Mars Food (China) vs. Jinlitai Food
On June 6 the Guangzhou Intermediate Court published its
final judgment in an unfair competition dispute and ordered
• Immediately stop infringement of Mars' unique
packaging design and decoration
• Pay Mars Rmb200,000 (US$30,000) in damages
The appeal decision
overturned the earlier decision of the Haizhu District People's
Court of Guangzhou City vindicating Mars' strategic shift
towards pursuing infringers through the civil courts rather
than focusing all its efforts on administrative actions.
As more and more rights owners begin to seriously
incorporate litigation into their brand protection planning
(24,000 IP cases were heard in China last year), Mars' decision
to protect its IP through litigation reflects a growing
confidence in the expertise of the IP court system as an
effective alternative to managing infringements.
Change in strategy
As one of the biggest chocolate and pet food producers in
the world, Mars is also the proprietor of many famous brands in
China including DOVE, SNICKERS, M&M'S, WHISKAS and
PEDIGREE. Mars invests time and money in not only the quality
of its products, but also in the creation, development,
maintenance and protection of all elements of its product
branding, including the design of its packaging.
Since entering the Chinese market, countless entities have
sought to unlawfully obtain the benefit of Mars' investment in
China by imitating its products and branding. As such, Mars has
been forced to make huge efforts to enforce its rights against
infringers using a combination of warning letters, educational
campaigns and administrative enforcement actions. This ensures
that customers are not misled and can have confidence that they
are purchasing the highest quality Mars products.
With the increased sophistication and complexity of
infringement cases, Mars began to realise the limitations of
effective enforcement through administrative channels. The
increase in look-alike and unfair competition issues further
highlighted the limitations of administrative enforcement,
leading Mars to rethink its strategy in 2004.
Noting that litigation in China was becoming more
predictable and transparent, Mars placed it at the forefront of
its new deterrent strategy. Bringing cases before the civil
courts would not only enable Mars to obtain injunctive relief
and damages against infringers, but also obtain clear guidance
as to the effect and scope of its rights.
In order to successfully implement and support this new
litigation strategy, Mars introduced three broad
Greater internal communication
To pre-empt major threats to key brand properties and to
enhance and maintain the distinctiveness of its brands, Mars
took internal steps to ensure that the marketing and legal
functions were working as close together as possible.
With support from senior management, the Mars legal team is
now involved much earlier in brand and marketing initiatives
with Mars' associates at all levels of the business. This has
led to the development of an even stronger portfolio of core
and protective rights which reflects the needs and interests of
the business and its customers.
As there is no discovery process in China, collection of
original and notarised evidence is particularly important. To
meet the greater evidential demands of more complex
infringements and to maximise chances of greater compensation
levels, Mars introduced internal systems to proactively
identify and retain key materials required for litigation
A continuing education and awareness programme was
implemented to insure that Mars associates were aware of the
ongoing need to retain vital evidence. In order to support
continuing enforcement and litigation strategies, an "evidence
bank" was created to facilitate greater cost efficiencies.
Targeting best venues
Unlike some brand owners who opt to litigate in larger
cities such as Beijing and Shanghai, Mars decided to take its
fight to the infringers' backyards, selecting Tianjin (near
Beijing), Quanzhou (the intermediate court venue covering the
city of Jinjian in Fujian province) and Guangzhou as the
preferred venues for litigation. These cities are home to a
concentration of factories manufacturing chocolate and pet food
and are thus an appropriate choice.
The aim was to establish a presence within the regions by
building up a reputation and case history that would be felt by
other companies in order to gain a first-mover advantage.
Four years on and the seeds of Mars' litigation strategy has
begun bearing fruit. Mars is benefiting from greater cost
efficiencies driven by greater procedural awareness, better
systems and having core banks of evidence in place. It has also
received many positive judgments and driven greater judicial
understanding of trademark infringement and unfair competition