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Hong Kong : The renowned apparel and household products Brand “MUJI” has encountered setback in a recent law suit in China

Japanese retailer MUJI has lost an appeal against a Chinese court ruling that ruled that the company violated trademark rights owned by a Chinese company.

Japanese retailer Ryohin Keikaku (commonly known as “MUJI”) was established in Japan in 1980. It entered the Chinese market in 2005 and opened its first store in Shanghai.

Muji then applied for the registration of its internationally renowned brand name “MUJI” in block Roman alphabet letters and a local trademark, “Mujirushi Ryohin”, in four Chinese characters (無印良品) which are pronounced “Wuyinliangpin” in Mandarin.

(Trademark adopted from MUJI official website)

MUJI subsequently discovered that a Chinese company named “Beijing Cottonfield Textile” had registered the trademark “Wuyliangliangpin” in China in Mandarin, meaning “quality goods without a brand”.

When the Japanese company began selling MUJI branded bedcovers and towels in China, Beijing Cottonfield Textile sued MUJI. The Chinese company sued MUJI for violating its registered trademark. In 2017, China’s Intellectual Property Court (IP Court) ruled that the plaintiff prevailed.

Not satisfied with the ruling of the IP Court, MUJI appealed to the Supreme Court of China.

Legal disputes have been going on for more than a decade before China’s Supreme People’s Court upheld the ruling in late 2019, ordering MUJI to pay the plaintiff 626,000 yuan (about US$ 90,000).

The ruling has been completed because China has a two-trial system for trademark-related cases. It bans MUJI from using its Mujirushi Ryohin brand name on certain products in China.

The ruling sparked strong protests from the international community. Some people think the verdict is ridiculous, saying that China’s trademark law is outdated and cannot protect intellectual property rights.

MUJI’s claim is mainly based on the reason of “malicious trademark registration”. But Beijing Cottonfield Textile is not a shell company. Instead, it does manufacture and sell bed linen and towels under the trademark. The company now has dozens of stores in China, most of them in third- and fourth-tier cities in China.

Therefore, it is difficult to say whether the Chinese company has committed trademark infringement.

Although China acknowledges the person who filed the trademark application first shall own the right, but left some loopholes in the trademark squatting, the key to such trademark litigation is usually whether the trademark has been used in actual commercial operations.

The bottom line is that MUJI is injuncted from using its Chinese name “無印良品” (“Wuyinliangpin” in Mandarin) in a limited number of goods and MUJI still enjoys protection for its English mark “MUJI”.

This case has also drawn comparison with a prior trademark dispute case for the American basketball star Michael Jordan, who has successfully claimed back his Chinese name “喬丹” (translated as “Jordan”) in China.

Benny Kong & Tsai © 2021

Benny Kong & Tsai, Solicitors

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