AMZN Amazon.com Inc

By Yang Jie 

Amazon.com Inc. can't use its cloud-computing business's AWS logo in China, a Beijing court ruled, the latest headache for a company that has already been hampered by Chinese regulations and rivals.

The Beijing Municipal High People's Court ruled that the trademark for the term "AWS" belonged to ActionSoft Science & Technology Development Co., a Chinese software and data services company, according to a court verdict published Dec. 30.

The court ordered Amazon to stop using the term AWS or any similar logos in China and pay compensation of 76.5 million yuan, equivalent to $11.8 million, to ActionSoft. The verdict was dated May 2020 but was released at the end of last month. Chinese courts often publish rulings months after they are made.

Neither Amazon nor Beijing-based ActionSoft replied to requests for comment.

On Amazon's cloud-computing service website in China, the term AWS, which stands for Amazon Web Services, was still frequently used as of Tuesday. A note at the bottom of its main webpage said AWS is used as an abbreviation and "is not displayed herein as a trademark."

It wasn't immediately known whether Amazon has appealed to the Supreme People's Court, China's highest court. When an appeal is submitted, the lower court's decision generally doesn't take legal effect until the higher court reaches a decision, lawyers familiar with Chinese law said.

Amazon is a relatively small player in China's cloud market, which is dominated by local rivals. Although the verdict is a headache for the U.S. company, the lawyers said it is unlikely to bring Amazon's cloud business in China to a halt, because the company can expect to be able to continue its business by using a different trademark.

ActionSoft registered AWS as a trademark for its cloud-computing services in China in 2004, while Amazon registered AWS with the smile logo in 2012, according to China's official trademark database.

Over the years, both companies have filed a series of applications to register their versions of AWS under various business categories. In September 2013, China's trademark regulator overturned some of Amazon's attempts, citing conflicts with ActionSoft's registrations, according to the court filing.

In July 2018, ActionSoft sued Amazon and its local joint-venture partner, alleging trademark infringement and seeking compensation of approximately $46 million. Amazon argued that it started to use and promote AWS as its cloud-computing service brand as early as 2002, according to the court filing.

For years, companies and celebrities ranging from Apple Inc. to basketball star Michael Jordan have fought with Chinese companies over trademark and naming rights. In some cases, local companies have squatted on foreign brands' trademarks in anticipation that brands would rather settle than face lengthy litigation.

In 2012, Apple paid $60 million to settle an iPad trademark dispute in China so that it could continue to sell the portable device in the country. Mr. Jordan, Facebook Inc. and Starbucks Corp. each claimed legal victories over Chinese companies using their names in Chinese characters.

In China, Amazon partners with local companies because the government limits foreign ownership of certain cloud-service providers.

In the first half of 2020, AWS was the fifth-biggest cloud provider in China with a market share of 7.2%, according to research firm IDC. It trailed Alibaba Group Holding Ltd, Tencent Holdings Ltd, Huawei Technologies Co. and China Telecom Corp., which together held a nearly 70% share in China's cloud infrastructure-as-a-service and platform-as-a-service markets.

Write to Yang Jie at jie.yang@wsj.com

(END) Dow Jones Newswires

January 05, 2021 05:22 ET (10:22 GMT)

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