What should we concern: when determining the level of similarity between trademarks, it should be limited to comparing the part that the citation mark has acquired the right to exclusive use with the mark in application. The part that is disclaimed of the exclusive right to use in an early registration even if has distinctiveness should not constitute a valid part for comparison and impede registration of a later filed trademark.

“Disclaiming the right to exclusive use” in trademark application refers to the situation in which the proprietor makes a disclaimer to give up any right to exclusive use for a part of the trademark, in order to avoid rejection of the whole application due to registrability issue of the disclaimed part. Signs prohibited from registration due to lack of distinctiveness are the part that is more commonly disclaimed of the right to exclusive use. In practice, some proprietors also disclaim the right to exclusive use for a part that has distinctiveness (the Disclaimed Part), which gives rise to the issue referred above, whether the Disclaimed Part will function to impede the registration by others of a later filed application.

The Chinese Trademark Review and Adjudication Board (TRAB) usually holds that although the proprietor of the early trademark disclaim the right to exclusive use for the Disclaimed Part, the disclaimer will not increase the probability to distinguish the citation mark from the mark in application. Therefore, the principle of comparison between overall appearances should still apply to decide whether they constitute similar trademarks. In other word, the Disclaimed Part still functions as an element in the citation mark, and together with the non-disclaimed part, the citation mark is compared as a whole with the later filed trademark.

The court expresses different thoughts in some cases. For example, in the judgment of the appeal for “MAGISTRALE” V.S. the cited early registration for “ ” (“MAGISTRAL NUTRITION” is disclaimed of the right to exclusive use), Xing Zhong Zi (2011) no.1348, Beijing high court holds that they are different in terms of overall appearances, even if used in relation to the identical or similar goods e.g. cosmetics and others, they are unlikely to cause confusions among the public. Therefore, they do not constitute similar trademarks. More importantly, the court further points out that “MAGISTRAL NUTRITION” in the citation mark is disclaimed of the right to exclusive use, and should not limit fair use by others.

Supposing that the aforesaid judgment is still made on the basis of making a comparison between the overall appearances, in a recent judgment made by Beijing First Intermediate People’s Court, Xing (Zhi) Chu Zi (2014) no. 6144, when deciding whether the early registration for “ ” (“WELLS FARGO” is disclaimed of the right to exclusive use) should impede the registration of WELLS FARGO COMPANY’s application for “WELLS FARGO”, the court makes a breakthrough to its previous principle of comparison in overall appearances, and makes clear that “When making comparison between a trademark in application with a citation mark, it should be limited to comparing the part that the citation mark acquires the right to exclusive use e.g. the device part with the mark in application. The part that is disclaimed of any exclusive right to use in the citation mark should not be taken into account as a part of the citation mark to impede fair use and registration of the mark in application.”

In this case, the mark in application is comprised of “WELLS FARGO” in plain text, the citation mark is comprised of “WELLS FARGO” and device, but “WELLS FARGO” is disclaimed of the right to exclusive use. KWM acts for WELLS FARGO & COMPANY (NYSE: WFC) and insists in the appeal that according to Article 4 of PRC Trademark Law, trademark registration is granted to applicants “needing to acquire the right to exclusively use a trademark”. For the part in a trademark that its propitiator does not wish to acquire the right to exclusive use, the administrative authority has no reason to entitle the propitiator to the right to exclusive use and impede an application by others who need to acquire the right to exclusive use; Moreover, now that “WELLS FARGO” in the citation mark is disclaimed, it should not limit fair use by others of the Disclaimed Part, and it is incorrect to conclude the mark in application as similar to the citation mark, by comparing the Disclaimed Part with the mark in application.

Beijing First Intermediate People’s Court accepts the view of the plaintiff and holds in the judgment that “the basis for an early registration to function to impede the registration of a later filed application, is that the early registration acquires the right to exclusive use earlier than the later filed application. The starting point and basis for determining the level of similarity is that the early registration has acquired the right to exclusive use, any other principles for determining the level of similarity will apply only when this pre-condition is met.” The court’s attitude is clear on the issue referred above and this will have great influence on similar cases.

Therefore, the TRAB announced the refusal ground of Trademark Review and Adjudication Board is not tenable.

King & Wood Mallesons is the trademark attorney representing Wells Fargo Company in this case.

Comments:

For trademarks that are partially disclaimed of the right to exclusive use, when applying the principle of comparison of overall appearances, there remains the question as to determining the parameters of protection for the disclaimed part. If the standard is too strict, it will give material protection to the disclaimed part which contradicts to the principle set up by Article 4 of the Trademark Law; if the standard is too loose, the disclaimed part will be excluded from the comparison of the overall appearances, resulting in failure to protect its spatial relationship, design element and other contents that may function to distinguish different trademarks and should be admitted to the scope of exclusive use.

The significance of the court judgment lies in that is provides an important precedent case setting the parameters of protection for the disclaimed part when applying the principle of comparison of overall appearances, namely, the disclaimed part should not limit fair use and registration of the same by others, the contents of a disclaimed part should not be taken into account in the comparison of similarity of a later filed mark. Additionally, we think what should actually be included in the comparison of overall appearance of a disclaimed part is its design element, its spatial relationship, configuration, space and method of combination with other elements. The case is currently pending in an appeal.

Note: This article was originally written in Chinese, the English version is a translation.