Prosecutors’ intervention shows alternative route for brand owners

Chinese prosecutors do not normally get involved in the filing of trademark applications in China. However, the situation is changing as more and more brand owners are frustrated by the difficulties they face when trying to register their trademarks.
The DUCK KING case involved a legal battle between two well-known Chinese restaurants. Beijing Duck King Roast Duck Shop Co Ltd started operations in September 1997, using 'Duck King' as its trade name. Shanghai Huaihai Duck King Roast Duck Restaurant Co Ltd was established in June 2002. Shanghai Duck King, which apparently had a better sense of the importance of trademarks, applied to register the DUCK KING mark in January 2002. The mark was later registered under No 3083416. 
When Beijing Duck King became aware of this, it sought to cancel Shanghai Duck King’s trademark. In October 2008 the Beijing Higher People’s Court ruled that Shanghai Duck King’s trademark was invalid. In particular, the court held that Shanghai Duck King’s trademark violated Beijing Duck King's pre-existing rights in its trade name. The court further found that Beijing Duck King had:
  • invested heavily in the promotion of its trade name Duck King; and
  • achieved a certain degree of reputation among the relevant public.
The court also held that Shanghai Duck King's conduct in filing the trademark application was “improper” because its founders were living in Beijing and must have been aware of Beijing Duck King. 
Shanghai Duck King petitioned for a retrial, but the Supreme Court refused to hear the case. In normal circumstances, most brand owners would have to give up because the Supreme Court has the final say.
However, in July 2009 the Supreme Prosecutors' Office, the highest authority for prosecutors in China, intervened and filed a kang su with the Supreme Court, challenging the Beijing Higher Court’s decision. In November 2009 the Supreme Court ruled that the Beijing Higher Court should reconsider the case.   
A year later, in December 2010, the Beijing Higher Court reversed its earlier decision and held that it was “inappropriate” to cancel Shanghai Duck King's trademark. However, the court also held that the reputation developed by Beijing Duck King deserved legal protection - this suggests that Shanghai Duck King will not be able to sue Beijing Duck King for trademark infringement in the future.  
What is really interesting in this matter is the role of the prosecutors. Under the Chinese procedural laws, prosecutors have the 'supervisory' power to challenge court decisions in civil and administrative lawsuits. The scope of this power is quite broad: prosecutors are allowed to challenge court decisions in certain circumstances, for example when the factual findings made by the court are not supported by evidence. When prosecutors file a kang su, the court must conduct a new hearing to reconsider the challenged questions of facts and law.
In practice, there have been very few cases in which the prosecutors have intervened to challenge civil court decisions in IP matters. Shanghai Duck King's success shows that there is an alternative route for frustrated brand owners.

He Jing,  ZY Partners, Beijing

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