The three Chinese characters 'Kasite' were the focus of a contest lasting more than a decade between the French wine merchant CASTEL and Li Daozhi, a Chinese national of Spanish citizenship. On one side was an administrative non-use cancellation proceeding; on the other, an infringement suit with sky-high damages: the first and second instances awarded RMB 33.73 million, and the Supreme People's Court reduced it to RMB 500,000 on retrial. The case addresses both the assessment of Chinese transliteration use of foreign marks and the calculation standard for infringement damages.
Case Overview
Trademark No. 1372099 'Kasite' was applied for in 1998 and registered for wines in Class 33, owned by Li Daozhi. After the 'CASTEL' wines of Castel Freres S.A.S. of France entered the Chinese market and needed a corresponding Chinese name, they came into conflict with the prior registered 'Kasite' mark. In 2005, Castel applied to cancel the 'Kasite' mark for three consecutive years of non-use; the CNIPA once ruled cancellation, but after Li Daozhi requested review and submitted sales invoices, the TRAB maintained the registration, and the Beijing First Intermediate People's Court, the Beijing Higher People's Court, and the Supreme People's Court on retrial all upheld the registration.
In October 2009, Li Daozhi and his affiliate Shanghai Banti Wine Co., Ltd. filed a trademark infringement suit in Wenzhou, alleging that Castel used the 'Kasite' sign on wines without permission and claiming RMB 40 million in damages.
Issues in Dispute
- Whether the registered mark should be cancelled for three consecutive years of non-use;
- Whether the use of 'Kasite', the customary Chinese transliteration of the foreign mark 'CASTEL', was somewhat reasonable;
- How to calculate the infringement damages.
Judgments and Case Numbers
Civil case: the Wenzhou Intermediate People's Court of Zhejiang Province awarded RMB 33.73 million at first instance, and the Zhejiang Provincial Higher People's Court affirmed in (2012) Zhe Zhi Zhong Zi No. 166. After Castel applied for retrial, the Supreme People's Court granted review by ruling (2013) Min Shen Zi No. 1405 and, on January 11, 2016, issued civil judgment (2014) Min Ti Zi No. 25, vacating the first- and second-instance judgments and reducing damages to RMB 500,000.
The main reasons for the reduction: although industry profit margins may be referenced in calculating damages, the profits of an unrelated company cannot be used to directly extrapolate the infringer's profits in this case; where the rights holder could not prove the infringer's profit margin, the statutory damages cap of RMB 500,000 under the law then in force applied; and the court also considered the history of the dispute between the parties and the fact that 'CASTEL' is customarily translated as 'Kasite', making the defendant's use of that Chinese name somewhat reasonable (source: Supreme People's Court civil judgment (2014) Min Ti Zi No. 25, available through China Court Network trial broadcasts and public judgment channels).
Follow-up case: Li Daozhi and Shanghai Banti Wine Co., Ltd. separately sued Castel Wine (China) Co., Ltd. and Beijing Baidu Netcom Science Technology Co., Ltd. for trademark infringement and unfair competition; the Xuhui District People's Court of Shanghai dismissed all claims in civil judgment (2019) Hu 0104 Min Chu No. 13056 (December 30, 2020) (source: public judgment documents).
Key Takeaways
- 'Use' in cancellation proceedings needs documentation: the trademark survived because the owner submitted sales invoices, showing how critical it is to keep contracts, invoices, and advertising materials bearing the mark from daily operations;
- Transliteration use has room for justification: where the customary Chinese translation of a foreign mark coincides with the text of a prior registered mark, courts consider the reasonableness of the use—but this does not mean others' registered marks can be used at will;
- Damages calculation must return to the evidence of this case: confirmed business volume does not equal confirmed profits, and profit margins of unrelated companies cannot simply be borrowed; where losses and profits cannot be ascertained, only statutory damages remain.
Lessons for Businesses
When introducing a foreign brand, always search whether its customary Chinese transliteration has been registered by someone else, to avoid investing heavily in promotion only to be caught in infringement disputes. Trademark owners should build archiving habits for evidence of use—under the risk of three-year non-use cancellation, sales invoices, import and export customs declarations, and advertising records are all key materials for preserving rights. Claimed amounts must also match provable losses or profits, or they risk falling sharply from a high demand.
To engage the services described above, you may submit a non-use cancellation defense on MyTMBee, and a filed trademark agent will follow up.