A local motel ordered to pay damages for using the name “Channel”

There is a motel situated in Taichung City, whose English name in part is “Channel” (“香奈兒” in Chinese characters) (hereinafter the “name in dispute”) and whose bedding and in-room facilities all bear the printed word “Channel”, almost identical to the trademarks owned by Switzerland-based Chanel Sarl and the French company, Chanel S.A. (hereinafter collectively referred to as “Chanel Company”) with only one difference that there is one more letter “N” in the motel name in dispute.  For this matter, Chanel Company filed a complaint against the said motel, and the case was brought to the Taiwan IP Court.  The IP Court determined that the owners of the said motel should never use any name or mark similar to the Chinese characters, “香奈兒” and “香奈爾” or “CHANEL” and should publish the main text of the IP Court’s judgment in local newspapers and also pay TWD3 million in damages on the ground that the said motel’s use of the name in dispute has impaired Chanel Company’s business reputation and adversely affected the brand image of Chanel Company’s 香奈兒 mark and CHANEL mark which represent fashion, quality goods, luxury and elegance. 

According to the IP Court judgment, Chanel Sarl and Chanel, both under the Chanel Group, are the world renowned makers and sellers of fragrance, cosmetics, and ready-to-wear products.  Since 1960, they have successively acquired Taiwanese registrations for their CHANEL mark and their three Chinese character香奈兒mark.  On the other hand, during August 2002, several partners opened the said motel in Taichung City (named香奈兒休閒旅館, which was further renamed on January 15, 2015), and all of the signboards, throwaways, domain name, bedding, and in-room facilities of the said motel bear the printed word identical to the 香奈兒mark or similar to the CHANEL mark.  Chanel Company thought that the foregoing has caused confusion among consumers and also diluted the distinctiveness and business reputation of their香奈兒mark, thus seeking a damages payment of TWD4 million and also demanding that the said motel should never using any name or mark similar to香奈兒mark or similar to the CHANEL mark.

The said motel contended that mainly engaged in the motel business, they have gained income mainly from business charges for accommodation and break, and they did use ”香奈兒” as their business name and company name without selling any products under that name.  Moreover, they have already renamed the motel as “香馜兒” and have stopped providing any items bearing Chanel Company’s trademarks.  Besides, Chanel Company is engaged in the business of luxury goods and clothing products, not in the motel business, and thus the said motel has different customers from those of Chanel Company.  By the foregoing arguments, the said motel denied the existence of confusion. 

The IP Court held and determined that the owners of the said motel and the motel should severally and jointly pay to Chanel Company damages of TWD3 million in total on the grounds that the said motel took a free ride on the business reputation of Chanel Company’s香奈兒mark and CHANEL mark and the said motel would cause relevant consumers’ confusion due to the sharp image difference between their motel accommodation service and Chanel Company’s luxury brand, and that would also dilute the distinctiveness and business reputation of Chanel Company’s香奈兒mark and CHANEL mark.  The case is appealable.  (February 2016)
/CCS