This is a case in which a shell company established in Hong Kong seeks unreasonable compensation by squatting trademarks and bringing a lawsuit against a multinational corporation for trademark infringement. The Plaintiff Ambitmicro Technology Limited (hereinafter referred as “Plaintiff” or “Ambitmicro”) was registered in Hong Kong by a mainland individual Zhanglong Pei on December 18th, 2015 which has no business or premises for actual use. The Defendant Ambiq Micro, Inc. (hereinafter referred to as “the Defendant”) was founded in the United States in 2010. Since its establishment, “Ambiq Micro” has been registered as the Defendant’s trade name and continuously used in actual business. AMBIQ MICRO branded products enjoy high reputation and influence in the semiconductor field.

The Plaintiff filed the application of “Ambitmicro” trademark in Class 9 covering "computer storage devices; computer peripherals", etc. during the month it established. When it obtained the trademark registration of “Ambitmicro” on February 7, 2017, and then swiftly sent a large number of warning letters to the Defendant, the distributors, investors and cooperators since May 31st, 2017. Receiving the interpellation from the Defendant, the Plaintiff not only refused to withdraw the warnings or escalate a lawsuit, but also expanded the scope of sending malicious warning letters and harassment emails, even slandered in the letters that one of the Defendant’s distributor was punished by the administrative authority. Finally, failed in threatening for any money from the Defendant, the Plaintiff filed a lawsuit to Shanghai Pudong New District People’s Court(hereinafter referred as “the Court”) tried to cease the Defendant’s use of the Ambiq Mrico mark and compensate its economic loss for CNY400,000.
On behalf of the Defendant, Our attorneys carefully analyzed the case files, endeavoring to find out the breakthrough of the case, accurately formulated the litigation strategy for the case. At the stage of evidence collection and pre-trial scrutiny, we carefully prepared the litigation materials and then actively participated in the multiple evidence exchanges and cross-examinations organized by the Court. Based on all the above work, the panel supported Ambiq’s claims at greatest extend, not only confirming the prior right of the AMBIQ MICRO brand, but also pointed out AMBITMICRO’s bad faith in filing the appeal as well as its registration of AMBITMICRO mark and rejected all the claims of the Plaintiff.

Background

The Defendant, founded in 2010, is a US company specialized in the research and development of energy-efficient semiconductor products. In 2012, the Defendant had registered many trademarks such as “Ambiq Micro”, “spot” and “appollo” in the United States. The mark "Ambiq Micro" under US Reg. No. 4327655 was registered by the Defendant on April 30th, 2013 in Class 9 covering semiconductor devices products, etc.
“Ambiq Micro” goods entered the Greater China markets such as mainland China, Hong Kong, and Taiwan in 2010.There are more than 20 distributors in major cities of Shanghai, Shenzhen, Beijing, Dalian, Suzhou, Nanchang, Hong Kong, Taiwan etc. There are many domestic manufacturers using Defendant’s products such as Xiaomi, Huawei, Meizu, TSMC, Guangdong Transtek Medical Electronics Co., Ltd., Schneider (Quanzhou), Fossil Group (Misfit bracelet manufacturer). Ambiq ever been ranked the second place among 60 most noteworthy semiconductor startups on the 2016 silicon60 list. Being widely reported and recommended by the domestic journal media, the Defendant was known as a leading company in the electronics industry.
The Plaintiff, a shell company established in Hong Kong on December 18th, 2015 without actual business activity or premises. The Plaintiff registered the trademark Ambitmicro under the Reg. No. 18766213 in Class 9 on February 7th, 2017. In viewing of the Defendant's popularity in the semiconductor industry, the Plaintiff’s act of registering the Ambitmicro mark, which is similar to “Ambiq Micro”, constitutes malicious squatting. In the defense for the declaration of invalidation against the Ambitmcro mark filed by the Defendant, the Plaintiff also confirmed the trademark is not actually put into use on the designated products. 
The Plaintiff continually and maliciously sent warning letters and harassment mails to the Defendant and its affiliates, which had seriously derogate the Defendant's business and reputation. Meanwhile the Plaintiff kept calling our firm and implied to settle with the Defendant but still threatening that they would keep on sending letters. On June 29th, 2018, failed to grab for any money from the Defendant, the Plaintiff initiated a lawsuit with Shanghai Pudong New District People's Court alleged trademark infringement and seek for damages. During the court hearing, the Defendant submitted a large amount of evidences that the Defendant had extensively advertised and promoted its brand and products worldwide including mainland China before the application date of the Plaintiff's trademark, and enjoyed a high reputation in relevant public. The Court organized multiple evidence cross-examinations, finally the court supported Ambiq’s claims at greatest extend, not only confirming the prior right of the AMBIQ MICRO brand, but also pointed out AMBITMICRO’s bad faith in filing the appeal as well as its registration of AMBITMICRO mark and rejected all the Plaintiff’s claims.

