Too many posts on this page? Click on the link in this box for the whole list of news ever published on our website:
HongFangLaw ~ Law Updates ~ n’ 81
13 April 2019
What trademarks may be rejected for “negative effects”?
Co-Author: Betty Chen, Shirley Lin
As the number of trademark filings soars while the examination period continues to be shortened, examiners’ work is increasingly intensive and difficult, which in turn takes a toll on the odds of registration. In response, trademark applicants usually run a check for similar prior marks to avoid possible obstacles. However, this is far from enough. A distinct application could still risk refusal by trademark administrations if it is found to have negative effects.
Neither is such a reject allowed to be used as a trademark by law.
The application No. 20736191 (粘花惹草[ZHAN HUA RE CAO]) filed by Haozhou Zhixintang Medicine Sales Co., Ltd. was eventually rejected by the Trademark Review and Adjudication Board (TRAB) after refusal review procedures. In the decision No.  0000003309, the TRAB held that the applied mark is a Chinese 4-character idiom that figuratively describes one’s act of sowing wild oats, and therefore could not be decently used as a trademark. It may impose negative effects on the traditional Chinese culture as well as public order and good customs, and it may also undermine socialist ethics, as banned by Article 10.1.8 of the Trademark Law.
Also rejected by the TRAB, the application No. 21966552 (吃我豆腐 [CHI WO DOU FU]) was found in the decision No.  0000097934 that, when used as a trademark, it would damage socialist ethics and generate ill effects. The phrase with both literal and figurative meanings could be simply interpreted as “eating my tofu” or a seductive invitation – “come touch me”. Although the trademark applicant submitted relevant evidence trying to establish the mark’s reference to mainly the designated products’ raw and safe nature, the TRAB found that the original meaning still would not prevail over the developed negative connotation in the public’s cognition as far as the exhibits are shown. Therefore, the mark was dismissed pursuant to the same Article 10.1.8.
Applied by Jiangsu Yuexin Elderly Care Industry Co., Ltd., the application No. 19691932 (蛋蛋的幸福[DAN DAN DE XING FU]) also had no luck with the TRAB for its non-standard use of the last Chinese character “福” (FU). According to the decision No.  0000152184, by wrongly presenting the character, the mark was likely to cause negative social effects and thus constituted a violation of Article 10.1.8. Hence, the mark could neither be used nor registered as a trademark, despite the applicant’s submission of evidence trying to prove otherwise.
In all of the three cases above, the applied marks were rejected for the “negative effects” they entailed during the substantive examination by the Trademark Office (CTMO) pursuant to Article 10.1.8 of the Trademark Law, whose decisions were again affirmed by the TRAB in later procedures.
According to the provision, “The following signs shall not be used as trademarks: (8) those detrimental to socialist morality or customs, or having other unhealthy influences.” In practice, “unhealthy influences” is an encompassing umbrella. The following examples may throw some light on what it really means.
(1) Politically negative effects
《商标审查及审理标准》规定，同中华人民共和国的国家名称、国旗、国徽、国歌、军旗、 军徽、军歌、勋章等相同或者近似的，以及同中央国家机关的名称、标志、所在地特定地点的名称或者标志性建筑物的名称、图形相同的，属于具有政治上的不良影响。如商标中含“国”、“军”字样的，例如：北京京牛广发酒业有限公司申请的第11703982号（旗军）商标， 逆序看着就是“军旗”，属于具有政治上的不良影响的商标。目前，申请人申请含有“国”、“军”文字的商标的数量已逐步下降。另外，含有国家的重点战略或建设项目、工程名称等名称的商标也不得注册和使用。如第19348277号（益带益路）商标，即因与“一带一路”项目内容相关，被以违反第十条第一款第（八）项规定为由驳回。
In accordance with the Standards for Trademark Examination and Trial, names and signs identical with or similar to the national and military names, flags, emblems, anthems, medals, etc., the names, signs, places of central state organs, or the names, signs of signature buildings, are deemed to have politically ill effects. For example, a trademark generally should not incorporate the character “国” (GUO， meaning“state”, “nation” etc.) or “军” (JUN, meaning “military”). The application No. 11703982 (旗军 [QI JUN]) filed by Beijing Jingniu Guangfa Alcohol Co., Ltd. was deemed a violation, as it could be interpreted as “JUN QI” (military flag) in reverse. In light of the standard, the number of applications as such has gradually declined in recent years. In addition, names of national strategies or construction projects should not enter into registration either. An example is the rejected TM No. 19348277 (益带益路, YI DAI YI LU) for its similarity to the Chinese characters of “One Belt One Road” (一带一路).
(2) Detrimental to religious beliefs, sentiments or folk beliefs
商标中含有“寺”、“庙”、“祠”文字的，如第21357905号（鹿门寺），第20708130号（泰山碧霞祠），第23201274号 （禅蕴）商标，均被以违反《商标法》第十条第一款第（八）项规定为由驳回。又如涉及宗教教派的，如含有佛教、道教、伊斯兰教等各种教派词汇的、间接表达宗教信仰和涉及宗教感情词汇的，又或者涉及宗教图案的，也会被以“与佛教图案近似 ，用作商标易产生不良社会影响”的绝对理由驳回。
Trademarks featuring the characters “寺” （SI）, “庙” (MIAO), “祠” (CI), synonyms of“temple”, have witnessed refusals time and again for violating Article 10.1.8,such as No. 21357905 (鹿门寺 [LU MEN SI]), No. 20708130 (泰山碧霞祠 [TAI SHAN BI XIA CI]) etc. Those touching upon religious denominations and invoking religious sentiments by using words or signs explicitly or implicitly referential to Buddhism, Taoism, Islam, etc. may also be rejected for negative effects – just as No. 23201274 (禅蕴 [CHAN YUN], “Zen”) was.
(3) With “non-standard idioms” and “non-standard characters”
A number of applicants substitute or alter the characters in idioms with their phonetic counterparts to make a trademark hoping to impress: No. 19988891 (味所欲为 [WEI SUO YUWEI], originated from the idiom “为所欲为” [WEI SUO YU WEI]), No. 9320998 (津津友味 [JIN JIN YOU WEI], from “津津有味” [JIN JIN YOU WEI]) etc. It is imaginable that if the trademarks are broadly used, they may confuse the public especially elementary learners as to the correct presentation of the idioms in issue, thus causing reverse influences. The third case concerning 蛋蛋的幸福[DAN DAN DE XING FU] illustrated above went farther as it also substantially changed the calligraphic display. Such distortions disrupt the public’s recognition of Chinese language use. In the long term, they may hinder the communication, inheritance, and development of the culture.
(4) Indecent buzzwords
Along with the development and popularization of the Internet, the language we use has also undergone rapid change, making buzzwords an essential part of life online and offline for many, more so for the youth. Before adopting such buzzwords as a trademark, applicants should delve into whether there may be negative meanings by nature and nurture. As our language is constantly evolving, a trademark previously registered may take on problematic connotations later, and risks invalidation for this reason. For example, the trademark No. 8954893 (MLGB) registered in 2011 began to be recognized as a handy dirty phrase in the following years. Upon the request for invalidation filed by a third party, two trials were held to examine the registration. Eventually, it was invalidated for its vulgar meaning and negative effects.
Indeed, the CTMO and the TRAB uphold relatively rigorous standards when it comes to whether an application has “unhealthy influences” as they strive to shut problematic trademarks from the market. This is beneficial in general. After all, when a trademark comes to be known by the public, consumers from all walks across all demographics may be concerned. The use of indecent trademarks with negative effects may eventually impact society by giving a signal that such use is tolerable. The public may thus be misled to use such questionable words on a broader scale. The above rejections may serve as a reminder that while applicants try to make a statement by endorsing a distinct and eye-catching trademark, they might as well keep their applications in check so as not to go too far beyond the limits of public order, good customs, and social ethics. This is something that should be attended to besides avoiding similar applications.
If you would like some more personalized review of the news from us, please kindly let us know by writing to:email@example.com. Thank you.
HongFangLaw ~ Law Updates ~ n’ 80
1 April 2019
Can artists continue to use stage name registered by an agency after their management contract ends?
Recently, the Internet has witnessed a heated debate over the use of artists’ and musicians’ stage names after their cooperation with their firms sever – the negotiation over the ownership of the girl group name “S.H.E” stagnated; the Hong Kong singer-songwriter G.E.M walked out while the adopted name had already been registered by her agency in multiple classes. All these set the public suspecting in what position stage names stand and to which party they belong to. A look into a similar dispute may give us the answers.
The main case we will look into is one of Beijing Shangjia First-line Music Culture Communication Co., Ltd., and Niu Chunhua over the unfair competition dispute:
This case focused on an unfair-competition lawsuit over the reassignment of a stage name. The Plaintiff Niu Chunhua debuted as Yun Feifei after she entered into a management contract with Beijing Shangjiayixian Musical, and Cultural Communication Co., Ltd. (hereinafter “Shangjiayixian Co.”) in 2007. After their agency relationship came to an end in 2012, the firm continued to use the name Yun Feifei, but on another artist Bian Yiran. Together with her new agency, Niu Chunhua resorted to litigation against the former two parties, requesting to stop the infringement and to be granted damages. On the other hand, Shangjiayixian Co. maintained that it had registered the trademark “Yun Feifei” and thereby enjoyed legally protected ownership thereof.
According to the presiding court:
Citizens in the nation enjoy the right of the name and thus are entitled to determine, use or change their names via due process, which is protected from interference, usurpation, and false representation, as set forth in the General Principles of the Civil Law. In the Anti-Unfair Competition Law, business operators are banned from using without permission a personal name of others in misleading ways, which is a violation of the principle of good faith and generally accepted commercial ethics. Pursuant to the Interpretation of the Supreme People’s Court on Some Issues Concerning the Application of Law in the Trial of Civil Cases Involving Unfair Competition, the name of any natural person used in the business operation of commodities should be deemed as a use for the purpose of the Anti-Unfair Competition Law. Based on the above, a person may have a real name, a pen name, a stage name, etc. The rights thereto are personal. In addition, when names take on the function to identify commodities and influence consumer decisions, an economic aspect comes to form.
Therefore, the name “Yun Feifei” is of both personal and economic nature. On the first front, the name belongs to the Plaintiff Niu Chunhua and does not naturally become detached from her as the agency contract ends. Economically, “Yun Feifei” has also been bound up with Niu Chunhua as a commercial icon. The association given rise remains regardless of the relationship between the artist and the firm.
From a trademark perspective, it is if trademark application and registration should not impair a third party’s prior right. However, the trademark “Yun Feifei” was filed when Niu Chunhua’s popularity and influence had been established under the name, which was also in Shangjiayixian Co.’s awareness. Therefore, the Defendant’s trademark is infringing and should not be cited against the plaintiff.
The court ruled accordingly that the Defendants Shangjiayixian Co. and the artist Bian Yiran shall not use the stage name “YunFeifei” for show business and shall compensate for the Plaintiffs’ economic loss.
It may be concluded from the above that stage names are within the range of protection for the right of the name, and therefore also have personal and economic bearings. Talent agencies that preemptively seek registration of their affiliated artists’ stage names do not certainly become entitled to use those names for the registration alone. In our opinions, if no rights to or interests in stage names are waived by an artist when signing a management contract, the names should be deemed in the artist’s exclusive ownership and should be able to be used by the artist even if the cooperation dissolved.
Anti-unfair competition dispute between Beijing Shangjiayixian Musical and Cultural Communication Co., Ltd. and Niu Chunhua et al. (Judgment No. (2014) San-Zhong-Min-Zhong-Zi 07228 by the Beijing No. 3 Intermediate People’s Court.)
If you would like some more personalized review of the news from us, please kindly let us know by writing to:firstname.lastname@example.org. Thank you.
HongFangLaw ~ Law Updates ~ n’ 79
11 March 2019
How to name and register foreign brands in China
In essence, names are just codes for reference, but naming in our cultures matters a lot. In China, there is a long history of people studying how to make it right from meaning, sounds, readability etc.
There are mainly four ways of naming when looking at how foreign brands settled on their Chinese names as they entered the market.
The most common approach is transliteration, like “谷歌” (“GU GE”) for Google and “亚马逊” (“YA MA XUN”) for Amazon. It is not only almost universally applicable but also more connected to the names in the source languages.
The literal translation comes next. Great examples are “微软” (“WEI RUAN”, “WEI” for micro, “RUAN”for software) from Microsoft, “苹果”(“PING GUO”, equivalent) from Apple, and “脸书” (“LIAN SHU”, “LIAN” for face, “SHU” for book) fromFacebook. As catchy as the foregoing names are, the method has its limits because not every brand is blessed with the same luck
Some may combine the best of both worlds, as in the case of Starbuck (“星巴克” [XING BA KE]) and Unilever (“联合利华” [LIAN HE LI HUA]). Their Chinese equivalences both feature literal translation of the former half and transliteration of the latter half. It requires both the adaptabilities of the brand and the creativity of namers.
Yet some brand owners prefer a path less traveled for seemingly disconnected names. Oracle adopted “甲骨文” (“JIA GU WEN”) which means an ancient Chinese script which was written on bones for fortune-telling. The correspondence may not be as easily taken but reflects a considerable sense of creativity.
For importing brands, a good Chinese name may not translate directly into handsome returns, but a bad one or a wrong one may cause a lot of trouble. The following example throws light on how much is at stake when launching a Chinese name for foreign brands.
“New Balance”是国际知名的运动品牌。但是New Balance公司入华后只单一地选取了一个中文品牌名称，即使用了“New Balance”的直译名称“新平衡”。除此之外，对于其“New Balance”英文品牌名称可能的常见的中文音译、音译+直译或者联想转译等名称都没有及时进行任何商标注册。
New Balance, a globally renowned sportswear brand, settled on only one of its literal translation in Chinese (“XIN PING HENG”) when they tapped into the market. As for other equivalents that may be coined via transliteration or other strategies discussed above, the brand was not prepared and did not file for any trademark registration in relation.
“New Balance”仅使用直译名称作为中文品牌名称的做法不仅过于单一，且对于品牌的长远发展没有任何防御和储备的空间。2015年前后，New Balance公司即因在中国使用“新百伦”中文品牌名称而被他人起诉构成侵权，一审判决一度面临近亿元人民币的天价赔偿。
By putting all the eggs into one basket, New Balance was not able to pave enough of a path for its long-term development or defend itself from potential infringement. Around 2015, the company was sued for using the name “XIN BAILUN” (literal translation, plus transliteration) and was served with whopping monetary damage that came near RMB 100 million (approx. US$15 million) for the infringement in first instance proceedings.
Therefore, a half-baked or missing altogether, naming strategy risks not only losing the chance of landing on a good name but also daunting economic costs as in the New Balance case. Worse still, a company’s goodwill and brand development could also be in danger.
It may be natural for corporations of a certain scale to obtain defensive trademarks for brand protection when they tap into the Chinese market. It helps to pre-empt damages to a brand’s good standing by copycats, and lay foundations for possible expansion going forward.
But small and micro companies that are built on a single product or do not actually operate in China for now and/or in the near future may question the necessity of defensive registrations across the board. They may also be concerned about the potential costs.
With cost-efficiency in mind, registration of associated trademarks is recommended as a middle way. When selecting marks to be filed, a holistic view of the foreign brand is required, covering as many the above-mentioned approaches as possible. The Chinese names conjured up via transliteration, literal translation etc. may all be filed on each core class.
If you would like some more personalized review of the news from us, please kindly let us know by writing to:email@example.com. Thank you.
HongFangLaw ~ Law Updates ~ n’ 78
01 March 2019
Seeking protection of merchandising rights in trademark opposition
A review on the case “MAO LI LUAN BU”
1. The Facts
The Opposed Trademarks No. 18742871 and No. 18742961 “MAO LI LUANBU” were filed by Xike (Shanghai) Culture Development Co., Ltd. (“Xike Co.”) on 29 Dec 2015. They were published for opposition on Trademark Gazette Vol. 1526. The designated services were “traffic information, car rental, tour guides, tourist agencies (except hotel reservation), escorting of travelers, sightseeing, booking of seats for travel, arranging of cruises, arranging of travel tours” etc. in Class 39 and “text publishing (except advertising text), publication of books, electronic books and magazines online publishing, providing online electronic publications (not downloadable), training, organization of exhibitions for cultural or educational purposes, film production, other than advertising films, production of shows, production of radio and television programs, television entertainment” etc. in Class 41.
2. The Grounds
Our client and Opponent Wang?Zichuan?(aka Mao Li in stage name and pen name) is the author of MAO LI LUAN BU, a best-selling travel book. In the opposition, we claimed his exclusive rights to using the name Mao Li and to merchandising his book’s title. The namesake trademarks which incorporated Mao Li was opposed for their infringement upon the Opponent’srights of name and merchandising rights. Meanwhile, the Opponent’s interests were impaired in view of him being a celebrity and his influential work. If the Opposed Trademarks were to be registered, consumers might be misled to associate the services bearing the mark with the Opponent and his book.
In addition, the Respondent may have filed the Opposed Trademarks in bad faith. A shareholder of?Xike?Co. had known and cooperated with Mao Li, and thus should be aware of his name and work. Still, Xike Co. attempted to register the identical marks on highly relevant services, which could hardly be considered as without fault.
Based on the above, we cited the Opponent’s prior rights to using his name Mao Li and merchandising the book title MAO LI LUAN BU pursuant to Article 32 of the Trademark Law and argued against the Respondent’s preemptive filings as a violation of Article 15 of the same law.
3. Official Decision
The China Trademark Office (CTMO) determined based on our submitted evidence that the Opponent’s pen name Mao Li and his travel-themed work MAO LI LUAN BU published in 2013 had a certain influence among the relevant public. The Opposed Trademarks were identical to the book’s title and likely to damage the Opponent’s rights and interests by falsely indicating to consumers licensing or other relationships between the subjects.
It was therefore decided that the No. 18742871 and 18742961 applications “MAO LI LUAN BU” in Classes 39 and 41 should not be registered.
Among the rights we asserted in the proceedings, the “merchandising rights” of the best-selling book title deserve more discussion. It is actually an interest not stipulated in earlier Chinese law, as opposed to copyrights, trademark rights and rights of an image that is more explicit and more often cited. Nevertheless, it is still applicable because authors or other owners of names of works and characters may attain reputation, popularity and other benefits from the creations or ownership, and are thus entitled to make profits by the merchandization of such.
As for rights of a name, we believe the following conditions should be in order when seeking protection on such basis, as revealed by the Trademark Law, the Anti-Unfair Competition Law, and relevant judicial interpretations as well as similar precedents. 1) The name at issue should be known by and familiar to the relevant public, and concerning the natural person laying such claims. 2) There should be a stable cross-reference between the name and the person. From a psychological standpoint, though clashes of names do happen, the most famous bearers first occur to consumers when a name is given. Therefore, a celebrity’s name (real name or not) harbors great value and influence and will translate into massive sway in advertising and on consumer behavior once it is exploited in the business world.
Besides the Opponent and the names’ fame and popularity, we also view the relevance of the services under the Opposed Trademarks and the likelihood of confusion as an important factor in light of similar precedents. Trademarks function to identify the source of products and services, distinguishing one from the other as effectively as they could. When citing prior work or character names that have wide coverage, the interests attached thereto do not certainly thwart other’s rights across the board but are limited within a scope that is relevant. As in the “Kung Fu Panda” case where the trademark squatter’s filing was eventually dismissed, the court held that, considerably well-known work titles or character names may provoke the desire to purchase and increase the rate of transaction by attracting consumers with the symbols’ distinctiveness and influence, when they are used on particular goods or services.
After the thorough analysis, we approached the case and prepared the evidence with the following three points in mind, trying to establish the merchandising rights and rights of name that the Opponent enjoyed.
The Opponent, with the stage name and pen name Mao Li and his best-selling two-book travel series, is an influencer among the relevant public. Mao Li had become known to his readers and prompted the audience as his books hit the market. As a celebrity blogger, he had also been recognized as Mao Li on Weibo, the Chinese equivalent of Twitter, and amassed a huge following. His comments on travel topics had quite a weight in the circle. Moreover, the Opponent was interviewed, advertised, adopted to popularize brands, and televised on reality shows as Mao Li, thus boosting his fame and popularity.
The Opponent’s books had already become well-known before the Opposed Trademarks were filed. According to statistics from online book-sellers, an impressive number of copies were sold to vast areas in China. His works were also reviewed and recommended by mainstream media including popular websites, newspapers, and magazines. Thus it could be said that the Opponent’s books had well been known and recognized by the mainstream media and the relevant public, adding more influence to them.
The book MAO LI LUAN BU authored by the Opponent based on his personal experience on journey, had a theme highly relevant to the services designated under the Opposed Trademarks in Classes 39 (“escorting of travelers, sightseeing, booking of seats for travel” etc.) and 41 (“text publishing (except advertising text), publication of books, electronic books and magazines online publishing, providing online electronic publications (not downloadable)”). As a best-selling travel journal, the publication had offered the Opponent an advantageous footing and transactional opportunities in travel-related markets. The acquired reputation and interests were expected to be undermined given the work’s earlier formation and the public’s recognition of its genre as closely related to the Opposed Trademarks’ coverage.
