Judicial interpretation governing administrative trademark appeals effective on March 1

by DLA Piper
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On January 10, 2017, the Supreme People's Court of China (the SPC) promulgated a judicial interpretation concerning trademarks, entitled the SPC Provisions on Certain Issues Related to Trials of Administrative Cases Involving Grant and Confirmation of Trademarks (the Provisions). The drafting of the Provisions started in 2013, when the recent amendments to the Trademark Law (the Trademark Law 2013) were enacted. The Provisions became effective on March 1, 2017. 

This judicial interpretation is refined and summarized not only from past advisory guidance (notably an opinion issued by the SPC in 2010 for the same area), but more practically from recent cases and opinions issued by various courts. The Provisions consist of 31 articles covering both substantive and procedural issues in relation to trials of administrative trademark appeals. Below is a brief summary of the key rules introduced in the Provisions.

Scope of Review

Under the Provisions, the court's scope of review for administrative trademark matters are confined to various decisions issued by the Trademark Review and Adjudication Board ("the TRAB"), including the decisions for reviews on refusal, invalidations, reviews on non-use cancellation, and reviews on invalidation decisions (made by the China Trade Mark Office).  

As a general rule, the court should conduct the review based on the claims of the plaintiff. However, the Provisions also authorize the court to expand the scope of the review if the court considers the relevant determination of the TRAB evidently inappropriate after hearing the statements of opinion by the parties.

The laws have been ambiguous regarding whether the TRAB's violation of the statutory procedures in deciding cases is subject to judicial review. Whilst it is clear that the TRAB should make decisions in accordance with procedural rules set out under the Trademark Review and Adjudication Rules issued by the State Administration for Industry and Commerce, there have been no statutory provisions on penalties to the TRAB or resorts to the parties in case of the TRAB's violation of the statutory procedures. The Provisions now enumerate circumstances where the court can overrule the TRAB's decisions for "violated statutory procedures": (1) the arguments for review that actually affects the right of the parties have been omitted; (2) the identity of the panel has not been notified to the parties, such that a member subject to recusal fails to be recused; (3) the appropriate party to the matter has not been duly notified and it raised objections; (4) any other situations that are in violation of the statutory procedures.

Protection of Well-Known Trademark

The Provisions enumerate multiple factors to consider when determining whether there is "likelihood of confusion" or "damage to the well-known mark", which is significant for protection of unregistered and registered well-known trademarks respectively.

A.   For unregistered well-known trademarks, the court shall consider the following factors for determination of confusion:

(1) the extent of similarity of the two trademarks; (2) the extent of similarity of the goods of concern; (3) the distinctiveness and reputation of the alleged well-known mark; (4) the extent of the perception of the relevant public; (5) any other relevant factors. The intent of the trademark applicant and evidence of actual confusion may also be taken into account in determining likelihood of confusion.

B.   For registered well-known trademark, in determining whether the trademark at concern would cause damage to the interests of the registered well-known trademark holder, factors to consider are: (1) the distinctiveness and reputation of the trademark alleged to be infringed upon; (2) whether the two trademarks are sufficiently similar; (3) the goods designated for use; (4) the overlapping and perceptions of the relevant public; (5) other's legitimate use of trademarks that are similar to the alleged well-known mark.

C.   When determining bad faith (which is a key condition to get around the general 5-year time bar against invalidation post registration), the court should take into consideration: 1) the reputation of the alleged well-known mark; 2) the applicant's reasons for the application; and 3) how the applied-for mark is being used. The court may presume the bad faith if the alleged well-known mark is very famous in China and the applicant fails to provide a justifiable reason for the application.

Principle of Good Faith

The Trademark Law 2013 included a new article stressing that the "principal of good faith" shall be followed in the registration and use of a trademark. The Provisions echoes such legislative intention in many aspects.

