Louis Vuitton v. Xianmei Case: Defect in Evidence Supplemented by Other Evidences

Feynman Z. LIANG | July 29, 2016

In November 2014, Louis Vuitton Malletier, S.A. (Hereafter referred as “Louis Vuitton”) discovered that large number of handbags and backpacks with trademark and design similar to the registered trademarks and design of Louis Vuitton were being sold in Xinjinpu Fashion City, which is located in Qipu Road of Shanghai. It was further discovered that the allegedly infringing products were produced by Guangzhou Huadu District Shiling Town Xianmei Leather Goods Factory (hereafter referred as “Xianmei”) and distributed by Shanghai Xinjinpu Company (hereafter referred as “Xinjinpu”). Then in December 2015, Louis Vuitton discovered that allegedly infringing products produced by Xianmei were also sold in “China Leather City”(a wholesale market for leather goods) in Haining of Zhejiang Province. Louis Vuitton filed a complaint before the local court against Xianmei and Xinjinpu for trademark infringement and unfair competition, asking for the court to order the defendant to stop the infringement, namely manufacturing and selling of infringing product, publicly express apology in the media, and recover the monetary damages plus reasonable enforcement costs of CNY 1.6 million (about USD 246,000).

In the litigation, Xianmei did not attempt the argument on whether the products were infringing the exclusive right of trademark of Louis Vuitton. Instead, Xianmei argued in both the first instance and second instance cases that it had never produced the infringing product and Louis Vuitton did not provide sufficient evidence to prove that Xianmei was the manufacturer of the allegedly infringing product.

Xianmei argued that on the label of allegedly infringing product, as well as the packaging bag (PB1) of the product, as preserved as evidence by Louis Vuitton, the manufacturer was marked as “Guangzhou Xianmei Leather Goods Factory,” which is substantially different from the complete name of Xianmei(i.e., Guangzhou Huadu District Shiling Town Xianmei Leather Goods Factory) because elements of the company name were missing. The first instance court held that in spite of the missing information, considering the fact that Xianmei had acknowledged there is only one “Xianmei” in Huadu District and the phone number printed on the packaging bag (PB1) is the phone number of Xianmei, it has been established that Xianmei is the manufacturer of the allegedly infringing products. Therefore, the court held that Xianmei has infringed the trademark right of Louis Vuitton.

Xianmei appealed the judgment of the first instance court before the Shanghai IP Court. In the second instance case, Xianmei submitted another sample packaging bag (PB 2) and claimed this packagingwas the real packaging produced and used by Xianmei. Xianmei argued that the difference between these two packagings(PB 1) and (PB 2) proved Xianmei is not the manufacturer of the allegedly infringing products. Furthermore, Xianmei argued that, since the information such as company name of Xianmei and the trademark “Babilu” shown on the label as evidence submitted by Louis Vuitton are accessible to the public, there exists the possibility that someone else produced the infringing product and forged the label with Xianmei’s name and company details on it.

The Shanghai IP Court held thatthe evidence (label, company name on the package,the company phone number, and Xianmei’s trademark “Babilu”) provided by the plaintiff in the first instance case clearly showedassociation with Xianmei. Furthermore, Xianmei failed to provide evidence proving the details of manufacturing, such as thetime and placeof manufacturing, of the packaging bag (PB2). (***Did Xianmei attempt to provide such evidence and it was inadequate, or did they not attempt it?***) In conclusion, the Shanghai IP Court rejected the appeal and upheld the judgment of the first instance court.

In IP litigation, in order to establish infringement and damages the following aspects need to be proved:
1. The plaintiff has a valid IP right;
2. The defendant has infringed that IP right;
3. The defendant has caused damages, and/or become enriched from infringement, and/or a reasonable royalty arrangement existed between the parties beforehand, and/or there are other considerations, such as the type of IP right, duration of infringement, willfulness of infringement, etc. which warrant the award of damages.

Regarding condition 2 above, the plaintiff must prove both that the act is infringing and, the act has been performed by the defendant. In trademark cases, the act of infringement as defined by the Trademark Law of China as:

Article 57. Any act of the following situations constitutes infringement of trademark: (1) to use a trademark that is identical with a registered trademark in respect of the same goods without authorization of the proprietor of the registered trademark;
(2) to use a trademark similar to a registered trademark in respect of the same goods or to use a trademark identical with or similar to a registered trademark in respect of similar goods, without authorization of the proprietor of the registered trademark, where such use is likely to cause confusion;
(3) to sell the goods that infringe the exclusive right to use a registered trademark;
(4) to counterfeit, or to make, without authorization, representations of a registered trademark of another person, or to sell such representations of a registered trademark as were counterfeited, or made without authorization;
(5) to replace, without authorization, a registered trademark and put the goods bearing the replaced trademark on the market;

(6) to intentionally provide a person with conveniences for such person's infringement of the trademark of another person or facilitate such person’s infringement of the trademark of another person;
(7) to cause, in other aspects, prejudice to the exclusive right of another person to use a registered trademark.

Article 48 The use of trademarks as mentioned in this Law arefers to affixing trademarks to commodities, commodity packages or containers as well as commodity exchange documents or using trademarks to advertisements, exhibitions and other commercial activities to distinguish the origin of the commodities.

In other words, the plaintiff has to prove that defendant has performed the act of infringement, namely, applying the trademark on the product.

In this case, although there is a defect in the evidence provided by the plaintiff (namely, that certain elements were missing in the company name printed on the label or package of the product), both the first instance court and the second instance court held that the manufacturer of the infringing product is the defendant. As long as essential elements on the infringing product are identical to the defendant’s name (in this case, the trade name “Xianmei” is shared by both the name on the label and the defendant’s name), it can prove strong association between the manufacturer and the defendant. With the additional incriminating evidence, such as the phone number printed on the package and the existence of only one company with such a trade name in the related area, it was considered proved that the defendant is the manufacturer.