Protection of merchandising rights has not been enacted but rather granted in individual precedents. And it has long been absent from the court’s consideration. The earlier cases concerning trademarks “TARZAN”, “TIAN XIA BAOBAO” (Teletubbies in Chinese) etc. did not deliver favorable outcomes to the opponents, until such rights were first affirmed against “BANG DE 007 BOND” in an administrative lawsuit. By the time the “Kung Fu Panda” case was heard, the court had developed quite sophisticated logic and standards for examination of claims to merchandising rights against trademark filings.
Later in 2017, such rights became traceable in law as the Provisions of the Supreme People’s Court on Several Issues Concerning the Hearing of Administrative Cases Involving the Granting and Affirmation of Trade Mark Rights entered into effect. It is provided in Article 22 Paragraph 2 that, Where a party claims for the right of name with its pseudonym, stage name, translated name and other specific names, the specific name has certain reputation, the party has established stable correspondence with the natural person, and relevant public refers to the natural person with the name, the people’s court shall grant support thereto.
Notwithstanding that the stipulation was designed for administrative court proceedings, it still plays an important role, as a guideline for how merchandising rights could be protected and how far the protection could go, in oppositions with the Trademark Office and invalidations with the Trademark Review and Adjudication Board. Specific to our case, our opposition argumentation, presentation of evidence and the official decision all aligned with the essence of the enactment, and served well to bring it to practice.
Judgment No. (2016) Jing-Xing-Zhong 2012
Judgment No. (2015) Jing-Zhi-Xing-Chu-Zi 6361
Judgment No. (2009) Gao-Xing-Zhong-Zi 516
Judgment No. (2010) Yi-Zhong-Zhi-Xing-Chu-Zi 432
Judgment No. (2010) Gao-Xing-Zhong-Zi 1237
Judgment No. Gao-Xing (Zhi) Zhong-Zi 37
HongFangLaw ~ HFL Awards ~ n’ 77
25 February 2019
HFL awarded “Best IP Service Provider” by AmorePacific
On February 18th, 2019, during an award ceremony held in the “AmorePacific” Shanghai office, HongFangLaw was honored with the “Best IP Service Provider of the Year” Award.
After long and fruitful cooperation between our two companies, in 2018, HongFangLaw represented Korean largest cosmetic group AmorePacific in several copycat civil litigations and successfully assisted the client in the recognition of the well-known trademark status in judicial procedure and the acquisitions and registration of key brands.
Eric Su, one of HFL partners, participated in the ceremony and presented a case review for the year directly to the Korean Global IP director for AmorePacific. Together with him, two of our promising colleagues Karen Hao and Kayla Sun, who were involved in the cases at hand, also participated.
In conclusion, we would like to thank again our client AmorePacific for providing us with this great honor, and as always, we will persevere in providing exceptionally high-quality legal service to all our clients.
HongFangLaw ~ HFL Law Updates ~ n’ 76
15 February 2019
On the originality of typefaces/fonts
Co-authors:?Edmond Au, Shirley Lin
Growing together with economic development is the Chinese enterprises’ awareness of enhancing the protection of their intellectual property rights. An example is the increasing copyright lawsuits filed by font makers such as Beijing Founder Electronics Co., Ltd. against unlicensed uses of their products. Whether their claims to protection should be supported depends largely on how original their typefaces/characters of typefaces are, as required of copyrightable works.
Do the characters of a typeface count as original works of art? Courts in Beijing gave varying answers in similar cases. In Founder v. Wenxing, the first-instance Beijing No. 1 Intermediate People’s Court affirmed the characters’ originality and their eligibility for copyright – “The characters are works of art as they are digital expressions created by Founder independently, and they are graphic designs consisting of lines and possessing aesthetic value. Founder enjoys copyright on every character of its typeface as well as the font made of data and codes.” While the Beijing Higher People’s Court shared similar opinions, the Beijing Haidian People’s Court ruled differently in another lawsuit brought by the same plaintiff. In Founder v. P&G, the court, while denying copyright to individual characters of the typeface, found the opposite for the aggregate, citing the latter’s originality given rise by the unified style and shape – “A typeface (as a work of art) is normally used as a whole for its innate continuance, while the characters, when used separately, are not up to the standards (for artistic works)”. The court elaborated on how the originality of characters could be undermined by the typeface’s style, in general, ： “Constrained by the typeface which requires a consistent expression, the characters cannot be as distinctive as calligraphies bearing personal traits or single topographic designs independently developed.” In our opinion, the Beijing Haidian Court’s acknowledging copyright on the overall yet denying it on the parts may not be soundly grounded.
First, the consistent style of a typeface does not necessarily hurt the originality in the consisting characters. Conclusions should be made case-by-case. For example, if each of the elements can be distinguished by themselves (such as for not being concrete or utilitarian enough) from existing designs in the public domain, they should be deemed original regardless of the typeface’s limitations. Therefore, rather than rush to conclusions, comparison, as mentioned above, is necessary when deciding whether the aesthetic or utilitarian value weighs more in the characters. In practice, the majority of typefaces have been generated based on existing ones in the public domain (Mincho, Clerical Script, Regular Script etc.) without any modifications. As industrial products, they are developed more for practical use. In the lack of enough distinctiveness and originality, they fail to produce aesthetic effects that are part and parcel of artistic works. If this was the case that the Beijing Haidian Court was judging, the court would have had quite sold grounds to grant the rulings. The denial of protection in such cases is for the good of society. Copyright on typefaces less original would risk confusing font makers and the general public in terms of the legal boundaries. If too broad protection was given, there would likely be more infringements unconsciously committed and obstacles to the use and development of characters as a communication tool. At the core, it would run contrary to the essence of copyright that was supposed to protect originality.
Second, a typeface (rather than the font, the program for producing a typeface), as a compilation of characters, should not be original enough to be considered as an artistic work. When making a typeface, designers mainly work on the individual characters which have been picked based on national standards or user behavior to have the parts carry similar traits. When designers do not invest much intellectual work in the process to give their products sufficient originality, copyright should not be granted to the characters even, let alone the overall typeface. Therefore, it would not be reasonable for the Beijing Haidian Court to have favored the compilation while voting against the elements.
As for fonts, the Supreme People’s Court (SPC) found in Founder v. Blizzard et al. that the plaintiff’s Lan Ting Font Family was a computer program eligible for copyright, but the typeface as the result of codes and data was not a copyrightable work of art. When it came to the characters generated by running the program, their originality could not be determined without a context. However, the SPC also emphasized that, the defendants would not be deemed infringing even if the characters of the Lan Ting Font Family were found original– “…in the consideration of the characters’ expressive and communicative functions, which were highlighted in the defendants’ uses, the characters could be reasonably used for these purposes regardless of whether copyright was applicable or not.”
In a nutshell, in order to determine whether there is a copyright infringement upon a typeface/font, we should not only factor in the originality of the object used but also consider how and why it has been used. As in the last example, if stylized characters are used for communication rather than their visual effects, infringement may not be affirmed even if the characters bear originality. But for font makers, re-programming fonts with other’s works and producing similar results might risk violations. All in all, few current typefaces are original enough to be copyrightable due to their industrial nature: they are more than often required to be recognizable for pragmatic use, which puts a cap on how far the originality could possibly go. Under these circumstances, copyright infringement is rather avoidable when such typefaces/characters are used in ordinary communications only.
Judgment No. (2003) YZMCZ4414 by Beijing No. 1 Intermediate People’s Court
Judgment No. (2005) GMZZ443 by Beijing Higher People’s Court
Judgment No. (2008)HMCZ27047 by Beijing Haidian People’s Court
Judgment No. (2010)MSZZ6 by Supreme People’s Court
HongFangLaw ~ HFL Law Updates ~ n’ 75
25 January 2019
SHIP Court: The use of “LAN ZHI SHUI KU / LΛNEIGE” in Class 18 infringes upon the well-known trademark “LANZHI / LΛNEIGE” in Class 3
案例来源/ Case Docket:
- Civil Judgments Nos. (2017) H73MC394 & 395
承办律师/ Competent Attorneys:
- Eric Su, lawyer of Shanghai Hong Fu Law Firm (for cases nos. 394 & 395)
- Kayla Sun, lawyer of Shanghai Hong Fu Law Firm (for case no. 394)
- Karen Hao, lawyer of Shanghai Hong Fu Law Firm (for case no 395)
涉案主体/ Parties Concerned:
- 原告：株式会社爱茉莉太平洋/ AMOREPACIFIC CORPORATION
- 被告一：兰芷（上海）皮具有限公司/ LANZHI (SHANGHAI) LEATHERWARE CO., LTD
- 被告二：周小君/ ZHOU XIAOJUN
- 被告三：爱茉莉太平洋集团有限公司/ AIMOLI PACIFIC GROUP LIMITED
- Plaintiff: AMORE PACIFIC CORPORATION
- Defendant I: LANZHI (SHANGHAI) LEATHERWARE CO., LTD (hereinafter “LAN ZHI CO.”)
- Defendant II: ZHOU XIAOJUN
- Defendant III: AIMOLI PACIFIC GROUP LIMITED (hereinafter “AIMOLI LTD.”)
案件导读/ Case Overview:
The Plaintiff AMORE PACIFIC CORPORATION owns the registered trademarks “兰芝” (read and hereinafter “LAN ZHI”, an equivalent of “LΛNEIGE”, hereinafter “LAN ZHI”), “LΛNEIGE” etc. on cosmetics in Class 3. The trademarks have acquired well-known status in the relevant domain after continuous and extensive use and advertising in the Chinese Mainland. “AMOREPACIFIC” as the plaintiff’s trade name has also established a certain degree of visibility in the market. Meanwhile, the Defendants LAN ZHI CO., ZHOU XIAOJUN, and AIMOLI LTD. are respectively the manufacturer, the distributor and the licensor for the “兰芝水库 / LΛNEIGE” (read and hereinafter “LAN ZHI SHUI KU”, meaning “LAN ZHI Water Bank”) branded women’s bags. The individual ZHOU XIAOJUN is the one and only shareholder and the legal representative/director of the companies sued. The Defendants were using marks identical or similar to the plaintiff’s “LAN ZHI” and “LΛNEIGE” on leather wears in Class 18 and advertising the products as associated with “爱茉莉太平洋” (an equivalent of “AMOREPACIFIC”) on social media platforms (Weibo, WeChat).
In the Plaintiff’s lawsuits against the infringements, we Shanghai Hong Fu Law Firm (HongFangLaw) helped the brand owner win over the first-instance court, in the Shanghai Intellectual Property Court (SHIPC). It is held that “LAN ZHI” and “AMOREPACIFIC” are well-known trademarks on cosmetics, and “AMOREPACIFIC” enjoys considerable popularity in the market; thus the Defendants’ activities surrounding “LAN ZHISHUI KU / LΛNEIGE” has constituted infringement upon the Plaintiff’s exclusive rights to its well-known trademarks; the Defendants were also found with unfair competition by infringing upon the Plaintiff’s trade name. With two causes involved at the same time, the disputes offer much to be learned.
审查视角/ Examination Opinion:
- Considerating that the Defendant III AIMOLI LTD. holds the registered trademark No. 3648074 “LANEIGE” in Class 18, does the use by the Defendants of “LΛNEIGE” on relevant goods still constitute an infringement of the Plaintiff’s well-known trademark “LΛNEIGE” in Class 3?
The Defendants have been using the same mark as the Plaintiff’s registration “LΛNEIGE” instead of the trademark No. 3648074 “LANEIGE” held by the Defendant III on the Sued Products. Combined with the Defendant’s bad faith to be elaborated in the following paragraphs, as well as the high degree of confusion and the damages to the Plaintiff that may arise from the trademark use, the Defendants should be deemed infringing upon the well-known trademarks by using “LΛNEIGE” on women’s bags.
- Are the trademark infringement and unfair competition joint violations by the three Defendants?
According to the SHIPC, the three Defendants, while aware of the well-known status of “LANZHI” and “LΛNEIGE”, still conspired to jointly copy, imitate and use the plaintiff’s trademark and company name that had established certain influence. In the specific:
- The Defendants were jointly engaged in the operations related to the Sued Products, during which there was obvious convergence of intention on the use of any company names and marks.
(LAN ZHI CO., AIMOLI LTD. were both founded by ZHOU XIAOJUN who is the one and only shareholder and legal representative of LAN ZHI CO., and the one and only shareholder and director of AIMOLI LTD. Absent contrary evidence, it is reasonable to attribute the sued companies’ business to ZHOU’s management and decision-making.)
- The Defendants had malicious intentions to mislead the relevant public to associate the Sue Products with the Plaintiff during their joint operations:
ZHOU XIAOJUN had registered AIMOLI PACIFIC GROUP LIMITED (Defendant III) which shares a Chinese name with AMOREPACIFIC; the namesake was being advertising as the licensor for the Sued Products during the Defendants’ commercial activities;
The Defendants were constantly using “LAN ZHI” and “LΛNEIGE” side by side, which had come to indicate that the names were mutually referential and exchangeable;
The Defendants were promoting the Sued Products with the slogans: “LANEIGE Giveaway! LAN ZHI lotions and handbags for free”, “In the past 20 years, LAN ZHI has made a number of miracles in skincare … and now officially launches a new handbag series”;
The Defendants were using images of the Korean actress Song Hye-Kyo who had been adopted by the Plaintiff as the face of the “LAN ZHI” and “LΛNEIGE” branded cosmetics;
The trademark “LANZHI SHUI KU” registered by ZHOU XIAOJUN shares the same pronunciation with a product of the Plaintiff’s.
鸿方评论/ HFL Comments:
- 我们认为，本案中，被告爱茉莉太平洋公司虽然在第18类相关商品上注册了第3648074 号“LANEIGE”商标，但是在实际使用过程中自行改变了商标标识，完全复制了原告在化妆品领域驰名的“LΛNEIGE”商标，二者商标看似仅为细微差别，实际上彻底改变了其原有注册商标的显著特征。结合三被告的主观恶意情节，因此，三被告在第18类女士皮包商品上使用“LΛNEIGE”的行为，不属于注册商标的使用。
- In our opinion, though the Plaintiff III has the registered trademark No. 3648074 “LANEIGE” in Class 18, it has changed the reproduction in actual use to the extent that the mark becomes a blatant copy of the plaintiff’s well-known trademark “LΛNEIGE” in class 3. Despite the seemingly subtle difference, the distinctive character of the trademark has been altered. In addition, the Defendants are in bad faith in many ways. Their use of “LΛNEIGE” is therefore not legal trademark use.
- Similarly, there are a number of mal-intentioned business operators at large who attempt to register marks similar to famous brands by all means and go on to use them in even more confusing ways with alterations. This constitutes blatant trademark infringement and should be resisted in commercial practice.
HongFangLaw ~ HFL Law Updates ~ n’ 74
11 January 2019
Are names for virtual currencies registrable as trademarks?
Co-authors: Kevin Xu, Shirley Lin
Since Bitcoin was created, virtual currency (or cryptocurrency) has gradually become the most popular form of blockchain technology worldwide. Those take to issuing or naming such coins don’t shy from trademarking their inventions. Mainstream currencies including “比特币/ BI TEBI” (Bitcoin), “以太币/ YI TAI BI” (Ether), “莱特币 LAI TE BI” (Litecoin) and “瑞波币/ RUI BO BI” (XRP) are now protected as registered trademarks, mainly in Class 36 on financial and monetary services etc. However, the author noticed a free-fall in the number of approved trademark applications incorporating the word “币/BI” (coin) in the class of services or other related ones over the recent year. The refusals have been made based on the violation of certain absolute prohibitions set forth in the Chinese Trademark Law.
First, there are trademark filings for “美币/ MEIBI”, “欧币/ OU BI” etc. that are deemed likely to be confused with the US dollar (“MEI YUAN”) and Euro (“OU YUAN”) in Chinese, and are thus prone to trigger “adverse social influence”. Besides, the China Trademark Office (CTMO) also found some applications misleading, likely to be perceived as names for circulating fiat money, which they are not. The author agrees with the CTMO on the first scenario but not so much as to names that are not confusingly similar to those of legal tender.
As opposed to the painless registration of Bitcoin etc. a few years back, examination on such applications has become increasingly rigorous. The stark contrast is contributed by changing attitudes towards cryptocurrencies among the Chinese authorities. In light of the chaos in coin transactions, such dealings are banned by a streak of documents issued by the authorities since September 2017. The attempts to outlaw cryptocurrency trading practices have left a mark that cries “illegal” on the names being used and closed their door to trademark registration.
In the author’s opinion, the shutdown on coin-related trademark registration is due to the misunderstanding of the national policy by trademark administrations which fail to distinguish the legality of virtual currencies from that of their transactions.
As is discussed above, the restrictions on trading cryptocurrencies are placed to enhance security and regulate the market. However, the coins themselves are not denied of their legality altogether. A revealing example is a trial on the first Bitcoin dispute in China concluded before the Beijing Haidian People’s Court, which found virtual currency transactions illegal but deemed the property rightfully protected as a form of civic interest. The suit was brought by Mr. Feng, a Bitcoin buyer who failed to cash out his purchase via the exchange OK-Coin, so he sued the operator Beijing Lekuda Network Technology Co., Ltd. after no resolution could be reached between the parties. The Court held that, “Virtual commodities such as Bitcoin are transactional subjects for the purpose of the Contract Law and thus shall be legally protected as a ‘civil interest’; although cryptocurrencies are allowed to be held, owners shall take the risks arising therefrom”, “Pursuant to the existing national policy, the exchange between virtual currencies and legal tender is not allowed; financial and payment institutions shall not provide Bitcoin as their product or price their services with it, and shall not trade it directly or as central counterparties”.
In summary, since cryptocurrencies can be a civil interest, it is absurd to deny their “objectivity” and therefore dismiss trademark filings for their names (of course, not when the names are otherwise still not registrable for other reasons). As for whether such cryptocurrency-related trademarks are legally used after registration, it is another subject matter that worth further reviews and discussion, and should not affect the registration procedure itself.
HongFangLaw ~ HFL Events ~ n’ 73
13 December 2018
British Chamber Shanghai – Live Lounge Podcast Featuring HFL
LL#3: Launching your brand in China
On Nov. 13, 2018, HongFang Law was invited to participate at a live lounge podcast event, organized by the British Chamber of Commerce in Shanghai. The event is one of a series of marketing focused podcasts aimed to benefit new and experienced companies that plan to make the Chinese market part of their future.
This time around, an expert panel has shared stories about how to launch a brand in China. Supported by a legal and marketing expertise, the panel dispelled myths and armed the audience with essential knowledge to better one’s own approach in the China market.
- protecting your intellectual property and growing your brand in China;
- adapting to the local mindset and building local alliances;
- how to combat sudden policy changes and navigate government regulations;
- protecting your brand cross-border.
Host: Kirsten Johnston, CEO of JWDK
- Michael Norris, Research Manager, Resonance
- Harold Broese van Groenou, Owner XIX Spirit; Co-founder & Director Gotham East
- Matthew Waddick, Founder, Shanghai Customs
- Karen Hao, Attorney at Law, Hong Fang Law
We highly recommend listening to the podcast, if you are interested in any of the topics above, as we believe it really formative.
Scan the Qr code below to listen to the podcast directly on the British Chamber dedicated page:
Otherwise, you can find and download the podcast on the dedicated Apple podcast application on mobile phones.
In conclusion, we would like to thank once again our partners at the British Chamber of commerce for their support in the organization of the event, and their continuous effort to educate and support companies in the Chinese market.
HongFangLaw ~ HFL Events ~ n’ 72
07 December 2018
How can Startups Protect their Intellectual Property in China
China Classifieds together with HFL explore the topic of how to protect intellectual property for startups
WeWork Labs, Shanghai, China
On Dec. 5, 2018, HongFang Law jointly organized an event with China Classifieds, focusing on the protection of intellectual property rights for Startups, and also the recent developments of IP Law protection in China as well as online monitoring and enforcement, along with how to monetize one’s own IP portfolio in China.
The event was hosted at the WeWork Labs location in Nanjing road in Shanghai and welcomed several professionals coming from different business sectors in exploring the on-going changes that are affecting the Chinese market in the last years. In details, we focused our attention on the acquisition of rights in China and the protection of such rights both online and offline.
With this opportunity at hand, HFL decided to highlight the recent developments of the IPR system in China, to explain how it can provide better protection for our goods and services and a safeguard for the future of the production of them in the country.
We had 3 speakers involved from our team, whom each focused on a separate topic.
Karen Hao took the stand and introduced to the attendees’ the clear definition of what IP law is and what it can protect, she explored the landscape of trademarks, patents, and copyrights systems and how they are the product of a company uniqueness. She then focused on the importance of IP protection for the future and for the establishment of a successful company, as well as the new developments on the Chinese IP system, such as the 2017 Unfair-competition law amendment (effective on 1 Jan 2018) and the Trademark Office calling this March for public comments for the future amendment of the Trademark Law.
