Case illustrates application of Article 41(1) of Trademark Law

China

The Beijing Higher People’s Court has upheld a decision of the Trademark Review and Appeal Board (TRAB) in which the latter, relying on the concept of 'improper means' as an absolute ground for refusal, had cancelled pre-emptive trademark registrations for the manga character Crayon Shin-chan, even though the marks had been registered for more than five years.

Crayon Shin-chan is a famous animation and manga character created by Japanese author Yoshito Usui in the 1980s. In 1997 Guangzhou Chengyi Garment Co Ltd registered nine 'Crayon Shin-chan'-related marks in Classes 9, 16, 18, 25 and 28 of the Nice Classification without the authorisation of the Japanese author. The registrations include a device representing the cartoon character and its name in traditional Chinese characters; they cover various goods ranging from shoes and clothing to toys.

Registrations 1026605 and 1044841:

Registration 1026606:

Chengyi Garment also registered approximately 50 other internationally well-known marks, including Snoopy, 7UP and COLGATE. The nine 'Crayon Shin-chan'-related registrations were subsequently transferred to Jiang Su La Bi Xiao Xin Garment Co Ltd.

In March 2007 Futaba-Sha Co Ltd, the publisher of the Crayon Shin-chan manga in Japan and the exclusive licensee of the copyright in China for the abovementioned device and characters, initiated a cancellation action with the TRAB based on: 

  • its exclusive licensing rights;
  • the reputation around the world - in particular, in Korea, Hong Kong, Taiwan and China - of the Crayon Shin-chan character; and
  • the fact that Chengyi Garment had applied for the registration of the marks in bad-faith.

In principle, the cancellation action should have been rejected because it was filed too late. Articles 41(2) and (3) of the Trademark Law, which provide for cancellation actions based on prior rights, stipulate that a cancellation action cannot be filed more than one year (under the 1993 version of the law) or more than five years (under the revised 2001 version) after the date of registration of the mark at issue. However, in such cases, it is common practice to base the action on Article 41(1), which refers to the absolute grounds for refusal and to the general concept of 'improper means'.

In April 2010 the Supreme People’s Court had published an opinion which, in its Article 19, dealt precisely with this issue: it clarified that the expression 'improper means' corresponds to situations where the general public order is disturbed (eg, misappropriation of public resources, injury to public interest and disruption of the trademark registration order) and cannot be used when the cancellation action is based only on a relative ground for refusal (ie, a prior right).

In this case, the TRAB noted that, even though the action was based on a prior right, the pre-emptive registrations made Chengyi Garment were on such a large scale, with a clear intention to obtain illegal profits, that the phrase 'improper means' under Article 41(1) was applicable. Therefore, the trademarks should be cancelled.

The owner of the marks appealed to the Beijing Number 1 Intermediate Court and, subsequently, the Beijing Higher People’s Court. Both courts upheld the TRAB's decision.

This case illustrates the application of Article 41(1), as interpreted by the Supreme People’s Court in its April 2010 opinion. If the disputed trademark is part of a large series of bad-faith trademark applications, it is possible to claim, even if the cancellation action is based on a prior right (under Articles 41(2) and (3)), that the general trademark order has been affected and that the absolute grounds for refusal under Article 41(1) should apply.

Hui Huang and Charles Feng, Wan Hui Da Law Firm & Intellectual Property Agency, Beijing

The authors' firm acted for Futaba-Sha Co Ltd in this case

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