Playboy judgment sends market a 'important message'

Playboy Enterprises International Inc expressed its appreciation for the fairness and efficiency of China's judicial authorities in the handling of intellectual property cases after the US company's victory in a campaign against the illegal use in China of one of its trademarks, the Playboy ICON.

The Hefei Intermediate People's Court ruled that the defendant Shanghai Baotu Investment and Management Ltd's repeated infringement of Playboy's trademark was done with evident deliberate intent. The Shanghai company was ordered to immediately cease and desist from any further infringement of the Playboy ICON brand.

"This is a very important case," said William Rosoff, managing partner of the Beijing office of Akin Gump Strauss Hauer & Feld LLP, the US law firm representing Playboy, at a news conference in Beijing last week. "We believe it would send an important message to others in the market who try to steal Playboy's brand that they risk serious sanctions."

It is also comforting for anyone with a global brand to know that the Chinese legal system will protect the rights of IP holders, he said.

Playboy sued Shanghai Baotu and a local distributor in Hefei, the capital of Anhui province, last year for alleged trademark infringement.

James Luo, the managing partner of Beijing Lawjay Partners and one of Playboy's local counsels in the lawsuit, said the Hefei intermediate court has a history of handling litigation cases, citing the case of Louis Vuitton against the Baima wholesale market for trademark infringement. The Supreme People's Court ranked the case among China's Top 50 IP Best Practice Cases of 2014.

Shanghai Baotu claimed that it had obtained Playboy's authorization to use the Playboy ICON brand, presenting a license agreement and two authorization letters purported to be from Playboy in support of its claim. Playboy described the documents as "forgeries".

Luo said Shanghai Baotu's shareholder, Lin Xiance, had earlier registered a company named SINO Hong Kong in Hong Kong.

"Playboy entered into a trademark license agreement for the Playboy ICON brand with Hong Kong ICON Designer Brands Ltd and another local company in 2012," said Luo. "Hong Kong SINO was the guarantor under the agreement with an obligation to pay a fixed sum and, in return, SINO was allowed to hold half of Hong Kong ICON's equity. However, as SINO only paid a portion of the upfront payment agreed on, and failed to pay the rest, Playboy terminated the agreement in 2013."

Playboy claims that Shanghai Baotu illegally changed the terms of the agreement.

Based on the verification report issued by the Nanjing Normal University Judicial Verification Center and the relevant rules on evidence, the court refused to accept the legitimacy of either the so-called trademark license agreement and the two purported authorization letters that Shanghai Baotu presented to the court in support of its claim to have obtained permission to use Playboy's brand and licensee authorization to use the relevant trademarks.

"Playboy has been doing business in China for more than 20 years, and it is a very important market for the company," Rossof said. Playboy generates sales of about $500 million annually in the Chinese market.

The company said it remains committed to taking all measures necessary, including administrative and criminal enforcement, to protect the rights and interests of Playboy's legitimate licensees and distributors in China.