Karen was closely followed by our colleague Cathy He, she decided to switch the conversation focus towards online monitoring and enforcement of a company IP portfolio. Once your IP is protected, we believe that a company has to actively be aware of the market share it is a part of. Several squatters and counterfeiters try to succeed by creating fake and misleading stores online, such things are naturally not appreciated by both the police authorities and the government.
For this reason, Alibaba and several other platforms have moved to secure the right older positions on the market, by instituting online IPR protection platforms, which are extremely successful in cracking down counterfeiters.
Cathy has then focused on the best practices to take in order to protect one’s IP rights both online and offline.
After the presentation was completed a panel took place, where both Karen and Cathy took the stand, together with our team Business Development and Marketing expert Federico Bartolini. The team replied to several questions from the audience, in relation to how their specific trademarks or patents could be protected, as well as how they could monetize their IP portfolio in the Chinese market. There was a clear interest in the prices of such registrations, which we agreed, in the end, were quite fair, and the length of a court proceeding as well as their success rate.
The IP practice and regulations in China have come a long way since their first institution, and are now one of the most successful around the globe, still, misconceptions are prevalent outside of China, and many foreign businesses are wary of the market. We at HFL firmly believe that even if there is always room for improvement, the current IP regulations are strong and stable enough to protect all companies that seek safeguard of their IP portfolio.
There is no reason for concern, as China is a country of consumers always interested in trying new experiences and high-quality products, and the legal system protects both consumers and producers of goods, as best as possible.
In conclusion, we would like to thank once again our partners at China Classifieds and WeWork Labs for their support in the organization of the event, and their continuous effort to educate and support new companies and startups in the Chinese market. China landscape is one of high competitivity and we firmly believe that any new company that wishes to succeed here, needs to be relevant, be innovative but most importantly be protected.
If you would like to know more about the event and receive additional insights on the IPR system in China, please get in touch with our team.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 71
23 November 2018
JIA SHI DUO (Castrol) v. JIA SHI JIE
Protection Bridging between the Trademark Law and the Anti-Unfair Competition Law
Co-authors: Edmond Au, Shirley Lin
Recently, Castrol, aka JIA SHI DUO in Chinese, has filed an administrative complaint, claiming for anti-unfair competition protection against a kind of lubricant product named JIA SHI JIE. In the case, the counterpart noticeably labeled his “嘉世捷”(JIA SHI JIE) lubricants as related to “嘉实多” (JIA SHIDUO is the Chinese equivalent of Castrol), the registered trademark and tradename of Castrol in China. Despite the aggressive use of the text “authorized by JIA SHI DUO (China) Ltd.”, “JIA SHI JIE – JIASHI DUO Group”, “supervised by JIA SHI DUO (China) Ltd.” to confuse consumers, the difference between the two Chinese marks make it difficult for trademark infringement. Faced with the conundrum, Article 58 of the Trademark Law caught the attention of the author as a potential solution.
Article 58 was added to the Trademark Law in the 2013 amendment as “Where any entity uses a registered trademark or an unregistered well-known trademark of others as a trade name in its enterprise name to mislead the public, if any unfair competition is constituted, it shall be handled in accordance with the Anti-Unfair Competition Law of the People’s Republic of China.”  On the issue, it is similarly provided in Article 1.1 (hereinafter “Interpretation1”) of the Interpretation of the Supreme People’s Court Concerning the application of Laws in the Trial of Cases of Civil Disputes Arising from Trademarks that “using the words that are identical or similar to the registered trademark of any other person as the tradename on identical or similar commodities so that the relevant public is liable to be misled” constitutes an act of “causing other damages to the registered trademark of other people”. The provisions together provide a relatively well-round solution to the conflicts between a prior trademark and the use of it as the trade name. They also serve to complete an improve Article 4 of the provisions of the Supreme People’s Court on Issues Concerned in the Trial of cases of Civil Disputes over the Conflict between Registered Trademark or enterprise Name with Prior Right which regulates the court’s jurisdiction over such issues. 
For precise law application of Article 58, the key concepts that the provision entails should be taken right. “A registered trademark” mentioned therein should refer to a registration either well-known or not since the former is unarguably entitled to broader protection, regardless of the singled out “unregistered well-known trademark” that follows as a parallel. It is because the wording intends only to draw the line between a registration and non-registration, and should not be cited against a registered well-known trademark. When bringing in the first Interpretation that outlaws a questionable trademark use “as the trade name”, it becomes obvious that Article 58 actually regulates against a less severe condition — the use” as a trade name” in the user’s enterprise name. While both usages are expected to give rise to confusion, the former imposes graver damages for the high-profile violation, whereas the latter is less noticeable in the disguise of the infringer’s own company name, and thus only constitutes an act of unfair competition as opposed to blatant trademark infringement. Although it has been accepted that any violation that fits in Article 58 should be handled pursuant to the Anti-Unfair Competition Law, opinions still vary on which provision should be cited in practice for the void unfilled.
There are mainly three opinions: firstly people deem it is about the Article 2 of the Anti-Unfair Competition Law, which has been validated by a number of judgments of the High People’s Courts in Tianjin, Chongqing, Jiangsu, Jiangxi, Shandong etc. ; the second one to Article 6.2, an approach taken by some other courts; and third opinion agrees that it is to “false advertising” provided in the same law before amendment, citing untruthful statement about the producer. While the former two opinions both have a point and help navigate judicial and administrative enforcement, the other hinges on a condition that is no longer regulated by the Anti-Unfair Competition Law, and thus should not be cited when more applicable provisions are still available, in a way to avoid unnecessary expansion of the interpretation of any specific legal concept.
In citing the more general Article 2, the court is suited to do so as it is within their rights to interpret laws. It is not uncommon for the court to give its take on the intertwined trademark and enterprise name matters at issue based on general rules of laws: in addition to the above mentioned, there is Article 10 of the Notice of the Supreme People’s Court on Issuing the Opinions on several issues concerning Intellectual Property Trials Serving the Overall Objective under the Current Economic Situation, “…We shall, under the principle of good faith, maintaining fair competition and protecting the prior rights, hear such disputes of rights according to law. Where there is a legitimate form of business such as industrial and commercial registration but still trademark infringement or unfair competition substantively constituted, such violation shall be affirmed according to law. For commercial identifiers such as enterprise names acquired outside China, trademark infringement or unfair competition is still applicable if relevant laws are violated and economic order disrupted within the borders, pursuant to the principle that intellectual property is independent and regional…Where an enterprise name appropriates a considerably high-profile registered trademark of others and thus inevitably causes confusion in the market no matter the use is accentuated or not, the court shall rule to ban or change the name at the request of the party concerned…” Therefore, the court may similarly apply Article 2, a general provision of the Anti-Unfair Competition Law, together with Article 58 of the Trademark Law to find unfair competition in hearing such trials.
As for Article 6.2, it provides for “using without permission another person’s name with certain influence, such as the name(including abbreviations and trade names) of an enterprise”. Such uses should include the direct and high-profile way, as well as sneakily incorporating other’s trade name into one’s enterprise name. The latter is exactly what we have discussed in the context of Article 58. To finish the case building, the last piece is to establish that the trademark being cited (“a registered trademark of an unregistered well-known trademark”) is also the rights holder’s trade name. Compared to Article 2 above, Article 6.2is a specific regulation easier to enforce in administrative proceedings. All conditions being fulfilled, law enforcers may take action against unfair competition by citing Article 58 of the Trademark Law and Article 6.2 of the Anti-Unfair Competition Law. This was precisely the way they pursued the infringer in “JIA SHIDUO” v. “JIA SHI JIE”. With “JIA SHI DUO” being the trademark and trade name of Castrol Ltd., it was argued on grounds of unfair competition pursuant to the articles, winning the support from the authorities who punished the adverse party accordingly.
In summary, to bring out the potential of Article 58 of the Trademark Law in synergy with the Anti-Unfair Competition Law for law enforcement in judicial and administrative practice, we should understand what the provisions are for and how they can be applied in both proceedings to achieve substantial outcomes.
 Article 1 of the Interpretation of the supreme people’s Court Concerning the Application of Laws in the Trial of Cases of Civil Disputes Arising from Trademarks:
a. Using the words that are identical or similar to the registered trademark of any other person as the name of one enterprise on identical or similar commodities so that the relevant public is liable to be misled.
b. Copying, imitating or translating the registered well-known trademark of another person or the major part thereof is used on non-identical or dissimilar commodities as a trademark for the purpose of misleading the general public so that the interests of the registrant of the well-known trademark may be damaged;
c. Registering the words or characters identical or similar to the registered trademark of another person as a domain name and engaging in the electronic commerce of relevant commodities via the domain name so that the relevant general public is liable to be misled.
 Article 4 of the Provisions of the Supreme People’s Court on Issues Concerned in the Trial of Cases of Civil Disputes over the conflict between Registered Trademark or Enterprise Name with Prior Right: If the enterprise name of the defendant infringes upon the right to the exclusive use of a trademark or constitutes unfair competition, the people’s court may, by taking the plaintiff’s claim and the specific situation of the case into account, order the defendant to stop or regularize the use of enterprise name and assume corresponding civil liability.
 Article 2 of the Anti-Unfair Competition Law of the People’s Republic of China: Businesses shall, in their production and distribution activities, adhere to the free will, equality, fairness, and good faith principles, and abide by laws and business ethics.
For the purposes of this Law, “act of unfair competition” means that in its production or distribution activities, a business disrupts the order of market competition and causes damage to the lawful rights and interests of the other businesses or consumers, in violation of this Law.
For the purposes of this Law, “business” means a natural person, a legal person, or a non-legal person organization that engages in the production or distribution of commodities or the provision of services (commodities and services are hereinafter collectively referred to as “commodities”).
 Article 6 of the Anti-Unfair Competition Law of the People’s Republic of China: A business shall not commit the following acts of confusion to mislead a person into believing that a commodity is one of another person or has a particular connection with another person:
(1) Using without permission a label identical or similar to the name, packaging or decoration, among others, of another person’s commodity with certain influence.
(2) Using without permission another person’s name with certain influence, such as the name (including abbreviations and tradenames) of an enterprise, the name (including abbreviations) of a social organization, or the name (including pseudonyms, stage names, and name translations) of an individual.
(3) Using without permission the principal part of a domain name, the name of a website, or a web page with certain influence, among others, of another person.
(4) Other acts of confusion sufficient to mislead a person into believing that a commodity is one of another person or has a particular connection with another person.
 Article 9 of the Anti-Unfair Competition Law of the People’s Republic of China (1993): Managers shall not use advertisement or the other methods to make a false propaganda for the quality, composition, function, usage, producer, time of efficacy and place of production of commodities.
Advertising company shall not be an agent of, or design, or make, or propagandize false advertisement if it knows or should know the truth.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 70
16 November 2018
Being squatted of your own domain name? Arbitration helps
Just as a house number is to a building, so a domain name is to a website, guiding readers to their desired destinations. Business owners tend to register a domain name with their brands for brand development and as greater traffic to their websites in the shortest time as possible. The process for registering a new domain name is easy and fast with the rule of “first-apply, first-register” as long as there is no prior identical domain name existing, squatters have been lured to exploit the resource, taking the free ride of reputable brand owners, but this also brings misleading damage to relevant consumers’ legal rights.
What can we do if being squatted with domain name registration by others? Negotiation for assignment might make you feel uncertain about the cost, a civil lawsuit would bring you into a long judicial proceeding process that might take years. Comparatively, to go through the arbitration proceeding would be a good option to solve the domain name dispute.
1. Definition of domain name arbitration
It involves filing a complaint with an institution for domain name dispute resolution, in an attempt to have a registration canceled or transferred to the complainer based on the arbitrator’s administrative decision.
2. Domain name dispute resolution institutions in China
There are various arbitration organizations in China for different types of disputes. For those concerning generic top-level domains (gTLD), for instance, .com, .net, .org and so on, complaints may be filed with organizations certified by the Internet Corporation for Assigned Names and Numbers (ICANN).In practice, when a Chinese party is involved, the complainer often takes the case to the Asian Domain Name Dispute Resolution Centre (ADNDRC), whose Beijing Office is run by the China International Economic and Trade Arbitration Commission (CIETAC), and Hong Kong Office by the Hong Kong International Arbitration Centre (HKIAC).
In the meantime, similar mechanisms and institutions have been established for disputes over .cn,.com.cn and a collection of Chinese domains used within the country. They are also handled by the CIETAC and the HKIAC.
3. Mechanisms and rules for domain name dispute resolution
Institutions arbitrate in gTLD-related disputes based on the Uniform Domain Name Dispute Resolution Policy (UDRP) and the UDRP Rules acknowledged by the ICANN. As for national domains in China, the relevant disputes are handled pursuant to the China Internet Network Information Center (CNNIC) Domain Name Dispute Resolution Policy (CNDRP) and the CNDRP Rules.
4. Grounds for decisions by domain name dispute resolution institutions
The above-mentioned policies and rules share the same principles at the core. In summary, institutions factor in the following conditions when they decide whether a domain name should be canceled or transferred.
The domain name in question is identical or confusingly similar to the trade name or trademark to which the complainer enjoys certain civil rights and interests
Generally, a common scenario that suffices for the above condition is the complained domain names incorporating the full name or mark cited by the rights holder. Take the disputed “Webwework” as an example. It was found to be confusingly similar to the complainer’s trademark “WEWORK” for the full use of the mark, and for the failure of the additional “Web” to distinguish the domain name because the word is too generic in the context of the Internet.
The complained holder is not legally entitled to the domain name or the main part of it
After establishing that the complained party has no authorization, no commercial exchange with the complainer, no application or registration of the mark concerned etc. to preliminarily fulfill the complainer’s burden of proof, it is the respondents turn to shake off the assumption that he/she is not entitled to his registration, as requested by arbitrators. In the dispute over “bananaboatcn”, the presiding expert panel held the same opinion and shifted the burden to the respondent after the complainer showed that there existed no authorization or distributorship between the parties.
Bad-faith registration or use of the domain name in question by the respondent
In practice, the more well-known the complainer’s cited mark is, the more likely the respondent would be found with bad faith, a critical circumstance similarly considered in trademark infringement cases. This is because a well-known mark tends to boast more exposure than usual, which helps establish that the respondent could have knowingly appropriated the mark while he/she was supposed to take reasonable measures to avoid touching upon other’s prior rights. However, in a trademark dispute, a rights holder may not be granted protection in a country where the evidence of the cited trademark’s well-known status is not sufficient, considering that intellectual property is highly regional. It turns out to be less of a concern to expert panels for domain name arbitrations when they decide whether to acknowledge some evidence generated outside the country.
JVP, a company based in Israel who had neither registration of a namesake trademark nor sufficient evidence of its use in China, took to filing a complaint against “jvpvc.cc”. Regardless of the vulnerabilities, JVP as a trademark was found to enjoy considerable fame and reputation by the expert panel, based on an enormous amount of evidence from websites and publications originated from overseas, which could have been dismissed in a trademark dispute.
It usually takes around 60days from complaint filing to service of a decision. After the decision becomes effective, the complainer may request with the concerned domain name registrar for the relevant cancellation or transfer.
Domain name arbitration has its cons though, and institutions are not in the power to grant damages, and the respondent may go on to filing a lawsuit if he/she has objections. A comprehensive review of all factors in play is necessary for reaching the best solution based on the circumstances.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 69
26 October 2018
Co-existence agreement helps secure thwarted trademark applications
Co-authors:?Walker Xu, Shirley Lin
According to statistics published by the China Trademark Office (CTMO) of the State Administration for Industry and Commerce on its website , the total number of trademark applications in China has amounted to 22.931 million up to 2017, among which 15.145 million were granted registration. Validly registered trademarks account for 12.937 million. It goes without doubt that the colossal base of trademark applications and registrations is expected to increase refusals of new filings .
In light of a rejected trademark application, a well-planned plan should be developed first before an applicant apply for a review of the unfavorable decision with the Trademark Review and Adjudication Board (TRAB).
In countering the CTMO’s dismissal of the applied trademark for similarity ruled out by Article 30 of the Trademark Law, besides establishing the opposite argument, the most favored strategy is to get prior trademarks out of the way. Therefore, cancellation and/or invalidation proceedings are often initiated against cited trademarks when the refusal is sent on appeal. Negotiation for a buy-out is also an option . Certainly, it is also possible for the applicant to hit the jackpot, finding that the blocking trademark is no longer an issue, as a result of the no renewal to its lapsing validity period. 
Another approach that can be tried in addition to the above, or amid insurmountable difficulties in carrying the actions through, is seeking a co-existence agreement. It may be a silver bullet and thus a highly recommended solution for troubled trademark applicants going forward.
Although no provisions have been made on co-existence agreements in the Trademark Law, it is known that the Beijing Higher People’s Court and the Beijing Intellectual Property Court are quite open and positive to the practice as has recently been revealed.
Multiples cases, that have lately been publicized, see the Beijing Higher People’ Courtrepeal several judgments rendered by the Beijing Intellectual Property Court and decisions by the TRAB who ruled against trademark applicants. The higher court’s opposite ruling is due to co-existence agreements reached between trademark applicants and owners at odds .
In the course of this new developments, the Beijing Higher People’ Court affirmed the TRAB and the first-instance court’s determination that the disputed trademarks had touched-upon Article 30 of the Trademark Law for being similar to their corresponding item trademarks. However, co-existence agreements had come in being, between the parties of conflicting interests in second-instance proceedings, so prior judgments and decisions against the trademark applicants were eventually overturned based on the change of situations.
The precedents show that trademark co-existence agreements may come to play a decisive role in getting certain blocked applications through to preliminary approval and publication even if they have been found similar to cited trademarks and thus been rejected pursuant to Article 30 of the Trademark Law. This is a revealing lesson on the importance of such agreements to successful trademark registration.
?Trademark refusals discussed in this article are limited to those deemed similar to prior trademarks and thus violating Article30 of the Trademark Law by the CTMO.
 Cancellation and invalidation can be launched only when certain conditions are met; buy-out negotiation has varying outcomes and comes with relatively large costs.
 For example, it happens when a trademark has the refusal of the registrant to retaliate the case, or at the stage of the lawsuit, it has expired due to time constraints.
 For example, judgments No. (2018)JXZ1617 and No. (2018)JXZ1980.
If you would like some more personalized review of the news from us, please kindly let us know by writing to:firstname.lastname@example.org. Thank you.[/column]
HongFangLaw ~ Chinese IP Law Updates ~ n’ 68
10 October 2018
Should Invalidation Action Cease for Non-use Cancelled TM?
Co-authors: Betty Chen, Shirley Lin
Judgement No. (2015)JZXCZ02902
Plaintiff: Wm. Wrigley Jr. Company (“Wrigley Co.”)
Defendant: Trademark Review and Adjudication Board of the State Administration for Industry and Commerce (“TRAB”)
Third Party: Garton International Limited (“GartonLtd.”)
Wrigley Co. applied for invalidation of Garton Ltd.’s registered trademark No. 8416566 “MELEPINA5 and device” (the “Disputed Trademark”) before the TRAB who decided to maintain the trademark. Not satisfied with the result, Wrigley Co. took the TRAB to the Beijing Intellectual Property Court in May 2015. In December of the same year, the Disputed Trademark was canceled for not having been in use for a three years period. In February 2018, the invalidation of the trademark dispute was declared in the first instance of the administrative confirmation case between Wrigley Co. and the TRAB. In court, the Plaintiff pleaded for termination of the court proceedings since the Disputed Trademark’s cancellation has been effective and published on the Trademark Gazette issued in December 2015, citing no necessity to continue the trial.
The court held that trademark cancellation and invalidation are different in their nature and implications. While cancellation hinges on whether a trademark has undergone true and valid commercial use in a certain period, invalidation is centered around its compliance with regulations on trademark application and registration. As for their legal consequences, the cancellation means that the related exclusive trademark rights are terminated upon the Trademark Office’s decision as such, but after invalidation, the rights are deemed non-existent in the first place. In summary, a trademark that suffers cancellation is still able to maintain a validity period from the date of its registration to when canceled, as opposed to invalidation. The court thus regarded it was necessary to carry on with the trial, and eventually maintained the TRAB’s decision not to invalidate the Disputed Trademark.
Even if both proceedings aim to erase rights to a registered trademark, cancellation and invalidation still differ in some ways. A trademark is canceled by the competent administration for incidents that have undermined the grounds for its protection after its registration, pursuant to Article 49 of the Trademark Law. Since no wrong has been done during the acquisition of the trademark rights but rather it was found the improper use (or no substantial use at all) of the trademark, later on, the deprivation of the rights is thus relative and only concerned with the period after registration. On the other hand, invalidation occurs when laws and regulations on a trademark’s application and registration are violated, threatening the country’s order of law and the public’s interests.
