Starbucks Corporation and Shanghai President Coffee Corporation v. Shanghai Starbucks Cafe Company Limited and Shanghai Starbucks Cafe Company Limited, Nanjing Road Branch 
〖Subject〗  PATENT DISPUTE 
〖1st Inst date〗  12-31-2005 
〖1st Inst Court〗  NO.2 INTERMEDIATE PEOPLE'S COURT OF SHANGHAI MUNICIPALITY 
〖2nd Inst date〗  12-20-2006 
〖2nd Inst Court〗  THE HIGHER PEOPLE'S COURT OF SHANGHAI MUNICIPALITY 

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Starbucks Corporation and Shanghai President Coffee Corporation v. Shanghai Starbucks Cafe Company Limited and Shanghai Starbucks Cafe Company Limited, Nanjing Road Branch

(Dispute over Trademark Infringement and Unfair Competition)

Plaintiff: Starbucks Corporation, domiciled at Utah Ave. South, Seattle, Washington State, U.S.
Legal Representative: David M. Landau, senior deputy president and deputy general advisor of the Company.

Plaintiff: Shanghai President Coffee Corporation, domiciled at Huaihai Middle Road, Luwan District, Shanghai, P.R.C.
Legal Representative: Lin Cangsheng, board chairman of the Company.

Defendant: Shanghai Starbucks Cafe Company Limited, domiciled at Hongqiao Raod, Changning District, Shanghai, P.R.C.
Legal Representative: Zhuang Lizhi, board chairman of the Company.

Defendant: Shanghai Starbucks Cafe Company Limited, Nanjing Road Branch, domiciled at Nanjing East Road, Huangpu District, Shanghai, P.R.C.
Person-in-charge: Zhuang Lizhi.

Starbucks Corporation and Shanghai President Coffee Corporation (the plaintiff, hereinafter referred to as President Corporation) brought a lawsuit with No. 2 Intermediate People’s Court of Shanghai Municipality (hereinafter referred to as Shanghai No. 2 Intermediate Court) against Shanghai Starbucks Cafe Company Limited (the defendant, hereinafter referred to as Shanghai Starbucks) and Shanghai Starbucks Cafe Company Limited, Nanjing Road Branch (hereinafter referred to as the Branch) due to a dispute over trademark infringement and unfair competition.

Starbucks Corporation and President Corporation alleged: Starbucks Corporation was founded in 1971, and established the first “STARBUCKS” coffee store in Seattle, USA in 1976. Starbucks Corporation adopted a unique and effective management mode, and provided consumers with high-quality products and services. After more than 30 years of development, Starbucks Corporation had become a world famous coffee enterprise of chained operation, and “STARBUCKS” has become a globally well-known coffee brand.

In July 1976, Starbucks Corporation registered the first trademark “Starbucks” (in Chinese) in US, and the ratified commodity class was Class 30 (coffee, coffee drinks, white coffee drinks, coffee flavorings, biscuits, cakes, breads, etc.). After that, Starbucks Corporation successively registered the trademark “STARBUCKS” as well as the word and figurative mark “STARBUCKS COFFEE” in more than 100 countries and regions around the world, with the commodities and services ratified for use covering more than 20 classes. From 1996 to 2003, Starbucks Corporation separately registered the word and figurative marks “STARBUCKS” and “STARBUCKS COFFEE” in the Mainland of China, which were used upon ratification for more than 10 classes of commodities and services, including Class 30 and Class 42 (restaurants, cafes, eateries, fast-food restaurants, etc.). From 1999 to 2000, Starbucks Corporation registered the trademark “Starbucks” (in Chinese) in the Mainland of China, which was used upon ratification for 5 classes of commodities and services. The trademark “STARBUCKS” has a very high prestige globally, and is a well-known trademark recognized by a lot of consumers. Starbucks Corporation as the holder of the trademark “STARBUCKS” registered it in many countries and regions around the world, and never stopped using it.

In 1999, Starbucks Corporation entered the market of China’s Mainland, and established President Corporation upon authorization of Starbucks Corporation on March 2, 2000. After President Corporation was established, it successively opened a number of Starbucks chain coffee stores at the advantageous locations in Shanghai, Hangzhou and Ningbo, etc. These chain coffee stores gained huge economic and social benefits in China. Meanwhile, “STARBUCKS”, “Starbucks” (in Chinese), and the word and figurative mark “STARBUCKS” also have very high prestige in China.

Starbucks Corporation and President Corporation found that Shanghai Starbucks was established on March 9, 2000, and its trade name was “Starbucks” (in Chinese). The Branch was established on July 1, 2003, and was subordinate to Shanghai Starbucks. Both Shanghai Starbucks and the Branch used marks identical or similar to “STARBUCKS”, “Starbucks” (in Chinese) and the word and figurative mark “STARBUCKS” on the mobile light boxes, light boxes, seat separation boards, coffee menus, invoices, payment slips and name cards, etc. in the coffee business of Xianxia Store and Nanjing Road Branch.

Starbucks Corporation and President Corporation held that, the 6 trademarks registered for commodities of Class 30 and services of Class 42, such as “STARBUCKS”, “Starbucks” (in Chinese), and the word and figurative mark “STARBUCKS” (hereinafter referred to as the 6 trademarks), were well-known trademarks, and the right to exclusive use of such trademarks should be protected by the Trademark Law of China. On the condition of knowing that the above said trademarks had a very high prestige, Shanghai Starbucks and the Branch still used the trademark “Starbucks” (in Chinese) as its trade name in its enterprise name, used the trade name distinctively on many articles in its cafe, and meanwhile used marks identical or similar to the 6 trademarks for commercial purposes in its business. Its acts obviously had the intention of “hitchhiking”, and were enough to mislead the relevant public to consider that there were certain connections between the defendants and the plaintiffs who were holders of the trademark “STARBUCKS”, or to misunderstand that both the plaintiffs and the defendants belonged to the same market subject. Thus the public might be confused about the source of the commodities and services. The defendants’ acts infringed upon the plaintiffs’ above said trademark rights, and constituted unfair competition. Therefore, Starbucks Corporation and President Corporation pleaded the court: (1) to confirm the 6 trademarks registered by Starbucks Corporation as well-known trademarks; (2) to order the defendants to immediately stop infringing upon the above said right to exclusive use of the registered trademarks and their unfair competition against the plaintiffs, as well; (3) to confirm the defendants’ use of the Chinese characters for “Starbucks” in its enterprise name constituted the infringement upon the plaintiffs’ well-known trademark “Starbucks” (in Chinese); (4) to order the defendants to stop using all figures and marks identical or similar to any of the 6 trademarks, and to stop using the enterprise name containing the Chinese characters for “Starbucks”; (5) to confiscate and destroy the defendants’ existing infringing articles; (6) to order the defendants to make a public apology to the plaintiffs, to eliminate the negative influences, and to publish a statement of apology on Jiefang Daily and Xinmin Evening News; (7) to order the defendants to compensate 500,000 yuan of economic losses to the plaintiffs; and (8) to order the defendants to pay the plaintiffs a total amount of 560,000 yuan including the retainer paid by the plaintiffs reasonably for the lawsuit concerned.

Starbucks Corporation and President Corporation provided the following items of evidence:

1. A group of trademark registration documents, which manifest the registration of the 6 trademarks and their associated trademarks in the Mainland of China, US and other countries and regions in the world, and prove that the plaintiffs enjoy trademark rights over the 6 trademarks and their associated trademarks.

