Battle of the Crocodile Trademarks

[By Arthur Tan-Chi Yuan]

[Author’s note: Key lessons for non-Chinese litigants: Supreme People Court’s interpretations]

Supreme People’s Court

Lacoste (Petitioner)

v.

Crocodile International PTE Ltd. (Respondent)

And

Shanghai East Crocodile Clothing Co. Ltd. (Respondent)

December 29, 2010[1]

This case is about a trademark tug of war between two internationally known apparel companies, Lacoste® and Crocodile International PTE Ltd. (“CIL”), in China.  To set the stage for this case, a timeline of relevant facts will be helpful:

Lacoste

CIL

                These companies were formed about 10 years apart on the opposite end of the world during the WWII era; one in France in 1933 and the other in Singapore in 1943.  Both have their respective markets: one mainly in Europe and the other one in Southeast Asia.  Before this lawsuit in China, Lacoste and CIL were not stranger to each other.  As shown in the flowchart, CIL had sued Lacoste in Japan in 1969 for trademark infringement.  The parties later settled their disputes in Japan and Lacoste was allowed to register its trademark.  In addition, the parties reached a settlement agreement in 1983 (“1983 agreement”) intending to (1) resolve all pending legal disputes; (2) develop their respective businesses separately; (3) collectively oppose third-party infringement; (4) collaborate in a list of other countries; (5) include payments from Lacoste to CIL for past use of the “crocodile” trademark; (6) use parties respective marks without causing confusion; and (7) collaborate in other geographical regions, if possible.

                With this background information about the two companies, we can now turn to the current case in China.  Table 1 below shows a small sample of the trademarks that the parties have filed in China.  The bolded ones are pertinent in the case at hand:

Chinese TM Data: Reg. No; Filing date; Class

Lacoste

Crocodile International

Chinese TM Data: Reg. No.; Filing date; Class

141103

1331001

1979-5-12

1993-12-24

25

25

879258

1343051

1994-11-07

1994-06-29

25

18

940231

5358242

1995-7-21

2006-05-18

18

25

1318589

5258239

1998-06-15

2006-05-18

25

25

213407

1082191

1983-12-28

1994-01-10

18

18

312273

324206

1987-05-22

1987-10-07

9

18

 

 

239718

1985-03-11

25

Table 1

                Lacoste first filed a trademark infringement suit against CIL in 2000 in Beijing after Lacoste purchased a T-shirt bearing the mark “Cartelo” and the crocodile logo, owned by the defendants.  While the suit was pending, Lacoste continued to purchase products produced by CIL in 2002.  All of the purchased products bear “Cartelo + logo” mark on the wrapping and tags.  All, however, also include just the “crocodile logo” without the “Cartelo” lettering (as shown in Table 1) somewhere on the products themselves.      

                Lacoste separately in 2005, 2006 and 2007 filed lawsuits in other cities in China accusing trademark infringements.  The courts in those suits held that CIL had infringed Lacoste’s trademarks with registration numbers: 141103, 879258 and 1318589.

                As for the present case on appeal, Lacoste accused that CIL infringed its trademarks with registration numbers 131103, 940231, 1318589, and 879258.  The Beijing High People’s Court (BHPC) held that CIL’s own trademarks, Reg. No. 1331001 and 1343051, would not have caused confusion between Lacoste’s “Lacoste + crocodile logo” marks. 

                The BHPC also held that the 1983 agreement was dispositive and binding in China (even though China wasn’t specifically mentioned).  The BHPC found that the parties intended to resolve all disputes in the future and that marks of the two companies co-existed in China with enough distinction to not cause confusion to the consumers.  Therefore, the BHPC held there was no infringement.

