Introduction

Absolute grounds

Relative grounds

Procedural issues

Introduction

In 2014 the Supreme People's Court circulated draft trademark provisions for comment, after which the draft was significantly revised. The final version of the provisions was adopted at the 1703rd meeting of the Judicial Committee of the Supreme People's Court on December 12 2016 and will enter into effect on March 1 2017.

The provisions introduce useful guidance for the Beijing IP Court (first instance) and the Beijing High Court (second instance) in relation to appeals filed against decisions of the Trademark Review and Adjudication Board (TRAB).

The 31 articles of the provisions address a variety of situations, including:

  • absolute grounds of refusal;
  • relative grounds of refusal;
  • bad faith applications;
  • other prior rights (eg, copyright and rights in names);
  • the use of a trademark; and
  • several procedural issues.

The provisions refer to the relevant articles of the Trademark Law (eg, Article L.10) and to their own articles (eg, Provision 4).

Absolute grounds

Prohibited signs (Article L.10) Regarding the use of state names (Article L.10.1.1), the provisions recommend looking at the trademark "as a whole". This means that even if a trademark contains the name of a state, if the mark is not similar to such name as a whole and if the registration of the mark would not be "detrimental to the national dignity", the mark may be registered (Provision 3).

The interpretation of the term 'deceptive signs' in Article L.10.1.7 may be made by reference to the same article of the 2001 version of the Trademark Law: "exaggeration and fraud in advertising" (Provision 4).

The expression 'having other unhealthy influence' (Article L.10.1.8) refers to cases where the filing of a trademark has a "negative or adverse effect on China's public interests", which, for example, may be the result of the filing of the name of a public figure in the political, economic, cultural, religious, ethnic or other field (Provision 5).

In principle, geographical names (whether Chinese places above county level or foreign places known to the public) are prohibited under Article L.10.2. However, they may still be used if the sign as a whole has a meaning that distinguishes it from the geographical name (Provision 6).

Distinctiveness (Article L.11) Signs that are the generic name of a product may not be registered as trademarks (Article L.11.1).

However, the sign must be examined as a whole. If the sign contains a descriptive element that does not affect the distinctiveness of the sign, or if the descriptive sign is presented in a special manner so as to serve as a source identifier, the sign may be registered (Provision 7).

In order to determine whether a sign is generic, the court should verify whether it is commonly perceived as such by the relevant public and may refer to professional reference books and dictionaries. The public perception may also be determined by reference to historical tradition, local customs and practices, the geographical environment or other reasons. The court should also consider the subjective knowledge of the applicant (which knows or should know that its trademark has become generic). Finally, it should consider the filing time of the application. However, if the situation has changed at the time of approval, the court may base its decision on the time of registration.

Where a foreign language is used, the foreign words may have a descriptive inherent meaning and should, in principle, be refused trademark registration. However, if the relevant public is largely unaware of the meaning of the word, the mark may still function as a source identifier and be registered (Provision 8).

Descriptive signs may not be registered as trademarks (Article L.11.2). This is the case for signs that merely or mainly describe the features of the goods or services designated by the application. However, if the sign insinuates only the features of the goods and this does not affect its identifying function, the mark may be registered.

Three-dimensional trademarks (Article L.12) The registration of a three-dimensional sign remains difficult. If, under most circumstances, the relevant public is unlikely to take the sign as a source identifier, the mark may not be registered. Further, the fact that the sign was originally created by or first used by the applicant does not necessarily prove that it is distinctive. However, it is possible to rely on acquired distinctiveness through long-term or extensive use (Provision 9).

Relative grounds

Unregistered well-known trademark (Article L.13.2) The owner of an unregistered trademark may oppose or invalidate a litigious trademark by claiming that such trademark is a "duplication, imitation or translation" of its trademark, provided that the owner can prove that:

  • its trademark, even though not registered in China, is well known in China (Article L.13.2); and
  • the registration of the litigious trademark is likely to cause confusion.

To determine the likelihood of confusion, the provisions enumerate the following factors to be considered by the courts:

  • the extent of similarity of the trademarks;
  • the extent of similarity of the goods on which the trademarks are designated to be used;
  • the extent of distinctiveness and the reputation of the trademark seeking protection;
  • the degree of attention of the relevant public; and
  • other pertinent factors.

In addition to the above, the intention of the applicant and the evidence of actual confusion may also be taken into consideration, but – as specified by a Supreme People's Court judge during a conference introducing the provisions – the lack of evidence concerning the intentions of the applicant or any actual confusion will have no negative impact.

Provision 12 may be compared to previous Supreme People's Court opinions, published in 2010 and 2011, where the Supreme People's Court advised the courts to take the reputation of both trademarks – the cited trademark and the litigious trademark – when assessing the similarity and the likelihood of confusion. This was called the 'inclusive development theory'. This theory seems to have been abandoned.

Registered well-known trademarks (Article L.13.3) The provisions address the situation covered by Article L.13.3, where the owner of a registered well-known trademark opposes the application or requests the invalidation of an identical or similar trademark designating dissimilar goods or services (Provision 13). Interestingly, the provisions do not use the word 'dissimilar'. However, while it may be implied, the omission might be voluntary, as will be seen when examining Provision 14. The court must examine whether the litigious trademark is likely to cause a certain degree of association in order to mislead the public and harm the interests of the well-known mark owner. This examination is to be made by considering the following factors:

  • the distinctiveness and extent of reputation of the cited trademark;
  • whether the trademarks are sufficiently similar;
  • the goods on which the trademarks are designated to be used;
  • the extent of overlapping of the relevant public and the degree of attention thereof; and
  • signs similar to the cited trademark that are legitimately used by other market entities or other pertinent factors.

