Courts relies on 'unhealthy influence' clause to reject bad-faith application

The Beijing Higher People’s Court has upheld a decision of the Beijing Number 1 Intermediate People’s Court in which the latter had applied the 'unhealthy influence' clause under Article 10(i)(8) of the Trademark Law to reject a bad-faith application.

An individual named Zhou Jun applied for the registration of a trademark consisting of the abbreviation of 'Chinese Premier League' in Chinese characters (No 3383774) for wine products in Class 33 of the Nice Classification.

The Chinese Football Association (CFA) - the managing organisation of the Chinese Premier League - filed an opposition with the China Trademark Office. The Trademark Office rejected the grounds of opposition and approved the mark’s registration.

The CFA filed an appeal with the Trademark Review and Adjudication Board (TRAB), which rejected the appeal. The CFA then took the TRAB to the Beijing Number 1 Intermediate People’s Court.

The court found as follows:

• Since the CFA did not request the protection of its trade name during the opposition procedure, the TRAB’s decision was not made on this ground. As the court can rule only on the legitimacy of the TRAB’s decision, the CFA’s claim for the protection of its trade name was irrelevant.
• The mark at issue is the abbreviation of 'Chinese Premier League' in Chinese characters, which establishes a unique link with the Chinese Premier League in the mind of the Chinese public. The registration of the mark for wine products in Class 33 would easily mislead consumers into assuming that goods bearing the mark originate from the Chinese Premier League or that they have been authorised by the Chinese Premier League. Thus, registration of the mark would violate Article 10(i)(8) of the Trademark Law.
• Therefore, the TRAB’s decision - which was based on the finding that registration of the mark would not have any adverse effect - was wrong and should be revoked.

The TRAB and the owner of the mark appealed to the Beijing Higher People’s Court, which, in its final verdict, upheld the ruling of the first instance court.

From a theoretical aspect, the 'unhealthy influence' clause of Article 10(i)(8) aims to protect the public interest and public order. Strictly speaking, as far as the case at hand is concerned, the only relevant articles of the Trademark Law were Article 13 (well-known trademarks) and Article 31, which provides that a trademark application may be rejected if it is identical or similar to a sign that is already used by a third party and has acquired a certain influence. However, in the present case, it was obvious that the mark at issue had not become well known before the application date of the opposed mark, nor had it been used on wine products. Therefore, Articles 13 and 31 were not applicable.

Yet, where a party files an application for registration of a famous name as a trademark for its products, it shows an intention to gain profit from the reputation of that name. If such intention to gain profit from the reputation of others is unjustifiable, it is necessary to find a legal basis for action under the Trademark Law as a 'back-up' - hence the reference to the general term 'unhealthy influence'.

In a case concerning another individual, Ji Shiqing, who owned almost 200 trademarks (mostly famous foreign brands), the Beijing Number 1 Intermediate People’s Court ruled that the disputed trademark application was part of a series of bad-faith applications, and also relied on the 'unhealthy influence' clause to reject the application. However, the Beijing Higher People’s Court reverted to a stricter interpretation of the 'unhealthy influence' clause, and used a different provision as a legal basis to reject the application.

Therefore, according to the precedents, the 'unhealthy influence' clause shall be used as a back-up in cases where no other clauses can be relied on to fight a bad-faith application. It is hoped that the revised Trademark Law will provide for the necessary legal basis to deal with bad-faith applications efficiently.

Wu Xiangrong, Wan Hui Da Law Firm & Intellectual Property Agency, Beijing