2. A group of evidential materials showing that the 6 trademarks were well-known trademarks, which manifest the public’s knowledge of the 6 trademarks and their associated trademarks, the duration and geographic scope of the plaintiffs’ use and propaganda of the above said trademarks, the records on protecting the above said trademarks as well-known trademarks, and other factors causing them to be well-known. The evidential materials prove that the above said trademarks were well-known globally and in the Mainland of China.

3. The industrial and commercial registration materials of Shanghai Starbucks and the Branch, which prove that the trade name in the enterprise name registered by the defendants is the same as the plaintiffs’ trademark “Starbucks” (in Chinese).

4. The relevant report on Jiefang Daily dated August 1, 2003, whose contents were as follows: Mr. Mao, general manager of Shanghai Starbucks, was interviewed by Jiefang Daily and said because he thought the US Starbucks Corporation established more than 4000 stores and the brand “Starbucks” (in Chinese) was well known, he rush-registered “Starbucks” (in Chinese) in Shanghai. The report proves that the defendants subjectively had the intention of “hitchhiking”.

5. The No. 7486 (2003) notarial deed issued by No. 1 Notarial Division of Huangpu District, Shanghai Municipality, which proves that the defendants used word and figurative marks similar to the plaintiffs’ 6 trademarks in the business activities.

6. Notarized spot check materials and the media’s relevant report on the defendants’ infringements, which prove that the public were confused about the plaintiffs and the defendants, as well as their products and services, and that the defendants subjectively had malice.

7. The notarial deed on statistics of the defendants’ customer volume, statistics of the defendants’ profits since its start of business, and invoices and receipts of the retainer, notarization fee and translation fee paid by the plaintiffs, which prove that the defendants should compensate the plaintiffs 500,000 yuan of economic losses, and pay the plaintiffs 560,000 yuan of fees including the retainer reasonably paid by the plaintiffs for the lawsuit concerned.

Shanghai Starbucks and the Branch argued: (1) Starbucks Corporation and President Corporation provided the notarized and certified corporation registration certificate which proves that Starbucks Corporation was established on November 4, 1985, but they alleged in the bill of complaint that Starbucks Corporation was founded in 1971 and applied for registration of the first trademark “STARBUCKS” in 1976. All the evidential materials provided by the plaintiffs on their rights to the trademark “Starbucks” (in Chinese) registered in the Mainland of China and the trademark “STARBUCKS” were photocopies instead of original copies. Among other provided evidence on the right to the trademark “STARBUCKS” registered abroad, the notarial deeds were separated from the notarized documents, and there was not a uniform mark. The items of evidence should not be adopted according to law, either. Therefore, the plaintiffs were not qualified as right holders. (2) Starbucks Corporation and President Corporation violated legal provisions by adding litigation claims after expiry of the deadline for provision of evidence. (3) The litigation claims of Starbucks Corporation and President Corporation could not be tenable substantively. The trademark “Starbucks” (in Chinese) and the trademark “STARBUCKS” (in English) were independent from each other, and the latter was irrelevant to the present case. The “Starbucks” (in Chinese) was merely a common trademark, and President Corporation had run its business for less than four years by the date of bringing the lawsuit, which was not long, and the public had little knowledge of this trademark, thus the trademark “Starbucks” (in Chinese) was not a well-known trademark. (4) Starbucks Corporation and President Corporation had no legal basis to demand the defendants to stop using the enterprise name containing the Chinese characters for “Starbucks”. The defendants acquired the right to the enterprise name containing the Chinese characters for “Starbucks” on October 20, 1999, and Starbucks Corporation acquired the right to the trademark “Starbucks” (in Chinese) after the defendants’ enterprise name was pre-approved. Therefore, the defendants’ right to enterprise name as the prior lawful right should be protected. (5) The defendants’ acts did not constitute trademark infringement or unfair competition. The defendants used the full enterprise name all along in its business without highlighting the Chinese characters for “Starbucks”, and did not infringe upon the plaintiffs’ right to exclusive use of the trademark “Starbucks” (in Chinese). The defendants lawfully used the coffee cup logo in the decorations of its stores for advertisement, and the logo was distinctively different from the plaintiffs’ figurative mark, i.e., the “mermaid” logo, in respect of composition and visual effect. Hence, the use did not constitute infringement upon the figurative mark. In addition, when Shanghai Starbucks was pre-approved to use the Chinese characters for “Starbucks” as a part of its enterprise name, the plaintiffs had no cafe or coffee enterprise named “Starbucks” (in Chinese) in the Mainland of China. To sum up, the litigation claims of Starbucks Corporation and President Corporation should not be upheld.

Shanghai Starbucks and the Branch submitted the following items of evidence:

1. The notification on pre-approval of Shanghai Starbucks’ enterprise name, which proves that Shanghai Starbucks’ name was pre-approved on October 20, 1999.

2. A group of evidential materials including photos and pictures, which prove that the round figure with white words and a circle on the green ground was an uncertain mark generally used by cafes.

3. The photos published by Jiefang Daily, which prove that Starbucks Corporation’s mermaid figurative mark (i.e., the word and figurative mark “STARBUCKS”) was distinctively different from the defendants’ logo of coffee cup, and there would not be any confusion.

4. The market investigation report, the application for revocation of the suspension of using the registered trademark for three consecutive years, and other similar evidential materials, which manifest that it was found from the investigation on President Corporation’s 5 chain stores in Shanghai that Starbucks Corporation never used the trademark “Starbucks” (in Chinese) (Class 42) after acquiring the right to exclusive use of it. Thus Shanghai Starbucks lawfully applied for revocation of the registered trademark.

Upon application of Starbucks Corporation and President Corporation, Shanghai No. 2 Intermediate Court ruled on January 6, 2004 to take evidence preservation measure against Shanghai Starbucks and the Branch.

After cross-examination of the evidence, both parties had objections to the time of Starbucks Corporation’s establishment and the issue of whether partial evidence provided by the plaintiffs existed lawfully and effectively.

Starbucks Corporation and President Corporation alleged that Starbucks Corporation was founded in 1971, and registered the first trademark “STARBUCKS” in 1976. However, Shanghai Starbucks and the Branch held that the registration certificate provided by the plaintiffs proves that Starbucks Corporation was established on November 4, 1985, thus Starbucks Corporation’s actual identity did not conform to its assertion.

Shanghai No. 2 Intermediate Court held: The time when Starbucks Corporation was founded, as alleged by Starbucks Corporation and President Corporation, was indeed contradictive to the time of its establishment as indicated on Starbucks Corporation’s registration document. In order to determine the time of Starbucks Corporation’s establishment, the notarized and certified corporation registration document provided by the plaintiffs should be deemed as the basis. That is to say, it should be determined that Starbucks Corporation was established on November 4, 1985. Hence, Starbucks Corporation’s statement that it registered the trademark in 1976 could not be tenable, while the objection of Shanghai Starbucks and the Branch to the time of Starbucks Corporation’s establishment was tenable.

