Further to the groundbreaking Kung Fu Panda case (discussed in our previous article), in which the Beijing Higher People’s Court recognised DreamWorks Animation’s ownership of merchandising rights in the title of its popular film Kung Fu Panda, the Supreme People’s Court (SPC) of China has now confirmed, in a new judicial interpretation, that the title of a work, or the name of the character in a copyright work, that enjoys a relatively high level of recognition and reputation shall be protected as an “earlier interest” under the Trade Mark Law.

The “Provisions of the Supreme People’s Court on Several Issues Concerning the Hearing of Administrative Cases Involving the Granting and Affirmation of Trade Mark Rights” (the SPC Provisions), which became effective on 1 March 2017, provide that “with respect to those works within copyright terms, if the title of a work or the name of a character in the work enjoys a high reputation, and its use as a trade mark in respect of relevant goods is likely to mislead the relevant public to believe that such goods are authorised by or have certain associations with the copyright owner of the work, and the party concerned claims prior right based on this, the Court shall uphold such claim”.

While the term “merchandising rights” is not expressively mentioned, the SPC Provisions implicitly recognise these rights by expanding the scope of the concept of “earlier rights” in Trade Mark Law to include civil interests arising from the title and character name of a reputable copyright work.

This development is encouraging for rights holders who were concerned that the Kung Fu Panda judgment might have limited bearing on future cases given that China has no common law tradition. However, rights holders should note that protection of merchandising rights remains limited. These rights may only form the actionable basis in administrative proceedings, such as trade mark oppositions and invalidation petitions. They do not enable rights holders to proactively prevent pirates from using titles or character names of their copyright works as unregistered trade marks. Also, these rights only apply to titles or names of characters in copyright works, such as works of literary fiction or motion picture films. They do not extend to names or images or other identifiable characteristics of celebrities or famous imaginary figures that are often targeted by pirates.

The SPC Provisions, however, do endeavor to address protection of celebrity names. They provide that where the relevant public believes that the trade mark at issue refers to a natural person (celebrity) and believe that the goods to which such trade mark is attached are authorised by or have an association with such person, the court may determine that the trade mark infringes the name right of that person. This extends to pseudonyms, stage names, translations of the name, if such specific name enjoys a reputation and is established as relating to that natural person. This reflects the recent SPC decision in favour of NBA legend Michael Jordan, who had long waged a campaign for ownership of the Chinese character trade mark "乔丹” (QIAODAN – transliteration of JORDAN) that had been preemptively registered by a Chinese sportswear maker. The SPC found that the Chinese transliteration of JORDAN was closely associated with the former NBA athlete in China, and so the registration of the Chinese mark by a third party would impair Mr Jordan’s right to his personal name even though JORDAN may be a common family name in the west. The SPC Provisions do not go further to address protection of images or other identifiable characteristics of celebrities or famous imaginary figures.

The SPC Provisions also touch on other areas, including tests on how to assess fame of a mark, likelihood of confusion, and circumstances where bad faith can be inferred. There is guidance on basic rules in reviewing trade mark cases. These include assessment of registrability and distinctiveness (by observing the mark as a whole), providing that use of a trade mark by a party in a manner not against the will of the owner shall be deemed use by the owner, and that non-use can be justified if an owner intended to use the mark and undertook necessary preparations for use but was prevented by objective circumstances.

While the SPC Provisions break no new legal ground, they do reinforce the bases for decisions handed down in various recent high profile cases and attempt to introduce practical measures to improve examination standards for which we should be grateful.