WeChat decision bends first-to-file rule in favour of Tencent

China

A recent Beijing IP Court decision concerning the trademark WEIXIN (the Chinese name for 'WeChat') has caused heated discussion and debate in China.

On March 11 2015 the Beijing IP Court issued its first instance judgment in the dispute, affirming the Trademark Review and Adjudication Board’s refusal to register the WEIXIN mark, applied for by Trunkbow Asia Pacific (Shandong) Co Ltd. The court cited Article 10(1)(8) of the Chinese Trademark Law to rule that Trunkbow’s WEIXIN mark, which had not been filed in bad faith, would have an “unhealthy influence” or “ill effect” on the existing market order and would potentially lead to false recognition among the public. What is particularly noteworthy is that the court believed that allowing Trunkbow’s earlier application to be registered would harm the public interest.  

The facts were simple. Trunkbow applied for the registration of WEIXIN two months before Tencent Inc publicly released WeChat 1.0 (in January 2011). The court found that both parties had applied for and used the WEIXIN mark without knowledge of the other party’s use. Trunkbow dropped the name Weixin for its software in June 2011, while the WeChat social network application developed by Tencent achieved unprecedented success: the number of users rocketed to 400 million by July 2013 and rose to 800 million by November 2014.

The controversy lay in the court’s application of Article 10(1)(8) and its reasoning concerning public interest. The court determined that WeChat or Weixin had established a significant amount of public awareness in the social media market and that the public clearly recognised Weixin, in association with Tencent. The registration of Trunkbow’s WEIXIN mark would have an unhealthy influence on the existing, stable market and on the public recognition of the origin of WeChat. Therefore, Trunkbow’s WEIXIN mark should not be registered.

This judgment received both praise and criticism. The main concerns related to the overly broad interpretation of Article 10(1)(8) of the Trademark Law, and its negative influence on the first-to-file trademark registration system in China. Opponents believed that the determination of "unhealthy influence" should be based solely on the conditions existing at the time of the trademark application. In addition, some commentator argued that Article 10(1)(8) is intended to put an absolute ban on the use of signs which are considered as having an unhealthy influence, regardless of who would use the mark. Therefore, it did not make sense for the court to allow Tencent to use the WEIXIN mark, while rejecting Trunkbow’s application, based on this provision.

What is particularly interesting is that Judge Zhou Liting, who apparently wrote the court's opinion, published an article defending the opinion. With respect to whether the huge popularity and reputation of WeChat should be considered, Judge Zhou argued that circumstantial factors that have come into existence by the time the judgment is issued in a trademark case should also be taken into account, because a new public interest has been formed and could potentially be jeopardised. She cited the example of generic names as a basis for such a rationale - ie, if a disputed trademark has become generic by the time the judgment is issued, such trademark may not be eligible for registration.

Further, Judge Zhou argued that registrability does not relate only to similarity, but also to whether the trademark would negatively impact the public interest or a stable market order. These considerations would not be in fundamental contradiction with the first-to-file principle.

Judge Zhou’s explanations were quite revealing. It appears that she gave special consideration to the role of trademarks in the online world. The judge seemed to genuinely believe that, if the WEIXIN mark were registered by a party other than Tencent, the potential confusion caused to 800 million WeChat users would be so significant that the court had to intervene to protect the public interest. 

Whether or not such reasoning is accepted, this case vividly demonstrates the rising challenges in China's trademark world. Cases such as those involving the iPad, Tesla and Michael Jordan all raised very challenging issues from both a legal and policy point of view. 

For years, foreign brand owners have been calling for the Chinese trademark authorities and courts to recognise the overseas reputation of their brands in order to defeat bad-faith trademark registrants. The courts have delivered some encouraging results (eg, in the Harry Potter and Crayon Shin-chan cases), but numerous brand owners were not so lucky. 

The present case may raise the hopes of international brand owners. If the new Beijing IP court is willing to be more progressive in recognising what amounts to "unhealthy influence", Article 10(1)(8) may be revived as a means to combat bad-faith trademark registration. However, if the decision merely reflects the huge popularity of a Chinese social media app, the case might be totally irrelevant for other brand owners.  

Judge Zhou Liting’s article, verified as of March 30 2015.

He Jing and Lyu Pei, AnJie Law Firm, Beijing

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