Shanghai Starbucks and the Branch had its objection to the authenticity of partial evidence provided by Starbucks Corporation and President Corporation, and held: (1) On some documents notarized in US, it was Xingyuan Coffee Company, a party not involved in the case, who made the declaration and guarantee; (2) Among the evidential materials such as trademark registration documents and accounting documents, etc., the notarial deeds and the notarized documents were still separated from each other, and there was not a uniform mark; (3) The plaintiffs had the evidential materials such as the trademark registration documents, etc., which were formed out of US, notarized and certified in US, but had the evidential materials such as the news reports of the media of all over the world, which were collected in Hong Kong, notarized and certified in Hong Kong. The notarization and certification were not lawful, and among the evidential materials on rights, those such as trademark registration lists and branch store lists, etc. were made by the plaintiffs themselves, and had no probative force; (4) The information sourced from overseas websites and acquired by the plaintiffs from Internet in China was overseas evidence, and should not be adopted before it was notarized and certified.

Starbucks Corporation and President Corporation held: (1) Some notarized documents as referred to by Shanghai Starbucks and the Branch stated, “A senior employee of Starbucks Corporation that runs business in the name of Xingyuan Coffee Company hereby makes the declaration.” Since Starbucks Corporation carried out its business activities in the name of Xingyuan Coffee Company, it was not inappropriate for the above said declaration to state the declarer and guarantor as Starbucks Corporation’s senior employee. (2) Generally, the notarized and certified documents were bound up together with other ones, but in the present case, there were a large number of documents bound up into different volumes, and this method was permitted by the judicial practices of US. (3) The number of documents obtained by Starbucks Corporation around the world on proving its trademark rights or business eligibility, etc. was large, and the plaintiffs submitted lists to reflect the overall situation of their relevant rights on the basis of selecting the closely associated evidence on rights. Other evidence in the present case could corroborate the authenticity of such contents. According to the Rules of China on Evidence in Civil Litigation, the place where evidence is formed shall be understood as the place where the evidence is colleted. In the present case, the relevant evidential materials submitted by the plaintiffs were mainly collected in US and Hong Kong, and had been notarized and certified, thus completely conformed to the rules on evidence. (4) Under supervision of Chinese notaries, the information downloaded from websites was objective and legal, and could be used as evidence.

Shanghai No. 2 Intermediate Court held: (1) On the basis of the relevant evidential materials and the statements made by the plaintiffs, Starbucks Corporation should be deemed as having made declaration and provided guarantee in some documents provided by the plaintiffs and notarized in US. The plaintiffs’ explanation was reasonable and should be adopted; (2) When a large number of documents are notarized, the party concerned may, for the sake of convenience or for some particular needs, bind up the notarized documents into different volumes, provided that it shall meet the requirements on notarization procedures. Since there were a large number of notarized documents in the present case, Starbucks Corporation bound up them into volumes, with a list being attached to the notarial deed. It was found from examination that the names of the listed documents were corresponding to the notarized documents one by one, and all listed documents were certified. Therefore, the above said notarized documents met the procedural requirements; (3) Article 11 of the “Several Provisions of the Supreme People’s Court on Evidence in Civil Litigation” (hereinafter referred to as the Rules on Evidence in Civil Litigation) prescribes, “If the evidence submitted by a party concerned is formed out of the territory of the People’s Republic of China, the evidence shall be subject to the certification of the notarial office of that country and shall be authenticated by the embassy of the People’s Republic of China stationed in that country, or shall be subject to the certification formalities as provided in the relevant treaties concluded between the People’s Republic of China and that country. If the evidence submitted by a party concerned is formed in Hong Kong, Macao or Taiwan, relevant procedures shall also be fulfilled.” In the present case, whereas the trademark “STARBUCKS” was first registered in US, Starbucks Corporation was also registered in US, and its commercial activities and its trademark management center were also located in US, it was not inappropriate for the plaintiffs to collect corresponding evidence on trademark rights in US. All the evidence collected by the plaintiffs in US and in Hong Kong had been notarized and certified, and should be recognized. As for the information sourced from overseas websites and collected from Internet within China, the plaintiffs had it notarized in China, which conformed to the Rules on Evidence in Civil Litigation. To sum up, the objection of Shanghai Starbucks and the Branch to the authenticity of partial evidence provided by the plaintiffs could not be tenable.

It was found out by Shanghai No. 2 Intermediate Court after trial:

Starbucks Corporation was registered and established in US, and ran coffee retail business in US and around the world by way of corporate operation and franchise. The corporation establishment certificate was issued on November 4, 1985. President Corporation was a Chinese-foreign cooperative enterprise established on March 2, 2000 upon approval of the administrative authority for industry and commerce. Its business scope covered coffee, teahouse (including drinks), refreshments, ice creams and catering.

The word mark “STARBUCKS” was registered in US on November 26, 1985, and was used upon approval on commodities of Class 21 (coffee kettles, tea cups, etc.). By March 11, 2003, the word mark “STARBUCKS” had been registered for the commodities and services of Classes 7, 9, 11, 14, 16, 18, 25, 29, 30, 32 and 42, etc., the word and figurative mark “STARBUCKS” had been registered for the commodities and services of Classes 30, 31 and 42, and the word and figurative mark “STARBUCKS COFFEE” had been registered for the commodities and services of Classes 7, 9, 11, 14, 16, 18, 21, 25, 28, 29, 30, 32, 35 and 42. The above said classes of trademarks containing the word mark “STARBUCKS” (hereinafter referred to as the “STARBUCKS” series trademarks) were also registered in more than 120 countries and regions including UK, France, Germany, Brazil, South Africa, Australia, India, Japan, China’s Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan Region for more than 20 international classes of commodities and services such as Classes 30 and 42. By the time when the present case was entertained, the “STARBUCKS” series trademarks had been totally registered for nearly 1400 times around the world, including the trademark “STARBUCKS” and the word and figurative mark “STARBUCKS COFFEE” registered for about 600 times, and the word and figurative mark “STARBUCKS” registered for more than 100 times.

On September 28, 1997, Starbucks Corporation and Starbucks US Brands Corporation concluded a trademark protection and license agreement. According to the agreement and its amended documents, Starbucks US Brands Corporation should grant Starbucks Corporation a non-exclusive right, license and privilege, and Starbucks Corporation was therefore entitled to use or sub-license others in US (but not including Hawaii, possessions and dependencies of US) to use Starbucks US Brands Corporation’s all properties including the trademarks and service marks.

According to Starbucks Corporation’s annual accounting reports, Starbucks Corporation had 2,498 stores in 13 countries including China in 1999, its net income reached USD 1.68 billion, and its assets totaled USD 1.25 billion; in 2002, Starbucks Corporation had 5886 stores around 30 countries and regions, its net income reached USD 3.23 billion, and its assets totaled USD 2.29 billion.

According to the information on Internet and the US authoritative publications, the brand “STARBUCKS” ranked No. 88 among the global top brands on the 2001 Business Week, with the brand value at USD 1.76 billion. In the “Most Admired Global Companies” published on the Fortune magazine in 2001 and 2002, the brand “STARBUCKS” ranked No. 1 among the brands of food service companies for two consecutive years. In the 2002 “Fortune 1000” (the 1000 largest corporations in US), the brand “STARBUCKS” ranked No. 4 in the food service class. In the US super brands published on Issue 25 of the 2003 Brand Week, “STARBUCKS COFFEE” ranked No. 8 among the super brands of fast food. In the column of world well-known trademarks on www.dealbrand.com (browsed on May 9, 2004), there listed the logo “US Starbucks” and the word and figurative mark “STARBUCKS COFFEE”.