The Trademark Office or the TRAB has the power to announce a wrongfully registered trademark to be invalidated citing absolutely or relatively banged circumstances according to Articles 44 and 45 of the Trademark Law.
This results in prima facie and absolute void of trademark rights effective ab initio – as such, the trademark is deemed to have never been applied or registered and there existed no rights attached thereto upon the authorities’ decision.
In practice, the Beijing Intellectual Property Court should bring an end to a court action concerning disputes over a trademark’s cancellation after it has been invalidated. But in reverse order, court proceedings should continue their course to decide whether a canceled trademark should be subjected to invalidation or not.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 67
07 September 2018
HongFangLaw won the “2017-2018 Excellent Trademark Agency Case” award
From August 31 to September 3, 2018, the 2018 China International Trademark Brand Festival was held at the Tangshan International Convention and Exhibition Center. As one of the major events held around the field of intellectual property, the China International Trademark Brand Festival has an important position in the national intellectual property strategy market. At the same time, the China International Trademark Brand Festival is also a world-renowned international “brands for trademark” event, aiming to serve enterprises to better build internationally renowned brands, promote international exchanges and cooperation, build a communication platform between government and enterprises, and to be highly recognized by domestic and foreign trademark brand experts alike. The event drew the attention of scholars, entrepreneurs, and related professional institutions.
This year’s trademark brand festival organized 17 sub-forums and 5 trademark salons around the theme of “creation, protection and application” of trademarks. It has gathered many entrepreneurs, trademarks agents, and scholars in the field, as well as professionals from all over the country. In addition, foreign authorities shared cutting-edge news and information about trademarks.
The climax of this year’s trademark brand festival was undoubtedly the awarding of prizes for excellence and the announcement of the “excellent trademark agency case” award. In this year’s Trademark Brand Festival, Mr. Zhang Zhaolong’s (Bob Zhang) “‘Cat Force Steps” trademark opposition was awarded the 2017-2018 Excellent Trademark Agency case. This case demonstrated how to effectively protect the names of works with high visibility and the names of characters in the works with prior commercialization rights. It was an excellent practice case for its display of relatively new problems in the trademark field around the protection of prior commercialization rights. In addition, we also believe it is worth mentioning, that HongFang won last year a similar award the “2016-2017 Excellent Trademark Agency case” with the “Fa Qi Bao” trademark refusal review case, during the previous trademark brand festival.
The selection of the annual excellent trademark agency case is utilized as a way to summarize and publicize the innovative practices and advanced experience of trademark agencies and establishing a good case benchmark to play the role of guidance and future reference. The excellent trademark agency case was selected by a number of applicants from an expert jury composed of the heads of trademark authorities, well-known experts and scholars in the intellectual property field. The consecutive awarding of HongFang’s “Fa Qi Bao’s” trademark refusal and “‘Cat’s chaos” trademarks cases are undoubtedly a reaffirmation of HongFang’s trademark agency level.
“Cat force chaos” trademark opposition
Main reasons for the selection and legal significance of the case:
The prior rights advocated in this case are the right to commercialization based on the name of the best-selling work and the name right based on the author’s pseudonym. This prior right is different from the more common copyright, portrait or trademark rights. In the previous relevant laws, there was no clear definition of “commodity right”, which was only reflected in some cases. However, the name of the work or the name of the role does allow the owner of such work or name to gain reputation, fame, popularity, etc. through the work, name, etc., and the owner can combine the above-mentioned reputation, fame, popularity, etc. with additional goods or services. Commercial use of such relevance and popularity might be abused to achieve economic benefits by infringers of the right.
Article 22 of the Supreme People’s Court’s Regulations on Several Issues Concerning the Trial of Administrative Cases for the Recognition of Trademark Authorizations, which was adopted in 2017, may be used as a prior commodities interest for the name of the work with higher visibility and the role name in such work. For this reason, protection had to be clearly defined. The case, starting from the writing of the objection grounds and considering the preparation of the relevant evidence to the final decision of the Trademark Office in accordance with the law, was in line with the legislative spirit of the law, and as such the protection of the prior commercialization right was well practiced.
HongFangLaw ~ Event Updates ~ n’ 66
12 September 2018
PTL Group Partners Exchanging Opinions with HFL & Procon Pacific LLC about the China-US Trade War’s Impact on Supply Chain Shift in Asia and China IPR Development
Servcorp Kerry Center, Shanghai, China
On Aug. 31, 2018, HongFangLaw jointly organized an event with PTL Group & Procon Pacific LLC, focusing on the impact caused by China-USA trade war to the supply chain shift in Asia, and also the recent developments of IP Law protection in China, along with the increasing level of domestic market and industry sectors.
The event welcomed several professionals coming from different business sectors in exploring the on-going changes that are affecting the Chinese market in the last years. In details, we tried to focus on the latest changes mandated by the US government that started the so-called “Tariff War” with China, basically affecting a good number of businesses and industry sectors both in China and in the whole south-east Asia markets.
The China-US tariff war has already singled out the manufacturing, ICT and energy industries as the most affected by it. As companies are starting to invest in this shift into the South East Asia market, many have taken the decision to move their industrial efforts from China to other countries, mainly Vietnam, Thailand, and India.
This naturally affects the landscape of the labor cost and labor displacement, as our colleagues in Procon Pacific LLC stated during the event, and accelerated the shift that was already in action from the massive Chinese market, into the newly developed South East Asia one (and its countries). Such countries have still some challenges, including the demand for high-speed production and international logistics services and the control of labor cost.
At the same time, customs and IPR protection in these countries are still in the early stages, if compared to the international standards. With this opportunity at hand, HFL decided to highlight the recent developments of the IPR system in China, to explain how it provides a better protection for our goods and services and a safeguard for the future of the production of goods in China.
Karen Hao took the stand and highlighted how in recent years companies that produce in China through OEMs and corporations that just export to the country have seen a swift change in how the authorities and the customs deal with their cases, which is now more severe in line with the international standards. More protection brings out fewer chances for trademark squatters and patents infringements and a better environment for international and Chinese companies alike.
At the end of the event, we all came to the conclusion that the overall quality of the Chinese market and industry landscape is increasing, which brings China even more to the forefront of the goods production, but also, prices for production and overall cost have increased, as the quality of life in those production areas has risen at the same time. We will see an upsurge in the shift, during the next years, of the production of some goods and materials, from China to other countries in South East Asia.
In conclusion, we would like to thank once again our partners at PTL Group and Procon Pacific LLC for their insights in this new everchanging landscape, and we have achieved a better understanding of the international market together.
If you would like to know more about the event and receive additional insights on the IPR system in China, please get in touch with our team.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 65
31 August 2018
How liabilities on sellers of products constituting Unfair Competition have been implemented in the new amendment of the law
Co-authors: Edmond Au, Shirley Lin
“Products constituting unfair competition” defined in this article largely correspond with the circumstances provided in Article 6 of the new Anti-unfair Competition Law, where unfair competition is typically characterized as “unauthorized use” of other’s rights. Such use is, in our opinion, consistent with trademark use prescribed in Article 57.1 and 57.2 of the Trademark Law in terms of their nature. This is because even though the context is different in the two laws, the meaning of “use” should remain unchanged, as the provisions concerned are closely correlated and aim to address the same issue – identification of the source of products.
Similar to trademarks, a product’s “name, packaging or decoration”, a business’s “corporate name” and “the name of an individual” set forth in article 6 also function to identify where the product in question comes from. The two laws go hand in hand to serve as a bulwark against IP infringement inChina. So what does “unauthorized use” cover? Does it include pure distribution activities? We believe the answer is no, given its counterpart’s coverage in the Trademark Law. In the Trademark Law, the echoing trademark use is an act parallel with “sale”, and separate provisions have been designated for them.
In light of the correspondence between “unauthorized use” and trademark use, the same rule applies to the former. Therefore, the scope of the term “use” is supposed to be linked with direct use, i.e. by manufacturers who may also sell as well as produce. As for sellers who do not manufacture, their behavior is not regulated by this provision.
With pure distributors’ liabilities up in the air in the Anti-unfair competition law, reference could be drawn from ministerial regulations or administrative opinions. In the 1995 Certain Regulations on Prohibiting Unfair Competition Activity Concerning Imitating Specific Names, Packaging or Decoration of Well-known commodities, the State Administration for Industry and Commerce of PRC (SAIC) laid down in Article 9 that “Selling commodities containing specific name,packaging or decoration of a well-known commodity which is known well or ought to be known well by the sellers shall be punished according to the provisions of Articles 7 and 8 of these regulations.”
The Administration also rendered an official reply to its subordinating bureau in Tianjin on such an issue. Upon the latter’s query about how to deal with the sale of free-riding commodities, the SAIC affirmed that distributors’ selling goods exploiting other’s brand and reputation constitute a violation of Article 5.3 of the Anti-unfair Competition (before 2017 amendment) and should be punished pursuant to Article 21. The aforementioned regulations and reply are still in effect as of today and continue to be an established major standard that has been in place for years to guide law enforcement with regard to whether sellers are infringers by unfair competition.
In judicial practice, the regulations and reply shortly of legislation would not be cited for rendering judgment. Instead, courts factor in how well the product being infringed upon and the related right holder (name of corporate or individual) are known, and how much of bad faith the seller has displayed in a case. If the seller is obviously ill-intentioned and fails to justify the selling with proof of a legal source of the product in question, courts would generally make the seller stop the infringement and compensate the right owner, pursuant to Article 58 of the Trademark Law and Article 2 of the Anti-unfair Competition Law. The practice has been witnessed in two cases where the distributors were found with obvious bad faith to have sold products infringing upon their well-known competitors’ rights. Although unfair competition perpetrated by mere selling is not elaborated in the legislation, courts are within their rights to affirm infringement by resorting to Article 2, a fundamental provision of the law. In view of such court discretion within an acceptable range, it is no wonder that law-makers were comfortable enough to have left out a provision for pure selling as a form of unfair competition in the law.
We reckon that the omission has its bright side because some sellers might otherwise suffer loss. Unlike trademark or patent or copyright, rights concerned in unfair competition disputes are not publicized for the public to check on. If unfair competition by mere selling was written down in the law, small and micro sellers with good faith but lacking resources could have been found infringing to their surprise when they were not able to foresee what would constitute unfair competition, a term encompassing so many forms of infringement. Reasonable or not, the legislation is the way it is, but it should not be a reason to let go of infringing sellers at stake.
Lenient enforcement would aggravate the already severe landscape of unfair competition in China. Perpetrators would step up their violations knowing that they could easily get away, pushing originally good-faith operators towards the pursuit of illegal easy money. But if we stem unfair competition on the demand side by punishing sellers, it would in turn curb violations by manufacturers. It is, therefore, necessary to put administrative and civil liabilities on pure distributors considering the current workings of China’s market and economy.
But the question is, when and how to do it? Articles 60 and 64 of the trademark law could be a way. If a seller unknowingly provides products constituting unfair competition and is able to prove legal acquisition and identify a source of the products, it is only required that the seller stop the distribution without being subjected to any administrative penalties or civil liabilities. With the above-mentioned regulations and reply in place, infringing sellers can be effectively punished on reasonable grounds by the administrative authorities. As for court proceedings, Article 2 of the Anti-unfair competition law is available to be cited depending on the circumstances of selling activities to pass down judgments at courts’ discretion.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 64
17 August 2018
“Ghost Blows Out the Light” vs. “Captain Touchers of Gold”
Copyright dispute arises over an author’s novel re-creation containing elements of a previous novel that had its copyrights acquired
Co-authors: Mamie Mai, Shirley Lin
Judgment No. (2015) PMS (Z) CZ838
Shanghai Xuanting Entertainment Information Technology Co., Ltd. (“Xuanting Co.”) has acquired the economic rights on the series novel “Ghost Blows Out the Light” from the author Zhang Muye (pen name: Tianxia Bachang). They have reached a contractual agreement that Xuanting Co., with the assigned rights, is entitled to develop works and products derivative from the novel in question, as it pleases, based on market demand. On the other hand, the author Zhang Muye, in light of the effective agreement, can no longer create any work identical to or similar to the novel with his real name or pen name, or with the book title or the major chapter titles of “Ghost Blows Out the Light”.
After some time from the agreement, Zhang Muye wrote and published a new novel “Nine-Phantom General of the Captain Touchers of Gold” (“Captain Touchers of Gold”), in which an array of ingredients of “Ghost Blows Out the Light” are used, including the names, images of the characters and their relationships, including the methods, taboos, and rules for tomb raiding. Therefore, Xuanting Co. sued Zhang Muye, alleging the defendant’s infringement of the company among other rights and interests concerning the copyrights it has on “Ghost Blows Out the Light”.
The court has examined the use by the author of such forming parts of the novel from 1) the parties’ contractual agreement and 2) protection of the elements in question (e.g. character names and images).
Regarding the first point, the court is of the opinion that the author should be allowed to produce derivative works with the elements of his/her writing such as the characters he/she has given life to. This is in line with the spirit underlying the legislation of the Copyright Law that aims to flourish the literary and artistic industry, which eventually benefits audiences at large. Bearing the spirit of the law in mind, interpretations of the agreement between the plaintiff and the defendant should be strictly literal, limiting extensions to those backed by solid evidence. As far as what the parties have agreed, the assignment of the economic rights to Xuanting Co. is general with no exclusion. The author Zhang Muye has not been barred from re-creating activities with the objects contained in the writings of “Ghost Blows Out the Light”.
The case also hinges on whether such elements in question deserve copyright protection. According to the court, works that could be copyrighted should be external expressions objectively perceivable by others. However, building blocks of a literary work such as the characters therein hardly constitute such expressions, as they generally serve as no more than just media via which the plot develops and tools with which the author works on storytelling. Therefore, to determine whether the alleged infringement is established, the stories as a whole should be compared. “CaptainTouchers of Gold” is different from “Ghost Blows Out the Light” in this sense. The court has thus dismissed the plaintiff’s claims against the defendant for copyright infringement, citing insufficient evidence for the argument that elements of the story are entitled to copyright protection.
The case provides two approaches to viewing an author’s re-creation with the ingredients of a work whose copyrights have been assigned. One way to go is to look into the assignment agreement, evaluating whether the author has been precluded from using elements related to the transfer. The other aspect comes down to comparing the original story and its derivative for similarity.
Another issue to note is that storytelling elements including characters installed in the plot, while not qualified for copyright protection, are not to be used as freely as the author wants. If they are distinctive enough to identify the work concerned, they might be able to enjoy protection from the Anti-unfair Competition Law as a bundle. Infringement in this regard should be determined based on whether the use of the items in a new work complies with certain codes observed in the industry. Factors such as who the user is, what he/she intends, where the original work stands and how the use affects the market of the original work should be taken into consideration.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 63
10 August 2018
A View on the State of Variation against Reference Views – How do they impact a design patent’s scope of protection?
Co-authors:?Jessica Li, Shirley Lin
As Article 59.2 of the Patent Law states, “For the patent right of an invention or utility model, the scope of protection shall be confined to what is claimed, and the written description and the pictures attached may be used to explain what is claimed.” Requirements for pictures are further stated in the Guidelines for Patent Examination, “Concerning the relevant views and stereoscopic drawings or photographs, so far as a product with a three-dimensional design is concerned, if the essential features of the design of the product involve six sides, the applicant shall submit orthographic projection of six-side views; if the essential features of the design of the product involve the view from one side or several sides only, the applicant shall submit at least orthographic projection view and space diagram of the side concerned.
So far as a product with more simple design is concerned, if the essential features of the design of the product involve the view of one side only, the applicant may submit the orthographic projection view of the relevant side alone; if the essential features of the design of the product involve the view of two sides, the applicant shall submit the orthographic projection views of the two relevant sides. The applicant may also submit, if necessary, the complete view, cutaway view, sectional view, enlarged view, and view of the state of variation.
In addition, the applicant may submit the reference views. Reference views are usually used to indicate the purpose, method or place of use of the product incorporating the design.” There is no doubt from the above statements that orthographic projection and space diagram dictate the scope of a design patent’s protection, but regarding the view of the state of variation and reference views, the influence is left unclarified. This article will aim to illuminate how the latter pair would affect the protection scope, we will start by defining the terms.
According to the Guidelines, “A product of variable states means a product that can be in different states when on sale or in use.” That is why the view of a state of variation could be necessary. Again the guidebook mentions “reference views are usually used to understand to which field the product belongs, where the product is to be used, its use or purpose of use, in order to ascertain the classification.” It thus follows that the view of a state of variation displays a product’s state at some point, while reference views have other jobs to do. Therefore, a design patent’s scope of protection could be said to be confined by the view of the state of variation while reference views do not take on this role.
With the lack of explicit provisions on how the view of a state of variation and reference views relate to protection scope, left untouched in both the Patent Law and its Implementing Rules, the issue has long been debated by academics and professionals alike. However, official views are not missing: “Regarding a design patent on a product of variable states, if an allegedly infringing design is identical or similar to the design in all the various states of use as illustrated in the view of the state of variation, the People’s Court shall find that the allegedly infringing design falls within the protection scope of the patent right; if the allegedly infringing design lacks the design of one state of use or is neither identical nor similar to the design in a state of use, the People’s Court shall find that the allegedly infringing design does not fall within the protection scope of the patent,” as stated in Article 17 of the Interpretation on Several Issues Concerning the Application of Law in the Adjudication of Patent Infringement Dispute Cases by the Supreme People’s Court (II) (2016), in addition according to Article 92.2 of the Guidelines for Patent Infringement Determination (2017)“Reference views are usually used to indicate the purpose of use, the method of use or the place of use, etc. of the product incorporating the design, and cannot be used to determine the protection scope of the design patent of a product of variable states,”. Such statements offer support for our conclusion above.
A distinction should be made as to the roles of reference views and the view of the state of variation when ascertaining the scope of protection of a design patent. Reference views usually serve as an indication of the products method, purpose or function of use whereas the other works complementarily with the product’s six-side views to show its variable states, if applicable, when in use. Therefore, the view of a state of variation should be a factor for determining to which extent a design patent should be protected. With reference, the view also draws boundaries for such patent rights.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 62
31 July 2018
Celebrity’s Impact on Trademark Registration
Co-authors: Waker Xu, Shirley Lin
Michael Jordan is a household name referring to the basketball star that once shone on the court, however, its Chinese equivalent “乔丹” (read and written as “QIAO DAN”) has a different meaning. In China, this trademark is owned by sportswear manufacturers that are neither owned nor controlled by the former basketball player, nor does it have any license from the legend, yet they legally use the name. Agonizing over the alleged infringement upon his name, Michael Jordan has taken aim at a slew of “QIAO DAN” trademarks in various forms used by sportswear companies with the same brand name. His quest for protection has carried on for a few years and will continue its path, but the prospects are gloomy in the foreseeable future. And he may not be the only person that has to deal with this mess.
When the French team was carrying home the FIFA World Cup Trophy from the Luzhniki Stadium in Russia on July 15, 2018, they never would have expected what had been going on in the Far East as they strived for glory for their country and themselves on the field. Unbeknownst to them, their names were already applied for registration as trademarks on varying goods and services by individuals and companies that they have no ideas about or connection to. Accordingly, to the published Chinese trademark applications, 10 out of the 11 players in France’s starting line-up for the final of the 2018 FIFA World Cup Russia have seen their names in Chinese filed by others for trademark registration. Only Benjamin Pavard was spared for now, but just temporarily. The most exploited name points to no other but Kylian Mbappé, the most watched star athlete of this world cup. By the day of the final game, 159 trademark applications had been filed to own his name. Another member of the French team Samuel Umtiti was also subjected to the ‘name rush’. A corporate applicant has already filed “乌姆蒂蒂切尔西” (meaning “Umtiti Chelsea”), even though he has never played for the Chelsea Football Club that competes in the Premier League. Some might take it as a joke, but it would definitely not make even the jovial Kylian Mbappé laugh.
A takeaway from Michael Jordan’s fight for protection is that odds are against the athletes even if they dole out time and cash in the disputes. It is forbiddingly difficult for such individuals to secure protection of their names on grounds of their name rights alone. It is not surprising that cases like Michael Jordan’s will follow the players through to retirement as they are still being ruled. In China, pure trademark application (or even cybersquatting) is not illegal in itself and does not bear any actual legal liability. But it is not difficult to predict inevitable damages to a certain people’s rights including consumers’ rights to learn the truth should there be any improper practice in the registration system. Contrary to the low cost in trademark squatting, efforts required of individuals to seek for protection are disproportionately tremendous. It is high time that we take action to root up trademark squatting before any serious harm could be done.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 61
20 July 2018
A View on the Statute of Limitations Applied in Trademark Disputes in the Era of Post-General Provisions of the Civil Law
Co-authors: Kevin Xu, Karen Hao, Shirley Lin
The General Provisions of the Civil Law of the People’s Republic of China (“General Provisions”) was passed by the National People’s Congress and published on March 15, 2017, set to become effective as of October 1, 2017. One of the most controversial elements of the new provision on the statute of limitations for civil litigation is Article 188: “An action instituted in a people’s court for protection of civil rights is prescribed by three years, except as otherwise prescribed by any law.” Since new laws have precedence over old ones at the same level, the two-year period for general civil cases set forth in the old PRC General Principles of the Civil Law (“General Principles”) was immediately adjusted to this change.
