Three years after China Trademark Law’s amendment, Trademark Office (TMO) and Supreme Court made respective patch-ups on issues needing to be specified or guided. On January 4, 2017, Trademark Office published the revised Trademark Examination and Review Standard (the Revised Standard); followed by Provisions of the Supreme People 's Court on Trial of Administrative Litigations Involving the Granting and Affirmation of Trademark rights”(Judicial Provisions) entering into effect on March 1, 2017,. Dan Chen of Unitalen Attorneys at Law shares her obversations on the highlights.
Have you found something notably new in the area of trademark registation examination?
Dan Chen: In the 2013 revision of the Trademark Law, sound mark was first introduced into China trademark system. Based on the last three years’s practice experiences, the Revised Standard has provided detailed guidance on the examination of sound mark applications in both registrability determination and similarity test for the first time. In terms of phohibitive provisions, according to the Revised Standard, a sound mark shall not be identical with or similar to the Chinese or foreign national anthems, military songs, or “the International”, and shall not include religious music, or sounds having negative affect such as horrifying or violent sounds. In terms of inherent distinctiveness, a sound mark shall be considered as devoid of distinctive character if it directly indicates the contents, target consumers, functions or other characteristics of the designated goods or services, for example, the sound of playing piano used as trademark for musical instrument, or kids’ laughing sound used as trademark for infant powder milk. At the same time, pitch or rythem that is too simple or common, a complete song or a lenthy piece of music, or a direct singing of advertising words or common phrases in plain tones will also be considered as lacking distinctinveness and therefore cannot be registered as trademark. As to the examination on trademark similarity, it is important to note that, in addition to the comparison between the audio effects, the Trademark Office also compares the verbal elements contained in a sound mark with prior word marks.
Do the two documents provide strengthened measures to tackle trademark squatting?
Dan Chen: Yes, there are several provisions in the Revised Standard that can be beneficial to trademark owners.
First of all, Paragraph 1 Article 44 of the New Trademark Law prescribes that, where a registered trademark was acquired by fraud or any other improper means, the Trademark Office shall declare the registered trademark invalid; and any other organization or individual may apply to the Trademark Review and Adjudication Board for invalidation of the registered trademark. This has been frequently adopted as an miscellaneous provision in trademark opposition or invalidation proceedings, but the rule of thumb on its application was not very clear in the past. In the Revised Standard, the circumstances constituting “registration acquired through other improper means” are specified as 1) registering many trademarks which are identical with or similar to highly distinctive trademarks of others, 2) registering many trademarks which are identical with or similar to others’ business names, entity names or the special names for well-known products, and 3) registering a large amount of trademarks with obvious lack of use intention. Further definition has been given to “obvious lack of use intention” as having neither actual use nor intention to use and merely aiming at selling the mark, seeking royalty fee or compensation. These specified provisions will significantly improve the applicability of Paragraph 1 Article 41, and turn it into a powerful weapon against those “professional” squatters even if the trademark owner may not be able to prove its prior use of the mark in China.
Secondly, with respect to the application of Paragraph 1 Article 15 of the New Trademark Law concerning agent or representatives attempting to register a trademark without authorization from the trademark owner, the Revised Standard and the Judicial Provisions broaden the application scope to those registration attempts taking place during the negotiation stage before an agency or representative relationship is formed and after termination of the relationship. In addition, where there is certain relationship such as kinship or investment relationship between the trademark applicant and the agent or representative of the trademark owner, they may be presumed to be in collusion, and hence fall into the scope of Paragraph 1 Article 15 as well. These specified provisions will help ensure safer business environment for trademark owners facing the risk of disclosing their trademarks to potential business partners. At the same time, however, trademark owners still need be mindful of preserving evidence from the very beginning, and are expected to input more efforts in background investigation, in order to dig out any potential link between its agent / distributor and the trademark applicant.
We have seen more and more successful opposition and invalidation actions based on the prior-copyright claim. Will this trend be loosened or tightened under the two documents?
Dan Chen: In my opinion, both documents deliver the same strong message that prior copyright will remain an effective tool in trademark oppoistion or invalidation proceedings. At the same time, however, certain borderlines have been drawn to avoid abuse of such rights. In terms of examination scope, for example, the Judicial Provisions require courts to conduct thorough examination on 1) whether the object at issue constitutes a copyrightable work, 2) whether the petitioner is the legitimate copyright owner or an interested party entitled to claim the copyright, and 3) whether the trademark at issue constitutes infringement of petitioner’s copyright. At the same time, the Revised Standard makes it clear that the petitioner’s trademark registration certificate alone or the copyright registration certificate dated later than the filing date of the trademark at issue cannot consitutue sufficient proof of prior copyright. In the past, it had been a very common practice for opposition / invalidation petitioner to apply for copyright registration after starting the opposition / invalidation proceeding. In light of this new evidence requirement, copyright owners shall either keep complete record of prior creation or publication of the work (not necessarily in China though), or take actions to obtain copyright registration as early as possible.
