In a recent case, the Beijing High Court applied both Articles 13.1 and 31 of the 2001 Trademark Law to grant full protection over an unregistered trademark and clarified the assessment criteria of well-known status in the Internet industry. 

When a trademark, unregistered in China, is confronted with the obstacle of a prior application or registration (a "junior trademark"), and wishes to eliminate such obstacle, two articles of the Trademark Law (revised in 2014) may be cited: Articles 13.2 and 32 (these articles were respectively numbered 13.1 and 31 in the previous version of the Law dated 2001). Under the first of these articles (the previous numbering 13.1 will be used hereafter) it is necessary to prove (1) the well-known status of the unregistered trademark and (2) that the junior trademark is likely to cause confusion. Under the second of these articles (31), it is necessary to prove that the unregistered trademark had already been used and had acquired in China a certain "influence" at the time when the junior trademark was filed, and that such filing was "improper". In a recent case, the Beijing High Court applied both articles to grant full protection over an unregistered trademark.

Case Brief

Guangzhou KuGou Networks Ltd. (KuGou Networks) is a leading supplier of digital music interactive service in China. KuGou Networks has been offering to the public free music-streaming services since 2004.

In July 2009, Shantou Lifeng Electric Appliances Ltd. (Lifeng) applied for the trademark “酷狗 & KuGou” (KuGou in Chinese characters & pinyin) (the disputed mark) for the following services “arrangement and organization of concerts, program production, providing karaoke services; night club and entertainment, fitness club, mobile library, training; book publishing; modeling for artists etc.” in Class 41. This trademark was registered in December 2011.

In November 2014, KuGou Networks filed an invalidation application with the TRAB.

On February 18, 2016, the TRAB ruled in favor of KuGou Networks, invalidating the disputed mark on all designated services. The board found that: (1) the “酷狗” (Chinese characters of KuGou) constituted an well-known trademark for “providing online music service (not for downloading)”; (2) the registration of the disputed mark for “entertainment, providing karaoke services, etc.” was likely to cause confusion with the unregistered well known trademark and violated Article 13.1 of the Law; and (3) KuGou Networks has been using “酷狗” as its trade name prior to the application date of the disputed mark and had acquired a high reputation in the online music industry and therefore, the registration and use of the disputed mark violated Article 31 of the Law.

Lifeng filed an administrative suit with the Beijing Intellectual Property Court. The court confirmed the invalidation of disputed mark on the basis of article 31, for “arrangement and organization of concerts, program production, providing karaoke services; night club and entertainment”, but maintained the registration for the other services “fitness club, mobile library, training; book publishing; modeling for artists”. The court held that such other services, even though categorized in the same class, were not similar and that it was not possible to apply article 13.1 since this article only protect unregistered well-known trademarks against use or filing on identical or similar goods/services.

Both KuGou Networks and Lifeng appealed to the Beijing High Court.

On 13 March 2017, the Beijing High Court made a decision overruling the Beijing IP Court and upholding the TRAB’s decision: invalidation for all designated services.

In its judgment, the Beijing High Court adopted the method defined by the Supreme People' Court in its recent Provisions providing an interpretation of the Trademark law[1] : in Article 12 of the Provisions concerning the interpretation of article 13.1 of the Law, the SPC provides that in order to determine the likelihood of confusion, the court should take into account “the extent of reputation of the trademark (seeking protection), the extent of similarity between the goods/services designated by the trademarks, the extent of similarity between the trademarks etc.". Therefore, the higher the level of reputation of the prior mark, the lower the threshold of similarity between the trademarks and between the goods/services.

The Court opined that the difference between Article 13.1 and Article 31 lies in the extent of reputation of the unregistered mark and the object of the prior rights seeking protection. Article 31 intends to protect the prior trademark owner’s interests generated by its trademark use while Article 13.1 focuses on preventing confusion in the market. The court supported KuGou’s argument that, for the services (fitness clubs etc.) for which Article 31 could not be applied, Article 13.1 should apply because, in view of the trademark reputation and of the similarity of such services, there was a risk of confusion.

The court found that the evidence submitted by KuGou Networks - including certificate issued by industrial association, amount of tax paid, advertising and promotion materials, contract and invoice, and the media coverage - suffice to prove that the “酷狗” mark had reached the well-known status before the application date of the disputed mark.

The KuGou trademark obtained protection under both articles: article 31 for the services on which it had acquired influence through its prior use, and article 13.1, for the other services for which, due to the "extent of its reputation" and to the "degree of similarity between the services", there was a risk of confusion.

Comments:

This judgment is noticeable for two reasons:

Even though the case was adjudicated under the previous law, the court adopted the method recommended by the SPC in its most recent Interpretation.

This highlights the evolution of the market with regards to the determination of the well-known status of a trademark, based on Article 14 of the Law, which enumerates the factors to be considered, in principle. Such factors usually refer to the duration use of the trademark, the level of sales, the amount of advertising etc. However, in the Internet industry, most of these criteria do not fit. The Internet industry is a fast moving activity. Money and reputation can be acquired extremely fast. Advertising is made on website though totally different channels and methods. Therefore, assessing the well-known status of a trademark cannot be made by using the usual standards and requesting the proof of revenue, advertising cost and duration of trademark use.