Judicial opinion provides breakthrough for prior use defence

China

In patent infringement disputes, the 'prior use defence' is a well-established practice in China. However, can a defendant raise an equivalent argument in a trademark infringement dispute?

China adopted the 'first-to-file' principle in the Trademark Law of 1982. Since then, the policy on how to balance the rights and interests of the prior user of a registered trademark has evolved. On December 16 2011 the Supreme Court promulgated Judicial Opinion No 2011/18 1: “Opinion on Several Issues Concerning the Role of IP Trials to Enrich Socialist Culture Prosperity and to Promote a Self-Reliant and Balanced Economy”.

Article 22 of the judicial opinion addresses this problem as follows:

"If the defendant uses a registered trademark that is the reproduction, imitation or translation of another person’s well-known mark which is not registered in China, or a preemptive registration obtained by an agent to the detriment of his client, or a preemptive registration obtained through unfair means of another person’s reputed mark already in use, the defendant’s defence put forward on the above-mentioned grounds should be upheld."

This means that, if the (good faith) user of a registered trademark is sued by the owner of such trademark, and is able to prove that the plaintiff belongs to one of the three categories described above (ie, the plaintiff preemptively registered the well-known trademark of the defendant, or is the defendant’s agent and registered the trademark without authorisation, or registered through unfair means a trademark that was already in use and reputed), the defendant can raise the 'prior use defence'. 

Therefore, the defendant does not need to file an action for the cancellation of the trademark to make its point in court: it may raise this defence directly and obtain the dismissal of the claim. Article 22 virtually allows the prior user of a trademark to offer an affirmative defence in a civil lawsuit filed by the owner of the preemptive registration. Compared with prior practice, this is a significant breakthrough.

The judicial opinion also provides the prior user of a trademark with the possibility to seek declaratory judgment when facing threats of legal action by the owner of the preemptive registration.

Shuhua Zhang and Paul Ranjard, Wan Hui Da Law Firm & Intellectual Property Agency, Beijing

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