With regard to the use of a registered trademark, has there been any new requirement or trends?
Dan Chen: While the New Trademark Law describes trademark use as use of a trademark on goods, packages or containers of the goods or in trading documents, and use of the trademark in advertising, exhibition or any other business activities, to the extent to identify the origin of the goods, the Revised Standard further confines trademark use as use of a trademark in commerce and specifies several typical circumstances that do not constitute trademark use in the context of Trademark Law, namely, 1) publication of trademark registration information or declaration of trademark ownership; 2) use of a trademark other than in public business field; 3) use of a trademark merely on gifts; 4) mere transfer or license of trademark rights without actual use; and 5) symbolic use of trademark merely aiming at maintaining registration.
In our representation of trademark owners who are victims of trademark squatting, we frequently find trademark squatters carry out symbolic use of the preempted trademarks in an effort to keep the registration valid for sale. In the past, the Trademark Office would maintain a trademark registration so long as the registrant submitted one piece of valid use evidence. Under the new rules, petitioners of non-use cancellation will be able to challenge such single piece evidence as being symbolic use merely aiming at maintaining registration, and hence improve the chance of success. However, it is still not clear whether, at the stage of examination by Trademark Office, this test of symbolic use will be implemented ex officio and directly lead to the cancellation of a registered trademark.
Which would you consider the most typical trademark cases in the past year?
Dan Chen: Selected as 2016 top ten IP litigations by the Supreme Court, the series administrative litigations of Michael Jordan vs. TRAB and Qiaodan Sport are of significant importance for understanding the protection of person name rights against trademark squatting. These supreme court verdicts reflects the same standard as in the Judicial Provisions that the protection of person name rights includes not only the official name but also the pen name, stage name and translated name, to the extents that such name has enjoyed certain level of reputation, that a corresponding relationship has been established with the natural person, and that the relevant public refer it to the natural person.
Another 2016 top 10 IP litigation case concerning affirmation of trademark rights, namely the administrative litigation of Chateau Lafite Rothschild & TRAB vs. LAFEI MANOR, plays a guiding role in the determination of similarity between a foreign trademark with high level of reputation and the Chinese name preempted by others. During retrial of the case, the suprement court discussed various issues including composing elements of trademarks, degree of similarity in whole, the distinctiveness and reputation of the relevant trademarks, and most important of all, the determination of a stable corresponding relationship.
Last but not the least, the civil litigation between Maco, a Chinese company well-known for industrial adhesives and glues, vs. Xiujie Xinxing over trademark infringement has set a new record for the highest amount of indemnity ordered by Beijing IP Court, which is 10 million RMB Yuan (nearly 1.5 million USD). In this case, Maco determined the amount of idenmity based on the profit acquired by the Defendant through infringement activities, and provided evidence collected through public information channels at their best, which includes the Defendant’s scale of operations, unit sales profit of infringing goods, production volume, sales period, number and geographical coverage of Defendant’s retail stores. With regard to sales profit, Maco requested the court to take into account of the unit price difference and the gross margin of the alleged infrining products. As for the sales volume, although there is no exact number, Maco was able to prove the monthly production of one type of the alleged infringing goods as 10,000 tons. Based on such, in combination with other factors such as Denfendant’s scale of operation, the number of retail stores and geographical coverage, Maco made resonable deduction that the three types of alleged infringing products should have a total monthly sales volume over 10,000 tons. The Defendant challenged the objectivity of the above evidence, but refused to provide the bookkeeping records and information of the relevant business activities despite the court’s order. In the end, Beijing IP Court granted full support to Maco petition and ordered the Defendant to compensate Maco for 10 million RMB yuan.
Ms. Dan Chen has over 20+ years’ experience in counseling clients on Chinese trademark law, anti-unfair competition law and copyright law. She has helped many businesses in the fields of trademark registration, disputes, licensing and transfer, infringement investigation, administrative enforcement and litigation. Her clients, ranging from Fortune 500 to startups, benefit from her in-depth knowledge and responsive services in preventing risks and resolving disputes in IP fields, as well as in portfolio management. Ms. Che is listed in “The world’s leading trademark professionals” directory, and is describes as “meticulous, thorough and trustworthy… always the top choice for large portfolios”. She was invited to lecture at many regional and international conferences and workshops, including ECTA annual conference, ABA spring conference, and McCarthy Institute of University of San Francisco. She was also the first Chinese lawyer who has ever served at anti-counterfeit committee of ECTA and provided annual report input on China IP status to the association. She is now member of various IP associations such as INTA, AIPPI, AIPLA and ABA. Currently Ms. Chen is chairing Unitalen IP Consulting, LLC, a US-based affiliate company of Unitalen Attorneys at Law.