10 Typical Cases of IPR Protection —— Case Example 8

Prohibiting Unauthorized Use of the Trade Name of Others According to Law
To create a Market Environment with Fair Competition
——Beijing K Company v. Shenzhen K Company over Dispute of Unfair Competition

[Case Summary]
Beijing K Company was registered and established on March 20, 2015 as an operator of a short video platform with a business scope covering technology development, technology promotion, basic software services, application software services, software development, etc. Shenzhen K Company was registered and established on April 12, 2017 with a business scope covering network technology R&D, software services, software development, etc. Before the establishment of Shenzhen K Company, the trade name of Beijing K Company has been recognized by the relevant public and has a certain social influence. Beijing K Company sued to the court, demanding that Shenzhen K Company should stop using a certain word and change its business name, and compensate 100,000 yuan for economic losses.
[Ruling Results]
The court held that Beijing K Company was incorporated in June 2015. As a result of time-consuming publicity and product sales, certain trade name of the company has gained certain social influence and become known to the relevant public. A certain relationship has been established between a certain trade name and Beijing K Company. After years of operation, Beijing K Company’s business scope went beyond the area of Beijing and become an influential enterprise in the country. Therefore, the difference in registered addresses between the two didn’t affect the existence of a competitive relationship. Moreover, the business operations of the two overlapped, and the two constituted a competitive relationship. Shenzhen K Company knew that the company name of Beijing K Company was registered first, and gained a certain reputation, but it didn’t made reasonable avoidance. The company name registered with the same name as other people obviously had the intention of taking advantages of others business reputation to obtain improper benefits, which was enough to cause confusion among the relevant public regarding the sources of the products and services of the two companies, or a conclusion that the two companies had a special relationship. Such registration action constituted unfair competition. Therefore, Shenzhen K Company should bear the infringement liability, so it was ruled that Shenzhen K Company should stop using a certain trade name in its company name, and go through the procedure of changing its name with the market supervision and management department, and compensate Beijing K Company for the economic loss of 50,000 yuan, including reasonable expenses for defending its rights.
[Significance]
This case is a typical case of conflict concerning corporate trade name. Whether competition is fair is the basic principle for identifying unfair competition. Encouraging and protecting fair competition is one of the legislative purposes of the Anti-Unfair Competition Law. One of the principles embodying the legislative purpose of protecting fair competition is protecting prior rights, which means that the creation and exercise of subsequent rights shall not infringe upon the previous legitimate rights. If the subsequent rights are established on the basis of infringing on the rights of others, even if they somehow have acquired formal legitimacy, they have essentially lost the legitimacy of their rights and should not be protected by law. Although the name of the defendant in this case has been approved by the administrative organ, it does not necessarily mean there is no violation to the legal rights of others. The defendant ’s act of registering the name of others as his own has an obvious intention to take advantage of others business reputation, which will objectively cause confusion, breaching the principles of good faith and recognized business ethics, and violating the plaintiff ’s prior rights to its name, therefore should be prohibited.