Shein was recognized as Chinese

As it became known to Kommersant, the Chinese online retailer and manufacturer of fashionable clothes Shein is arguing for its brand with the Russian ND Commerce Group LLC. The latter in 2020 issued the shein trademark for clothing and footwear and sold these goods in the Russian Federation. Shein secured the deregistration of the mark, gaining the ability to seek damages. However, the Russian company promises to continue the fight for the sign in court.

The Chinese retailer Shein was able to defend its rights to the trademark of the same name, which in August 2020 was registered by the Moscow LLC ND Commerce Group for some goods. This follows from the decision of Rospatent published on August 16 on the objection of Shein Group Ltd and Zoetop Business Co. Ltd (Hong Kong) dated 7 May.

The applicants insisted that registering a brand for an LLC violates paragraph 3, paragraph 6, paragraph 8 of Art. 1483 of the Civil Code of the Russian Federation. We are talking about refusal to register a trademark if it is confusingly similar to the mark of other persons for homogeneous goods or misleads consumers. In addition, according to Shein, LLC abused the right and uses the brand in bad faith when selling clothes and shoes, including on Wildberries.

In support of their rights, the Hong Kong companies said they are part of the “world famous” Shein group, producing and selling clothes, shoes and other goods under the eponymous brand through an online store and mobile applications. In addition, they registered the Shein brand in Russia with an earlier priority (February 2015 and March 2018) for a number of goods (textiles, underwear, curtains, jewelry, accessories for shoes, clothes, hats, etc.) and services (retail or wholesale of clothing, footwear, accessories, etc.), which are homogeneous goods with those for which the mark has been registered by the LLC (clothing, footwear, headwear).

The Moscow firm insisted that the goods were not homogeneous, shein was not a well-known sign, and the applicants had not proven that consumers were being misled. ND Commerce Group also announced its readiness to refuse trademark protection for shoes if this would help to resolve the dispute out of court. Rospatent eventually canceled the registration of the shein mark for an LLC under paragraph 6 of Art. 1483 GK. The agency decided that the signs of Chinese companies and the Russian company are “associated with each other” and are similar, and their products are “related” or “complementary”, that is, homogeneous. But Rospatent did not recognize the fact of misleading consumers.

“We produced and sold clothes under the Shein brand, and long before the Chinese company, but, unfortunately, we registered the sign late,” Alexei Nevzorov, general director of ND Commerce Group, told Kommersant. The company will continue to use the brand and challenge the decision of Rospatent. Arno Legal patent attorney Polina Galtsova, representing Shein Group and Zoetop Business, declined to comment.

According to a Kommersant source in the market, ND Commerce Group sold goods under the shein brand in online stores, and then “wanted to sell the mark and even negotiated with the Chinese,” but failed to reach an agreement. There is no shein on the ND Commerce Group website in the Our Brands list, and there are currently no products from this seller under the shein brand on the Wildberries and Ozon sites.

There are two main reasons for registering the rights to a designation similar to a well-known brand, says Anastasia Dudko, senior lawyer at BGP Litigation: “The first is the opportunity to sell your goods using the reputation of another brand without investing in a PR company. The second is the desire to receive a reward for the return of trademarks. The head of NP-Advice, Natalya Pantyukhina, clarifies that “strengthening the market position at someone else’s expense” can be attributed to unfair competition, so Chinese companies could also apply to the FAS.

Elena Gorodisskaya and Anastasia Dudko, Head of the Intellectual Property Practice at Andrey Gorodissky & Partners, consider Rospatent’s decision to be justified. Now, Ms. Gorodisskaya explains, Chinese companies can demand that they stop using the brand and sue the LLC for damages. However, the decision seems “strange” to Natalya Pantyukhina, since it contains “too many formal listings of goods by class, little analysis of other evidence, and does not indicate whether the LLC made arguments about the history of the brand.” Lawyers believe that the lawsuit will continue in court.

Anna Zanina, Nikita Shchurenkov