Appeal to the Supreme People’s Court

                Lacoste was dissatisfied with the outcome and lodged this appeal to the SPC.  On appeal, Lacoste argued that the BHPC erred because CIL’s marks caused confusion because defendants used only the “crocodile logo,” without any lettering, on the accused products.  While the CIL marks were present on the wrappings and tags, consumers would not carry those wrappings and tags when they wear the products.  Lacoste further argued that, although CIL’s marks include “Cartelo” lettering, these characters are in English and, to Chinese consumers, the letters have less practical meaning to Chinese.  They would readily recognize the “crocodile” logo.  In addition, Lacoste argued that the 1983 agreement didn’t intend to include the Chinese market.  Moreover, the fact that the companies’ marks co-existed in the Chinese market merely showed CIL was using Lacoste’s goodwill of its mark.

                CIL countered that there was no confusion between its marks and Lacoste’s marks.  In addition, CIL argued that Lacoste should respect the 1983 agreement in which the parties not only intended to end all disputes but also agreed to “collaborate in other geographical regions, if possible.”

                As part of the appeal, both parties submitted additional pieces of evidence not presented before the BHPC, including each party’s respective trademarks around the world; other lawsuits in China, etc.  The SPC consolidated the issues into the following:

1.        Whether the Chinese Trademark law as amended in 2001 should be applied in the suit filed before BHPC; and

2.       Whether there is confusion between the parties marks (the bolded ones in Table 1).

Based on the facts found below and the newly presented evidence, the SPC held that:

1.        Regarding the first issue, the case below as filed in 2000 with the underlying alleged infringement occurred in 1995.  The BHPC accepted the case before the trademark law of 2001 went into effect on October 27, 2001.  Therefore, according to the “Interpretation by the Supreme People`s Court of the Issues Relating to Jurisdiction over and Scope of Application of Law to the Hearing of Trademark Cases,[2]” the BHPC erred in applying the trademark law of 2001 in this case.

2.       The SPC found that the BHPC was wrong to hold that the 1983 agreement was binding for the territory of China, but the SPC found that the BHPC was correct in taking the 1983 agreement into considering in its ruling.

3.       In applying pre-2001 trademark law and Article 9 of the “Interpretations of the Supreme People's Court of Several Issues Concerning the Application of the Law to the Trial of Civil Dispute Cases Involving Trademarks,[3]” the SPC found that Lacoste’s crocodile logo faces right while CIL’s crocodile logo faces left.  While they both look similar, (i.e., the logo consists of an opened mouthed crocodile figure), there are subtle differences.  In addition, considering both companies long histories of using their respective marks around the world, and their respective market acceptance in China, the SPC refused to find that CIL intentionally designed a logo to resemble Lacoste’s mark to confuse the consumers.  As such, the SPC didn’t find CIL’s products having just the “crocodile logo” in question infringed Lacoste’s marks in question.  Therefore, the BHPC didn’t err on this ruling.

4.      However, although there was no infringement, the SPC held that the parties should continue to maintain the distinction between the two marks.

As such, the SPC upheld the BHPC’s ruling of noninfringement.

 

Continuing saga:

  1. The crocodile figure in the Lacoste’s crocodile logo has its mouth opened to the right.  In 1994, Lacoste has applied for a logo with the crocodile figure opened to the left, a mirror image of the existing one, in China.  That application was rejected in 1996 and Lacoste appealed to the Beijing First Immediate Court who sided with Lacoste in 2009.  Currently, the Trademark Reexamination Board has appealed that ruling and the case is still pending before the BHPC at the time of this ruling.

 

Key lessons for non-Chinese litigants:

  1. Supreme People’s Court’s interpretations: From time to time, the SPC will issue these interpretations of law to guide lower courts to have consistent and uniform applications.  Sometimes the SPC also issues guidelines or provisions for lower courts to follow.  The SPC has the legal authority to issue these interpretations, guidelines or provisions, under section 32 of the “Formation of People’s Courts Act”.
  2. The SPC's decision failed to mention any survey done showing the likelihood of confusion.  Would such evidence make any difference in the Chinese courts?  It would certainly help Lacoste considering the two new trademarks filed in 2006 by CIL (see the third and fourth marks for CIL in Table 1 above) include just the crocodile figure facing left, which Lacoste has filed a similar design in 1994.  

 

[Author’s note: Any errors of the summary and translation of the original Chinese decision are mine and shall not be attributed to any portion of the original.]

 

Translated Decisions: