Recently, the Hangzhou Intermediate People’s Court of Zhejiang Province issued a final judgment in the second instance of Xuan Company v. Qiao Company et al. concerning trademark infringement and unfair competition. The NTD team represented the plaintiff, Xuan Company, and successfully obtained full court support for its claim of RMB 1 million in damages. This case is recognized as a groundbreaking precedent, the first in China to establish criteria for determining trademark infringement involving virtual and real-world goods, offering crucial judicial guidance for trademark protection in the metaverse.

The court found that, without authorization from Xuan Company, Qiao Company and other defendants not only used the trademark “G.PATTON” on physical goods such as automobiles but also authorized third parties to incorporate the infringing trademark into virtual goods within online games through brand collaboration agreements. This cross-context trademark imitation misled the public regarding the origin of the goods, seriously infringing Xuan’s trademark rights. The court also determined that the defendants’ false advertising constituted unfair competition. This ruling breaks with the traditional boundaries of "class of goods" in conventional trademark infringement determination, and firstly recognizes that virtual vehicle assets in online games and real-world automobiles may be considered as similar goods. Finally, the court ordered the defendants to immediately cease all infringing and unfair competition activities and fully supported Xuan’s claim for RMB 1 million in damages, strongly upholding the intellectual property rights of the trademark owner.

A key breakthrough in the case is the court’s clarification of the boundaries for trademark infringement involving digital virtual goods and real-world goods:

Unauthorized use of a real-world brand in online games constitutes trademark infringement if it causes public confusion. Concerning the criteria and factors for determining likelihood of confusion, the court elaborated in its ruling that although the “G. PATTON” virtual automobiles authorized by Qiao differed from real-world automobiles in function, sales channels, and target consumers on the surface, critical connections between the two were undeniable: functionally, as a game vehicle, the virtual automobiles not only serve a transportation function similar to real-word automobiles but also highly simulates the appearance and interior design of real-word automobiles, creating a strong visual correlation; from a consumer perspective, players using the virtual vehicle may become interested in—and potentially purchase—the corresponding real-world automobile, indicating a significant overlap in consumer groups; in terms of public perception, through gameplay and promotional content, the relevant public would naturally identify “G. PATTON” as an automobile brand and assume the brand had authorized the game collaboration, leading to confusion regarding the source of the goods.

Throughout the proceedings, the NTD team provided expert legal support to Xuan. During the second-instance court debates and in written submissions, the team systematically demonstrated the connection logic between virtual and real-world goods, persuading the appellate court to reverse the first-instance finding that “virtual goods do not constitute infringement”. This critical reversal secured robust protection for Xuan’s trademark rights.

This case was represented by Attorney Nathan Yang and Attorney Yan Zhang at NTD Intellectual Property Attorneys.

 

Nathan YANG

Nathan Yang graduated from the University of University of International Business and Economy with a Master of Law in 2008, and then joined NTD to engage in intellectual property legal services. Later, he went to Chicago-Kent College of Law and earned LLM degree.

 

Mr. Yang focuses on Trademark, anti-unfair competition, copyright, litigation and administrative enforcement, arbitration, investigation, customs detention, contract and negotiation, domain name dispute resolution, enterprise IP strategy and general legal consultancy.

 

The cases represented by Mr. Yang have successively won such honors as 2021 Best International Legal Service Cases by Beijing Bar Association, 2021 TOP litigation cases by Beijing Trademark Association, Sichuan Court Top 10 IP cases in 2020, Henan Court Top 10 IP cases in 2014, 2014 TOP 10 IP cases with the highest public attention, and National Excellent Trademark Cases Awards in 2015 elected by China Trademark Agency Association. He was selected as the World Trademark Review Recommended Individual 2023, 2021 China Excellent IP Lawyers TOP 50, 2021 Talent International Lawyers by Beijing Bar Association, and the 2019 -2022 Excellent Lawyer of Beijing Xicheng District.

 

Mr. Yang has been interviewed by NPR about Trump's trademark protection in China, and by CCTV2 and CNR about bad faith filings and geographical indication protection.

Yan ZHANG

Yan ZHANG joined NTD after graduating from Renmin University of China in2014 and started his profession in intellectual property.

Yan ZHANG concentrates her practice in litigation and non-litigation of trademarks, anti-unfair competition, copyright, including civil litigation, trademark administrative litigation, administrative enforcement, customs protection, domain name complaints and IP strategy counseling. She has represented well-known Chinese and foreign enterprises in trademark, copyright and unfair competition litigation.