A.   Article 15(1) of the Trademark Law 2013 prohibits an agent or a representative from applying or using the trademark of the principal or the represented party without authorization. The Provisions interpret the term "agent or representative" in a broad way to include 1) trademark agents; 2) sales agents; 3) persons under on-going negotiation for an agency or representation relationship; and 4) relatives of the above-said agents or representatives.

B.   Article 32 of the Trademark Law 2013 provides a limited scope of protection to unregistered trademarks that have been put into use in China, in that no applicant is allowed to pre-emptively register another's prior used trademarks with certain reputation in unfair means. The Provisions introduces three implementation rules for such mechanism, 1) a presumption of unfair means can be made if the prior used mark has accrued certain reputation, such that the applicant is aware or should be aware of the prior used mark; 2) the senior user should produce evidence to prove prior use of the mark in sales and/or promotional activities for a continuous period of time in a certain area of China; and 3) the protection should be limited to identical and similar goods.

C.  There has been a great deal of back and forth on the interpretation of "other illegitimate means" provided under Article 44(1) of the Trademark Law 2013. In the past few years, the prevailing opinion in the industry has been that Article 44(1) is only applicable to registrations which impair public interests. The Provisions changes the situation by providing that "other illegitimate means" here should include means used to pursue illegitimate interests, which should not be confined to public interests only.

D.   Albeit that there are no explicit statutory provisions on the issue, the trademark authorities have been consistently rejecting hijacking trademark applications against the names of celebrities by invoking a general provision of "unhealthy social influence" under Article 10(1) of the Trademark Law 2013. Such practice is now endorsed by the Provisions.

Prior Rights, especially Merchandising Rights

Article 32 of the Trademark Law (2013) requires that trademark applications shall not infringe upon the existing "prior rights", but fails to elaborate what kinds of rights can be asserted as "prior rights" here. The Provisions provides a further enumeration, which remarkably includes merchandising rights for the first time.

A.   Prior copyright

The court shall review according to the Copyright Law and the relevant regulations whether the asserted subject constitutes a work, whether the party is the copyright holder or is interested in the alleged copyright, and whether the trademark in dispute infringes upon the asserted copyright. Evidence such as sketching of the designs of the trademark, contracts showing ownership of the right, and copyright registration certificates are acceptable as prima facie evidence on the copyright ownership, whilst trademark registration certificates and trademark gazettes can be accepted as proof of the petitioner's standing in asserting copyright infringement claims (there is a standing requirement to file oppositions and invalidations under the Trademark Law 2013). 

B.   Right of personal name 

The court shall decide that the right of a personal name is violated if the relevant public contemplate that the trademark of concern refers to that natural person, and are likely to think that the goods bearing the mark are authorized by or related to that natural person.

Special names, such as pseudonym, stage names or translations of names also constitute prior right if these names have a certain reputation and are used to refer to that natural person by the relevant public.

C.   Character/name of the work/name of the role (Article 22

Copyright of the Character.  The character of a work can be protected by copyright. Therefore, the court shall review infringement claims of such right pursuant to the Copyright Law and the relevant regulations as introduced above. 

Names of the works or names of the roles can also constitute a prior right within the duration of the copyright protection if they are well-known, and use of the trademark at concern are likely to mislead the relevant public to consider that the goods bearing the mark are authorized by or related to that owner. This prior right is apparently introduced to solve the problem caused by the hijacking trademark applications against names of famous works and/or roles/characters within such works (e.g. movie names), which has been under heated discussions in the recent years.

Res judicata

The legal principal of res judicata requires that once a matter has been adjudicated by a competent court in legitimate procedure with final decisions/judgments, it should not be heard again by the court on grounds of the same facts and reasons. The Provisions introduces additional rules to this principle.

A.   If there is finding of new facts or new evidence, the principle of res judicata may not be applied.

B.   Once a court judgment has become effective and the TRAB makes a new decision as directed by such judgment, such decision is not subject to further administrative appeals.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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