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26 August 2019
In January 2014, following the 2013 revision of the Trademark Law, the Beijing High Court published guidelines on administrative trademark cases. These initial guidelines were relatively brief, comprising just 30 articles.
On 24 April 2019 the Beijing High Court published a more extensive set of guidelines, comprising 162 articles. As these guidelines were published the day before the recent revision of the Trademark Law took effect, they refer to the law as it previously stood.
The new guidelines are divided into two parts: procedural issues and substantive matters.
The procedural issues section of the guidelines concerns:
The substantive matters section of the guidelines concerns basic principles (ie, Article 4 of the law, the good-faith principle, trademark components, trademark assignment which does not affect the determination of relevant clauses and revocation or cancellation of a registered mark), as well as the application of the following articles:
Below is a summary of some of the key articles contained in the guidelines.
Article 2.2 concerns a situation which is fairly common – namely, where an opposed trademark is relatively dissimilar or filed for relatively dissimilar types of good and the opponent cites both Articles 13 and 30 of the law (Article 13 requires recognition of the mark's well-known status, but may provide a wider scope of protection than Article 30).
In such cases, if the National Intellectual Property Administration (CNIPA) (previously, the Trademark Review and Adjudication Board (TRAB)) rejects the opposition only on the basis of Article 30 (and does not even examine the possible impact of Article 13), the court may consider this to be an omission of review grounds. If the opponent complains that its rights have been violated and the court considers that such omission had a substantial impact on the opponent's rights, the court may find in the opponent's favour.
The Beijing High Court has acknowledged that a trademark owner that opposes another trademark on the basis of Article 30 (ie, similar signs and goods) could either lose the case because the similarity is insufficient or win the case if there is a risk of association based on the mark's reputation.
Article 5.3 clarifies the possibility of bringing an action against a ruling of the CNIPA (TRAB) when such ruling was remade in accordance with an effective court judgment. In such cases, no second appeal is allowed.
Article 7.1 concerns Article 4 of the previous Trademark Law. In the most recent revision of the law, the act of filing a trademark application with no intention of using the mark (ie, in bad faith) is grounds to refuse the application. The guidelines somewhat anticipated the revision of the law, as they give several examples of what constitutes the registration of:
This guidance should help to prevent parties from filing famous trademarks or names.
Article 9.8 concerns the distinctiveness of 3D marks. Under the guidance, the presence of words, graphics or other elements on a 3D figure will not help to prove that the mark is distinctive. This guidance is confusing: if a word, graphic or other element is distinctive, why would it lose this distinctiveness purely because it is affixed to a product?
Articles 11.2 to 11.4
Articles 11.2 to 11.4 concern the application of Article 13.3 of the Trademark Law (ie, the protection of well-known registered trademarks against identical, similar or translated trademarks filed for different goods). The guidance provides no new information in this regard; regrettably, the Beijing High Court did not address how trademark owners can defend themselves against the risk of association created by a remotely similar trademark filed for the same category of goods (as discussed in Article 2.2 above).
Article 11.7 seems to indicate that if a prior trademark owner files an opposition or invalidation against a later trademark in accordance with Article 13.3 and the CNIPA (TRAB) rules in its favour by applying Articles 30 or 31 of the Trademark Law (ie, the use of an identical or similar trademark on identical or similar goods), the defendant cannot claim that the ruling was based on an erroneous application of the law.
Article 11.8 clarifies the scope of protection afforded to registered well-known trademarks against their use on identical goods. According to the guidelines, the owner of a well-known trademark need not apply for an infringing trademark's invalidation within five years of its registration.
Article 15.1 concerns the so-called 'extension' of trademark registrations and addresses the situation in which parties that already own a registered trademark later decide to file a new application for an identical or similar mark only to find that this new application is opposed by the owner of another mark which was registered in the interval. In such cases, the opposed applicant will often claim that the new application is nothing but an extension of its prior registered trademark. Under the new guidelines, such reasoning is acceptable, provided that the prior registered trademark has been in continuous use and acquired a certain reputation.