However, as statutory provisions have not yet followed up on how to apply the new statute of limitations in specific disputes and how it accommodates other effective laws and regulations, opinions are split on certain issues concerned in practice. This article is an attempt to illustrate how the law applies specifically in cases of trademark infringement.
Despite a major procedural issue in trademark lawsuits, no statute of limitations has been provided in the Trademark Law, neither in the 2001 enactment nor the amended version in 2014. For the time being, reference can only be drawn from the Interpretation of the Supreme People’s Courton Certain Issues Concerning the Application of Law in the Trial of Civil Cases Involving Trademark Disputes (“SPC Interpretation on Trademark Disputes”).
The 2002 judicial interpretation prescribes in Article 18 that “the statute of limitations for bringing a suit for the infringement of a registered trademark is two years”, giving light to the issue after the Trademark Law entered into effect in 2001. With the absence of a new provision on how to apply the statute of limitations in trademark disputes in light of the new General Provisions, which standard should we follow as the new law and the old interpretation clash with each other?
Academics propose two conflicting approaches. Some give priority to the new law and thus advocate the three-year time limit, whereas others value special laws over general provisions and sticking to the custom. Before making a choice, we deem it necessary to answer the above question by giving literal explanations of the provisions concerned in the General Provisions and the SPC Interpretation on Trademark Disputes.
As mentioned above, the statute of limitations is prescribed as being three years in the General Provisions, followed by an exception when it is “otherwise prescribed by any law”. We will focus exactly on this exceptional situation.
There is no doubt that any statute of limitations laid down in the Trademark Law will be applied in lawsuits concerned, regarding the legislation’s statutory status in China. However, such provision is given not in the Trademark Law but rather in the aforementioned judicial interpretation by the SPC. We must, therefore, try to find an answer to whether judicial interpretations are treated as equal to laws and whether they can be certainly applied over statutory provisions.
Pursuant to the Legislation Law in China, legal interpretations have legal effects the same as legislation. The right to enact such interpretations is vested in the Standing Committee of the National People’s Congress. As for “judicial interpretations”, it is provided that “interpretations on law application by the Supreme People’s Court and the Supreme People’s Procuratorate should be made based on the laws concerning the relevant trial and prosecution, and should be in line with the goals, principles, and intentions for the legislation”. It is revealing that “judicial interpretations” by the SPC carry no effects equal to those of “laws”.
Coming back to the issue surrounding trademark suits, the statute of limitations of two years is prescribed by the SPC in the form of a “judicial interpretation”. It can, therefore, be concluded that the period should, in fact, be extended to three years pursuant to the new General Provisions as the law is of a higher level and thus takes precedence.
Furthermore, when looking into the general provision of the SPC Interpretation on Trademark Disputes, we can see that the interpretation has been made to “correctly try the cases of trademark disputes pursuant to the General Principles of the Civil Law of the People’s Republic of China, the Contract Law of the People’s Republic of China, the Trademark Law of the People’s Republic of China, and the Civil Procedure Law of the People’s Republic of China, etc.”. As one of the cornerstones of the interpretation, the General Principles of the Civil Law provides the former with the 2-year statute of limitations in question. In light of the enactment of the new General Provisions, the 3-year time limit sets in, evoking adjustment in the General Principles of the Civil Law. The shift, in turn, affects the trial of trademark disputes, putting the new statute of limitations in place.
If you would like some more personalized review of the news from us, please kindly let us know by writing to: email@example.com. Thank you.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 60
06 July 2018
Copyright Infringement by Online Game Adaptations of Original Novels
Co-authors: Cathy He, Shirley Lin
No. 2016S03MC369 Civil Judgment
In recent years, one of the fastest developing areas in IP Law is the adaptation of online games from popular literature, with the same name. The point is to develop games out of popular novels and comics of the same name, keeping the original characters and storyline, so that by using the already established audience and popularity of the original novel, the online game of the same name, can quickly accumulate a large number of users and gain a lot of benefits in the short term. However, this results in multiple copyright infringement disputes where the original copyright owner claims that the game company infringed the original book adaptation rights. This article aims to conduct a case study to illustrate how the courts think of such disputes between online games and an owner’s adaptation rights to his original work.
In 2016, the operator of the high-profile web novel site www.qidian.com, Shanghai Xuanting Entertainment Information Technology Co., Ltd. (“Xuanting Co.”) initiated litigation procedures to protect the adaptation rights of its popular novel Douluo Dalu. The defendants are www.4399.cn (“4399”) and Chengdu Jiqian Technology Co., Ltd. (“Jiqian Co.”), respectively the operator and the developer of the novel-adapted game. Recently, a first-instance judgment has been rendered by Jiangsu Xuzhou Intermediate People’s Court, granting Xuanting Co. a 5 million compensation for its loss and expenses against Jiqian Co.
Xuanting Co. claims that the mobile game New Douluo Dalu (The God’s Realm) bears an overwhelming resemblance to the copyrighted novel Douluo Dalu, which they own, with respect to; character names, story development, dialogues between characters, etc. Xuanting Co alleges that the adverse party infringes its adaptation rights.
Adversely, Jiqian Co. argues that the game’s adaptation is based not on the original novel but its derivative work Douluo Dalu – Legend of The Gods’ Realm for which the company has obtained a license for adaptation, allowing for its game’s development and operation. As for the alleged similarity, Jiqian Co. dismisses anything substantial, claiming the similar aspects are proportionately smaller when comparing the plaintiff’s novel and the game as a whole. Moreover, they also allege that their use of similar elements was in fact entirely reasonable.
The judging court states after examination that, “adaptation, as opposed to creation, exploits the fundamental creative expression of the original, making it a prominent part of the adapted work, thus forming its base or substance. “Under this rule, the court finds the alleged infringement established after comparing and contrasting the novel and the game in question, in terms of their names, characters, skill sets, basic storyline, details, etc.”
The court, in this case, has laid down a set of clear-cut standards for determining whether an online game’s adaptation infringes upon an original work. In doing this, infringement of the original creators’ creative expression must first and foremost be examined. The creative expression at stake can generally be made up of; the names – including that of the work and those of the characters -, skills deployable, core storyline, finer locations settings, dialogues, etc.
Although compared with the original novels, online games are relatively rare in terms of text expression, this does not allow online games to use the substance of the original works, nor may they rely on the excuse of reasonable use.
If you would like some more personalized review of the news from us, please kindly let us know by writing to: firstname.lastname@example.org. Thank you.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 59
29 June 2018
Interpretation and determination concerning Article 10.1.7 of the Trademark Law
Co-authors: Mandy Wang, Shirley Lin
Plaintiff: Zhejiang Dongli Real Estate Consulting Agency Co., Ltd. (“Zhejiang Dongli”)
Defendant: Trademark Review and Adjudication Board (TRAB) of State Administration for Industry and Commerce
Trademark No.19194458 “卫斯理” (aka “Wesley”, hereinafter “Disputed Trademark”) was filed for registration on March 2, 2016, by Zhejiang Dongli, designated on services such as “teaching, training” in Class 41. The China Trademark Office (CTMO) later rejected the Application.
Out of dissatisfaction, Zhejiang Dongli requested for a review by the TRAB, which administers trademark disputes on January 12, 2017. It argued against the CTMO’s decision by the counter-claims that the Disputed Trademark can be interpreted in many different ways. One of which is a Chinese equivalent of an English name commonly seen, which has been associated with the Hong Kong-based writer Mr. Ni Cong. Mr. Ni Cong was cited by the CTMO for having the same Chinese pen name, but it was decided that the similarity was not deceitful in nature. Meanwhile, the Disputed Trademark’s other namesake as an educator is not particularly well-known. “卫斯理/Wesley” has already been in use and has caused no misperception among the public. It is a legal and legitimate application filed under the applicant’s license from theUS Wesley Education Research Center.
However, the TRAB upheld the CTMO’s decision regarding the Disputed Trademark’s association with Mr. Ni Cong. It deemed the trademark’s registration and use on the designated services without Mr. Ni’s consent likely to mislead consumers when they identify the services’ origin. As a result, the application had remained rejected pursuant to Article 10.1.7, 30 and 34 of the Trademark Law.
Zhejiang Dongli continued its quest and filed an administrative lawsuit with the Beijing Intellectual Property Court. The Plaintiff insisted on arguing for the legitimacy, innocence, and lack of arising confusing from the Disputed Trademark. In the Applicants opinion, the name “卫斯理” does not correspond “one-to-one” with Mr. Ni. It was argued that even if protection was to be sought based on rights to the pen name, which is a sub-category under rights to personal names, Article 10.1.7 as an absolute prohibitive provision should not be cited because of such rights are merely relative ones. Based on those grounds, the Plaintiff claimed the TRAB’s decision as imprecise in fact, improper in law, and erroneous in the procedure by blocking its application pursuant to Article 10.1.7 and 30.
On the other hand, the TRAB defended its decision as unquestionable and pleaded to dismiss the Plaintiff’s requests.
After examination, the first-instance Court found in the Plaintiff’s favor that the Disputed Trademark does not violate Article 10.1.7 in its filing, as the TRAB was not able to establish their claimed correlation between “卫斯理” and Mr. Ni Cong. In the event of any civil rights being infringed upon, provisions other than the above-cited should be applied instead. Based on solid factual and legal grounds, Zhejiang Dongli was able to have the TRAB’s decision annulled with the Court’s support.
After the judgment was rendered, the TRAB was not satisfied and thus appealed to the Beijing Higher People’s Court. Ensuing court proceedings are still pending at the time.
Here we would like to break down Article 10.1.7 of the Trademark Law from the perspective of this case.
As the provision states, “None of the following signs may be used as trademarks: … (7) Those that are deceptive and likely to mislead the public in terms of the quality, place of production or other characteristics of the goods;” Technically, it has been embedded with certain loopholes since legislation. As a result, interpretations of the regulation vary drastically, giving rise to problems in law application.
- Understanding “deceptive and likely to mislead the public in terms of the quality, place of production or other characteristics of the goods”
We view “deceptive” therein as the core idea behind the provision, followed by two specific examples of how the public could be misled, which are not exclusive, allowing space for other characteristics of goods similar to “quality”. In other words, the provision can be interpreted as: What is implied and described by the trademark is not in line with the properties of the designated goods and services. Such efforts to hide the truth suffice to conjure up wrong perceptions of the products among the public.
- Determining “deceptive”
To tell whether a mark is “deceptive”, the general cognitive level and capacity of the public should be referred to when judging what the mark concerned entails exactly. One should not be called deceptive when it suffices not to arouse misunderstanding under general circumstances based on conventional experiences and recognition.
In practice, we might as well orient our judgment from the following considerations:
1. Deceit and mistake built around the characteristics and origins of goods and services may practically involve: quality, place of origin, raw materials, content, category, function, use, model, mass, quantity, price, time of production, technical points etc. Determination thereof should be made when the trademark’s meaning is also taken into consideration. For example, there were times when trademarks with the word “organic” were free to be registered, resulting in a plethora of them. However, it is a no-brainer to give every single of such trademarks a red light today for they are in themselves deceitful and likely to cause misunderstanding.
2. There are boundaries when it comes to how a trademark and its composing elements are expressed and described in real situations. No deceitful behavior should be found when the exaggeration of the subject is not misleading based on the public’s everyday experiences and knowledge. To take the trademark “永和大王” (“YONG HE DA WANG”, aka “King of Yong He”) as an example, “大王” meaning “king” herein implies quality goods and services in relation thereto, but it is in no way deceitful when used within boundaries, thus causing no mistake to the public.
3. The public is supposed to recognize the origin of goods as the way it is. A typical trademark review and adjudication case feature the dispute over the trademark refusal review on “恒大银行” (“HENG DA YIN HANG”, aka “Evergrande Bank”). The trademark was filed by Evergrande Real Estate Group on financial services in Class 36 and was rejected by the CTMO, citing misleading implications of the Applicant’s operations. Pursuant to Article 10.1.7, the trademark being applied was found deceitfully in corresponding with the applicant’s business in a substantial way, likely to mislead consumers if it was to be used to identify “bank” services.
In summary, judicial practice calls for better understanding of Article 10.1.7 of the Trademark Law, including its implications and extensions. Proper application thereof helps to reduce the abuse of administrative and judicial resources, eventually safeguarding the legal rights and interests of right owners.
If you would like some more personalized review of the news from us, please kindly let us know by writing?to: email@example.com. Thank you.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 58
22 June 2018
Reflection on “trademark use” prescribed by Art. 48 of the Trademark Law in OEM industry
Co-authors: Edmond Au, Shirley Lin
No.(2016) ZGFMZ339 Civil Judgment by the Supreme Court
No.(2015) SZMZZ00036 Civil Judgment by the Jiangsu Higher People’s Court
Retrial Applicant (defendant at first instance, appellee at second instance): Jiangsu Changjia Jinfeng Dynamic Machinery Co., Ltd. (“Changjia Co.”)
Retrial Respondent (plaintiff at first instance, appellant at second instance): Shanghai Diesel Engine Co., Ltd. (“SDEC”)
SDEC has rights to the trademarks No. 100579 and No. 624089 “东风 DONG FENG and device” on “diesel engines” etc. under Class 7 in China. TM No. 100579 was registered in 1981 and later extended to retain its validity through to Feb. 28, 2023. TM No. 624089, valid from Dec. 30, 1992, to Dec. 29, 2002, upon registration, also had experienced extension and will now continue to be in place until Dec. 29, 2022.
On the other hand, a company incorporated in Indonesia named PTAD IPERKASABUANA (“PTAD Co.”) is the registrant of the Indonesian trademark #IDM000089328 “DONG FENG”. Also registered under Class 7, the trademark covers a range of goods related to diesel machinery. It enjoys 10 years’ protection in the country starting from Jan. 19, 2007.
On Oct. 1, 2013, Changjia Co. and PTADI Co. entered into an agreement where the trademark registrant of TM #IDM000089328 asked the former to manufacture diesel engines and components with the trademark at issue and export the goods to import and export dealers who should limit the distribution within Indonesia. The agreement was set to expire on Jan. 19, 2017, exactly when the trademark “DONG FENG” concerned was also expected to expire.
Subsequently on Oct. 8, 2013, Changjia Co. declared the diesel engine parts (including bodies, oil tanks, and water tanks) destined for Indonesia with the Changzhou Customs. The batch of goods weighed 228,000 kg with a total value of USD 659,700. Informed of the declaration, SDEC requested Customs to seize the export on grounds of suspected trademark infringement. The Customs acted accordingly and withheld Changjia Co.’s products on Oct. 23.
SDEC continued to pursue Changjia Co. by taking it to the Changzhou People’s Court, which found the defendant not liable in its concerned OEM business. Unsatisfied, SDEC appealed to the higher court and won the lawsuit.
Changjia Co. was thus ordered to bear liabilities but in turn challenged the second-instance judgment, requesting the Supreme People’s Court (SPC) to have a retrial. In the trial proceedings, the SPC ruled in Changjia Co.’s favor and overturned the questioned judgment, thus affirming what the lower Changzhou People’s Court had delivered.
Trademark use specifically refers to attaching trademarks to goods, packages or containers as well as transaction documents, or applying them in commercial contexts including advertising and exhibition, with the aim to identify the origin of the goods concerned. In its essence, a trademark is meant to help with identification of or reference to where the goods or services related come from, functioning to distinguish between different sources.
Generally, when someone deals with a trademark that is not used to identify or distinguish between sources of goods from which misconception or confusion does not arise, the behavior does not interfere with trademarks’ function and thus does not constitute infringement prescribed in the Trademark Law.
Back to the case, the defendant Changjia Co. as an OEM service provider entrusted by PTADI Co. had sufficiently performed due diligence by reviewing the Indonesian company’s trademark rights concerned when it entered the contractual relationship. Furthermore, when proceedings unfolded in Indonesia where SDEC successfully secured rights to its trademark “东风 DONG FENG and device”, Changjia Co. voluntarily negotiated with SDEC over its manufacturing of the products in question, and paid reasonable compensation to SDEC, pursuant to a reached agreement between the two parties.
Obviously, Changjia Co. had reasonably fulfilled the duty of care required of a prudent actor when it came to examining its client’s trademark rights before it agreed to provide its services. Therefore, the second-instance erred in having opposite opinions on the fact.
At the time of the lawsuit between Changjia Co.’s OEM activities, the Indonesian Supreme Court had already affirmed PTADI Co.’s ownership of TM “DONG FENG”. This, in fact, had come to make it illegal for SDEC to export any further relevant or similar products bearing the identical trademark to the country. It was also revealed in the retrial that, between 2004 and 2007, SDEC’s export of its trademarked products to Indonesia was also entrusted. Given the circumstances, Changjia Co.’s OEM services in question did not substantially harm SDEC’s chances of striving for opportunities and interests in a competition based on its trademark rights in the Indonesian market.
After all, despite a trademark’s basic function of identification, it works not merely by itself, but in synergy with the goods and services as well as their quality it represents. Looking at the realities of international trade, there was no practical reason that could justify SDEC’s claim of substantial damages caused by Changjia Co.’s behavior and therefore, determination of trademark infringement was not applicable.
Although the Jiangsu Higher People’s Court rendered a judgment which was overturned by the Supreme Court, we still find some reason in the logic running through its determination of OEM infringement that is worth studying. Fundamentally, However, it was wrong in finding PTADI Co.’s registration of “DONG FENG” in Indonesia illegitimate, as the judicial and administrative bodies in the country had decided in favor of affirming the trademark rights of PTADI Co. Meanwhile, in 2008, when SDEC still had rights to “东风 DONG FENG and device” in Indonesia, Changjia Co paid contractual damages to SDEC. This fact was combined with its legitimate OEM business where it was reasonably prudent and careful enough to vet PTADI Co., to sell products only in Indonesia and not to be involved in any circulation and distribution in relation in China. Thus, the SPC found Changjia Co. not liable for trademark infringement.
In judicial practice concerning OEM infringement disputes, there have been significant Changes, over the years, in the Chinese judicial bodies’ attitude to what was thought of as infringement, as it has gradually shifted to the other side of the spectrum. There are many explanations for this development. Besides abiding by laws and regulations including the Trademark Law, the social impact should also be factored in, i.e.development of international trade, the balance of interest between domestic trademark owners and manufacturers, and foreign trademark owners or users. Back in 2001, a court found a Defendant’s OEM business infringing and liable (No.(2001) SZFZCCZ55 Civil Judgment). The dispute surrounded the use of TM “NIKE”; however, the court did not elaborate on whether such use functioned to identify a source. In the civil judgment No. (2007) SMSZZ0034, another court, while delivering the same result as to whether the infringement was established, had a change in opinion on granting compensation. On this issue, it said no harm could be done to the trademark owner’s interest in the market because there was no confusion or mistake concerning the origin of goods that could be caused to domestic consumers by OEM services. After the watershed “JOLIDA” case in 2009, it has become a common sense for courts in China to conclude that “OEM business constitutes no infringement as it involves no trademark use prescribed in the Trademark Law because it cannot confuse the relevant public in the domestic market regarding the source of goods”.
This time, the SPC goes in its judgment like this: any use of a trademark that works not to identify or distinguish between sources, and triggers no misconception or confusion thereof to such an extent that a trademark’s function is influenced, does not constitute an infringement for the purpose of the Trademark Law. It could be inferred from this conclusion that: there is trademark use in OEM business, but it does not count as what makes trademark stick. In similar precedents such as some three-year non-use administrative disputes, the Beijing Intellectual Property Court also affirmed trademark use in OEM industry that is set forth in Article 48 of the Trademark Law (No.(2015) JZXCZ5119 and No. (2015) JZXCZ408 judgments). With echoing court opinions, we can see a general theory that has been formed in the recent years’ judicial practice: a trademark used in OEM is not an identifier as it is supposed to be for a trademark to function.
There might be something confusing about why “trademark use” as in Article 48 is stated as “behavior for identifying the source of goods” in the first place given the above conclusion. In our opinion, the provision is somewhat unreasonable. In fact, “trademark use” differs from “trademark use in the Trademark Law”. The former can be interpreted as concrete ways of how a trademark can be applied, e.g. on commodities or their packages, but should not imply its legal consequences. This should be the notion to adopt when we decide whether a trademark has been used in three-year non-use cancellation disputes that focus on the substantial existence of and access to a trademark.
As for the latter, it is trademark use plus a process of identification, so it is concerned with what will follow after a trademark is exploited, which forms a big part in determining trademark infringement. In summary, we advocate that the kind of “trademark use” elaborated in Article 48 of the Trademark Law should not be restricted to identification involved behavior.
If you would like some more personalized review of the news from us, please kindly let us know by writing to: firstname.lastname@example.org. Thank you.
