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Attorney: Lu Tao, Male, thirty-one years old, employee of Beijing Vantone New-world plaza Limited., With his address at No.12 Madao Hutong, Xuanwu district, Beijing.

This is an action in unfair competition and trademark infringement involving Beijing Vantone New World Plaza Ltd. (referred to as “Beijing Vantone Company”), Wenzhou Bei-Bei Rubber-Shoes Company (referred to as “Wenzhou Bei-Bei”), Jiangsu Bei-Bei Group Company (referred to as “Jiangsu Bei-Bei”). Not Satisfied with Civil Judgement (1999) Gao Zhi Chu Zi by the High People’s Court of Beijing City, Wenzhou Bei-Bei appealed to the Supreme People’s Court. In accordance with the laws, this court established a panel to hear the appeal, now concluded.

The Supreme People’s Court identified facts as follows: Jiangsu Bei-Bei was established in December of 1990. Its first name was Zhangjiagang City Zhengye Rubber General Plant, which was changed into Zhangjiagang Bei-Bei Rubber General Plant. In May of 1992, its name was changed into Jiangsu Bei-Bei Shoes Group. Finally, its name was changed to Jiangsu Bei-Bei Group Limited in November of 1992. This company has applied to the China Trademark Office for trademark registration, and was granted registered trademark as “贝贝” Words (No. 1058253), the stylized form of “B” (No.1122724), and the overlapped design of letter “B” (No. 1058688). All goods under these trademarks are classified in class 25 of international classification. Jiangsu Bei-Bei Company’s products market covering most provinces, cities and districts of the whole nation since it produces rubber-shoes of all kinds, has created a quiet good reputation and popularity in consumers. Notarized documents No.2375 and 2430 Chang Zheng Nei Jing Zhi (1999) by Chengan Notary Office which were submitted to the court by Jiangsu Bei-Bei Company state: Jiangsu Bei-Bei Company’s agent bought gymnastic shoes under the brand “Bei-Bei Company” produced by Wenzhou Bei-Bei Company in Beijing Stores. The color and design of decoration on the packages of these notarized purchased goods are similar to those produced by Jiangsu Bei-Bei Company. The packages also bear the words of “Bei-Bei Rubber-shoes Company”. Jiangsu Bei-Bei Company has brought an action against Beijing Chaoyang District Yianfeng Store and Beijing TongZhou Department Store etc. in a separate lawsuit. In that lawsuit, Jiangsu Bei-Bei Company and those two stores reached a civil conciliation. The settlement document states: those two stores had sold rubber shoes produced by Wenzhon Bei-Bei Company which infringed the exclusive right to use the registered trademark of Jiangsu Bei-Bei Company.

Wenzhou Bei-Bei Company was formerly named as Ruian City Feixia Rubber-shoes Plant, established in May of 1996 with business scope of manufacturing rubber-shoes. In October of 1998, the plant’s name was changed into Wenzhou Bei-Bei Rubber Shoes Company Limited with business scope expanded to manufacture and sales of rubber-shoes. Before and after Changing the plant name, Wenzhou Bei-Bei Company started to use the brand of “贝贝” on the packages for the gymnastic shoes manufactured and sold. Without the certification of “high-quality Products”, Wenzhou Bei-Bei Company put “high-Quality products” sign on it’s products. Actually, its products only were granted the certification of quality inspection approval on the seventh of May in 1999 by Zhejiang Province Ruian City Technology Supervision Bureau.

Beiijing Vantone Company is the operation organization of the Beijing Vantone Market. It leases out counters to vendors separately. These vendors pay rent to Beijing Vantone Company.

The court of original trial, according to Jiangsu Bei-Bei Company’s application of preservation, determined to freeze up a deposit of two million-yuan RMB in the bank account of Wenzhou Bei-Bei Company in October of 1999. Because Wenzhou Bei-Bei has insufficient deposit in the Bank account, the court, according to Jiangsu Bei-Bei Company’s application, determined to preserve the property of Wenzhou Bei-Bei Company worth of two million. However, in fact the frozen property was less than two million yuan RMB because the company did not have enough property. Meanwhile, the court also seized Wenzhou Bei-Bei Company account book of 1998 and 1999 relating to the infringing products. This accounting book did not used standard accounting method. Jiangsu Bei-Bei Company submitted its calculating for claimed damages to the court of original trial. Wenzhou Bei-Bei Company disagreed on the calculation, but didn’t apply for audition.

The court of original trial believed that: Jiangsu Bei-Bei Company enjoys the exclusive right to use the registered trademark“贝贝”. This registered trademark has obtained quite a lot of fame in Jiangsu province, even all over the country. It has been quite well known to the related public. Wenzhou Bei-Bei didn’t use its own company name on the packages of the produced gymnastic shoes. It not only used a brand similar to the registered trademark“贝贝”of Jiangsu Bei-Bei company on the packages of its products, but also used the design and color of decoration similar to that of Jiangsu Bei-Bei company. These actions had infringed the exclusive right of the registered trademark by Jiangsu Bei-Bei Company, as well as constituted unfair competition to Jiangsu Bei-Bei Company.