Article 15.2 concerns the criteria for determining the similarities between two trademarks when Articles 30 and 31 apply. Under the guidelines, the following criteria should be considered:
The Supreme People's Court defined these principles in its 2017 Interpretation of the Trademark Law, which concerned the determination of a likelihood of confusion under Article 13.2 (ie, unregistered well-known trademarks). Further, the Supreme People's Court orally confirmed that these criteria should also be used when applying Article 30 of the law. The purpose of applying Article 30 is to assess the likelihood of confusion between two marks, with the level of similarity being only one criterion. It would have been preferable for the Beijing High Court to clarify in the new guidelines that the purpose of Article 30 is likelihood of confusion (and not just similarity).
Article 15.3 specifies that "the reputation of [a] litigious trademark may not be considered" when determining similarity during review of a trademark refusal.
Article 15.4 concerns the determination of similarity during the review of an opposed trademark registration or invalidation request. In this regard, the solution offered in the guidelines is surprising:
If the applicant of the litigious trademark has no bad faith, and due to specific historical reasons, the litigious trademark and the cited trademark have been coexisting for a long time so much so that an established market pattern has been formed, where a party concerned claims that the coexistence of the two trademarks will not cause confusion among the relevant public, these trademarks may be determined to be dissimilar.
Factors such as evidence provided by the applicant of the litigious trademark and the owner of the cited trademark and the subjective state of the registrant of the litigious trademark may be comprehensively considered to determine whether the litigious trademark is similar to the cited trademark.
This position is essentially what the Supreme People's Court expressed in the so-called 'inclusive development theory' set out in its 2010 and 2011 Trademark Law interpretations – namely, that the reputation of both trademarks (ie, the cited and the opposed) had to be compared and if it was determined that the applicant or registrant of the litigious trademark did not act in bad faith and has acquired a critical position in the market, the two trademarks could continue to coexist. This theory attracted criticism, as it was seen as a way to legalise infringement through extensive use. As such (as discussed above), the Supreme People's Court rectified the position in its 2017 interpretation. Article 15.4 of the Beijing High Court guidelines therefore comes as an unpleasant surprise. The unpleasantry comes from the fact that the court:
Articles 17.2 to 17.4
Articles 17.2 to 17.4 concern the determination of 'other improper means', as mentioned in Article 44 of the law (ie, the invalidation of a trademark based on absolute grounds). These three articles provide examples of other improper means and exceptions to specific circumstances of other improper means. In short, the guidelines state that it is possible to request a trademark's invalidation by showing that the applicant has filed many other litigious marks (unless such marks were filed a long time ago and the applicant genuinely intended to use or is using them).
However, Article 17.5 specifies that Article 44.1 (as mentioned above) should not be the systematic solution to trademark invalidation. If it is possible to request invalidation based on another article of the law, Article 44.1 should not be cited.
Article 18.4 provides nine criteria for the determination of bad faith, as mentioned in Article 45.1 of the law. Notably:
Article 19.16 clarifies the Beijing High Court's position regarding the effects of original equipment manufacturing (OEM) use: if the trademark is affixed on goods that are exported (and thus not circulated within China) and the registrant claims to maintain the registration of such trademark (Article 49 of the law), this claim will be supported.
According to the Supreme People Court's interpretations, if all goods are exported, a mark affixed thereon cannot have a certain influence in China. Therefore, OEM activity cannot support a reference to Article 32 (ie, prior use having created a certain influence). However, if the trademark is affixed by a third party without the registrant's authorisation, the mere act of affixing the mark should constitute an act of infringement (Article 57 of the law), regardless of whether the goods are sold in China or abroad or even whether the goods are still in the factory. And yet, the Supreme People's Court has frequently decided that when goods are exported, the trademarks affixed thereon have not been used and there can thus be no infringement.
For further information on this topic please contact Hui Huang or Paul Ranjard at Wanhuida Peksung by telephone (+86 10 6892 1000) or email (firstname.lastname@example.org or email@example.com). The Wanhuida Peksung website can be accessed at www.wanhuida.com and www.peksung.com.
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