HongFangLaw ~ Company Updates
11 June 2018
HFL’s 140th INTA (International Trademark Association) Seattle Event report
This May 2018 another annual INTA event has taken place in Seattle, and HongFangLaw had the opportunity to visit Seattle together with colleagues coming from all over the world. Latest statistics tell us that this year more than 11,000 participants were greeted by this cold but welcoming city. Once again, the INTA presented itself as the prime enhancer of the trademark industry, thanks to its educational and networking events. Professionals from 150 countries were present including professional IP experts and corporate members.
As always, the INTA focused on the main innovations and achievements in the intellectual property practice, in order to push forward, once more, the limits of IP protection all around the world. International expert have taken part to the event and shared their insights on their own countries IP regulations and news.
This year, HongFangLaw was part of the event, represented by our firm partners, Nikita Xue, Tiger Zhao, Eric Su, Irene Zeng, Zhang Xu and Kevin Xu.
In addition to attending numerous receptions and networking events, we were able to take in a wide range of exhibits, presentations, committee meetings, and legal education sessions. Hot topics of discussion in both formal sessions and informal conversation included customs training, international trademark law and practice, mediation trainings, anti-counterfeiting, protection and enforcement of the rights of Logos, data protection and security, infringement and nonuse cancellation cases. One of the most interesting and useful aspects of our many conversations was to compare the Chinese legal system and other jurisdictions where our clients do business.
This year, our partner Nikita Xue had an active part in the INTA Bulletin committee thanks to her appointment as Co-chair of the Asia & Pacific, Law & Practice Sub-committee of INTA for the 2018-2019 period.
The event lasted from May 19 until May 24 with each day focusing on a separate topic, related naturally to the IP practice.
Most notably, on the first day, the focus was set on the fight against counterfeit, considering it a universal problem, as we know; tackling counterfeiting requires a holistic approach in which brands, consumers and other stakeholders must work tighter closely. Success is usually based all on planning, for such reason sessions were held between government official, corporate in-house representatives, and digital commerce service providers to exchange best practices and views on how to tackle online counterfeiting. Since the second wave of EU trademark reforms were introduced in October 2017, several questions have come up repeatedly and were reviewed during the event. In particular the removal of the need to represent a trademark graphically in an application was a cornerstone of the October reforms.
The second day, the focus was mostly on Design and trademark infringement, with attention on how to support businesses in closing the knowledge gap with the IP regulations. A big focus was set also on the different geographical difference in IP, this day the main focus was the African legal system which is growing steadily in this last years and has more and more a strong basis for protection.
May 21st was the official opening day of the event, and as such branched on various topics of conversation, bringing most of the new developments in the worlds IP practices to the table. Most notably we can see how there was a huge focus on the IP outlook in Latin America, which is improving but with still in need of a lot of harmonization and awareness. In addition, with the EU general data protection regulation coming into effect in May, brands need to get a grip onto their data privacy, and understand its implications. We also reviewed several other topics, such as Copyright in China, the trademark in the Cannabis industry, and a new approach against privacy.
May 22nd we shifted focus on Licensing, and how it can achieve more for a company than mere financial gain, but also balancing the requirements of licensor and licensee. We then came to understand that INTA’s new strategic partnerships & economic research department is conduction work across a range of topics and countries, with the brand value special task force, generation Z, and bridge building with non-legal association as its top priorities for 2018. Finally, we had some insights around IP enforcement in Asia, and how tackling counterfeiting in Asia can be a challenge, but with the right approach, brands can achieve effective results.
May 23rd was the last day for the conferences, leaving May 24 for the networking and final events. The focus on these days was more on linking the real with the virtual, and how to protect digital assets with the support of the new IP regulations, in fact designing ways to connect differently can play an important role in reaching global competitiveness. The last day then we had the chance of enjoying Seattle with the final parties and exploring the city most interesting venues, such as the space needle, the glass garden and the Pop music museum.
2018 INTA was a big success in many ways, and an opportunity to share insights with professionals around the world; preparations are well underway for the 2019 annual meeting in Boston, where all will enjoy an exciting program and fun city. We will look forward to meet our colleagues there as well.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 57
06 June 2018
Standards for determining contributory infringement in patent disputes
Co-Authors: Jessica Li, Shirley Lin
Case Docket No.: (2017) Jing-Min-Zhong No. 454
The civil lawsuit surrounding the invention patent ZL02139508.X granted on “a method for the secure access of the mobile terminal to WLAN and for secure communication via the wireless link”
Appealer (defendant at first instance): Sony Mobile Communications (China) Co., Ltd. (“Sony”)
Appellee (plaintiff at first instance): Xi’an Xidian Jietong Wireless Communication Co., Ltd. (“Iwncomm”)
In this case, the appellee Iwacomm owns the patent ZL02139508.X and sued Sony for the latter’s infringement thereon at the Beijing Intellectual Property Court, seeking to cease of the claimed violation and compensation for Iwacomm’s economic losses and reasonable expenses. The court ruled in Iwacomm’s favor, which dissatisfied Sony who continued to file an appeal with the Beijing Higher People’s Court. The higher court bought part of Sony’s opinions but affirmed the existing judgment anyway as its conclusions had remained intact, crushing Sony’s case.
In the second instance judgment, the higher court finds the appealer Sony’s grounds for no contributory infringement established. In details, the court says: in this case, no one could fully implement the patent concerned on his own, which is also true for non-commercial individual users. Meanwhile, there were no actors being instructed or controlled by a single person in implementation, or coordinating to jointly implement the patent. Without a direct implementer satisfying the above conditions, it is unlawful to deem a provider of a single component used in the infringement to be a contributory infringer. Otherwise, there would be too much protection to right holders, impairing public interests in turn. Therefore, the appellee Sony’s behavior does not constitute contributory infringement, pursuant to Article 21.1 of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Disputes over Infringement of Patent Rights (II).
Currently, for contributory infringement, China’s Patent Law provides no specific regulation. The only citable provisionin regarding this is the above-mentioned article, “Where any party fully aware that the relevant product is exclusively used for the materials, equipment, parts, and components or intermediates, among others, that exploits the patent provides such product for any other party for the purpose of production or business operation to implement the act infringing upon the patent right without the approval of the patentee, the patentee’s claim that the act of the provider falls within the scope of “assisting others in committing a tort” as prescribed in Article 9 of the Tort Law shall be supported by the people’s court.” However, issues still have not be solved surrounding (1) whether an indirect infringer should be held liable if a direct actor implements other’s patent for non-commercial purposes, or he behaves in a way that does not count as infringement according to Article 69 of the Patent Law, and (2) who should bear the burden of proof as to the determination of a product “exclusively used for something that “exploits” a patent?
Rightly so, in the second instance judgment, the Beijing Higher People’s Court addresses the above issues in a concrete way: (1) In an uncommon case where an “indirect infringer” should still assume civil liabilities even when direct infringement does not exist, the following conditions should all be in place: a. The actor provides, without a license from a patentee, products exclusively used for the materials, equipment, parts, and components or intermediates, among others, that exploits a patent to a direct implementer for business purposes, whilst aware of the products’ nature; b. The products being questioned “substantially” exploit the patent concerned, which is to say, the materials, equipment, parts, and components or intermediates are major enough to be indispensable to implementing the patent rather than playing a trivial or minor role; c. The products have “substantial non-infringing use”, meaning they generate no reasonable economic or commercial value except being used in relation to the patent; d. Existing evidence suffices to point to a direct implementer who at the same time is an individual with “non-commercial purposes” or his acts should be governed by Paragraph 3, 4 and 5 under Article 69 of the Patent Law; (2) Except that evidence of the above condition c should be provided by the”indirect infringer”, the burden of proof is all the patentee’s.
In an excellent attempt to balance protection of the patentee and public interests, the Beijing Higher People’s Court has rendered a judgment that helps establish standards for determining contributory infringement in patent disputes.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 56
08 May 2018
The Tale of the Two Innisfree Chinese Trademarks
Have you ever seen a touch of delighting green dotted around shopping malls or business centers? It may be brought to you by a naturalistic brand of cosmetics from South Korea. Established in 2000, it opened its first flagship store in Shanghai in 2012 and now boasts over 300 outlets flourishing in central business areas in China.
The brand is none other than Innisfree, with a Chinese equivalent of “悦诗风吟” (read “YUE SHI FENG YIN”).
What if one day you bumped into another “YUE SHI FENG YIN”, but noticed it had its last character changed, resulting in a slightly different pronunciation? This “悦诗风茵” (“YUE SHI FENG YIN”) you see, is how much likely to be mistaken as the genuine “悦诗风吟” (“YUE SHI FENG YIN”)?
We HongFangLaw, representing the trademark owner INNISFREE CORPORATION, has filed an opposition on the company’s behalf against “YUE SHI FENG Y?N” and won our client a favorable decision. The presiding administration China TrademarkOffice (CTMO) has refused to register the trademark in question, citing concerns of mistake and confusion over the similar trademarks among consumers if they were to coexist in the market as for how we argue in our application.
Our client’s trademark “YUE SHI FENG Y?N” is a coined word without any innate meaning fixed to it. However, it has acquired quite a reputation and distinctiveness in cosmetics after being promoted and used by INNISFREE CORPORATION.
Notwithstanding the fact that “YUE SHI FENG YIN” is also not a part of a conventional vocabulary in Chinese, it highly resembles “YUE SHI FENG YIN” in word composition and pronunciation. Had they been allowed to be used concurrently on cosmetics, consumers would almost be sure to find them confusing. It is exactly why the CTMO has adopted our opinions and made the refusal decision.
Therefore, it is safe to conclude that the two “YUE SHI FENG YIN”s are similar from the viewpoint of trademark use.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 55
24 April 2018
Administrative Dealing with Free-riding Trademarks
Confusing similarities of “CQVARTA”, “Chongqing VARTA”, “Josohnn Coslortn” with “VARTA”, “Johnson Controls” on storage batteries determined by the Wuxi AIC.
AIC Raid Action against the Infringers on March 27th, 2018.
Trademark Owner: Johnson Controls
First Infringer: Wuxi Ruixi Auto Parts Co., Ltd.
Second Infringer: Wuxi City Xueshi Auto Parts Co., Ltd.
The Trademark Owner Johnson Controls owns trademark rights to “VARTA” and “Johnson Controls” registered in Class 9.
VARTA, the world famous brand of automotive batteries, was founded in Hagen, Germany in 1888. For a long time, the VARTA brand has been the first choice of the world’s most famous carmakers with its high quality and advanced technology. With nearly 130 years of history, the VARTA brand is the advanced model of world automotive battery industry. Johnson Controls’ total business volume reached $16billion in 1999 and $37.2 billion in 2015. In 2016, Johnson Controls ranked 70th on the Fortune 500 list.
The above-mentioned trademark is derived from the Chinese and English trade names of the trademark owner. The trademarks have acquired quite a reputation in batteries after being constantly and broadly promoted and used in China mainland. Under the development of more than a century, the above-mentioned trademarks have gradually accumulated a unique and classic brand image and reputation in the world. VARTA has also formed an inseparable and complementary connection with the trademark owner, not only as the identifier of the right holder but also as the manifestation of its history and future. The relevant public has become very familiar with VARTA.
On the other hand, the Infringers are respectively the distributor and manufacturer of the CQVARTA/重庆瓦尔塔 (“Chongqing VARTA”) batteries, on which both English and Chinese trademarks in question are used. They also used “Josohnn Coslortn” which was passed off by changing the letters of “Johnson Controls”.
Pursuant to Article 57.2 of the Trademark Law, “Using a trademark that is similar to a registered trademark on the same goods, or using a trademark that is identical with or similar to the registered trademark on similar goods without the licensing of the registrant of the registered trademark, which is likely to cause confusion” is deemed as an infringement of the exclusive right to use a registered trademark. In this provision, “likely to cause confusion” requires only the possibility of misleading the consuming public over the goods’ origins or their relevance with a Trademark Owner’s products on which a registered trademark is used.
In this case, HongFangLaw supported the Trademark Owner Johnson Controls in winning the support from Jiangsu AIC and Wuxi AIC. They have recognized that the trademarks “VARTA” and “Johnson Controls” among other trademarks are highly reputed on the battery products. The infringer’s using the similar logos of the registered trademark of the owner “VARTA” and “Johnson Controls” on the car batteries constituted trademark infringement and could cause confusion to the relevant public. This case is typical and offers a lot to be studied.
Regarding the similarity between Infringer’s marks and Trademark Owner’s trademarks
In 2004, Johnson Controls officially opened its new car battery factory in Fuling District, Chongqing City. The infringers used the “CQVARTA” and “Chongqing VARTA” logo, which would cause the consumer to mistake that their products were produced by the Chongqing factory of Johnson Controls, causing confusion. For the mark “Josohnn Coslortn”, it is reproduced by just simply changing the letter order of “Johnson Controls”.
The Infringers also used the devices “X” and “Y”. After comparing the signs separately and together, the AIC found Infringer’s marks and Trademark Owner’s trademarks were similar without much difference.
Regarding the possibility of confusion of Infringer’s and Trademark Owner’s products
While the products do differ in how much they are priced, it is still possible for consumers to relate the Infringer’s commodities in some way to the Trademark Owner’s when seeing the similar signs, considering the popularity of the latter. Such capitalization of the Trademark Owner’s fame would contribute to an unfair comparative advantage to the Infringer’s offerings over products of their like. It is plain that the coexistence of Infringer’s and Trademark Owner’s products causes confusion among the consuming public.
On the other hand, regarding the overall appearance of the infringing products and the VARTA products, the infringers undoubtedly had bad faith Because the color, layout, and appearance were all similar.
On the above grounds, the AIC held that the Infringer’s use of signs similar to the Trademark Owner’s registered trademarks on the same or similar goods is an intentional act to capitalize on the Trademark Owner’s famous trademarks and is likely to confuse the relevant public. Hence, the Infringer’s conduct constitutes an infringement of the Trademark Owner’s exclusive trademark rights.
Under the joint cooperation of many departments, 3 stores and 2 warehouses were checked at the same time. More than 500 batteries were seized and the related books and lists were temporarily held. The AIC has investigated the parties involved in the case according to law, and actively unveiled the distribution network of the parties.
Live news coverage followed throughout the whole raid and continued to turn out follow-up reports.
The advantage of administrative raid action on free-riding trademarks
For such trademarks, besides trademark opposition and evidence preservation via notarization against the target stores, trademark right owners may also consider a more effective and efficient approach and file the administrative complaint. The active period is shorter and could target the infringement directly. At the same time, the AIC raid action could provide good support and guarantee for the subsequent trademark opposition and civil proceedings.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 54
16 April 2018
A Brief Analysis of the “JIAO GE YA ZI” Case
Second-instance court: “JIAO GE YA ZI” (“order a duck”) shall not be interpreted beyond its literal meaning
First-instance judgment: No. (2017) J73XC2359
Second-instance judgment: No. (2017) JXZ3393
Appellant (plaintiff at first instance): Beijing Wei Mei Qu Xiang Catering Management Co., Ltd.
Appellee (defendant at first instance): Trademark Review and Adjudication Board (TRAB) of State Administration for Industry and Commerce (SAIC)
In September 2014, Beijing Wei Mei Qu Xiang Catering Management Co., Ltd. (“WMQX Co.”) was established. 2 months later, it filed for registration of the trademark “JIAO GE YA ZI” with the China Trademark Office (CTMO) who subsequently issued a notice of its decision to reject the application in April 2016. WMQX Co. attempted an appeal for review but failed to get its trademark through, and eventually brought the case to the Beijing Higher People’s Court.
CTMO & TRAB:
“JIAO GE YA ZI” has vulgar implications prone to cause bad social influence.
The trademark in dispute comprises the text “JIAO GE YA ZI” and a cartoon of a duck. Generally, “YA ZI” refers to a domestic bird but is also used to address “male prostitutes” in subcultural contexts. The latter interpretation has no place in mainstream cultures and values and thus is not allowed to be spread as a trademark. Combined with the designated services “bar services; accommodation bureaux [hotels, boarding houses]” etc. in the application, the words “JIAO GE YA ZI”, which means “order a duck (male sexual worker)”, is expected to further associate the trademark with the inappropriate perception among the relevant public, thereby giving rise to ill effects in the society.
Second-instance court with an opposite opinion:
The public usually perceives “YA ZI (duck)” in general terms. Therefore, it is quite unlikely that consumers will overly interpret “JIAO GE YA ZI” under normal circumstances. The lower court’s understanding of the trademark as low-class does not necessarily represent the public’s thinking. In summary, there will not be adverse influence caused by the registration and use of the trademark in question with its designated services.
It is stated in Article 10.1.8 of the Trademark Law that, “The following signs shall not be used as trademarks: those detrimental to socialist morality and custom or having other ill effects.” For the purpose of this provision, “ill effects” are those arising from the registration and use of a trademark that may do harm to ethical norms or impose negative impacts on public interests and social order concerning the nation’s politics, economy, culture, religion and ethnicity.
Interpretation of trademark has long been an issue in the department. To reach a consensus on a trademark’s generally accepted meaning, it is considered that multiple facets should be examined based on how a case unfolds, including the cognition of the general public or relevant consumers, the primary meaning of a trademark is preferred to its other connotations, social and commercial custom, the contemporary way of thinking, possible broadening or alienation of the meaning etc. However, in today’s society overflowing with diversified values, varying opinions exist as to what the public generally thinks and further imagines. Meanwhile, the definition of “ill effects” is unlikely to be as objectively precise as to articulate where it goes and ends.
That is why the second-instance court’s opinions on what “JIAO GE YA ZI” means turn out to be opposite to those of the CTMO, the TRAB, and the lower court. A takeaway from this case is that a trademark applicant could eventually reverse a refusal decision by staunchly but wisely resorting to every means available. On the other hand, the quest could be time-consuming – 4 years in the case of “JIAOGE YA ZI”. While its applicant has been using the trademark and thereby building up some reputation in the market, it would still be vulnerable if any trademark infringement committed by its competitors occurred. For this reason, companies in the same situation should also consider new trademark applications and advertising strategies as a second plan as they seek for protection of their trademark rights.
It is also notable that, WMQX Co. has taken steps accordingly to avoid risks even after the favorable second-instance judgment was delivered. It has applied to the CTMO to remove the services “hotels” and “bar services” from its trademark application and changed its slogan from “Bring some fantasy to your life.” to “Add a dish to your table.” This is an example of how the public may negatively interpret of “JIAO GE YA ZI” when seeing it related to such services.
Trademark registration is core to establishing an enterprise’s brand. Yet only wholesome brand images are sustainable in the long term as an enterprise develops. For advertising considerations, an enterprise may be inclined to get attention by using sensational trademarks. It is reasonable as public attention drawn to stunts can sometimes be turned into huge benefits, but what wins over consumers for growing a stronger brand is never hype but quality products and satisfactory services.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 53
10 April 2018
Is Video Ad Blocking Unfair Competition?
The first case on ad-blocking technology in Zhejiang goes on to second-instance trial
On March 16, a dispute between video streaming services and an ad-blocking app was openly debated by the Zhejiang Hangzhou Intermediate People Court on the second instance. It is the first case of this kind on trial in the province. The proceedings have been initiated by the defendant at first instance – Hangzhou SEVEN Software Co., Ltd. (“SEVEN”). Which was not satisfied with the lower Hangzhou Railroad Transportation Court’s ruling affirming its acts of unfair competition against the video streamers Youku and Sohu by developing the application AdClear to block adverts aired by the plaintiffs. For its violations, SEVEN has been ordered to stop its illegal acts and pay Youku and Sohu a total RMB 620,000 (US$ 100,000) in compensation for the latter’s economic loss and reasonable expenses.
From the plaintiffs Youku and Sohu’s part, they jointly claim at first instance that they, as the leading video streaming services in China, feed on proceeds arising from paid memberships that exempt users from viewing ads to maintain their daily operations and provide licensed contents that come with loyalties packages. However, SEVEN’s app AdClear enables viewers to skip those ads they are made to watch if they prefer to enjoy videos for free, which is deemed to constitute unfair competition by the plaintiffs. Therefore, they respectively seek compensation, including RMB 1 million in damages and RMB 60,000 in reasonable costs of their legal actions.
SEVEN argues in defense that it is not a legitimate behavior for Youku and Soku to put their users to endure boresome and prolonged adverts that cannot be opted out ahead of videos, and thus there should not be legal rights and interests in relation thereto. Furthermore, AdClear has been developed on neutral technology to give its users a choice to block whatever they consider a threat to their cybersecurity. Indeed, such technology might hurt part of the plaintiffs’ vested interests. The result is part and parcel of free competition and technological advancement in the market economy, and thus should be accepted as a consequence of the risks inherent in the plaintiffs’ business model.
