the Chinese state-owned Legal Daily.

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