29 Sep 2017 in Newsletter
Under Armour Won Trademark Battle Against Uncle Martian in China
In August 2017, the People’s Higher Court of Fujian Province (the “Fujian Higher Court”) issued the first instance judgment on UNDER ARMOUR Inc. (“UNDER ARMOUR”) v. Fujian Tingfeilong, Inc. (“Tingfeilong”). The Fujian Higher Court held that the defendant’s act has infringed the plaintiff’s trademark rights and also constituted unfair competition. The Fujian Higher Court awarded 2 million RMB for damages (around $300,000 USD) and ordered Tingfeilong to publicly apologize for the negative impact caused by the infringement to UNDER ARMOUR in one of the major web portals. This case is another trademark litigation in China involving a foreign party that has attracted worldwide attention after the trademark dispute between the US citizen Michael Jordan and Fujian Qiaodan Sports, Co. (See previous article here). The difference is that owing to the timely protection of its right, the plaintiff in the case, UNDER ARMOUR, laid a perfect victory!
According to Article 57 of the Trademark Law of the People’s Republic of China (the “Trademark Law”), using a mark that is similar to a registered trademark on the same kind of goods, or using a mark that is identical or similar to the registered trademark on similar goods and is likely to cause confusion, without having obtained a license from the owner of the registered trademark, constitutes infringement of the exclusive rights to use a registered trademark. Comparing the two marks shown in the figure above, the Fujian Higher Court found that both marks are composed of a graph in the upper portion and an English logo in the lower portion, which are similar in view of the overall structure. Further, the U-shaped structure of the two marks are relatively close, and the surrounding decorative pattern of the UNCLE MARTIAN mark is intentionally toned light, which easily causes the consumers’ confusion with respect to the source of the goods. Thus, the two marks are considered similar. Additionally, the product of the mark UNCLE MARTIAN is the same as that of the registered trademark UNDER ARMOUR. Therefore, the Fujian Higher Court ruled that Tingfeilong’s act constituted trademark infringement.
Regarding the Fujian Higher Court’s determination of unfair competition, although Tingfeilong was fully aware that the series of UNDER ARMOUR trademarks have been registered, it still permitted its marketing staff to label their business cards with the name “安德玛（中国）有限公司Under Amour (China) Co. Limited.”  Tingfeilong obviously had the intention of taking a ride off the fame of UNDER ARMOUR, misleading consumers, and improperly obtaining market share of the products. As a competitor in the same industry, Tingfeilong violated the business ethics of good faith and fair competition, and damaged the interests of UNDER ARMOUR. Therefore, the Fujian Higher Court ruled that Tingfeilong’s act constituted unfair competition.
According to Article 63 of the Trademark Law, the amount of damages for infringement of the exclusive right to use a trademark shall be determined based on the actual loss suffered by the right holder as a result of the infringement. If it is difficult to determine the actual loss, the amount of damages may be determined according to the infringer’s profits. If it is difficult to determine both the actual loss of the right holder and the profits gained by the infringer, the amount of damages may be reasonably determined and calculated in reference to the multiples of the royalties from a trademark license. Where it is difficult to determine the damages with any of the above three methods, the people’s court shall render a judgment awarding damages in an amount no more than 3 million RMB based on the circumstances of the infringement. In this case, UNDER ARMOUR claimed a damage award of up to 100 million RMB. Because Tingfeilong had not distributed the infringing products into the market, UNDER ARMOUR could not prove its actual loss caused by the infringement or the profits Tingfeilong obtained from the infringing act nor could they provide a royalty rate as a reference, the Fujian Higher Court rejected UNDER ARMOUR’s claim regarding 100 million RMB damages. Nevertheless, the Fujian Higher Court looked into various factors comprehensively, including: (1) the reputation of UNDER ARMOUR, (2) the subjective malice of Tingfeilong, (3) Tingfeilong’s act constituting both trademark infringement and unfair competition, and (4) UNDER ARMOUR’s reasonable expenses for ceasing the infringement act (including the attorneys’ fees). As a result, the Fujian Higher Court ruled that Tingfeilong should immediately stop using the infringing mark on their products and destroy all of the samples, brochures, posters, and business cards that bear the infringing mark. Meanwhile, Tingfeilong should pay the damages in the amount of 2 million RMB (about $300,000 USD) and should publicly apologize to UNDER ARMOUR for the negative impact of the infringement on the “Sina” website.
Although the damages award of 2 million RMB in the decision is far below 100 million RMB claimed by UNDER ARMOUR, the Fujian Higher Court granted injunction relief against Tingfeilong and ordered Tingfeilong to make public apologies on a major web portal in China. Through the success of the right enforcement, UNDER ARMOUR has substantially increased its exposure to the Chinese market and also established a reputation and image as a good brand. In this case, because UNDER ARMOUR registered its trademarks as early as upon entering the Chinese market and took immediate action to collect and notarize infringement evidence after Tingfeilong launched its brand in the first place, UNDER ARMOUR’s legal rights were protected timely and thoroughly. With the expansion of the Chinese market and the improvement of Chinese courts’ impartiality in intellectual property related cases, it is more imperative than before for companies to procure intellectual property rights and build up intellectual property portfolios in China without delay.
 UNDER ARMOUR Inc. is the actual right holder of the registered trademark “安德玛.” However, 安德玛（中国）有限公司Under Amour (China) Co. Limited is a one-person company registered in Hong Kong by one of the shareholders of Tingfeilong, Can-Long Huang.