Issues often encountered in administrative actions clarified

China
On April 26 2010 the Supreme People’s Court of China published an “Opinion on Certain Issues Relating to Administrative Actions Regarding the Grant and Establishment of Trademark Rights”. The opinion aims to clarify issues that are often encountered in administrative actions brought against the Trademark Review and Adjudication Board (TRAB). In China, a party that is not satisfied with decisions of the Trademark Office in registration, opposition and cancellations proceedings can seek review before the TRAB, and TRAB decisions can be appealed to the People’s Court by bringing an administrative action against the TRAB.

The Supreme People’s Court held as follows:
  1. Where the trademark at issue has not been used on an extensive scale in the market, consideration should be given to the interests of consumers and other operators of the trade. On the other hand, where the mark has been in use for a relatively long period of time and has established a reputation, the ability of the public to distinguish that mark from earlier marks should be taken into account, with a view to minimizing the disturbance to a stable market.
  2. If a trademark contain elements that are similar to an earlier mark, the court should not necessarily consider that the later mark is fraudulent in nature if there is no risk of confusion among the public.
  3. When considering whether the registration of a mark should be refused on the grounds that it would give rise to undesirable effects, the court should consider whether registration of the mark will give rise to undesirable political, economic, cultural and religious consequences. The relative rights of third parties should be dealt with under other provisions of the Trademark Law, and should not be taken into account when determining whether registration of the mark will give rise to undesirable effects.
  4. The Trademark Law prohibits the registration of marks that are identical, or similar to, the names of Chinese administrative districts (above county level) or well-known foreign geographical names. If a mark consists of a geographical name and other distinctive elements (such that, on the whole, the geographical name is not the dominant element of the mark), the mark should not be refused registration on this ground.
  5. When considering whether an application should be rejected on the grounds that the mark is descriptive, consideration should be given to whether the mark as a whole has distinctive character. If a descriptive element does not affect the distinctive character of the mark, or if a descriptive element is presented in a distinctive manner, then the mark will not be devoid of distinctive character.
  6. When determining whether a mark in a foreign language has distinctive character, the common knowledge of the Chinese public should be taken into account. If a mark can be used by the public to identify the origin of the goods, the fact that it contains a foreign word with a specific meaning will not affect the distinctive character of the mark.
  7. When determining whether a mark consists of the generic name of the relevant product, both the statutory and the customary use of the name should be considered.
  8. If a mark was not generic at the time of application, but has become generic by the time the application is examined, the mark should be considered as generic. If a mark was generic at the time of application, but is no longer generic by the time the application is examined, registration should be granted.
  9. If a mark is exclusively or mainly descriptive of the quality, material, function, use, weight, quantity or place of manufacture of the goods, the mark should be regarded as being devoid of distinctive character. If a mark or its main element is suggestive of the characteristics of the goods, the mark should not be considered as being devoid of distinctive character if this does not affect its ability to function as a source indicator.
  10. In cases involving well-known marks, the court should refer to Articles 5, 9 and 10 of the “Supreme People’s Court Explanation on Certain Issues Regarding the Applicable Law Relating to Cases Involving Well-Known Trademarks”. These articles set out the factors to be taken into consideration in determining whether:
    • a trademark is well known;
    • confusion is likely to arise;
    • certain activities are likely to damage the interests of the owner of the well-known mark; and 
    • protection should be extended to goods that are unrelated to those for which the mark is known.
  11. The additional protection afforded to a well-known mark registered in China in respect of unrelated goods should be proportional to the reputation of the mark.
  12. An agent or representative cannot register the principal’s trademark in its own name without the principal’s authorization. This prohibition is extended to situations where the agent or representative pre-emptively files an application to register the principal’s mark before entering into an agency or representative relationship, as well as to parties colluding with an agent or representative.
  13. This prohibition covers trademarks which are similar, or identical, to the principal’s marks, and goods which are similar, or identical, to those of the principal.
  14. When determining whether trademarks are similar and whether goods are similar, the court should refer to the “Supreme People’s Court Interpretation of Certain Legal Issues Concerning the Adjudication of Civil Disputes relating to Trademarks”.
  15. When determining whether goods and/or services are similar, the court should consider the function, use, manufacture, sales channels and target customers of the goods, as well as the purpose, content, manner of provision and target customers of the services, the degree of connection between the goods and services, and the relationship between the providers of the goods and services. The Nice Classification and the Chinese sub-classification guide can be used as a reference.
  16. When determining whether trademarks are similar, the court should consider not only the similarities between the marks as a whole, but also the distinctiveness of the marks, their reputation and the degree of connection between the goods, in order to determine whether confusion is likely to arise.
  17. The prohibition against the registration of trademarks that may cause prejudice to the prior rights of third parties should be given a broad interpretation. 'Prior rights' refer not only to the rights set out in the Trademark Law, but also to rights protected by the general principles of the Civil Code and other legislation. When determining whether a trademark causes prejudice to the prior rights of a third party, the starting point should be the status of the marks as of the date of application. However, a mark can be registered if, at the time of examination, the prior right has ceased to exist.
  18. The Trademark Law prohibits the registration of a trademark in order to pre-empt a third-party trademark which has been used for a period of time in China and has built up a reputation. If the applicant knew, or should have known, of the third-party trademark, then the registration has been obtained by improper means. The protection of trademarks which have been used for a period of time and have built up a reputation (as opposed to well-known marks) does not extend to unrelated goods.
  19. Under the Trademark Law, a trademark registration is liable to be revoked on the grounds that the registration was obtained through fraud or other improper means. In this context, 'other improper means' refer to activities that disrupt the trademark registration system, harm public interests, abuse public resources or elicit improper gains. Activities that violate civil rights should be dealt with under other provisions of the Trademark Law.
  20. In cases involving the revocation of a trademark on the grounds of non-use for a continuous period of three years, the court should consider whether there is actual use of the mark concerned. Use of the mark by the owner or its licensee, or any other use that does not go against the owner’s intentions, constitute actual use of the mark. Use of a mark that is a slight variation from the form in which the mark was registered can be considered as use of the registered mark, as long as the distinctive character of the registered mark is not altered. However, the publication of the registration or an announcement on trademark rights does not per se constitute use of a trademark. A mark will not be revoked on the grounds of non-use if the mark cannot be used, or use is discontinued, due to force majeure, bankruptcy or liquidation, among other things, or if the trademark owner genuinely intends to use the mark and has taken steps in this respect, but has not been able to do so for reasons beyond its control.
The opinion seeks to bring China’s trademark system into line with international practice. However, it is unclear why most provisions in the opinion refer only to goods, while item 15 refers expressly to services. It is hoped that, in practice, the Trademark Office, the TRAB and the courts will take a more flexible approach and follow the spirit of the opinion, rather than a literal interpretation.
 
Rebecca Lo, Rebecca Lo & Co, Hong Kong

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