The Beijing Vantone Market operated by Beiijing Vantone Company, as an organizer of this market, has the liability to exam the legality of the supply channel and goods to sell. While knowing that Wenzhou Bei-Bei company’s products and their packages improperly using the corporate name, without identifying the origin, and without attaching the products quality certification, i.e., all the conducts obviously violating relevant regulations and laws, Beijing Vantone Market still sell the goods. This is infringement to the exclusive right of the registered trademark of Jiangsu Bei-Bei Company. Since there established a leasing relationship between Beijing Vantone Company and the vendors, Beijing Vantone Company has a liability to supervise the legality of these vendors’ operation. As the organizer of Beijing Vantone Market, Beijing Vantone Company is liable to the legitimacy of conducts in the Beijing Vantone Market. Neither Wenzhon Bei-Bei Company nor Beijing Vantone Company had applied to audition on the damage calculation that Jiangsu Bei-Bei Company submitted to the court. None of them provided the facts of illegal profit. Therefore, the damages of this suit was decided according to the production capacity of Wenzhon Bei-Bei company, the market share taken by the infringing products, the sales amount of the infringing products in Beijing Vantone company, and the extent of damage on Jiangsu Bei-Bei Company commercial goodwill caused by Wenzhon Bei-Bei company and Beiijing Vantone company’s infringing conducts.

The court of original trial had ruled as follows:

1. Wenzhou Bei-Bei Company and Beijing Vantone Company are hereby ordered to cease the production and sale of the infringing products immediately;

2. Wenzhou Bei-Bei Company is hereby ordered to compensate Jiangsu Bei-Bei company for the economic losses in an amount of three hundred thousand yuan. Beijing Vantone Compay is hereby ordered to compensate Jiangsu Bei-Bei company for the economic losses in an amount of twenty thousand yuan. All the money shall be paid once in all within 15 days from the effective of this judgement.

3. Wenzhou Bei-Bei Company and Beijing Vantone Company are hereby ordered to apologize to Jiangsu Bei-Bei Company publicly on a nationwide newspaper within 30 days from the effective of this judgement.

4. Other claims by Jiangsu Bei-Bei Company are denied.

The court acceptance fee is ￥30,010.00RMB. Jiangsu Bei-Bei company shall pay ￥23,090.00RMB (paid), Wenzhou Bei-Bei company shall pay 7,010.00 RMB within 7 days from the effective of this judgement. Beijing Vantone Company shall pay ￥810.00RMB within 7 days from the effective of this judgement. The preservation fee of ￥20,100.00RMB shall be paid by Wenzhou Bei-Bei Company within 7 days from the effective of this judgement.

Wenzhou Bei-Bei Company was not satisfied with the first-instance judgement and appeal to the Supreme People’s Court with following assertions.

The first-instance court is wrong in facts finding and clearly erroneous in law without sufficient evidences.

The appellant had never produced or sold product using the registered trademark“贝贝”or similar to it. The appellee has no evidence to prove that the alleged infringing products are produced by the appellant and sold in Beijing area by the appellant. The appellant only used the duly registered corporate name without any registered trademark on the product packages. The appellant’s products are shoes for children that had been granted a certification of quality approval the Quality Supervision Authority. There didn’t exist the problem of inferior quality.

The appellee has no evidence to prove that its products are sold in most provinces and cities of the whole nation. The registered trademark of appellee is only an ordinary trademark rather than a well-known trademark.

In summary, the appellant has not infringed appellee’s trademark and constituted unfair competition. Therefore, the appellant moved to vacate the 1 to 3 clauses of the first-instance judgement.

The appellee didn’t submit its responsive pleading in writing. The following argument was made during trial to this court.

The related notarized documents, conciliation agreements and the confiscated infringing goods are enough to prove that the appellant produces those infringing goods. The appellant’s change of its corporate name is an action for avoiding laws. Therefore, appellee requests this court to affirm the first-instance judgement.

The defendant in the High people’s Court, Beijing Vantone Company didn’t give any statement during trial.

Through conciliation by the court during the appeal, three parties reached an agreement voluntarily as-followings:

1. Wenzhou Bei-Bei Rubber-shoes Company Limited compensates Jiangsu Bei-Bei Group Company economic losses in an amount of ￥60,000.00RMB (this amount of money shall be sent to the No. 3 civil chamber of the Supreme People’s Court at the time of signing the conciliation agreement, and then be delivered to Jiangsu Bei-Bei Group Company when it receives the conciliation document).

2. Beijing Vantone New World Plaza Company Limited compensates Jiangsu Bei-Bei Group Company economic losses in an amount of ￥14,000.00RMB (this amount has been paid).

3. Jiangsu Bei-Bei Group Company waives it’s other claims.

The court acceptance fee of the first instance is ￥30,010RMB, and the preservation fee is ￥20,100.00RMB, totaling ￥50,110.00RMB. Jiangsu Bei-Bei Group shall pay ￥22,190.00RMB, Wenzhou Bei-Bei Rubber-shoes Company Limited shall pay ￥27,110.00RMB, Beijing Vantone New World Plaza shall pay ￥810RMB. The court acceptance fee of the appeal in an amount of ￥30,010RMB shall be borne by Wenzhou Bei-Bei Rubber-shoes Company Limited.

This court confirms that the above stated agreement is in comply with the related laws and regulations.

This conciliation document shall come into force at the time when all the parties has executed it.

Chief judge: Jiang zhipei

Judge: Wang Yongchang

Judge: He zhonglin

Clerk of the court: Xia lijun

Jan.20^th, 2001

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