In October 1999, Korea Intellectual Property Office determined in a decision on an application for objection to trademark registration that the trademark “STARBUCKS”, which was registered in Korea for 9 commodities and services of Class 112 (the restaurant industry), etc., was a well-known foreign trademark in Korea.

Upon approval of the Trademark Office of China, Starbucks Corporation registered the word mark “STARBUCKS” and the word and figurative mark “STARBUCKS” for Class 42 separately on May 14 and June 28, 1996, with the registration numbers being 839975 and 851969. The ratified services of both marks were cafes and restaurants. On January 7, 1997, Starbucks Corporation registered the word mark “STARBUCKS” and the word and figurative mark “STARBUCKS” for Class 30, with the registration numbers being 926045 and 926050. The ratified commodities of both marks included coffee, coffee drinks, coffee flavorings, tea and tea substitutes, etc. From May 1996 to March 2003, Starbucks Corporation also registered the word mark “STARBUCKS” as well as the word and figurative marks “STARBUCKS” and “STARBUCKS COFFEE” for commodities and services of other classes. Specifically, the trademark “STARBUCKS” was registered for Classes 7, 9, 11, 14, 16, 18, 21, 25, 28, 29 and 32, the word and figurative mark “STARBUCKS” was registered for Classes 7, 11, 21, 25 and 29, and the word and figurative mark “STARBUCKS COFFEE” was registered for Classes 30 and 42. On February 1, 1999, Starbucks Corporation registered the word mark “Starbucks” (in Chinese) in Taiwan of China for Class 42 for the first time. In December, 2001, the Intellectual Property Office, Ministry of Economic Affairs, Taiwan determined in a trademark objection case that the trademark “Starbucks” (in Chinese) was a “well-known mark”. In the Mainland of China, Starbucks Corporation registered the word mark “Starbucks” (in Chinese) for Class 35 on December 28, 1999. After that, it registered the word mark “Starbucks” (in Chinese) for Class 42 (restaurants, cafes, eateries, fast-food restaurants, etc.) and Class 30 (coffee, coffee drinks, white coffee drinks, coffee flavorings, biscuits, cakes, breads, etc.) separately on February 21 and 28, 2000, with the registration numbers being 1367394 and 1369000. In addition, Starbucks Corporation registered the word mark “Starbucks” (in Chinese) for Classes 21, 25 and 35. By the lawsuit of the present case was entertained, Starbucks Corporation registered the word mark “Starbucks” (in Chinese) in Hong Kong Special Administrative Region for Classes 21, 25 and 30, and in Macao Special Administrative Region for Classes 21, 25, 30, 35 and 42.

In January 1999, the first Starbucks chain store within the Mainland of China opened its business in Beijing. At that time, Starbucks Corporation advertised its trademark, products and services by printing advertising materials in order to cooperate in the start of business of the new store, and the advertisement contents involved the way of making coffee, the catalogue of the products, the start of business of new stores, the background of the brand Starbucks, the service quality, etc. These advertising materials used the word and figurative marks “STARBUCKS” and “STARBUCKS COFFEE”, and meanwhile used the Chinese characters for “Starbucks”. By December 2003, Starbucks Corporation had established 49 Starbucks chain stores by way of franchise in Beijing, Guangzhou and Shenzhen besides Shanghai.

In March 20, 2000, Starbucks Corporation, Starbucks Coffee International, Inc (Starbucks Corporation’s wholly-owned subsidiary corporation established in US, hereinafter referred to as SBI) and President Corporation concluded a trademark license agreement. According to the trademark license agreement, Starbucks Corporation was the trademark owner, and approved SBI to authorize President Corporation to use relevant trademarks in Shanghai, China for developing and running STARBUCKS stores, engaging in core business and selling core products; the trademarks licensed for use, either registered or not registered, including “STARBUCKS”, the word and figurative mark “STARBUCKS COFFEE”, and the mark “Starbucks” (in Chinese), which were all trademarks of Class 42, belonged to Starbucks Corporation. In terms of nature, the agreement was a contract on license for common use. The three parties amended the above said agreement in August 2002. According to the attachment to the amended agreement, President Corporation may use the marks “STARBUCKS” and “Starbucks” (in Chinese) as well as the word and figurative mark “STARBUCKS”, which were separately registered by Starbucks Corporation in the Mainland of China for Class 30 and Class 42.

After President Corporation was established, it successively established Starbucks coffee chain stores to expand its business, and used the trademark “STARBUCKS”, the word and figurative mark “STARBUCKS”, and the trademark “Starbucks” (in Chinese) in its business activities. According to President Corporation’s accounting reports, President Corporation’s assets in 2000 totaled more than 43 million yuan, its business income was about 9.8 million yuan, and its net profits were about –7.16 million yuan; by 2002, President Corporation’s assets totaled more than 58,110,000 yuan, its business income was nearly 106 million yuan, and its net profits exceeded 7 million yuan; in 2003, its business income still took a trend of continuing increase. President Corporation and other associated persons made market-based advertisement of the “STARBUCKS” series trademarks, etc. by way of entrusted advertising, sponsorship, and in other methods of cooperation, as well. It also contributed a large amount of advertisement costs. Various media made a lot of propagandizing reports on President Corporation and the above said trademarks.

Shanghai Starbucks was an enterprise running drinks and Western-style food, and retailing eat-here liquor. It got pre-approval of its enterprise name on October 20, 1999, and was established on March 9, 2000. On July 1, 2003, Shanghai Starbucks established the Branch upon approval, with the business scope covering drinks, food (excluding cooked food) and eat-here liquor.

According to the evidential materials collected from evidence preservation, Shanghai Starbucks and the Branch committed the following acts in its business places and business activities:

1. Using round green figurative marks printed with the words “Shanghai Starbucks Cafe Company Limited” and with three pentacles on glass doors, front glass, and screens;

2. Using round green figurative marks with the logo of coffee cup in the center and the words “Shanghai Starbucks Cafe” and two pentacles around on light boxes and name cards of the coffee stores;

3. Using the word mark “Shanghai Starbucks Cafe Company Limited” on glass windows, standing plates, payment slips, invoices with fixed value, and personal name cards of the coffee store;

4. Using the word mark “Starbucks Cafe” on glass doors, covers of price lists, standing plates, and name cards of the coffee stores;

5. Using the word mark “Starbucks Characteristic Coffee (in Chinese) Starbuck Coffee (in English)” on price lists; and

6. Using the word mark “Starbucks Characteristic” on payment slips.

The focuses of the dispute in the present case were as follows: (1) Whether the 6 trademarks were well-known trademarks; and (2) Whether the acts of Shanghai Starbucks and the Branch constituted trademark infringement and unfair competition.

Shanghai No. 2 Intermediate Court held that:

In cross-examination of the evidence, the objection of Shanghai Starbucks and the Branch to the time of Starbucks Corporation’s establishment was tenable, however, the trademark registration documents, etc. provided by Starbucks Corporation and President Corporation showed that, in the Mainland of China, Starbucks Corporation was the registrant of the 6 trademarks, and lawfully enjoyed the right to exclusive use of the trademarks, while President Corporation enjoyed the right to use the above said trademarks according to the contract. Therefore, it was not inappropriate for Starbucks Corporation and President Corporation to jointly bring the lawsuit to raise their respective claims. The allegation of Shanghai Starbucks and the Branch that the plaintiffs were not qualified as litigation subjects was short of factual and legal basis, and could not be tenable.