Difficulties

First, the Plaintiff owns the valid registration on Ambitmicro trademark registered on 2017 who enjoys the exclusive trademark right.
Second, there are special requirements for initiating a non-infringement litigation. Normally the plaintiff should demonstrate that the plaintiff received warning from the defendant about the infringement, and that the defendant do not take further legal action against the infringement at the given time, which has resulted in an uncertain and unstable status for the plaintiff’s business. Though all the aforementioned requirements are fulfilled, it is still difficult to select a court to handle the jurisdiction of non-infringement litigation for this case of which the Plaintiff and the Defendant are all enterprises based outside of mainland China.
Third, the product circulation is too complicated for the Defendant to provide sufficient evidence showing the complete transaction chain. In order to prove the Defendant’s certain fame of the AMBIQ MICRO trademark, we bear the burden of proving the prior use of the trademark in mainland China market. However, for the Defendant mainly conducts business with its distributors in China, and the whole transaction chain is too long involved with many subjects, so it is difficult to fully provide the transaction materials of each trading stage.

Strategy

After careful analysis, we concluded that the key disputes of the case is whether the Defendant’s trademark right of prior use defense shall be established. Therefore, we developed the following litigation strategy:
Firstly, in order to prove that the Defendant has prior rights on “Ambiq Micro” marks, we duly collected lots of evidences and sufficient arguments from the following aspects: On one hand, the Defendant was established in 2010 and the “Ambiq Micro” mark has been used as its trademark and trade name(Defendant registered the “Ambiq Micro” trademark in the United States on April 30th, 2013, the priority date is March 15th, 2012); On the other hand, the Defendant registered the domain name “ambiqmicro.com” in February 2010 for its worldwide promotion through the website. On June 8th, 2017, the Defendant set up a subsidiary for business in China.
Secondly, in order to prove the Defendant’s prior use of “Ambiq Micro” mark and the certain fame obtained in relevant industry, we submitted a large number of reports on Defendant’s brand & products as well as various international awards of the Defendant. We also provided the distribution agreements between the Defendant and its distributors, the transaction documents and the email chains with its clients. Although the transaction relationships are complex and there indeed exists defects of the evidence, it still could establish the evidence chain to prove the existence of the transaction facts.
Thirdly, in proving the Plaintiff’s malicious registration of its trademarks and the abuse of its trademark rights, we submitted a large number of evidence concerning the warning letters sent by the Plaintiff to Defendant and the affiliates. We also provided the warning sensed “Further Statement” and the “Compromise Arrangement” which the Plaintiff used to imply to settle with the Defendant to stop the Plaintiff’s continuous warnings and harassments. Through carefully analysis of the Plaintiff’s acts, we successfully proved the Plaintiff’s claim is groundless and the lawsuit shall be deemed as a malicious litigation which has severely wasted the judicial resources.

Comments

Firstly, the judgment of this case safeguards the legitimate rights and interests of Ambiq as an integrity market operator, and attacked the malicious trademark squatting and lawsuit. As the distinctive mark and well-known trade name of the Defendant, the “Ambiq Micro” mark has been used worldwide for many years. If the use of Ambiq Micro was considered as infringement, the Defendant not only have to pay high amount of compensation, but will be seriously impacted about its business development in China. Therefore, in the course of litigation, our lawyers actively carried out evidence collection and cross-examination work, fully protected the Client's business interests and brand image, endeavor to maximize the benefits of our Client.
Secondly, it is noted from the whole process of the trial in this case that the trial ability of the Court during handling complex intellectual property infringement cases is increased. The panel not only confirmed the certain fame of the Defendant's brand by organizing multiple evidences cross-examination work, but also fully demonstrated the irregularity of the Plaintiff's trademark registration and malicious accusation. It is uncommon among the same type of cases, and this trail has strongly established the fairness and professional ethic of the court.
Thirdly, in the background that China-US trade frictions are getting worse, the trial shows the attitudes of equal protection of the Chinese judges regarding to the domestic and foreign entities, which has greatly enhanced the confidence of foreign enterprises, such as the Defendant, in the investment and operations in China.