Why Is Chanel Trademark Dispute Losing Its First Strategy?

The French luxury brand CHANEL ended in a trademark lawsuit in China in the second instance. This is also the first time that the international top brand has lost its trademark infringement case for the first time. It has been a hot debate in fashion circles for a while. Product design is similar in shape but not in trademark use. Is it considered infringing? The reason for losing a lawsuit is a mystery. At the same time, the reference meaning that this case may bring to other brand disputes will also become a potential anxiety in the industry.

Luxury industry experts believe that CHANEL can not rule out the possibility of further appeal. The legal profession believes that the premise of trademark infringement is used as a trademark, but the case should belong to the scope of copyright litigation. CHANEL loses the lawsuit or originates from the failure of litigation strategy.

Why is litigation strategy wrong?

According to the fashion media LADYMAX report, the lawsuit began three years ago, and CHANEL experienced a lawsuit from the first instance to the second instance in the lawsuit.

How to define trademark infringement is regarded by some professionals as the key to reversing the outcome of litigation. The reporter learned from the notice of the China intellectual property court that the lawsuit started in 2016. Guangzhou Zhuhai District Bureau of industry and Commerce has found that the shape of goods sold by Zhou Bai Fu jewelry store, such as ear studs, pendants and rings, is similar to the registered trademark of CHANEL. There is a violation of the "double C" registered trademark of CHANEL company. After the punishment of the shop operator Ye Mou Zong, the CHANEL company took action against the defendant as a defendant.

In the first instance, Ye Mouzong said that the shop involved was a franchisee of Hongkong Zhou Bai Fu Jewelry International Group Co., Ltd., mainly engaged in the operation of Zhou Bai Fu brand. The products sold must be labeled by Zhou Bai Fu and hung by Zhou Bao Fu. They did not use the registered trademark of CHANEL company. It did not know that the product was suspected of infringement. The price of the product involved was only 6000 yuan, and it had not yet been sold and benefited, nor did it cause losses to the CHANEL company. In 2017, the CHANEL company won the first instance judgment, and ye Mou Zong must compensate the CHANEL company for its economic losses of 60 thousand yuan. He refused to accept it and appealed to the intellectual property court of Guangzhou.

The second instance held that when the shape of a commodity was similar to that of a registered trademark, it should be judged whether it constituted trademark infringement. According to the current law of our country, trademark infringement will only constitute trademark use. Second, we need to see whether there is a misleading consumer, a confusion, and a consumer's misconception that the goods are mistaken for the trademark owner's goods.

As far as the case is concerned, the goods sold by the shops operated by Ye Mou Zong have not used the registered trademarks of CHANEL. CHANEL company has not provided sufficient evidence to prove that when selling the above products, ye Mou Zong's shops have the use of the goods similar to the registered trademarks of the CHANEL company and attract customers and sell products as trademarks. Finally, the two trial decided to win a lawsuit.

For this result, Wang Ye, an intellectual property lawyer, told the Beijing Commercial Daily reporter that the shape of the commodity is similar to whether the registered trademark of others is a trademark infringement. The premise is whether the shape of the commodity is registered as a trademark or used as a trademark, and the premise does not exist in the case. But this situation may infringe on other intellectual property rights, such as copyright, CHANEL losing lawsuit or mistakes arising from litigation strategy.

Will CHANEL continue to appeal? The Beijing Commercial Daily reporter interviewed CHANEL through mail, but no reply was received as of press release. Zhou Ting, President of the Research Institute, said that the possibility of CHANEL's continuing appeal could not be ruled out.

The current situation of trademark disputes is very common.

Trademark is a symbol of brand, LOGO and symbol. It is the key to protect many elements of fashion IP, and also is the identity card of many brands.

In April this year, CHANEL issued a statement stressing that the brand name "CHANEL" is all written in capital, thereby strengthening the integrity of the brand and making the brand name a proper noun, which is sufficient to see the strong brand effect of LOGO. Because of this, luxury LOGO has become the easiest object to be counterfeited.

The Beijing Commercial Daily reporter retrieved relevant cases and found that in recent years, trademark litigation of luxury brands is common and not limited to China. In 2014, CHANEL accused the Chinese Spanish citizen and the double S cross sign registered under the Italy jewelry company, which is very similar to the trademark "double C" and is suspected of trademark infringement. In 2017, CHANEL won the case. Gucci's "double G" LOGO is also a serious disaster area in Shanzhai. According to the related reports in 2018, Gucci's parent company Kai Yun group sued Italy one China leather goods manufacturer to adopt a reverse double C trademark which is very similar to the Gucci double G trademark, which has brought confusion and misleading to consumers. In 2016, Gucci and fast fashion brand Forever 21 suffered several rounds of litigation because of the "blue red and blue" and "green red green" stripes. Back in the past, Gucci also had trademark disputes with the American fashion brand Guess in 2009, claiming that the trademark "G" and "green red green" used by Guess infringed the intellectual property rights of their trademark classic trademarks.

Trend LOGO will continue to decline in popularity

Bain's 2018 China luxury market research shows that Chinese consumers account for 33% of the global market share and expect to reach 50% by 2025. By 2027, the size of the middle class in China will further expand, accounting for about 65% of the total family.

But with the rapid growth of luxury consumption, the demand of Chinese consumers to identify the authenticity of online shopping luxury goods is also increasing. According to the statistics of a luxury luxury trading platform, compared with 2017, the total demand for luxury goods in 2018 was about 170% of that in 2017. Chinese consumers are obviously worried about the imitation of luxury goods.

The government has strengthened market supervision, increased penalties for selling holidays, and many luxury appraisal agencies have also been born. From the above cases, even if professional institutions and brand litigation procedures appear to be controversial about counterfeiting, it is more difficult for ordinary consumers to discern embarrassment.

The major luxury brands are expanding their stores in the Chinese market, accelerating the layout of online and offline businesses, strengthening the protection of intangible assets such as brands, and minimizing losses as far as possible. LVMH group launched the block chain encryption traceability platform AURA early this year to verify the authenticity of high priced goods. In addition, Vacheron Constantin, HUBLOT and other high-end watches brand also use block chain technology to prevent counterfeit.

However, Zhou Ting said that most of China's luxury consumers actually had a big decline in their enthusiasm for LOGO. To LOGO is an indisputable market trend. But because of the strong brand effect of LOGO and the early consumer psychology of Chinese consumers, it has become a shortcut for some businesses to make use of it. She stressed that international luxury brands have been having a lot of headache for a large number of "similar commodities" in various markets, and spend a lot of money on counterfeiting, but the scope is too large to be solved completely by legal means.

At present, because most brands do not provide identification services, ordinary consumers lack the ability to identify, and the trading places are gradually transferred to online. A wide range of e-commerce social media platforms also provide payment functions. There are more channels for luxury goods. International brands are faced with a more complicated market environment, and the difficulty and cost of infringement between industries have been increasing.