After the present case was entertained, Starbucks Corporation and President Corporation applied for several times for postponement of the deadline for provision of evidence on the ground that the provided evidence had to be notarized, certified and translated; while Shanghai Starbucks and the Branch applied for several times for such postponement on the grounds that they had a large number of evidence items, that they needed a lot of time to read the evidence, and that they needed to provide refuting evidence. On the basis of the specific facts of the case, and after soliciting opinions from both parties, the court presided over exchange of evidence for several times, and the last time was on September 14, 2004. When the case was heard in court on January 7, 2005, the plaintiffs proposed that, besides the 6 trademarks, the trademarks they requested for protection as well-known trademarks and for protection of anti-unfair competition included the word and figurative mark “STARBUCKS COFFEE” registered for commodities of Class 30 and services of Class 42. The defendants held that the plaintiffs added litigation claims after the deadline for provision of evidence, which violated the Rules on Evidence in Civil Litigation and should not be approved. While the plaintiffs alleged that since the litigation claims actually included the above said two trademarks, the request was merely to detail the litigation claims, and should be upheld.

Article 38 (2) of the Rules on Evidence in Civil Litigation prescribes: “Where the people’s court arranges for the parties concerned to exchange evidence, the day when evidence is exchanged shall be the day when the time period for providing evidence expires.” Article 34 (3) prescribes: “In case any party adds or modifies any litigation claim or lodges a counterclaim, he shall do so prior to the expiry of the time period for providing evidence.” Therefore, the day when the evidence was exchanged for the last time, i.e., September 14, 2004, should be the deadline for provision of evidence. Since Starbucks Corporation and President Corporation specified both in their bill of complaint and in the litigation activities organized by the court prior to the deadline for provision of evidence that the trademarks they requested for well-known trademark protection and anti-unfair competition protection were the 6 trademarks, their request in the court hearing of January 7, 2005 for expanding the scope of trademark protection to the word and figurative mark “STARBUCKS COFFEE” for commodities of Class 30 and services of Class 42 was to add a litigation claim after the deadline for provision of evidence. In conclusion, the plaintiffs’ view of detailing the litigation claims could not be tenable, and the above said litigation claims should not be accepted.

I. On determining well-known trademarks.

Starbucks Corporation and President Corporation held: The registered trademark series, including the mark “STARBUCKS”, the word and figurative mark “STARBUCKS”, and the mark “Starbucks” (in Chinese) belonged to an entirety, therefore, the said series of trademarks should not be divided by time or territory, and the plaintiffs’ above said series of trademarks had the same prestige in China as a whole. Shanghai Starbucks and the Branch held: the registered trademark “Starbucks” (in Chinese) and the registered trademark “STARBUCKS” were independent from each other, and the latter was irrelevant to the present case; none of the plaintiffs’ 6 trademarks was qualified as a well-known trademark.

Article 22 (1) of the Interpretations of the Supreme People’s Court Concerning the Application of Laws in the Trial of Cases of Civil Disputes Arising from Trademarks prescribes: “In the hearing of a dispute over trademark, the people’s court may, according to the allegations of the parties concerned and the specific circumstance of the case, decide by law whether the registered trademark involved is a well-known one or not.” Article 14 of the “Trademark Law of the People’s Republic of China” (hereinafter referred to as the Trademark Law) prescribes: “The following factors shall be taken into consideration in the determination of well-known trademarks: (1) how well is that trademark known by the relevant public; (2) the period during which that trademark has been in use; (3) the period, extent and geographic scope of any publicity of that trademark; (4) the record of protection of that trademark as a well-known trademark; and (5) other factors for which that trademark is well-known.” Upon request of Starbucks Corporation and President Corporation for confirming the 6 trademarks as well-known trademarks, and in order to settle the dispute between the plaintiffs and the defendants, it is necessary to decide whether the relevant trademarks in question, including “Starbucks” (in Chinese), were well-known trademarks.

Among the trademarks claimed by Starbucks Corporation and President Corporation, the trademark “STARBUCKS” was registered the earliest, and became the core of a series of trademarks formed later. Both the word and figurative mark “STARBUCKS” and the word and figurative mark “STARBUCKS COFFEE” contained the word “STARBUCKS”. Since the trademark “STARBUCKS” was registered in US in 1985, the “STARBUCKS” series trademarks were registered in more than 120 countries and regions around the world for more than 20 classes of commodities and services at a large quantity. With the operation and advertisements of relevant right holders, the “STARBUCKS” series trademarks or their brands gained a high prestige around the world. The trademark “STARBUCKS” was even protected in Korea as a well-known trademark. The trademark “STARBUCKS” was registered in the Mainland of China in 1996, and was closely connected with the trademark “Starbucks” (in Chinese). On the basis of the relevant evidence provided by the plaintiffs, among the characters “星巴克”, or “Starbucks” (in Chinese), “星” is the free translation of “STAR” in “STARBUCKS”, and “巴克” is the transliteration of “BUCKS”. Integrally, “Starbucks” (in Chinese) is the combination of the free translation and transliteration of the trademark “STARBUCKS”. Therefore, the trademark “星巴克”, i.e., “Starbucks” (in Chinese), is the Chinese translation of the trademark “STARBUCKS”, and the variation of the trademark “STARBUCKS” in the areas of Chinese language. In February 1999, the word mark “Starbucks” (in Chinese) was registered in Taiwan of China, and was recognized as a “well-known” mark. Although Starbucks Corporation registered the trademark “Starbucks” (in Chinese) in the Mainland of China a little later, it filed the application for registration in 1998, and meanwhile advertised the word mark “Starbucks” (in Chinese). In December 1999, the trademark “Starbucks” (in Chinese) was registered upon approval for Class 35, and was later registered by Starbucks Corporation for Class 42.

After Starbucks Corporation entered the market of the Mainland of China, it developed its business by franchise, the chain scale of Starbucks coffee stores expanded rapidly, and the sales volume increased largely for consecutive years by taking a good trend. The plaintiffs made long-term wide advertisements for the trademarks “STARBUCKS” and “Starbucks” (in Chinese), and contributed a lot of funds. Due to the wide international prestige of the “STARBUCKS” series trademarks, and the plaintiffs’ advertising and use of the trademark “Starbucks” (in Chinese) in the areas of Chinese language, the trademarks “STARBUCKS” and “Starbucks” (in Chinese) became prestigious rapidly, and have been familiar to the public of the Mainland of China. On the basis of the above said facts, it should be determined that the trademarks “STARBUCKS” (Class 42) and “Starbucks” (in Chinese) (Class 42) were well-known trademarks.

As for the issue of whether other 4 trademarks claimed by Starbucks Corporation and President Corporation were well-known trademarks, since the determination of the two well-known trademarks “STARBUCKS” and “Starbucks” (in Chinese) was enough to provide sufficient and effective legal protection of the plaintiffs’ rights, there was no necessity to determine whether other 4 trademarks were well-known. Hence, the plaintiffs’ above said litigation claim was not upheld.

II. On the issue of trademark infringement and unfair competition.

Starbucks Corporation and President Corporation accused that the infringing acts of Shanghai Starbucks and the Branch involved two aspects, i.e., registering the Chinese characters for “Starbucks” as the trade name of their enterprise names; using various Chinese and English word and figurative marks in their business activities.

(1) On the issue of whether the registration by Shanghai Starbucks and the Branch of the Chinese characters for “Starbucks” as the trade name of their enterprise names constituted infringement.