According to the first-instance court, SEVEN’s development and offering of the ad-blocking software AdClear, in addition to its advertising of the service as one that is capable of “blocking video adverts put on mainstream apps: Youku, Tencent, LeTV, Sohu etc.”, is been clear as to its intentions. Obviously, the defendant is aware or should be aware of the fact that users of AdClear will inevitably go on to block ads on the aforementioned video streaming sites, which eventually impairs the effects and returns that the plaintiffs expect from their business model, making the plaintiffs less attractive to advertisers as a result. That is to say, SEVEN has knowingly blocked adverts displayed by Youku and Sohu, thereby undermining the appeal and interests they are entitled to enjoy in the market based on their way of operations. This is disruptive to the plaintiffs’ business and not conforming to the principle of good faith and commercial ethics that are generally accepted. Therefore, SEVEN’s conduct is deemed in violation of Article 2 of the Anti-unfair Competition Law. Accordingly, the defendant has been ordered to provide the remedies above mentioned.
However, SEVEN did not accept the judgment and filed an appeal to the Hangzhou Intermediate People’s Court.
Now an appellant at second instance, SEVEN builds its case on three pillars: 1. The lower court erred in fact determination by finding it a competitor to Youku and Sohu, and improperly found ad-blocking illegitimate and the counterparty’s business model otherwise; it was inconsistent in its standards of evidence examination and failed to run an analysis of whether there has been an actual harm to the other companies business. 2. The lower court erroneously interpreted and applied laws, including Article 44.2 of the Advertising Law and Article 2 of the Anti-unfair Competition Law. 3. The lower court granted unreasonably high compensation without clear factual and legal grounds.
Together, the appellees Youku and Sohu replied against SEVEN that it has continued its bad-faith ad-blocking against the former’s legal and legitimate placement of adverts leading up to the trial; its behavior also violates Article 16 of the Interim Measures for the Administration of Internet Advertising besides Article 12 of the Anti-unfair Competition Law; its service pronouncedly targets Youku and Sohu by singling the two out in the description presented on its website and in the app in question.
The final judgment of this case is still undecided. However, it is reported that the parties are open to settlement as they have expressed their attitudes in court.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 52
30 March 2018
Non-use TM Cancellation Dispute
Tactics for Identifying Fake Evidence of TM Use
Co-authors: Cathy He, Shirley Lin
Recently, HFL has secured a favorable decision for our client in a 3-year long “non-use trademark cancellation” dispute, where it was sought to annul a trademark squatter’s registration. At first in the cancellation proceedings presided by the China Trademark Office (CTMO), the authority decided to keep the trademark in question based on the evidence of trademark use for the bad-faith registrant’s part. In order to examine further, whether such evidence was substantially valid, genuine and sufficient, a process that is not required in the CTMO’s decision-making, we suggested taking the case to the Trademark Review and Adjudication Board (TRAB) for a review of the previous decision and we eventually won the case. This article will focus on what tactics can be deployed to verify suspicious evidence based on our experiences.
Comments and takeaways:
On the validity of evidence:
Pursuant to Article 49 of China’s Trademark Law, everyone has the right to apply to the CTMO to cancel a trademark when it has not been used for 3 years without acceptable reason. Hence, only evidence generated within 3 years prior to the date on which the trademark is requested to be canceled qualifies to prove its use. The principle has thus made it a primary and critical job to check whether the registrant’s submission registers at a specific time and satisfies the prescribed limit.
This is how we found out most of our counterparty’s exhibits did not fall into this time slot and should be deemed invalid.
On the genuineness of evidence:
The genuineness of evidence is also a pillar of the examination tactics in those disputes, considering that transactional documents sometimes can be easy to falsify. Ill-intentioned trademark registrants may provide deceptive contracts, invoices, product pictures etc. to create nonexistent trademark use. Here are five parts that should be considered, in order to see through the squatter lies:
1. Are the submissions to the CTMO and the TRAB both without question?
It came to our attention that, notwithstanding the registrant’s failure to provide the CTMO with valid evidence that could meet the time requirement, he was suddenly able to gather everything, at least so at first glance, during the TRAB’s review. It appeared counterintuitive to us as the registrant actually had more time in the previous stage given the two months for evidence submission granted by the CTMO.
2. Is the evidence consistent enough to show a reasonable business pattern?
Generally, a company does its business in its own way along developed workflows. The pattern can normally be identified in the materials they comply during transactions, such as documents and invoices. However, this was not the registrant’s case. The deeper we looked into the party’s exhibits submitted respectively to the CTMO and the TRAB, the more inconsistent and even conflicting his commercial practice seemed. For example, he first presented no formal contract concerning his sale of wines (even for a big order trading hundreds of products) to the CTMO, but later turned out perfectly formatted agreements with accompanying invoices for selling merely dozens of wines before the TRAB. It was quite abnormal to see the registrant make a U-turn in his accustomed practice of business in such a short time.
3. Is the registrant’s evidence in line with common sense?
Regardless of what to prove, the evidence should at least be consistent with our common sense. Specifically for the kind establishing trademark use, the information is given, such as the goods’ pricing and sales, should reflect what we normally see in real life. In our case, the other party did not seem to be following this rule. He sold his products to his intermediate distributors and end consumers at the same price, charged far more in larger orders than in purchases that hardly impressed, and let his wines’ prices remain completely without fluctuations for years, which was not common for consumer products as such.
4. Do third parties concerned in the evidence have a stake in the registrant’s case?
When it comes to falsification, you normally don’t turn to someone you don’t know. Therefore, when parties other than the registrant appear in the evidence, efforts should be made to illuminate their relationships such as affiliation and partnership because the chances are high that they are also stakeholders. Some of our respondent’s exhibits were sales contracts entered into with other companies. During our investigation, one was found just next door to the registrant’s affiliated company with respect to their registered domiciles, and the other was said to have never purchased any product recorded in the contract by its own staff. It was telling that the evidence was not genuine.
5. Can the evidence be verified via authoritative channels?
In a modern society prospering in the information era, there are many ways we can tell if some evidence is credible with services provided by the authorities. For example, there is the tax bureau’s official website for sales invoices and the portals operated by departments for industry and commerce to verify a company’s status and capacity for executing a contract. There is one more thing that can be examined when the trademark in question is designated for goods that are more rigorously regulated: the qualifications of the registrant that are a prerequisite for the related manufacture and distribution. This piece of information can also be obtained from authorities concerned.
On sufficiency of the evidence to establish facts to be proved:
1. Does the evidence apply to the designated goods?
Since the substantial use of a trademark is limited to its designated goods, examination of the coverage should always come first. Trademark use on similar goods should not be considered as valid evidence.
2. Does the chain of evidence have links that cross-reference each other?
Contracts and invoices concerning a trademark’s designated goods are critical to establishing the use of the mark. Still, they need to be combined to show a clear picture and should, therefore, be consistent, which is vulnerable if the evidence is not genuine. With this tactic, we found during the dispute that the registrant was not able to provide such materials in complete sets or printed with his trademark. The missing pieces made it impossible to present a complete chain of evidence, thus insufficient to establish real transactions.
3. Is the registrant the one and only source of the evidence?
It is commonly acknowledged that evidence generated solely by a disputing party is less convincing. Hence, some materials provided by our counterparty such as the invoices unilaterally issued by him did not suffice to establish his trademark use due to the innate weakness.
4. Has the claimed trademark use been conducted only for display?
In past cases, we have seen bad-faith trademark registrants try to maintain their marks by using them no more than just enough to get the upper hand in potential cancellation proceedings, with minimum trade and documents in relation therewith. In fights against those deliberated moves, we have developed a strategy to analyze the scale of the infringers’ business activities concerned, combined with the goods’features, so as to shake their grounds by proving no substantial use can be established with so little sales volume.
Similarly in this case, regarding the trademark use in relation with wine documented on the registrant’s contracts and invoices, nothing substantial could be established given the few products sold. For a popular consumer product like wine, what was presented by the registrant was only superficial evidence, and he needed much more business activities to prove otherwise.
In the preceding paragraphs, we have listed a collection of strategies for examining evidence of trademark use in our 3-year non-use disputes. We believe that they can be adopted in combinations as fit for individual cases in practice to win over decision-makers.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 51
27 March 2018
Collective Trademark Protection Case
Co-authors: Edmond Au, Shirley Lin
First-instance judgment: No. (2014) PMS (Z) CZ468
Second-instance judgment: No. (2016) H73MZZ468
Appellant (defendant at first instance): Qingdao Ma Ke Li Pu Alcohols Co. Ltd.
Appellee (plaintiff at first instance): Scotch Whisky Association
Defendant at first instance: Shanghai Ma Ke Li Pu Alcohols Co. Ltd.
In light of the joint infringement by Shanghai Ma Ke Li Pu Alcohols Co. Ltd. (“Shanghai MKLP”) and Qingdao Ma Ke Li Pu Alcohols Co. Ltd. (“QingdaoMKLP”) who had manufactured and distributed whiskies infringing upon the collective trademark “Scotch Whisky” owned by the Scotch Whisky Association (SWA), the authorities of China took both criminal and administrative action against the infringers. In July 2014, the competent offices for industry and commerce in Shanghai, Laixi, and Qingdao respectively imposed a trail of administrative penalties including fines on the companies. Subsequently, the SWA sued the two before the Shanghai Putuo People’s Court to pursue their civil liabilities for joint infringement.
1. Did the defendants’ products and websites concerned constitute an infringement upon the SWA’s collective trademark?
The sign “BLENDEDSCOTCHWHISKY” was used by the defendants on the packages of four products including “Imperial Prestige Sislay Whisky 12 Years”; “SCOTCH” and “WHISKY” were used on the front label (split into two ends with a lion-shaped graphic in the middle, as above) of two products including “Imperial Prestige Scotch Whisky 12 Years” which was outright labeled as “Scotch Whisky” in Chinese on the back. Meanwhile, the products were advertised by Shanghai MKLP on e-commerce platforms such as Taobao.com with the description “Scotch Whisky”. The court of first instance held that the defendants, though presented “SCOTCH WHISKY” in English and Chinese in stylized ways that are not commonly seen, they failed to erase the similarity of those signs to the SWA’s collective trademark. Even more confusing was the Britannic tint falsely splashed on the products on the advertising rhetoric they used, sufficient for the relevant public to relate the products to Scotland or the SWA in some way. The defendants’ acts were thus deemed infringing.
2. Was there joint infringement?
The court assumed joint infringement on the grounds that:
(1) The defendants cross-referenced each other on their official websites;
(2) Qingdao MKLP facilitated the sale of the products concerned;
(3) Qingdao MKLP manufactured the products, knowing they were not genuine Scotch Whiskies;
(4) The defendants purposely used the same exotic trade name to boost the false brand story they told about the products.
3. What civil liabilities should the defendants bear?
As the defendants’ infringement was likely to undermine the reputation of “Scotch Whisky” among the relevant public and thus cause damage to the SWA and its members, the court ordered the infringers to respectively publish statements on their official websites to reverse the ill effects, and jointly compensate for the SWA’s economic loss (reasonable expenses included) with a RMB 450,000 (USD 70,000) payment.
4. Should the infringing products be destroyed in the seizure as requested by the SWA?
The court ruled that destruction was applicable if the defendants failed to remove the infringing elements related to the SWA’s collective trademark from their products and packages within 60 days.
Collective trademarks are in many ways different from individual ones in definition and registration. They contribute to a different set of criteria for trademark protection. Based on the applied subject, collective trademarks are roughly divided into what are and what are not geographical indications (GI), while the former accounts for the majority. The plaintiff’s trademark, in this case, is the perfect example. Regarding the management and use of collective trademarks as such, Article 4.2 of China’s Trademark Law Implementing Regulations provides: in the case of a GI-made collective registration, those who do not belong to the trademark-owning organization are still able to use the mark in a lawful way when certain requirements are met. As here the determination of infringement primarily comes down to whether legitimate trademark use exists, and the acceptable way of using a trademark to “certain requirements”, the focus of this case should be how the defendants behaved around the SWA’s trademark regulations.
In its Scotch Whisky Regulations, the SWA prescribes in Chapter 2 at great length for the origin, production, and quality of Scotch Whisky. Such provisions should be abided by if anyone was to use the collective trademark. It also states that a company which does not have a membership of the SWA or a distillery which does not produce Scotch Whisky may also use the collective trademark when it purchases the product from Scotch Whisky distilleries for its own brand as long as the regulations concerned are satisfied. This is a deciding factor to say whether the defendants, in this case, were allowed to use “Scotch Whisky” without the SWA’s authorization. However, their use of the collective trademark cannot be justified because they could not prove their products were imported from Scotland or made of Scotch Whisky, neither could the products be regarded as Scotch Whisky as they fell short of the criteria prescribed in Chapter 2 of the SWA’s regulations. Hence, the defendants who were not SWA’s members could not use “Scotch Whisky” without permission. Their acts constituted an infringement upon the SWA’s exclusive rights to use its collective trademark.
The courts made their decisions relying heavily on the aforementioned Article 4.2.The grounds for legitimate use of a collective trademark thereunder had been drawn for reference throughout the examination. However, there is yet another approach that can be found in Article 12 of the Procedures for the Registration and Administration of Collective Marks and Certification Marks but went unmentioned. It is a provision dedicated to protecting collective trademarks registered with GIs for wines and spirits, stating, “Where any party uses another party’s registered geographical indication for wines or spirits as a collective mark or certification mark to identify wines or spirits not originating in the place indicated by the geographical indication in question, even where the true origin of the goods is indicated…, Article 16 of the Trademark Law shall apply.” In this case, the defendants’ whiskeys count as a type of spirit and are self-made rather than from Scotland, making their use of the SWA’sGI-turned collective trademark a violation, not to mention that they did not honestly indicate their products’ origin. As an even more severe circumstance than provided in the Procedures, the defendants’ behavior could have been determined as illegitimate and infringing by simply citing Article 12 above.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 50
16 March 2018
Inclusive Coverage of Goods Helps Standardize TM Use
Co-authors: Edmond Au, Shirley Lin
Third party Attorneys:
Kayla Sun, Eric Su from HongFangLaw
Retrial applicant (plaintiff at first instance, appellant at second instance): Suntory Holdings Limited (“Suntory Ltd.”)
Respondent (defendant at first instance, appellee at second instance): the Trademark Review and Adjudication Board (TRAB)
Third party: Zhejiang Xiang WangTechnology Co., Ltd. (“Zhejiang Xiang Wang”)
Suntory Ltd. applied for a retrial due to its dissatisfaction with the administrative judgment delivered by Beijing High People’s Court (court docket number: 2016 JingXingZhong No.2631). In this case, Suntory Ltd. disputed with the TRAB, trying to cancel the third party’s registered trademark (as below) for no use in three years, but failed. Mr. Eric Su and Ms. Kayla Sun, from HFL, represented the third party Zhejiang Xiang Wang in court. The case has been concluded now as the Supreme People’s Court (SPC) agreed with our opinions and rejected Suntory Ltd.’s retrial application.
Main arguing points with this case:
- Which are the designated goods under the disputed trademark?
- Does “drinking water” belong to the same scope as “liquid drink”?
- Can a trademark use on similar goods but out of its designated goods be deemed standard use?
- Is the Suntory Ltd. eligible to apply for a retrial?
By Suntory Ltd.’s retrial application, the TRAB, first and second instance court had all decided to maintain the disputed trademark, based on the fact that the trademark is designated on “cola; liquid drinks; solid drinks; health drinks” (the semi-colon between “cola” and “liquid drink” was omitted during extension in 2008) and the determination that using the trademark on similar products beyond the designated ones shall be the same as within them. However, the SPC later corrected the errors in the factual determination and law application, making a clarification that trademark use shall be limited to a trademark’s designated goods, and it shall not be deemed legitimate otherwise. On the other hand, the evidence and opinions given by our firm were adopted by the SPC, which identified the original and corrected “cola; liquid drinks; solid drinks; health drinks” as the designated goods, and drinking water shall belong to liquid drinks. Thus, the disputed trademark being used on drinking water was justifiable as trademark use, and on this ground, the SPC found it reasonable to maintain the disputed trademark.
In China, trademark registrations have an exponential annual growth, increasingly squeezing the available resources. Therefore, it has become more difficult to obtain creative trademarks that fit in a certain business, turning new trademark applicants often into a three-year non-use cancellation case. This situation has naturally contributed to an increase in the number of such cases. In order for a trademark to be easily canceled, evidence of trademark use should be well-managed. Besides, reviewing the SPC’s opinions, in this case, has also taught us a lesson: inclusive coverage of goods helps standardize trademark use.
It does not matter which industry an operator is in, an issue inevitably comes up: the goods or services under registered trademarks do not always match with the strategies for brand development. It becomes even more pressing when the trademark is actually in use if the goods or services bearing the trademark have not been standardized by the book. Specifically, in this case, the product “drinking water” where the trademark in question has been used is not a standard item of goods on its own, as it is included with “liquid drinks”. As a result, the disputed trademark would have been canceled if the designated goods were determined to be “cola; liquid drinks; solid drinks; health drinks” because any trademark used beyond the designated goods is not protected. For an enterprise that manufactures and sells beverages, “non-alcoholic beverages” in Group 3202 should be the most inclusive item in terms of beverages and drinks. As long as this item is included in trademark registration, the omission of other specific goods under this umbrella will not break it out of its foundations.
To sum it up, trademark registration with extensive coverage of goods can not only avoid the embarrassing situation where a trademark used on goods similar to those designated can be canceled but also help standardize trademark use.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 49
12 March 2018
Pros & Cons of Cease & Desist Letter Use
Recently Mr. Eric Su, partner at HFL, and Ms. Jessica Li, patent attorney at HFL, have jointly shared their professional views by writing an article on PATENT LAWYER magazine about the pros and cons of sending cease and desist letters, talking about another recent court case that granted Shuanghuan Auto RMB 16 million (approx. to US$ 2.5 million) in monetary compensation.
In recent years, we have witnessed several cases in which sending a Cease and Desist letter turns out exposing the right-owner to a litigation case. In the end, a person who intends to protect his/her rights may have to pay damages or face an unfavorable court decision as to the counterparty’s infringement. By exploring the Honda vs Shuanghuan Auto case, this article reviews the court decision that granted Shuanghuan Auto the monetary compensation and focuses on how to deal with sending C&D letters appropriately.
The authors have looked at the two rounds of C&D letters sent to the dealers and business partners of Shuanghuan Auto, by Honda. By also reviewing the Supreme Court opinion on the case and understanding who is entitled to make use of C&D letters, we can understand better how to approach similar cases in the future. In addition, it is important to take into consideration the right time of when to send a C&D letter, the recipient, and the contents included in it. The sending of these two rounds of letters brought different results for HONDA in terms of protection of its rights, as the timing and recipients of its letters changed. Therefore, special attention should be paid to these two factors, which led to a different duty of care in different cases.
The conclusion reached by the authors is that sending a C&D letter is an efficient and low-cost mean of rights protection. It is significantly beneficial to right-holders when used properly, protecting their rights in a timely manner without the burden of complex and tiring court proceedings. However, when sending letters parties should check in advance whether they are entitled to do so and consider what to include in those letters, regarding the timing and the target, in order to avoid legal risks in their legal action.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 48
09 February 2018
Exhaustion of the rights conferred by a trademark
Schweppes SA v Red Paralela SL, Red Paralela BCN SL
JUDGMENT OF THE COURT (Second Chamber) 20?December 2017 In Case C?291/16
Plaintiff: Schweppes SA
Defendant: Red Paralela SL, Red Paralela BCN SL (Red Paralela)
In a request for a preliminary ruling – a special procedure exercised before the Court of Justice of the European Union (CJEU), which enables national courts to ask CJEU about the validity or interpretation of the European Union (EU) law – Commercial Court No?8, in Barcelona, Spain, presented a case, which concerns the exhaustion of the trademark “Schweppes”. The sign in question is known globally and registered in many countries. It is not only registered as a European Union trademark, but it is also registered in every single EU Member State and the European Economic Area (EEA). In addition, those nationally registered trademarks are alike. Originally, all the “Schweppes” trademarks registered in the EEA (the parallel trademarks) belonged to one company. After several acquisitions, restructurings, and licences granted, the outcome was as follows: identical trademarks in Spain and in the UK were exploited by different entities, which were?also?producing the tonic water separately.
In the infringement proceedings started by Schweppes against Red Paralela regarding parallel trademarks registered in Spain, plaintiff argued that the defendants had imported and distributed in Spain tonic water, manufactured in the UK, bearing Schweppes trademark. In the plaintiff’s opinion this was unlawful because those bottles of tonic water were produced and marketed not by Schweppes or with it consent, but by another entity, which as plaintiff argues, has no economic or legal connection with the parent company group. Therefore, given that the goods and signs are identical, consumers are unable to distinguish the commercial origin of the tonic water, i.e. whether it is from the UK or Spain.
The defendants Red Paralela claimed that the trademark rights have been exhausted. In addition, they argued that legal and economic connections between the entities involved in the proceeding in their mutual utilization of the ‘Schweppes’ sign as a worldwide trademark are unquestionable.
