New Supreme People's Court's opinion should benefit trademark owners

China

The Supreme People’s Court has released an "Opinion on the Utilisation of IP Judgments to Facilitate Socialist Cultural Development and Promote Independent and Coordinated Economic Development", which should further strengthen China’s IP rights enforcement system. One change of particular interest to trademark owners is the extension of the role of the courts in appeals from decisions of the China Trademark Office and the Trademark Review and Adjudication Board (TRAB).

The Supreme People’s Court is the highest court in China; it regularly provides opinions to the lower courts for their reference. While opinions are not legally binding, it is generally understood and accepted that Chinese courts should consider any guidance provided by the Supreme People’s Court when rendering a decision. The opinion at hand (Fa Fa [2011] No 18), effective as of December 16 2011, introduces a number of significant changes in relation to the adjudication of all forms of intellectual property. Article 23 relates to appeals from administrative decisions relating to trademark rights.

Prior to the issuance of the opinion, the Administrative Procedure Law of the People's Republic of China (promulgated on April 4 1989; effective from January 10 1990) limited the courts’ authority to confirming, overturning or partially overturning administrative decisions from the Trademark Office or the TRAB. 

Articles 54(1) and (2) of the Administrative Procedure Law provides as follows: 

 "After hearing a case, a people’s court shall make the following judgments according to the varying conditions:

(1) If the evidence for undertaking a specific administrative act is conclusive, the application of the law and regulations to the act is correct, and the legal procedure is complied with, the specific administrative act shall be sustained by judgment.

(2) If a specific administrative act has been undertaken in one of the following circumstances, the act shall be annulled or partially annulled by judgment, or the defendant may be required by judgment to undertake a specific administrative act anew:

a. inadequacy of essential evidence;
b. erroneous application of the law or regulations;
c. violation of legal procedure;
d. exceeding authority; or
e. abuse of powers
."

Article 23 of the opinion appears to extend the power of the courts in appeals from decisions of the Trademark Office or the TRAB by allowing any court that overturns such a decision to include an opinion, with supporting reasons, when deciding whether to allow or refuse a trademark registration. While the TRAB or the Trademark Office would be responsible for rehearing the case, they would have the benefit of the court’s guidance when doing so. 

Article 23 of the opinion provides as follows:

"Where a substantial judgment can be made as to whether a trademark registration should be allowed or revoked, a clear judgment can be included in the decision as guidance for the administrative authority to remake a decision."

The discretionary power might be viewed as a ‘follow-on’ from the transfer of TRAB appeals from administrative chambers to the specialist IP tribunal of the civil chamber of the Beijing Number 1 Intermediate People's Court, which took place in 2009 (Supreme People’s Court's "Rules for Distributing Jurisdiction in Administrative IP Cases Concerning the Grant of Rights and the Recognition of Patents and Trademarks", effective as of July 1 2009). 

As the experience and expertise of the administrative chambers focus primarily on administrative law and procedure, it is not surprising that those chambers would scrutinise TRAB and Trademark Office decisions more carefully with respect to whether administrative law and procedure have been followed, and accord greater deference to the TRAB’s and the Trademark Office’s consideration of the evidence.    

IP tribunals, on the other hand, have greater experience and expertise in trademark law. Given that the issue of distinctiveness is central to trademark law, and that the assessment of distinctiveness is a fact-driven exercise, an IP tribunal might not necessarily accord the same deference to the administrative authorities, but would focus more firmly on the evidence relied upon by the parties. 

By granting the courts the power to provide guidance to the trademark administrative authorities, the Supreme People’s Court's opinion increases the courts' ability to have input into the administrative consideration of evidence in a trademark hearing, which may be of a greater benefit to trademark owners.

Pursuant to the Administrative Procedure Law, when a court overturns a decision of the Trademark Office or the TRAB, it must send the case back to the responsible trademark authority for a rehearing. Based on current practice, it may take over 18 months before the responsible examiner is ready to make a new decision. However, clear guidance from the courts could hasten the decision-making process.   

Even if the application of this discretionary power does not expedite the rehearing process, the availability of a guiding opinion from the court (with supporting reasons) should, to some extent, provide greater certainty to trademark owners awaiting a second decision from the examiner. 

Therefore, litigants seeking judicial review of an administrative decision relating to a trademark right should now consider, as a matter of best practice, making a request to the reviewing court to exercise this discretionary power.   

George Chan, Rouse, Beijing

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