1. Starbucks Corporation used the Chinese characters for “Starbucks” earlier. In terms of the time of using the Chinese characters for “Starbucks”, Starbucks Corporation registered the trademark “Starbucks” (in Chinese) in Taiwan of China on February 1, 1999, while Shanghai Starbucks’ enterprise name was pre-approved on October 20, 1999. In terms of the time of registering the enterprise name and the trademark in the Mainland of China, the trademark “Starbucks” (in Chinese) was first approved for registration on December 28, 1999, and Starbucks Corporation acquired the right to exclusive use of the trademark as of the date of approval for registration; Shanghai Starbucks was established on March 9, 2000. Its enterprise name was pre-approved on October 20, 1999. However, according to the relevant provisions of the “Implementation Measures for the Registration Administration of Enterprise Names” of China, an enterprise may, as of the date of establishment, enjoy the right of name to the name registered upon its application, thus the right to the trademark “Starbucks” (in Chinese) was acquired earlier than the defendants’ right to their enterprise names.

2. Shanghai Starbucks had subjective malice of taking advantage of other’s well-known trademark by registering the Chinese characters for “Starbucks” as the trade name of its enterprise name. Starbucks Corporation had very good performance after entering the market of the Mainland of China. Meanwhile, due to the wide international prestige and good reputation of the “STARBUCKS” series trademarks, the trademarks “STARBUCKS” and “Starbucks” (in Chinese) became prestigious in the Mainland of China rapidly. Before Shanghai Starbucks registered its enterprise name, the trademarks “STARBUCKS” and “Starbucks” (in Chinese) had already had a high prestige in the Mainland of China. According to the report of Jiefang Daily dated August 1, 2003, Mr. Mao, general manager of Shanghai Starbucks, said when he was interviewed that US Starbucks Corporation established more than 4000 stores, and he liked the brand “Starbucks” (in Chinese), so he rush-registered “Starbucks” (in Chinese) in Shanghai. Thus it could be deduced that the defendants had known the trademarks “STARBUCKS” and “Starbucks” (in Chinese) before registering its enterprise name. However, in the court hearing, Shanghai Starbucks denied rush-registration, and provided another explanation of its originality to the enterprise name as follows: after Zhuang Lizhi, board chairman of Shanghai Starbucks, saw the film Lion King, she liked Simba, dramatis personae of the film, very much, and was deeply impressed by Simba’s image of sitting in the dark full of stars, and thus came to the originality. Later, she changed “辛巴” (Chinese for Simba) into “星巴”. Meanwhile, considering that she needed to restrain opponents when doing business, she added the character “克”, and composed the Chinese characters for “Starbucks”. Shanghai Starbucks’ above explanation was very far-fetched. It was hard to believe that the defendant’s use of the Chinese characters for “Starbucks” was merely due to the coincidence of originality, and meanwhile the explanation was contradictive to its prior statement of “rush-registration”. In comprehensive consideration of the facts in the present case, the defendants obviously had the intention of taking advantage of the plaintiffs’ well-known trademarks by using the characters identical to the plaintiffs’ registered trademark as their own trade name.

Article 1 of the Interpretations of the Supreme People’s Court Concerning the Application of Laws in the Trial of Cases of Civil Disputes Arising from Trademarks prescribes: “The following acts shall be the acts of causing other damages to the registered trademark of other people as provided in Article 52 (v) of the Trademark Law: (i) Using the words that are identical or similar to the registered trademark of any other person as the name of one’s enterprise on identical or similar commodities so that the relevant public are easy to be misled.” Hence, Shanghai Starbucks’ acts fell under the circumstance of Article 52 (v) of the Trademark Law, i.e., “causing other damages to other’s right to exclusive use of the registered trademark”, violated the principles of fairness, honesty and credibility for civil activities, and infringed upon Starbucks Corporation’s right to exclusive use of the well-known trademarks “STARBUCKS” and “Starbucks” (in Chinese) (for Class 42).

Operators shall, in market transactions, comply with the principles of free will, equality, honesty and credibility, and abide by recognized commercial ethics. Shanghai Starbucks was an enterprise that ran cafe and provided coffee services, and competed against Starbucks Corporation in the same industry. The trade name “Starbucks” (in Chinese) registered by Shanghai Starbucks was the core part of its enterprise name, and was completely identical to the trademark “Starbucks” (in Chinese) which was owned by Starbucks Corporation and licensed to President Corporation for use. Thus its registration had the obvious malice of taking advantage of other’s well-known trademarks, had caused the public to misidentify or misunderstand the trademark registrant and the enterprise name owner, and constituted unfair competition against Starbucks Corporation. Shanghai Starbucks should bear the civil liabilities of stopping infringements, eliminating negative influences, making an apology and compensating losses.

(2) On the issue of whether the use of various Chinese characters, English words and figurative marks by Shanghai Starbucks and the Branch in their business activities constituted infringement.

Starbucks Corporation and President Corporation alleged that, the mark “Starbucks” (in Chinese), the characters “Starbuck”, the logo of coffee cup and other various marks which Shanghai Starbucks and the Branch used in their business activities were identical or similar to the plaintiffs’ trademark “Starbucks” (in Chinese), trademark “STARBUCKS” as well as word and figurative mark “STARBUCKS”. The defendants’ above said acts also constituted trademark infringement and unfair competition. Shanghai Starbucks and the Branch argued that they did not use the Chinese characters for “Starbucks” distinctively in their business activities, and their use of the relevant words and figurative marks was reasonable and lawful, and did not constitute trademark infringement or unfair competition. In the present case, the defendants used the following marks in their business activities: 1. the round green figurative mark bearing the words “Shanghai Starbucks Cafe Company Limited” and three pentacles; 2. the word mark “Shanghai Starbucks Cafe Company Limited”; 3. the round green figurative mark bearing the words “Shanghai Starbucks Cafe” and two pentacles; 4. the word mark “Starbucks Cafe”; 5. the word mark “星巴克特色咖啡 Starbuck Coffee”; and 6. the word mark “Starbucks Characteristic” (in Chinese).

Firstly, all the above said 6 marks contained the Chinese characters for “Starbucks”. Shanghai Starbucks and the Branch either used the characters as the trade name in the enterprise name or as the shortened enterprise name, or used them in combination with the general name of the commodities. The defendants’ registration of the Chinese characters for “Starbucks” as the trade name in the enterprise name constituted trademark infringement, and their use of various marks containing the trade name “Starbucks” (in Chinese) in their business activities was short of lawful basis.

Secondly, when the English word “Starbuck” in Mark 5 used by Shanghai Starbucks and the Branch was compared with the word “STARBUCKS”, it could be found that “Starbuck” lacked a letter “s”, and the ways of capitalizing or lowercasing letters were also different. But the alphabetic orders of other letters of the two marks were completely the same, and their pronunciations were very similar to each other. Since “Starbuck” was the core part of Mark 5, in view of the distinctiveness and prestige of the plaintiffs’ trademark “STARBUCKS”, it should be determined that Mark 5, which contained the English word “Starbuck”, was similar to the trademark “STARBUCKS”.

