Michael Jordan v Qiaodan: lessons on dealing with bad-faith registrations

China

The People’s Republic of China follows a first-to-file trademark registration system, and does not require a demonstration of use for the registration of a mark. These two features of China’s trademark system leave unregistered trademarks particularly vulnerable to misappropriation by third parties and, consequently, bad-faith trademark applications and trademark squatting are rife in China.

Trademark owners are therefore advised to always submit trademark applications for the registration of their marks in China at the earliest opportunity. Unfortunately, the earliest opportunity for filing a trademark application is too late for many trademark owners, which leaves them, in theory, with three options for dealing with a bad-faith trademark registration: abandoning their trademark in China, invalidating the offending registration or taking a wait-and-see approach.

A recent administrative review decision from the Beijing High Court, Jordan v Trademark Review and Adjudication Board (No 052419), involved Michael Jordan, the former basketball star and current owner of the Charlotte Hornets of the National Basketball Association (NBA). This case corresponded to Michael Jordan’s attempt to cancel the trademark 乔丹 (pronounced as 'QiaoDan', which is the Chinese equivalent for 'Jordan'), and is illustrative of why foreign brand owners must not be complacent with the protection of their brands in China. In most cases, the only commercially sensible option for brand owners is to take immediate steps to invalidate bad-faith trademark applications.

On February 23 2004 Qiaodan Sports submitted an application with the China Trademark Office (CTMO) to register the mark below, which incorporates the sign 乔丹, for, among other things, clothing and swimsuits in Class 25:

The mark was approved for registration on September 28 2008.

It was not until October 31 2012 – over four years later – that Michael Jordan filed an application for the cancellation of the mark with the Trademark Review and Adjudication Board (TRAB).

The main issue to be decided in the hearing before the Beijing High Court was whether the mark infringed Michael Jordan’s name rights. In considering this issue, the court noted that Jordan is a common surname in the United States and, as such, the relevant public would not necessarily draw a connection between 'Jordan' and Michael Jordan. Thus, Michael Jordan’s claim that the mark infringed his name rights was rejected by the Beijing High Court, and his request for the invalidation of the mark on this ground was rejected.

This decision should be contrasted with a case involving Allan Iverson (another famous NBA basketball player) and his attempt to protect his name rights in China. An individual, Lin Zedong, had registered nearly 30 trademarks in relation to Allen Iverson, including IVERSON. Although the CTMO, the TRAB and the court of first instance upheld the registration of IVERSON by Lin Zedong, the Beijing High Court invalidated the registration on the basis that it infringed Allan Iverson’s prior name rights.

The Iverson decision may be distinguished from the Jordan case by the extensive use of the mark at issue by Qiaodan Sports.

In the period of time between the registration of the mark and the application for invalidation filed by Michael Jordan, Qiaodan Sports was able to demonstrate the commercial use of 乔丹 by providing evidence of:

  • promotional expenditures of approximately Rmb70,000,000 in 2010, including advertisements during broadcasts of NBA games in China;

  • audit reports showing that the business income of Qiaodan Co was Rmb518,480,000, Rmb780,930,000, Rmb2,860,990,000 and Rmb1,710,660,000 in 2008, 2009, 2010 and 2011 (until June 30), respectively;

  • Qiaodan’s net profits of Rmb52,710,000, Rmb929,40,000, Rmb510,470,000, Rmb96,690,000 in 2008, 2009, 2010 and 2011 (until June 30), respectively; and

  • the fact that Qiaodan Sports opened approximately 5,700 branded stores across China.

The decision issued by the Beijing High Court in the Jordan case also appears to be consistent with the opinion of the Supreme People’s Court in Article 9 of the "Opinions of the Supreme People's Court on Several Issues Concerning the Trial of Intellectual Property Rights Cases Serving the Overall Objectives of China Under the Current Economic Situation":

"The public-right-based grounds and the private-right-based grounds for cancelling a trademark registration shall be correctly differentiated to prevent the improper expansion of the scope for cancelling a trademark registration and avoid the arbitrary cancellation of trademark registrations. The registration of a trademark that has been registered and used for a relatively long period of time, has garnered a good market reputation and has been accepted by the relevant public shall not be cancelled without due prudence. Furthermore, in addition to protecting a priority right in accordance with the law, the court shall take into account the prevalent situation in the market that the relevant public has differentiated the trademarks concerned from each other…

Despite the very strong evidence suggesting that Qiaodan Sports sought to trade on the reputation of Michael Jordan (eg, the registration of trademarks incorporating the number 23 - Michael Jordan’s jersey number when playing for the NBA’s Chicago Bulls - and the Chinese equivalent of his children's names Jeffrey and Marcus Jordan - 杰弗里乔丹/Jiefuli Qiaodan and 马库斯 乔丹/Makusi Qiaodan), the use evidence submitted by Qiaodan Sports was sufficient to establish the latter's association with the 乔丹 mark in the mind of the relevant public.  

Foreign brand owners should bear in mind that, in cases where a foreign trademark has been pre-emptively registered by another party, the longer the legitimate trademark owner waits before taking action against a misappropriated trademark, the greater the risk that it will lose its rights to the mark in China.

Sophie Zhao and George Chan, Simmons & Simmons LLP, Beijing

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