Risk of cancellation due to alteration Risk of cancellation based on non-use Risk of failure to claim damages in civil lawsuit Exception Comment

In principle, registered trademarks should be used in the exact form in which they were registered. However, occasionally a rights holders may alter its registered mark (eg, where there is a change in branding or shifting market needs). Unfortunately, this is not risk-free. If a registered trademark is altered in such a way that its distinctive features change, the rights holder could lose its right to the mark or be unable to enforce it.

Risk of cancellation due to alteration

Under Article 49.1 of the Trademark Law, an administration for industry and commerce may order a rights holder to rectify the alteration of its trademark. If this is not done within a specified period, the China Trademark Office (CTMO) may cancel the registered trademark ex officio. However, this has yet to happen and it would be easy to defend such an action by claiming that the varied trademark is a different unregistered trademark.

Conversely, a rights holders may find itself on the other side of the infringement if a third party registers a trademark, but uses a substantially modified version that infringes the rights holder's registered trademark. In such cases, rights holders may want to enforce Article 49.1 fully, although this is difficult.

Risk of cancellation based on non-use

Under Article 49.2 of the Trademark Law, a trademark can be cancelled if it has not been used for three consecutive years. In a 2010 opinion, the Supreme People's Court specified that if a registered trademark is altered in such a way that its distinctive features have changed substantially, use of the modified trademark will not be deemed to be use of the registered trademark. Therefore, if a rights holder uses only the substantially changed version, the registered trademark can be cancelled for non-use. However, the law does not specify to what extent a trademark must be altered for this to apply. In practice, changes to the font or case of English characters or the type of Chinese characters (simplified or traditional), or to the order of the components (eg, word and device components), will not usually be deemed to be substantial.

However, it may be problematic if a trademark or any of its components are significantly altered. For example, a party registered the ???TINIT trademark, but used the ???LISHIX trademark. The Beijing High Court held that the use of the ???LISHIX trademark did not constitute use of the registered trademark, as the distinctive component TINIT had been changed to LISHIX. The court thus upheld the cancellation on the basis of non-use.

Risk of failure to claim damages in civil lawsuit

Article 64.1 of the newly amended Trademark Law provides that a rights holder must prove that its trademark has been used when claiming damages. The civil courts generally treat trademark variations in the same way as the China Trademark Office, although sometimes they are stricter. Thus, if only a variant is used, a court may uphold the infringement, but refuse to grant damages on the basis that the registered trademark has not been used.

Exception

Under Article 1.2 of a 2008 Supreme People's Court interpretation, the Chinese courts do not accept infringement lawsuits filed by the owner of one registered trademark against the owner of another registered trademark. However, the interpretation provides for an exception: when a registered trademark has been altered in such a way that its distinctive features are substantially different, it is possible to file a suit against the mark.

For example, Lacoste sued the rights holder of another registered trademark (Figure 1), as it had been modified (Figure 2) to look similar to Lacoste's alligator trademark (Figure 3).

 

Similarly, BMW sued MBWL, as its registered trademark (Figure 4) had been modified (Figure 5) to look like BMW's trademark (Figure 6).

 

Comment

Rights holders must monitor how their registered trademarks are used. If for some reason they use a trademark that differs from the original, rights holders are advised to file a new trademark and ensure that they make sufficient use of the original.

For further information on this topic please contact He Wei at WAN HUI DA - PEKSUNG IP Group by telephone (+86 10 6892 1000) or email (hewei@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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