Thirdly, when Mark 3 used by Shanghai Starbucks and the Branch (called by the plaintiffs and the defendants as “coffee cup logo”) was compared with the word and figurative mark “STARBUCKS” (called by the plaintiffs and the defendants as “mermaid trademark”), it could be found that they were identical in the following aspects: either mark had two circles, with the big circle covering the small one; both marks adopted green as the basic color; either mark had two symmetrical pentacles in the middle of the two circles. Their differences included: in the plaintiffs’ trademark, there was a mermaid logo in the inner circle, while there was a coffee cup logo in the inner circle of the defendants’ mark; in the plaintiffs’ trademark, there were the word “STARBUCKS” above the two circles but it was blank below, while there were the words “Shanghai Starbucks” at the same position of the defendants’ mark and the word “Cafe” below. After all factors were combined, the integral structures were similar to each other. After separated observation, and meanwhile in view of the distinctiveness and prestige of the word and figurative mark “STARBUCKS”, it should be determined that the defendants’ Mark 3 was similar to the word and figurative mark “STARBUCKS”.

To sum up, by using various marks identical to Starbucks Corporation’s trademark “Starbucks” (in Chinese) in their business activities, and by using marks similar to Starbucks Corporation’s trademark “STARBUCKS” and its word and figurative mark “STARBUCKS”, Shanghai Starbucks and the Branch jointly infringed upon Starbucks Corporation’s right to exclusive use of the well-known trademarks “STARBUCKS” and “Starbucks” (in Chinese) (both for Class 30 and Class 42), as well as the right to exclusive use of the word and figurative mark “STARBUCKS” (for Class 42 and Class 30), and meanwhile infringed upon President Corporation’s right to use the above said trademark. Their acts fell under the circumstance of Article 52 (v) of the Trademark Law, i.e., “causing other damages to other’s right to exclusive use of the registered trademark”. The defendants’ acts meanwhile constituted unfair competition against the plaintiffs, and they should jointly bear the civil liabilities of stopping infringements, eliminating negative influences, making an apology and compensating losses according to law.

III. On the amount of compensation in the present case.

Article 56 (1) and (2) of the Trademark Law prescribe: “The amount of compensation for infringing upon the right to exclusive use of a trademark shall be the proceeds obtained from the infringement during the period of infringement, or the losses suffered by the infringed due to the infringement during the period of being infringed, including the reasonable expenses paid by the infringed to stop the infringing acts. If it is difficult to determine the proceeds obtained from the infringement referred to in the preceding paragraph, or it is difficult to determine the losses suffered by the infringed due to the infringement, the people’s court shall determine a compensation of 500,000 Yuan or below according to the circumstances of the infringing acts.” Article 20 (1) of the “Anti-unfair Competition Law of the People’s Republic of China” (hereinafter referred to as Anti-unfair Competition Law) prescribes: “A manager shall, if causing any damage to the damaged party in violation of this Law, bear the liability for compensation. The amount of compensation shall be equivalent to the profits made by the damager during its damaging if it is difficult to measure the amount of damage; it shall also compensate the reasonable costs to the damaged party who has paid the costs to investigate the activities of unfair competition made by damager.”

The amount of compensation claimed by Starbucks Corporation and President Corporation in the lawsuit totaled 1,060,000 yuan. As for the economic losses, on the basis of the analysis of the operational conditions of Shanghai Starbucks and the Branch for the latest three years, their profits of the three years were 2,720,000 odd yuan, but the plaintiffs only claimed for 500,000 yuan; as for the reasonable expenditures paid for stopping the infringements and the unfair competition, the plaintiffs claimed for 488,000 yuan of retainer, 20,000 yuan of notarization fee, and 52,000 yuan of translation fee, with the total amount at 560,000 yuan. As for the retainer, the plaintiffs and the law firm agreed on the hour-based payment at the rate of 3,000 yuan/hour. The defendants argued that the amount of their profits calculated by the plaintiffs was short of basis, and should not be recognized. They also held that the lawyers spent too much time in collecting irrelevant evidence on the well-known trademarks, and thus the plaintiffs’ calculation of the retainer was not reasonable.

It was on the basis of the profits made by Shanghai Starbucks and the Branch from infringements that Starbucks Corporation and President Corporation claimed for compensation of economic losses. The amount of profits was calculated on the basis of the notarized statistics of the defendants’ customer volume. Although some factors on the formation of the defendants’ profits were taken into account at the time of calculation, the said amount is not completely objective and reasonable in general. Thus Shanghai No. 2 Intermediate Court did not adopt the amount of profits calculated in this way. As for the retainer claimed by the plaintiffs, a reasonable amount should be determined in light of the actual situation of the dispute concerned. Since both the profits made by the two defendants from infringements and the losses suffered by the two plaintiffs from the infringements were hard to be determined, the amount of compensation should be lawfully determined as 500,000 yuan in view of the specific circumstance.

In order to eliminate the negative influences of the infringements of Shanghai Starbucks and the Branch to Starbucks Corporation and President Corporation within a reasonable scope, the defendants shall publish an announcement on Xinmin Evening News designated by the court, make an apology to the plaintiffs regarding their infringements, and eliminate the negative influences. The plaintiffs’ claim for publishing the announcement on two newspapers is not upheld. As for the plaintiffs’ litigation claims for confiscation and destruction of the defendants’ existing infringing articles, they did not fall within the scope of trial of the present case because confiscation and destruction are not the methods of bearing civil liabilities.

To sum up, Shanghai No. 2 Intermediate Court decided as follows on December 31, 2005:

1. Shanghai Starbucks and the Branch shall stop infringing upon Starbucks Corporation’s right to exclusive use of the well-known trademarks “STARBUCKS” and “Starbucks” (in Chinese) (both for Class 42); stop infringing upon Starbucks Corporation’s right to exclusive use of the trademark “STARBUCKS”, the trademark “Starbucks” (in Chinese) as well as the word and figurative mark “STARBUCKS”; and stop infringing upon President Corporation’s right to use the above said trademarks.

2. Shanghai Starbucks and the Branch shall stop their unfair competition against Starbucks Corporation and President Corporation.

3. Shanghai Starbucks and the Branch shall, within 30 days as of effectiveness of the present judgment, modify the enterprise name, and the modified enterprise name shall not contain the Chinese characters for “Starbucks”.

4. Shanghai Starbucks and the Branch shall compensate 500,000 yuan of economic losses to Starbucks Corporation and President Corporation.

5. Shanghai Starbucks and the Branch shall publish an announcement on Xinmin Evening News (the contents shall be subject to the court’s verification), make an apology to Starbucks Corporation and President Corporation, and eliminate the negative influences.

