Recently, Shanghai No.2 Intermediate People's Court made the first-instance decision in favor of Swarovski AG against Shanghai Swalro Dress Co. Ltd(hereinafter as Shanghai Swalro) for trademark infringement and unfair competition. The Court ordered Shanghai Swalro to cease infringement and eliminate bad effect and pay 280,000 Renminbi yuan in damages and reasonable fee of 20,000 Renminbi yuan.
Registered in the Principality of Liechtenstein, Swarovski AG was founded in 1968, and engaged in manufacturing and distribution of crystal products. And the birth of “SWAROVSKI” brand has made Austria a world famous crystal country. In the 1980s, the company registered “SWAROVSKI” and “施华洛世奇” trademarks in China.
Shanghai Swalro was established in 2004, which specializes in various kinds of dresses. Swarovski AG alleged that the Shanghai company used “施华洛”, “施華洛”, and “SWALRO” labels in its wedding dress, promotional materials, website, company decoration, and also established its website of www.swalroweb.com. Such action has not only infringed trademark of “施华洛世奇”, but also constituted an act of unfair competition due to its promotional wording of “Swalro crystal wedding dress” and “Swalro wedding dress, together with Swarovski crystal, to lead a luxury fashion in wedding dress”. This has caused great loss to Swarovski Company's reputation and business.
The court held that since Swarovski AG entered China in the 1990s, it has done extensive advertising by using “SWAROVSKI” and “施华洛世奇”, and has already occupied a large market share in China. It ranks the top in sales volume among other products of its kind, and enjoys good reputation among the consumers. In 2009, “SWAROVSKI” and “施华洛世奇” trademarks were identified as well-known trademark by Beijing Higher People's Court.
After examination, the court also held that SWAROVSKI crystal entered the Chinese market early, and as a wedding dress manufacturer, Shanghai Swalro should be aware of the visibility and influence of “SWAROVSKI 施华洛世奇” trademark. Shanghai Swalro, however, still registered the “施华洛” as its company name, and used “施华洛” , “施華洛” and “SWALRO” in business activities. Besides, it also registered the domain name of www.swalroweb.com and used its website for commercial publicity. Although there is difference between simplified and traditional Chinese characters, it is difficult for public to distinguish the source of the products. It would make consumers think that there is some relationship between the two trademarks. As a result, this may have an effect on the market share of SWAROVSKI AG.
The court ruled that the use of “施华洛”, “施華洛” and “SWALRO” by Shanghai Swalro infringed the trademark “SWAROVSKI 施华洛世奇”, and such advertising constituted unfair competition. Therefore, the Court ordered Shanghai Swalro to assume civil liability of stopping infringement, making compensation and eliminating bad effects, and pay a compensation of 280,000 Renminbi yuan as well as a reasonable cost of 20,000 Renminbi yuan to the plaintiff.
