AWS? Not for Amazon in China

Introduction

AWS is Amazon’s brand for its dominant cloud services. A series of administrative and court decisions have confirmed that a Chinese company has the legal rights to the “AWS” trademark in China.

China is a “first to file” trademark jurisdiction. Use or intended use is not part of registration. This is very different from many other jurisdictions and not paying attention to this has cost many companies the loss of the right to use their “outside” brand in China.

Chinese company Yanhuang Yingdong Technology and Development Co Ltd (“Yanhuang Yingdong”) owns several China trademarks. Between February 7, 2008 and April 14, 2012 it registered “AWS” as its trademark in computer and technology related categories in classes 42 (TM 4249189), 9 (TM 8967031) , and 35 (TM 8967030 ).

An Amazon affiliate, Amazon AWS Technology Services (Beijing) Co Ltd (“Amazon Beijing”) together with Beijing Guanghuan Xinwang Technology Company Limited (“Guanghuan Xinwang”) provide cloud computing services in China, using “AWS” branding. Despite trying, they were not successful in getting a China trademark for “AWS”. They continued with their use of the “AWS” branding anyway.

Amazon Technologies Inc AWS Trademark Applications

On October 9, 2012, Amazon Technologies Inc. (“Amazon Tech”) applied to register “AWS MARKETPLACE” as a trademark in Class 42 (TM No.11577355). This was rejected by the China Trademark Office in September 2013 because it was similar to Yanhuang Yingdong’s “AWS” trademark.

On September 13, 2017, Amazon Tech applied to register an “AWS and device” trademark in Class 42 (TM No.26377486). This was also rejected. Amazon Tech applied for re-examination of the rejection but this failed. The ruling was that the distinctive part of the trademark applied for was “AWS” and this was similar to Yanhuang Yingdong’s trademarks. Pressing on, Amazon Tech applied to the Beijing Intellectual Property Court for review of the re-examination decision, but also lost that case.

Yanhuang Yingdong High Court Proceedings for AWS Trademark Infringement

Yanhuang Yingdong commenced trademark infringement proceedings against Amazon Beijing and Guanghuan Xinwang as co defendants (together the “Defendants”) in the Beijing High Court, seeking orders to cease the use of “AWS” and for damages. The Beijing High Court was the appropriate venue because of the amount of damages sought.

The case was accepted on July 12, 2018. Pre trial, the Court ordered the parties to exchange and review evidence three times: June 10, 2019; June 13, 2019; and June 27, 2019.

Remedies sought by Yanhuang Yingdong

  1. Guanghuan Xinwang should immediately stop its infringing activities including any use of “AWS” and “AWS and device”: on its website; as key words for Internet search; on the website amazonaws.cn; and stop use of these and other similar marks in commercial activities.
  2. Amazon Beijing should immediately stop its infringing activities including any use of “AWS”, “AWS and device” and other marks similar to them in marketing and promotion for cloud computing services at its official wechat account.
  3. The Defendants should compensate Yanhuang Yingdong with RMB 300,000,000 (approx *USD 46,438,190).
  4. The Defendants should also compensate Yanhuang Yingdong with RMB 260,000 (approx *USD 40,246) for its expenses incurred in stopping their infringement; and
  5. The Defendants should make an announcement on China Intellectual Property News to mitigate the effects of their infringement.

Beijing High Court Decision

The Beijing High Court rendered its final decision on May 6, 2020

The Court stated that there were two issues before it: whether the Defendants have infringed the trademark rights of the Plaintiff; and, if infringement can be established, what liabilities should be assumed by them?

The Court held that the Defendants had infringed the trademark rights of Yanhuang Yingdong.

The uses of “AWS” and “AWS and device” by the Defendants have the function of identifying or showing the source of goods or services. This is trademark use.

Guanghuan Xinwang had argued that its use of AWS was merely referring to the technology it had adopted for its services but the court held that on the evidence this argument could not stand.