6. Other litigation claims of Starbucks Corporation and President Corporation shall not be upheld.

Shanghai Starbucks and the Branch were dissatisfied with the judgment of the first instance, and appealed to the Higher People’s Court of Shanghai Municipality (hereinafter referred to as Shanghai Higher Court), pleading the court to reverse the judgment of the first instance, and to reject all litigation claims of Starbucks Corporation and President Corporation. There grounds were as follows: (I) The procedures in the judgment of the first instance were unjust. (1) Shanghai No. 2 Intermediate Court postponed the deadline for the appellees’ provision of evidence again and again, but did not provide Shanghai Starbucks and the Branch with enough time for reading the evidence and preparing for refuting materials; (2) Shanghai No. 2 Intermediate Court accepted the evidence provided by the appellees, but did not accept the material evidence provided by Shanghai Starbucks and the Branch such as paper cups, drinking cups, napkins, etc. (II) The judgment of the first instance found the facts unclearly, and applied laws incorrectly. (1) The large amount of overseas evidence provided by the plaintiffs was not notarized at the place where such evidence was formed; some overseas evidence was separated from notarized documents, and it was wrong for Shanghai No. 2 Intermediate Court to adopt such evidence; (2) It was wrong for the judgment of the first instance to determine the trademark “Starbucks” (in Chinese) as a well-known trademark. The judgment of the first instance did not find out the facts proving the trademark “Starbucks” (in Chinese) to be well-known, and omitted the examination of the “Notification for Archival Filing of the Contract on License for Use of the Trademark” dated October 26, 2000. The notification can prove that the Beijing Company of the appellee’s first chain store within China did not obtain the trademark “Starbucks” (in Chinese) until February 21, 2000. Before that, the trademark “Starbucks” (in Chinese) was never used within China. “STARBUCKS”, which was not determined by the judgment of the first instance as a well-known trademark, was actually far more well-known than the trademark “Starbucks” (in Chinese); (3) The judgment of the first instance was short of evidence to determine that Shanghai Starbucks and the Branch had malice; (4) The judgment of the first instance was short of evidence to determine that the appellants’ trademark was similar to the appellees’ word and figurative mark “STARBUCKS”; (5) It was obviously wrong for the judgment of the first instance to determine the amount of compensation as 500,000 yuan on the basis of the retainer, notarization fee and translation fee, etc. provided by the appellees; and (6) Once Shanghai Starbucks’ right of name was pre-approved, Shanghai Starbucks enjoyed lawful rights to the name. The judgment of the first instance favored large international enterprises, and was obviously unfair.

Starbucks Corporation and President Corporation argued: The judgment of the first instance found the facts clearly, applied laws correctly, and should be sustained.

After trial, Shanghai Higher Court confirmed the facts found out in the first instance.

Shanghai Higher Court holds:

1. On the issue of the procedures of the judgment of the first instance.

Shanghai Starbucks and the Branch alleged that Shanghai No. 2 Intermediate Court postponed the deadline for provision of evidence by Starbucks Corporation and President Corporation, but did not provide Shanghai Starbucks and the Branch with enough time to read the evidence and to prepare for refuting materials. Article 36 of the Rules on Evidence in Civil Litigation prescribes: “If any party concerned has real difficulty in producing evidence during the prescribed time period, it shall apply to the people’s court for extending the period during the time period for producing evidence. It may delay the production of evidence upon the approval of the people’s court. If the party concerned still has difficulty in producing evidence during the extended time period, it may apply to the people’s court for another extension of the time period for producing evidence. It is up to the people’s court to decide whether to approve the application or not.” The present case was complicated and the evidence was various, so it was not inappropriate to properly extend the time limit for providing evidence. In order to give concurrent attention to both parties’ lawful rights and interests, Shanghai No. 2 Intermediate Court presided over exchange of evidence for several times, and after the exchange, either party had enough time to read the other party’s evidence and to prepare for refuting materials. As a matter of fact, Shanghai No. 2 Intermediate Court had noticed this issue and had effectively prevented either party from showing evidence unexpectedly. Therefore, this appellate ground of Shanghai Starbucks and the Branch is short of legal or factual basis.

Shanghai Starbucks and the Branch alleged that Shanghai No. 2 Intermediate Court accepted the evidence provided by Starbucks Corporation and President Corporation, but refused to accept the material evidence provided by Shanghai Starbucks and the Branch such as the paper cups, drinking cups, napkins, etc. However, it was found from investigation that, during the first instance, Starbucks Corporation and President Corporation did not submit paper cups, drinking cups or napkins, etc. as evidence, thus Shanghai Starbucks and the Branch’ this appellate ground had no factual basis.

2. On the issue of the facts found by Shanghai No. 2 Intermediate Court and the application of laws.

Shanghai Starbucks and the Branch had their objection to the evidence provided by Starbucks Corporation and President Corporation, but did not put forward any new ground in the second instance. The argument of the judgment of the first instance was appropriate, and the above said objection of Shanghai Starbucks and the Branch shall still be rejected.

Shanghai Starbucks and the Branch held that it was wrong for the judgment of the first instance to determine the trademark “Starbucks” (in Chinese) as a well-known trademark. The judgment of the first instance stated the registration, use, advertisement of “Starbucks” (in Chinese), the market prestige and reputation thereof, and the relationship between the said trademark and the trademark “STARBUCKS”, and the argument in the judgment for concluding that “Starbucks” (in Chinese) was a well-known trademark was appropriate. As for the issue of examination of the “Notification for Archival Filing of the Contract on License for Use of the Trademark” dated October 26, 2000, the judgment of the first instance pointed out that in about January 1999, Starbucks Corporation used the word and figurative marks “STARBUCKS” and “STARBUCKS COFFEE”, and meanwhile used the Chinese characters for “Starbucks”. That is to say, it was found out in the first instance that the trademark “Starbucks” (in Chinese) was not used within China as of February 21, 2000, and the evidence for finding the facts was sufficient.

Shanghai Starbucks and the Branch held that the judgment of the first instance had no factual basis to determine that they had malice. In fact, the explanation of originality made by Shanghai Starbucks and the Branch in the first instance was very farfetched, and it was hard to believe that their use of the Chinese characters for “Starbucks” accidentally came from originality. According to the report of Jiefang Daily dated August 1, 2003, Mr. Mao, general manager of Shanghai Starbucks, stated his rush-registration of “Starbucks” (in Chinese) when he was interviewed by the correspondent, so it can be determined that Shanghai Starbucks and the Branch had the malice of taking advantage of other’s well-known trademarks.

Shanghai Starbucks and the Branch held that it was wrong for the judgment of the first instance to determine 500,000 yuan of compensation on the basis of the retainer, notarization fee, translation fee, etc. provided by Starbucks Corporation and President Corporation. In fact, the judgment of the first instance did not simply determine the amount of compensation on the basis of the retainer, notarization fee, and translation fee, etc. provided by the appellees, but determined the amount after comprehensively considering the nature, period, consequences, etc. of Shanghai Starbucks and the Branch’ trademark infringement and unfair competition. The amount was not inappropriate, and should be sustained.

Shanghai Starbucks and the Branch held that Shanghai Starbucks had lawful right over its name as long as its right of name had been pre-approval. On one hand, the trademark “Starbucks” (in Chinese) was first approved for registration on December 28, 1999, and Starbucks Corporation acquired the right to exclusive use of the trademark as of the date of approval for registration; although Shanghai Starbucks’ enterprise name was pre-approved on October 20, 1999, the enterprise was established on March 9, 2000. According to the relevant provisions of the “Implementation Measures for the Registration Administration of Enterprise Names”, an enterprise may, as of the date of its establishment, enjoy the right of name over its name registered upon its application. Hence, the right to the trademark “Starbucks” (in Chinese) was acquired earlier than Shanghai Starbucks’ and the Branch’s right to the enterprise name. On the other hand, Shanghai Starbucks was subjectively malicious when the enterprise name was approved, and thus had no lawful right over the enterprise name containing the Chinese characters for “Starbucks”.

To sum up, the appellate grounds of Shanghai Starbucks and the Branch have no legal or factual basis, and their claims shall be rejected. Shanghai Higher Court decided as follows in accordance with Article 153 (1) (i) of the “Civil Litigation Law of the People’s Republic of China” on December 20, 2006:

The appeal shall be rejected, and the judgment of the first instance shall be sustained.

The present judgment shall be final.