Again, no reference is made to the reputation of the litigious trademark reputation, which confirms the abandonment of the inclusive development theory.

Provision 14 introduces what appears to implement a ruling made by the Supreme People's Court on May 19 2016 in P&G v TRAB. In this case, P&G requested the invalidation of the WEISHIDA mark more than five years after the registration date. Therefore, pursuant to Article 41.2 (now renumbered Article 45.1) of the Trademark Law, P&G had to prove that its trademark was well known at the date of filing the litigious trademark and that the litigious trademark has been applied in bad faith. However, another difficulty had to be overcome: the protection of a registered well-known trademark, as provided in Article L.13, applies only to cases where the litigious trademark is used on dissimilar goods. In this case, the goods were identical. However, the Supreme People's Court ruled that Article 13 could apply even if the goods are identical.

According to Provision 14, if a party opposes an invalidation action against a litigious trademark, claiming that its trademark is well known, and the TRAB rules in favour of such claim on the basis of Article L.30 of the law (this article concerns the protection of any (even unknown) trademark against identical or similar trademarks designating identical or similar goods), the court may apply Article L.30 if the trademark has been registered for less than five years, or Article L.13.3 if the trademark has been registered for more than five years.

From this provision, it appears that the Supreme People's Court agrees that a mark owner may invoke Article 13.3 (in addition to Article L.30) even when the litigious trademark is applied or registered for identical or similar goods. Indeed, if Article L.13.3 can be applied after the five years to a litigious trademark that would have been refused or invalidated pursuant to Article L.30 (within five years), it is obvious that the 'dissimilar goods' condition is no longer required for the application of Article 13.3.

Unregistered trademark with certain influence (Article L.32) If the opponent or invalidation applicant cannot prove that its trademark is well known, it is still possible to oppose or invalidate a trademark that has been applied or registered "preemptively by unfair means" (Article L.32). The owner of the cited trademark must prove that the trademark has been used in China and has acquired a certain influence, and must also address the "unfair means" issue. Here, the provisions offer some assistance (Provision 23): if the applicant of the litigious trademark definitely knew or should have known of the existence of the prior trademark, this may be presumed to constitute pre-emptive registration by unfair means, unless the applicant adduces evidence to prove that it has no bad faith in exploiting the reputation of the prior used trademark. Thus, provided that sufficient prior use is adduced, the Supreme People's Court considers that the burden of proof should be placed on the litigious trademark applicant.

Regarding the evidence proving a certain influence, the provisions give examples such as continuous use for a certain period of time in a certain geographical area. Further, the provisions add that Article L.32 applies only to trademarks filed on identical or similar goods or services.

Other prior rights, copyright and rights in names (Article L.32) If the prior right cited under Article L.32 is another civil right, it must be valid not only before the date of the litigious trademark application, but also at the time of the approval of the trademark (Provision 18).

Provisions 19 to 22 set out how to prove the ownership of copyright and the conditions for obtaining protection of a name, pseudonym, trade name or character image.

Bad faith Provisions 15 and 16 provide details concerning the interpretation of Articles L. 15.1 and L.15.2. For example, the terms 'agent' or 'representative' used in Article L.15.1 should be construed widely as including any kind of intermediary in the sense of sales agency, and should include persons having a kin or any specific relationship with such agent, and even if negotiation have taken place without being concluded. Similarly, the term 'other relations' used in Article L.15.2 covers a wide range of circumstances (eg, family relationships, labour relations, business locations in the proximity and unconcluded negotiations).

Finally, Provision 25 deals with another aspect of Article L.45.1 – that is, the bad-faith registration of the litigious trademark. Here, the Supreme People's Court has introduced two new ideas:

  • The court should examine not only the intentions of the litigious trademark applicant at the time of filing, but also the status of use of the litigious trademark, which implies the consideration of facts that occurred after filing, including applying the P&G v TRAB decision.
  • Where the reputation of the cited trademark is high, the court may presume that the litigious trademark was filed in bad faith unless the applicant can prove proper cause for such filing. This is the same reversal of the burden of proof as provided for in Provision 23.

Use of trademark (Article L.49.2) Provision 26 clarifies the conditions for the revocation based on three-years' non-use, as stipulated in Article L.49.2. For example, if the used trademark has only a subtle difference with the registered trademark, this constitutes valid use. Showing the intent to use through necessary preparation may serve as a "proper reason" for the mark not yet to be in use. However, in the absence of actual use the mere fact of signing an licence assignment agreement is insufficient.

Procedural issues

Provisions 2 and 27 to 30 address procedural technicalities.

Provision 2 stipulates that the court may, ex officio, raise a legal ground that a plaintiff failed to raise in the administrative litigation in order to rectify a decision that appears obviously inappropriate.

Provision 28 clarifies a situation that occurs frequently: a trademark is refused on account of a prior right and the applicant files both a review with the TRAB and a procedure against such prior right, but the procedure is still pending when the TRAB confirms the refusal. The case is then referred to the court. The provisions state that if the prior right obstacle has been removed, the court may order the TRAB to re-make its decision (even though the decision was correct at the time).

For further information on this topic please contact Paul Ranjard at WAN HUI DA - PEKSUNG IP Group by telephone (+86 10 8231 1199) or email (ranjard@wanhuida.com). The WAN HUI DA - PEKSUNG IP Group website can be accessed at www.wanhuida.com and www.peksung.com.

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