The Court reviewed the evidence and held that Guanghuan Xinwang had used “AWS” and “AWS and device” with the intention to indicate the provider and sources of its products and services.

The Court further held that the evidence showed that in its official wechat account “awschina”, Amazon Beijing used “AWS” and “AWS and device”. Similarly on its website “amazonaws-china.com”, Amazon Beijing used the “AWS” logo and also put up statements like “AWS products, services and prices”, “how to pay for AWS”, “AWS free package”.

Continuing, the Court held that the distinctive part of the trademarks “AWS” and “AWS and device” used by the Defendants is “AWS” and this is the same as the trademarks relied on by Yanhuang Yingdong. They were used in categories of service that were also similar to those covered by Yanhuang Yingdong’s “AWS” trademarks.

Having established infringement as pleaded, the Court turned to the question of damages.

Relying on evidence of profits in Guanghuan Xinwang’s accounts, the length of the infringing period, and other relevant facts disclosed by the evidence, the Court held that the basis for calculating infringement compensation was RMB 38,231,500 (Approx *USD 5,918,006).

Turning to Amazon Beijing, the Court held that it should have been aware of the Plaintiff’s “AWS” trademark registrations when its trademark application was rejected. Despite this it intentionally continued to infringe by using the “AWS” mark. This made it a very serious infringement.

Further, the Court noted that the Defendants had increased the negative impact of their infringement by objecting to the jurisdiction of the Court and delaying proceedings by 8 months.

Because of this the Court decided that punitive damages were warranted: the Defendants should compensate the Plaintiffs at twice the basis for compensation – an amount of RMB 76,463,000 (Approx *USD 11,836,012).

The Court also supported the Plaintiff’s compensation claim for the reasonable expenses incurred in this case – RMB 260,000 (Approx *USD 40,246).

Commentary

China is an IPR jurisdiction with its own characteristics that must be understood and taken account of.

Unfortunately, this is yet another trademark case where a large company has apparently failed to understand, at its cost, that China is a “first to file” trademark jurisdiction, not “first to use” as in some other jurisdictions. We have previously reported on aspects of this, including the importance of a Chinese language version. Examples  herehere, and here.

Another China characteristic is the weight given to words and letters in a “device” mark when considering distinctiveness. They are very important!

It seems that Amazon Beijing was formed on April 13 2012. Yanhuang Yingdong’s first AWS trademark, its registration in Class 42 covering services like computer programming was applied for registration on September 1, 2004 and approved for registration on February 7, 2008.

Amazon Tech applied for its “AWS MARKETPLACE” trademark in September 2012, five months after the formation of Amazon Beijing.

In this case, as in many others, the true cost is not only measured in money. It is the loss of branding in a major world market.

There is no China trademark action that is more cost effective than getting experienced on the ground advice and direct filing in China.

An appeal?

After the decision a Wall Street Journal report quoted an Amazon representative as saying: “Amazon was the first to use the “AWS” logo in China to sell cloud services by many years. We strongly disagree with the court’s ruling and have appealed the case to the Supreme People’s Court.”

At the China Supreme Court level it can take a long time for an appeal to be listed for hearing. We have not yet seen any relevant information about the appeal referred to in the WSJ quotation.

Take-aways

  • The individual characteristics of China’s IPR regime should not be ignored.
  • Navigating China’s IPR regime is all about detail and on the ground advice is important.
  • China is a first to file jurisdiction and this is an important difference from many other jurisdictions.
  • Prior use of a trademark outside China carries little, if any weight in China.
  • Any business planning to invest in, appoint an agent or distributor for, or sell product into China, should, before anything else, register their trademarks in China. They should also register and control the Chinese language version of their trademark. Almost every product and service in China is known by its Chinese brand name.
  • Remember that filing a trademark directly in China is almost always the least expensive trademark related action that can be taken. Using the Madrid Protocol may not be the most cost effective China trademark solution for your needs. 

Contributing Advisors