Supreme People's Court seeks comments on draft provisions

China

The judicial review of administrative cases relating to the grant or confirmation of trademark rights has increased significantly in recent years, with the People’s Courts accepting 2,161 administrative cases at first instance in 2013. With the growing number of trademark administrative review cases being heard by Chinese courts, the Supreme People’s Court has published the draft "Provisions of the Supreme People's Court on Certain Issues Relating to Trials of Administrative Cases Involving the Grant and Confirmation of Trademark Rights" for public consultation.

The new draft provisions may be viewed as one of the most welcome legal documents issued by the Supreme People’s Court in recent years in relation to bad-faith trademark applications and, in some cases, will lessen the evidentiary burden for brand owners. The draft provisions address the following issues:

  • Commercialisation rights - while commercialisation rights had been recognised as a prior right by the Beijing Higher Court in TRAB v Danjaq LLC ((2011) 高行终字第374号), the draft provisions provide the first indication that the Supreme People’s Court is prepared to recognise commercialisation rights as prior rights that may be asserted against bad-faith trademark applications. 

    When bad-faith trademark applicants file trademark applications for the names of fictional characters (eg, James Bond), the owner of the rights to the fictional character is often at a loss in identifying a prior right to oppose the bad-faith trademark application. For example, the name of the fictional character may never have been used as a trademark, and therefore the owner of the fictional character cannot claim a prior trademark right. While copyright is recognised as a prior right that can be asserted against bad-faith trademark applications, the names of fictional characters will typically lack sufficient originality and therefore not qualify as a work that is subject to copyright protection.

    Article 17 of the draft provisions provide that, while a fictional name may not constitute a work, if the fictional name enjoys a high reputation and the use of such name as a trademark on goods would easily mislead the relevant public into believing that the use of the fictional name is by way of a licence from the owner of the fictional character or that there is another specific relationship with the owner of the fictional character, the fictional name may qualify as a prior commercialisation right and can serve as a basis for opposing or cancelling a bad-faith trademark application or registration.

    As such, the formal recognition of commercial rights by the Supreme People's Court should be warmly welcomed by media and entertainment brand owners.
     
  • Measure on mass pre-emptive registrations - while there is no shortage of bad-faith trademark applicants in China, there are extreme cases where a bad-faith applicant will target multiple brand owners through mass pre-emptive registrations (eg, Guangzhou Chengyi Garment Co Ltd had registered close to 50 well-known trademarks, including SNOOPY, 7UP and COLGATE).

    Article 3 of the draft provisions provides that, “where a trademark registrant obviously lacks an intention to use, applies for a large quantity of trademarks which are similar to another’s trademark with a certain reputation or another’s geographical name with a certain reputation, or applies for trademarks in large quantities without a proper reason, the People’s Court can support the TRAB’s decision to refuse to register or invalidate according to Articles 4 and 44 of the Trademark Law”.

    The provisions therefore clearly provide that a party who file many pre-emptive trademark applications may be understood as being a trademark squatter who is disturbing the trademark registration system and, therefore, should be denied trademark rights.
     
  • The intention of the applicant - although the ‘use’ of a registered mark is necessary to maintain a trademark registration, an ‘intention to use’ a trademark is not a requirement in order to secure the registration of a trademark, nor is the intention of the applicant relevant in opposition or invalidity proceedings.

    In December 2011 the Supreme People’s Court issued the "Circular of the Supreme People's Court on Issuing the Opinions on Exerting the Function of Intellectual Property Rights Judgment in Facilitating Socialist Cultural Development and Prosperity and Promoting Independent and Coordinated Economic Development". Article 18 of the circular provides that “whether the trademark applicant or registrant has a true intention to use the mark” should be assessed in order to suppress the improper registration of trademarks. In referring to the "intention to use" a trademark, it was understood that the Supreme People’s Court had the fight against trademark squatting in mind.

    The draft provisions further raise the profile of the “intention to use” a mark by the applicant in opposition cases. In addition to referring to whether a trademark applicant has the intention to use a trademark in cases of mass pre-emptive trademark filings, the provisions also refer to the intentions of the applicant in relation to the opposition of bad-faith trademark applications that are duplications, imitations or translations of prior unregistered well-known marks (Article 8 of the provisions) and in cases where an applicant has had its business licence revoked for three or more years and the trademark at issue has not been licensed for use (Article 25 of the provisions). In these cases, the lack of an “intention to use” the mark applied for may be considered as a factor for refusing what may be understood as a bad-faith trademark application.

Public comments may be submitted to the Supreme People's Court by November 15 2014.

George Chan and Tracy Liu, Simmons & Simmons, Beijing

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