Between March 1999 and September 2001, Jieyang Kentong Automobile Glass Factory, in South China's Guangdong Province, was raided three times by police. The company had been manufacturing and selling counterfeit automobile windshields.

With each raid, the number of counterfeit windshields seized, and the number of brands pirated, had increased.

The first time the company was raided, 362 windshields were seized. Police said the company had used five trademarks, of famous foreign automakers, illegally. During the second raid 3,877 windshields, with nine illegal trademarks, were seized.

In the third raid, police seized 7,081 windshields, with 16 well-known brands.

Ketong continued to produce and sell counterfeit windshields as prosecution proceeded. Fake windshields, bearing Toyota and Honda's trademarks, were discovered during a raid of a shop in Guangzhou in May 2003. Police said those items had been traced back to Kentong.

Authorities say Kentong had infringed on other firms' trademarks for more than five years, and the company's sales of illegal windshields reached 1.5 million yuan (US$180,723).

The company continued its illegal behaviour even after being raided several times, authorities add.

To disguise the crime, the company painted the trademarks on 6,800 windshields with black printing ink, authorities allege.

It took nearly three years for the trademarks' owners including DaimlerChrysler, BMW and Audi from Germany; Toyota and Mitsubishi, from Japan; and Volvo, from Sweden to file a joint complaint.

Their petition to Jieyang Municipal Procuratorate was denied. The trademarks' owners filed appeals, in November 2002, to the Guangdong Provincial Procuratorate, which overturned the previous decision and prosecuted Kentong and its legal representative, Huang Weihua.

Eventually, the company was fined 800,000 yuan (US$96,386) and Huang was sentenced to one year in jail, to be suspended after completion of 1.5 years of probation. Huang was also fined 100,000 yuan (US$12,048).

The case has been regarded as a triumph, as it entrenched local protectionism.

Shedding some light

World-leading retailer Wal-Mart Stores has sued Tong Xiaoju, owner of a lighting company in South China's Guangdong Province, for trademark infringement and unfair competition.

Tong registered the Zhongshan Woerma Lighting Co in 1999 in Guangdong, and registered the domain name woerma.com.cn in 2002. Woerma is the Chinese pronunciation of Wal-Mart.

The Shenzhen Intermediate Court ordered, in its first instance, in August last year, that the defendant, Zhongshan Woerma Lighting Co, stop using the domain name immediately and pay 120,000 yuan (US$14,500) of compensation to Wal-Mart.

Wal-Mart was founded in Arkansas, in the United States, in 1962. It has become the world's largest retailer. It has more than 5,000 outlets throughout the world.

In 1996, Wal-Mart entered the Chinese market and registered its Chinese trademark as Woerma. Wal-Mart has 45 outlets in 21 cities in China, and employs more than 23,000 people in China.

Wal-Mart said it had invested heavily in advertising and marketing in China, and paid more than 1.4 billion yuan (US$169 million) in taxes.

Last year, Wal-Mart earned US$285.2 billion in sales globally. Wal-Mart was ranked No 1 on FORTUNE 500 in 2001 and 2003, and has been listed as one of the Most-admired Companies in America many times. Last year, Wal-Mart topped the China Business Competitiveness Index, among commercial and trade companies, and was the only retailer on the list. Last August, Wal-Mart was ranked No 8 among the Most-admired Companies in China.

The Shenzhen Intermediate Court ruled Wal-Mart, or Woerma, was a well-known foreign trademark that enjoyed high business value in China.

According to the Trademark Law and the Anti-unfair Competition Law, the court said Mal-Mart was a reputable trademark, and it was unfair for another company to register it as company name, trademark and/or domain name.

Tong's Zhongshan Woerma Lighting Co used the Woerma trademark as its own company name, trademark and domain name, which violated the law and, possibly, misled and confused consumers.

The court ordered the defendant to stop using Woerma as its company name and trademark, to cancel the domain name and to pay 120,000 yuan (US$14,500) to Wal-Mart as compensation.

Both sides accepted the judgement.

Xu Chao, an official with the National Copyright Administration, says it is a violation to have a domain name that contains a world-famous trademark or brand without the authorization of the brand's holder.

Source: the Supreme People's Court

(China Daily 06/20/2005 page9)