[Jian Xu] Real estate developer mentioning luxury brand in advertisements to boost sales - not trademark infringement but unfair competition in China

A Chinese real estate developer showed the PRADA branded women’s handbags in their advertisements, with the description that “Top luxury brands to stay in the commercial property, leading luxury lifestyles here”. PRADA subsequently sued for both trademark infringement and unfair competition.

The court, however, did not recognise trademark infringement, for two reasons.

The goods are different. PRADA trademark is registered on clothing, bags, etc. while the real estate developer on housing. The developer does not apply the PRADA mark on the registered goods such as clothing.

The description mentioning luxury brand PRADA, although misleading, is not trade mark use, because it does not disrupt the link between the mark and the owner. In other words, the fact that PRADA is associated with the registrant is not affected by the description. Again, the basic function of trade mark as identifying the source of producer is stressed.

The court did find unfair competition, as the real estate developer is clearly taking unfair advantage from the reputation of PRADA, to attract customer attention. Furthermore, the property is not of the top quality one which PRADA might consider opening shops, so it will cause damages to the reputation of PRADA brand by associating lower quality property with the brand.