Japanese retailer Muji has been ordered to pay 626,000 yuan (US$89,000) and issue a public apology to a Chinese company after losing its appeal against an earlier court ruling on a trademark infringement.
At a hearing last month, the Supreme People's Court in Beijing upheld a 2017 ruling in favour of Natural Mill, whose parent company Beijing Cottonfield Textile Corp owns a trademarked name used by Muji.
When Muji entered the mainland China market in 2005, it registered its international brand name "MUJI" - in block letters - and took out a local trademark - represented by four Chinese characters spelling out "Wuyinliangpin", or "no brand, quality goods" - to cover most, but not all, of its goods.
However, Chinese company Hainan Nanhua had registered the Wuyinliangpin trademark for certain woven fabric products, including bed covers and towels, in 2001. It later transferred the rights to the name to Beijing Cottonfield Textile Corp.
In 2015, the two companies sued Muji for breach of the trademark, and in 2017 the appeal court for intellectual property disputes in Beijing ruled in their favour.
Last year, Beijing Cottonfield Textile Corp said online that its decision to trademark the Wuyinliangpin name had nothing to do with Muji, but represented the fact that the company made only good-quality products and did not use dyes.
Muji acknowledged that the rights to the Wuyinliangpin trademark for bed covers and towels was held by the Chinese firm but appealed against the intellectual property court's ruling on the grounds that it had legally registered almost all of its other products under the name.
The supreme court, however, did not agree.
"Beijing Cottonfield Textile Corp has the exclusive rights to the trademark," it said in court documents, adding that "others may not infringe on that right without permission".
It ordered Muji to make financial recompense to the plaintiff and to apologise for the trademark infringement on its online shop and in its retail stores.
China is Muji's largest market outside Japan.
This article was first published in South China Morning Post.