Although China is a civil law country, unregistered trademarks may be protected as prior rights under the Trademark Law and the Anti-unfair Competition Law
Foreign companies should not underestimate the importance of registering their trademarks in China. There are no common law rights for unregistered trademarks due to China’s civil law tradition. Instead, unregistered trademarks are provided ‘prior rights’ status under the Trademark Law of the People’s Republic of China and the Anti-unfair Competition Law of the People’s Republic of China. Chinese law also distinguishes unregistered well-known trademarks from less renowned unregistered trademarks. Overall, the scope of protection provided by Chinese law for all unregistered marks is significantly less than what is afforded under common law. However, these prior rights may be sufficient to contend with two of the most common problems faced by unregistered trademarks in China: bad-faith registrations and counterfeiting.
Trademark registration in China follows a first-to-file practice for designating who has first claim to a disputed trademark.
Should the rightful trademark owner lose the race to the Trademark Office against a badfaith registrant in order to secure registration of its trademark, the former may, within three months of the date of publication, file an opposition to the trademark registration with the Trademark Office based on Article 31 of the Trademark Law.
Article 31 of the Trademark Law prohibits any trademark application that employs unfair means to register preemptively a trademark that has some reputation and belongs to another person.
No definition of ‘unfair means’ is provided under the Trademark Law. Published decisions from the Trademark Office, the Trademark Review and Adjudication Board (TRAB) and courts dealing with oppositions based on Article 31 of the Trademark Law most often cite knowledge of prior rights to a trademark before filing an application for registration of the said trademark as a consideration for ‘unfair means’. Prior knowledge can be evidenced by the use of a similar trademark or packaging. Also, the Trademark Office and the courts may consider media reports and whether the parties operate in the same or similar industry to impute knowledge of the trademark.
An opposition based on Article 31 also requires that the opponent demonstrate that the trademark in dispute had some reputation in China prior to the date of filing the contested application. The requisite level of reputation is that the trademark enjoyed some degree of recognition within the relevant Chinese public, which can be evidenced by the trademark having been previously used in China.
If a third party has successfully secured a registration for another party’s unregistered trademark, any interested party disputing the registration may, within five years of the date of approval of the trademark registration, file a request to invalidate the registration with the TRAB.
The basis for cancelling a registered trademark that encroaches on the prior rights of an unregistered trademark is provided by Article 41 of the Trademark Law, which prohibits any registered trademark that is contrary to the provisions set forth in Articles 31 and 13 of the Trademark Law.
The evidence required to establish that an application was wrongfully considered and registered by the Trademark Office in an invalidation proceeding based on Article 31 before the TRAB will be similar to that offered by an opponent at an opposition hearing before the Trademark Office.
Well-known unregistered trademarks
Well-known trademarks are afforded special status under Chinese trademark law. If an applied-for trademark might be confusing with a reproduction, imitation or translation of another person's well-known trademark not registered in China, and is directed to similar or identical categories of goods and/or services as the well-known mark, an opponent may rely on Article 13 of the Trademark Law in an opposition proceeding.
Article 13 stipulates that “where a mark is a reproduction, imitation, or translation of a third-party’s well-known trademark which has not been registered in China and where the goods are identical or similar, which may cause public confusion and damage the interests of the registrant of the well-known mark, no registration shall be granted and the use of the mark shall be prohibited”.
In order for a trademark to be considered well known, the opponent must:
- apply for recognition that the unregistered trademark is well known; and
- show that the unregistered well-known trademark is “widely known to the relevant sectors of the public and enjoys a relatively high reputation in China”.
In making this determination, the Trademark Office will consider whether the trademark is viewed favourably as a wellknown mark after considering the following factors listed under Article 14 of the Trademark Law:
- reputation of the mark to the relevant public;
- time of continued use of the mark;
- consecutive time, extent and geographical area of advertisement of the mark;
- records of protection of the mark as a well-known mark; and
- any other factors relevant to the reputation of the mark (eg, reputation and sales outside China).
“Relevant sectors of the public” includes consumers of the type of goods and or services, operators that manufacture the said goods or provide the said services, and sellers and other persons involved in the distribution of the type of goods and/or services to which the mark applies.
Pursuing an opposition under Article 13 of the Trademark Law does not require that the trademark owner demonstrate that unfair means were used for the trademark application. However, proving that a trademark is well known in an opposition proceeding is a statistically difficult task. By the end of 2007 only 16 trademarks had been recognized as well known by the Trademark Office by way of opposition proceedings.
Article 41, which provides for invalidation of registered marks that are contrary to Article 13, also provides that “[w]here a well-known mark is registered in bad faith, the genuine owner thereof shall not be restricted by the five-year limitation”.
In practice, parties can attempt to argue that their trademark is well known during invalidation proceedings in order to avoid the five-year limitation for bringing an application for invalidation. However, convincing the TRAB that a trademark is well known is also a very difficult task. At the end of 2007 only 51 trademarks had been adjudicated as well known by the TRAB from invalidation proceedings.
Anti-unfair Competition Law
Damages and injunctions are not available for infringement of unregistered trademarks under the Trademark Law. Instead, owners seeking damages or injunctions relating to the copying of an unregistered trademark must resort to unfair competition law. Unfair competition law is directed to the protection of all aspects of a famous commodity, including its trademark, trade dress and decoration.
Article 5 of the Anti-unfair Competition Law prohibits another party from using, without authorization, the names, packaging or decoration peculiar to famous goods, or from using names, packaging or decoration similar to those of famous commodities so that their own goods are confused with the famous commodities of others, causing buyers to mistake them for the famous commodities of others.
From the above, only unregistered trademarks relating to famous commodities are afforded this right of protection under the Anti-unfair Competition Law. According to the Supreme People’s Court interpretation on unfair competition, a ‘famous commodity’ as referred to under the Antiunfair Competition Law is a commodity already sold in China with high popularity and known to the relevant public.
To determine whether a commodity is famous, reference is made to factors that are analogous to those listed under Article 14 of the Trademark Law – that is, the commodity’s sales period, sales regions, sales amount, sales targets, as well as duration, degree and regional scope of any promotion, and how the commodity was protected as well known.
In addition, the protection of specific names, packing and decorations of an internationally famous commodity should be based on the relevant Chinese public’s familiarity with the famous commodity; however, the court need not exclude the factor of being famous abroad.
Based on the reasoning of the Supreme People’s Court in the recent Ferrero Rocher decision, remedies available for an unregistered trademark being copied under unfair competition law can be the same as for a trademark being infringed under trademark law.
Bad-faith registrations continue to plague legitimate trademark owners in China and leave the rightful owner’s interests vulnerable to interference. Using the various enforcement mechanisms available, bad-faith applicants may disrupt the sales, shipping and manufacturing of any goods associated with the subject trademark. In some instances, companies faced with the possible disruption of their Chinese operations, and consequently their international operations, have been forced to re-brand their goods in China.
When faced with a bad-faith registration, legitimate trademark owners can assert the prior rights of their unregistered trademarks at opposition and cancellation proceedings. In this respect, the lack of registration for a trademark is not necessarily fatal to the owner of an unregistered trademark when dealing with a third party that has either applied for or successfully registered its trademark.
When opposing a registration of a trademark or requesting invalidation of a registered trademark, practically speaking, only the most confident complainant should proceed with arguing that its trademark is well known. The more conventional method of arguing against a trademark application and registration, under Article 31 of the Trademark Law, should be the primary means of asserting prior rights due to the difficulties associated with demonstrating that a trademark is well known before the Trademark Office and TRAB in opposition and invalidation proceedings. The five-year time limit for bringing a request for invalidation before TRAB should be observed strictly.
When dealing with the infringement of unregistered trademarks in China, the rights afforded to unregistered trademarks compared to those provided for registered trademarks are far inferior. Most importantly, contending with counterfeiting of an unregistered trademark is especially difficult under Chinese law, whereby protection is provided only to unregistered trademarks associated with famous commodities. Most commodities in the world cannot be considered famous, and even commodities recognized as famous in some parts of the world may not be recognized as famous in China.
For the aforementioned reason, registration is the single most important step that a trademark owner can take to ensure the maximum protection of its trademarks in China. A trademark owner that does not register its mark in China is not only limiting the maximum ambit of protection a trademark is afforded under Chinese law, but also enabling third parties to exploit its trademark wilfully.