Inevitably, the most important legal provision in this case is Article?7(1) of DIRECTIVE 2008/95/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 22 October 2008 to approximate the laws of the Member States relating to trade marks. Entitled ‘Exhaustion of the rightsconferred by a trade mark’, it provides: “The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.”
Link to the original court Judgment:?http://curia.europa.eu/juris/liste.jsf?language=en&jur=C,T,F&num=C-291/16&td=ALL
CJEU held that Article 7(1) of Directive 2008/95 does not allow the national trademark owner to oppose importation of identical goods with identical trademark that previously, in another EU country, was owned by him/her, but now belongs to a different entity in two specific cases. Firstly, when after the assignment of the trademark, he/she continues to enhance the reputation of the trademark, alone or with third parties (which also deepens the confusion among the relevant public). Secondly, when after the trademark assignment, there are economic connections between the trademark owner and the third party (which leads to control the use of the trademark, goods and their quality).
While the case is truly rooted in the EU law, especially regarding the free movement rule and intertwined exhaustion of the rights rule, some general remarks can be made.
- When administering your IP rights portfolio, regardless of what it is consisted of, one must be very careful. Very often big commercial enterprises, in order to optimize tax policies, or expand their businesses to new markets, in consequence of acquiring or selling assets or in relation to many othe revents that lead to the reshaping of the companies’ structure, fiddle with their IP rights, sometimes with detrimental results. Whether granting a licence, creating a joint venture or commercializing IP rights in any way, some exceptional precautions must be taken, with special consideration to future business plans, i.e. future markets, the degree of control over other companies, which exploit the same trademarks, regional laws, connection to the IP rights and the prevailing parallel import doctrine.
- Trademark right is very powerful, but it has many dimensions. In the case at hand, the shared care of a trademark, a very valuable asset for each party, created a unique situation.Should the different parties not care together about the trademark and cooperate in maintaining it, maybe they could oppose import of the same goods bearing the same trademark but owned by another entity.
HongFangLaw ~ Company news
06 February 2018
Chinese New Year 2018 Holidays
Please kindly be noted that we will have our public holiday for the “2018 Chinese New Year” from February 14th (Wednesday) until February 21st (Wednesday), 2018, and all cases’ deadlines for any official procedures with China Trademark Office and the State Intellectual Property Office, which fall into this period, would be officially extended to February 22nd (Thursday), 2018.
For this reason, communication via office phones might not be available on those days, and emails response might be delayed.
For urgent matters, please contact our colleagues that are working on your case, and if you need any other support, please feel free to write us:
We wish you all a very prosperous and healthy new year in 2018!
HongFangLaw ~ Chinese IP Law Updates ~ n’ 47
05 February 2018
“Wesley” should not be mistaken for “Wisely”
Bob Zhang, Eric Su from HongFangLaw
First instance judgment: (2017) J73XC No. 9152 administrative judgment affirmed by Beijing IntellectualProperty Court
Plaintiff: Zhejiang Dongli Real Estate Consulting Agency Co., Ltd.
Defendant: Trademark Review and Adjudication Board (TRAB) of State Administration for Industry and Commerce
Both the plaintiff’s trademark (hereinafter “Wesley”), adopted after a commonly used English name, and the author Mr. Ni Cong’s pen-name (hereinafter “Wisely”), which was also given to an adventure character created by him, have been written as “卫斯理”. What would happen when two 卫斯理s (“Wesley” and “Wisely”) were to be confronted beside each other by the court? As an involved party advocating for the rights to “Wesley” in the trademark dispute, HFL will unveil the whole story for you in this article.
Previously, the defendant (hereinafter TRAB) decided to block the trademark application No. 19194458 “Wesley” from being registered on the services of “Teaching; Tuition” etc. in Class 41. The plaintiff Zhejiang Dongli Real Estate Consulting Agency Co., Ltd., who unsatisfied with the registration refusal, entrusted HFL to file a lawsuit with the Beijing Intellectual Property Court, had filed the above mentioned application. The decision in question was made because the TRAB deemed that the renowned Hong Kong writer Mr. Ni Cong who literarily addressed himself as “Wisely” owned the rights to “Wesley”.
The TRAB held that the registration without Mr. Ni’s consent on “Teaching; Tuition; Practical training [demonstration]; Coaching [training]; Arranging and conducting of workshops [training]; Mobile library services; Publication of electronic books and journals on-line; providing not downloadable on-line electronic publications; providing not downloadable on-line videos,” would mislead consumers as to the origin of the services, which falls foul of Article 10.1.7 of the Trademark Law of the People’s Republic of China (“Trademark Law” in short).
Focus of Dispute
Is the application for the registration of “Wesley” in violation of Article 10.1.7 of the Trademark Law?
As the defendant provided no evident to prove that consumers perceives “Wesley” as identical to Mr. Ni Cong’s pen-name, the application for the registration of “Wesley” does not violate Article 10.1.7 of the Trademark Law. In the event of the Hong Kong author’s civil rights being infringed upon, other provisions should be cited for the remedy instead. Hence, the TRAB erred in its decision in both determination of facts and application of law while the plaintiff’s claims are well established on factual and legal basis. In its judgment, the Court supported the plaintiff by revoking the TRAB’s decision that blocked the registration of “Wesley” (TRAB’s Decision: (2017) No. 124176 Decision of Refusal Review on No. 19194458 “Wesley”).
- As an absolute prohibitive provision, Article 10.1.7 of the Trademark Law can be used to block any registration once it is deemed by trademark examiners to be infringing a right. Therefore, to avoid abusing it when other regulations should be used, examiners should take into consideration the when, where and how Article 10.1.7 should be applied. The TRAB examiners involved in this case were found to have crossed the line when HFL started to work on the case. Not only they did cite a misplaced provision, they also misinterpreted the facts. Although, Mr. Ni Cong enjoys prior rights to his pen-name “Wisely”, registering “Wesley” on goods or services that are not quite relevant with the former will not necessarily make consumers mistake the origin of the goods or services. In addition, rights to pen-names are protected as those to names, which should be regulated by the relative provision of Article 32 of the Trademark Law. In this case, remedy should be sought for by the person concerned based on his or her rights instead of the trademark authorities’ direct intervention.
- In the Supreme People’s Court’s Interpretation on “Certain Issues Concerning Trials of Administrative Cases Involving the Grant and Confirmation of Trademark Rights” that was published in early 2017, it is affirmed that the People’s Courts acknowledges claims for rights to pen-names, stages names and translated names if those names are well-known and stable enough to be used by the relevant public to refer to the specific natural person. Furthermore, prior rights and interests to names of artistic works or characters in those works are also protected by courts if they are highly recognizable, but if used by others as trademarks, which may lead the relevant public to falsely relate them or the products used by them to the right-owners. However, both rights to names and rights to characters’ names are owned by specific individuals as civil rights and interests. Generally, no social or public interests are involved, neither will their use disrupt public order. Therefore, Article 10.1.7 cannot be applied every time when a name is filed for trademark registration.
- When considering whether registering a prominent figure’s pen-name as a trademark will mix up the source of the goods or services for consumers, there are several important factors: the distinctiveness, the visibility etc. of the pen name concerned. While in this case, HFL argued for “Wesley” on the following grounds: Firstly, “卫斯理” is the direct translation of the English name “Wesley” which is a common name in foreign countries. It is not an original and exclusive use of Mr. Ni Cong. As such the Wesley trademark application is justified. Secondly, the word “Wesley” does not directly connects itself to Mr. Ni Cong. The defendant failed to provide evidence that “Wesley” and Ni Cong had a unique association between them and failed to prove that Ni Cong had a high reputation in the education industry and would cause the relevant consumers to misidentify the trademark. Thirdly, the plaintiff applied for “Wesley” trademark not with the purpose of damaging the rights of others and this act did not result in damaging consequences or undermining the rights of others. Finally, seeking protection for pseudonyms is a matter to be dealt with by other provisions and it does not require such a prohibitive and absolute one as Article 10.1.7. Therefore, the plaintiff’s application for “Wesley” in Class 41 is not deceitful or misleading and thus is not in violation of Article 10.1.7 of the Trademark Law.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 46
02 February 2018
“Ronghua” Trademark Infringement Case
Why the protection of unregistered trademark should be based on its influence in its target market
Plaintiff: Foshan Shunde Sushi Ronghua Food Co., Ltd.
Defendant: Dongguan Wing Wah Cake Shop Ltd.
被告商标/ Defendant’s Trademark
原告商标/ Plaintiff’s Trademark
Recently, the Beijing High People’s Court has delivered its second instance judgment on the dispute over the trademark infringement between Su Guorong, Foshan Shunde Sushi Ronghua Food Co., Ltd. (plaintiffs in first instance court, hereinafter “ShundeRonghua”) and Dongguan Wing Wah Cake Shop Ltd., Wing Wah Cake Shop Ltd.(defendants in first instance court, hereinafter “HK Wing Wah”). In the judgment, the Court dismisses Wing Wah’s argument that “榮華” (traditional Chinese characters of “荣华”, hereinafter “RONG HUA”) amounts to a name peculiar to well-known goods.This is because the evidence submitted by HK Wing Wah is not sufficient to prove that the sign had well-known status as an unregistered trademark or a name peculiar to well-known goods like mooncakes before Nov. 14, 1989, when Shunde Ronghua’s trademark No. 533357 “荣华” (hereinafter “Rong Hua” for disambiguation) was filed for registration.
For this reason, the Court affirms its lower court’s judgement that HK Wing Wah has infringed upon the trademark “Rong Hua” by using signs containing “RONG HUA” on similar goods such as mooncakes and desserts. On the other hand, the Court lowers the damages from the enormous RMB 15 million (USD 2,400,000) that was granted by the lower court to RMB 3 million (USD 500,000) after considering the nature, the period and the consequences of the infringement in its decision.
Analysis and the Way Forward：
The focal point of this case is how to deal with the conflicts between a previously used but unregistered sign and an officially granted trademark. Those troubles are not unheard of in such a large country like China where the same product names may coexist in different areas. And in judicial practice, conflicts of rights are rising over and over again between similar marks. To give a solution to those conflicts, legislators have amended China’s Trademark Law. Pursuant to Article 59.3 of this law, “Where, before a trademark registrant applies for registration of a trademark, another party has used a trademark that is of certain influence and is identical with or similar to the registered trademark on the same kind of goods or similar goods, the holder of the exclusive right to use the registered trademark shall have no right to prohibit the said party from continued use of the trademark within the original scope of use, however, the holder may require the latter to add a proper mark for distinguishment”. Literally, the provision can be interpreted as: in the event of any conflict, an unregistered mark used before a registered one can only prevail when it is “of a certain influence”. However, it cannot be used beyond where it has been in use. Obviously, what matters most is whether the prior mark is “of a certain influence”.
Although the provision is new, the point is familiar. Therefore, when it comes to determination, we regard it appropriate to draw reference from Article 32 of the Trademark Law: “No applicant for trademark application may infringe upon another person’s existing prior rights, nor may he, by illegitimate means, rush to register a trademark that is already in use by another person and has certain influence”. Considering that, judges and examiners might think they have more discretion when determining what amounts to a trademark “of a certain influence”, and it gives prior trademark users a relief opportunity to support their claim that their goods did not constitute infringement.
Regarding the case at hand, while HK Wing Wah was able to establish substantial use of “RONG HUA” before “Rong Hua” was registered, “certain influence” thereof was not proved due to insufficient evidence. Thus, in this regard, the Court did not support HK Wing Wah’s claim. Trademark owners and users have a big lesson to learn from this case. As China improves its trademark administration system, it is moving from a lopsided protection of registered trademarks to a more holistic approach, giving more attention to prior users. This can reduce lawful but unreasonable judgments on trademark infringement that deprive the genuinely entitled users of their rights. At the same time, right-owners should raise their awareness of how they could use their trademark and invest more into it. What matters most is not the fact that a trademark has been used. It must be used profusely, because it is the key to acquire well-known status by a trademark when it cannot be registered at the time. Meanwhile, relevant evidence of trademark use should be gathered and preserved in advance to help secure a victory in any future dispute.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 45
29 January 2018
Sulwhasoo vs. Sulansoo Trademark Case
Confusing similarity of “XUE LIAN XIU” and “XUE HUA XIU” on cosmetics products was determined by the first instance court
Karen Hao, Eric Su from HongFangLaw
First instance judgment: (2016) H0115MC No. 86694 Civil Judgment
Plaintiff: AMOREPACIFIC CORPORATION
First Defendant: Shanghai Wei Er Ya Cosmetics Co., Ltd.
Second Defendant: Shanghai Wei Er Ya Daily Chemicals Factory
The plaintiff AMOREPACIFIC CORPORATION owns trademark rights to “Sulwhasoo” and its Chinese equivalent “雪花秀” (“XUE HUA XIU”) registered in Class 3. The trademarks have acquired quite a reputation in the cosmetics market after being constantly and broadly promoted and used in Mainland China. On the other hand, the defendants are respectively the distributor and manufacturer of the Sulansoo/雪莲秀 ( “XUE LIAN XIU”) cosmetics, on which both English and Chinese trademarks in question are used.
Pursuant to Article 57.2 of the Trademark Law, “Using a trademark that is similar to a registered trademark on the same goods, or using a trademark that is identical with or similar to the registered trademark on similar goods without the licensing of the registrant of the registered trademark, which is likely to cause confusion” is deemed as an infringement of the exclusive right to use a registered trademark. In this provision, “likely to cause confusion” requires only the possibility of misleading the consuming public over the goods’ origin or their relevance with a plaintiff’s products on which a registered trademark is used.
In this case, HongFangLaw supported the plaintiff AMOREPACIFIC CORPORATION in winning over the first instance court. Recognizing the visibility of “XUE HUAXIU” on cosmetic products, court has determined that the similar goods manufactured and sold by the defendants are likely to confuse the relevant public as they bear the signs similar to the plaintiff’s registered trademarks. It is a case worth studying.
- Regarding the similarity between the Defendant’s “XUELIAN XIU” and the Plaintiff’s “XUE HUA XIU”. The signs are identical in word composition except the middle Chinese characters “莲” (“LIAN”) and “花” (“HUA”), but they are also similar, sharing the element “艹” (related to flora) on the top of a paralleling bottom part with the same font. In addition, the defendant’s sign also follows suit when the plaintiff stylizes “XUE HUA” and “XIU” in different ways to section the three-character trademark. After comparing the signs separately and together, the first instance court delivered the above conclusions and thus found Defendant’s “XUE LIAN XIU” and Plaintiff’s “XUE HUA XIU” signs similar without much difference.
- Regarding the possibility of confusion of Defendant’s and Plaintiff’s products. While the products do differ in how much they are priced and where they are sold, it is still possible for consumers to relate the Defendant’s commodities in some way to the Plaintiff’s when seeing similar signs, considering the popularity of the latter. Such utilization of the Plaintiff’s fame would contribute to an unfair advantage for the Defendant’s offerings over products of their like. It is plain that the coexistence of Defendant’s and Plaintiff’s products causes confusion among the consuming public.
- On the above grounds, the first instance court held that the Defendant’s use of signs similar to the Plaintiff’s registered trademarks on the same or similar goods is an intentional act to capitalize on the Plaintiff’s famous trademarks and is likely to confuse the relevant public. Hence, the Defendant’s conduct constitutes infringement of exclusive trademark rights.
- Factors to be considered when judging trademark similarity are: the fame of the cited trademark and the defendant’s other attempts of imitation (e.g. slogan, packages etc.) in addition to the similarity per se. Such aspects weigh significantly when court deals with trademark infringement and looks at whether the disputed and the cited trademarks are similar in the meaning of the Trademark Law. Moreover, according to our experiences in practice, products or services on which the trademark in question is used also matter. It is because the likelihood of confusion varies as consumers pay different attention to different products. For example, goods affecting life and health or costing a larger sum such as real estates or automobiles, or printed with bigger signs generally attract more attention. Therefore, even if the signs themselves are similar, they are still allowed to coexist when their target consumers tend to be more cautious as in the case of car brands and . Another opposite example can be seen when dealing with watch brands, because the logo printing area in the watch dial itself is relatively small, minor differences are imperceptible to the normal public and are likely to cause confusion and misidentification.
- Factors to be considered when judging the likelihood of confusion are: the registered trademark’s distinctiveness and reputation, the intention of the defendant, the extent of attention given by the consuming public, evidence of actual confusion along with other relevant factors and their influence on each other.
- Regarding the damages from intellectual property infringement: where the plaintiff fails to establish his losses or the defendant’s profits. Article 16.2 of the Supreme People’s Court’s Interpretation on Several Issues Concerning the Application of Law in Trial of Civil Trademark Dispute Cases applies: “When a people’s court is determining the measure of damages, it should make an overall determination having considered factors such as the nature, the period and the consequences of the infringement, the reputation of the trademark, the amount of trademark licensing royalties, the types, periods and scope of trademark licenses for the mark, the reasonable expenses incurred in stopping the infringement etc.” For this reason, rights holders should consider gathering evidence in a number of ways and note as many of the features of the product concerned as possible, for example, the full list of products and production operations of the defendants, including any kind of infringement episodes, duration of those, implication of the product (such as harm done to the public), the price of the product, and many other kinds of categories and variety of factors. The plaintiffs has the duty of the full burden of proof at trial, in order to facilitate the court, having conclusive evidence will support a higher amount of compensation at the time of the verdict.
HongFangLaw ~ Event Updates Sharing
26 January 2018
CBBC-QBPC IPR Owners Meeting
We are pleased to share the news that on January 19th, 2018, China-Britain Business Council (CBBC) jointly with QBPC (Quality Brand Protection Committee) hosted in Shanghai an IP Rights Owners Exchange Meeting on enforcement against logistics industry and express delivery companies.
QBPC is registered under the China Association of Enterprises with Foreign Investment (CAEFI) in order to contribute facilitating and promoting continuous improvements of administrative and judicial protection for intellectual property in China.
Tom Duke, IP Attache of the UK Embassy in China, and Mick Ryan, Director of IP and Business Environment of CBBC, gave the audiences the opening and closing remarks and chaired the event.
Our Partner, Zhang Xu, participated to the event on behalf of one of our clients, member of CBBC, and gave a speech focusing on IPR challenges in logistics/couriers. Beside the IPR issues, the event went for a brief introduction to Chinese logistics industry and express delivery companies’ business model as well as their business and working procedures. Closing the event was QBPC’s sharing their experiences and challenges on enforcement with express delivery companies.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 44
22 January 2018
TM Law Protection on Deceased Celebrity’s Name
How TM Law Protects Deceased Celebrity’s Name from MICHAEL JACKSON to MONET
(2017)SBYZ No. 0000041130 Decision on Disapproval of Trademark Registration of No.16677034 “MONET GARDEN”
Opponent: Académie des Beaux-Arts
Case Handled by:
Kayla Sun, HongFangLaw
被异议商标/ Opposed Trademark
异议人引证商标/ Cited Trademark
Issues over how rights to the names of famous people, especially of the ones who already passed away, should be protected by the Trademark Law in administrative procedures have been dealt with in the opposition against the “MICHAEL JACKSON” trademark. The Trademark Office blocked its registration, citing Article 10 of the Trademark Law that provides for an absolutely prohibitive scenario: signs that are likely to cause public confusion or have other ill effects shall not be used as trademarks. However in the “MONET” case, the Trademark Office instead resorted to Article 30 of the Law in its disapproving decision, showing a more cautious approach towards the absolute provision. Similar, but more direct elaboration on applying Article 10 to protect the name of a deceased famous person can also be seen in the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Administrative Cases on Granting and Affirming Trademark Rights.
During the opposition procedure, our IP consulting company under HFL has succeeded in winning over the Trademark Office and blocking the opposed trademark MONET GARDEN registration for Académie des Beaux-Arts.
According to the official decision, the opposed trademark and the cited trademark constitute similar trademarks on similar goods on the grounds that, “MONET” is perceived by the public to be the renowned painter Oscar-Claude Monet in both of the trademarks, especially when the element is highly noticeable in the opposed one. Besides, they are designated on goods sharing similar use and functions, sales channels and target consumers, therefore likely to cause confusion and mistake when they are both present in the market. Despite the favorable decision, the opponent’s other reason went unsupported. It challenged the opposed trademark on its infringement of the respondent’s right to the name and to its commercialization based on the aforementioned Article 10.
However in the “MICHAEL JACKSON” case in 2015 where Article 10.1.7 and 10.1.8 were cited, the Trademark Office held that the trademark in question should not be registered because it was possible to mislead consumers to relate the designated goods “backpacks” to the legend singer Michael Jackson who had been widely known in China before the trademark filing and thus could cause undesirable impacts (Decision on Disapproval of Trademark Registration of No.11777656 “MICHAEL JACKSON”).
- It is not difficult to figure out from the above two cases that the Trademark Office has grown more prudent on the application of Article 10 of the Trademark Law despite the similarity of the two cases. Once supportive of opposition for inappropriate relevance to household names, it now turned against the opponent’s argument that “the opposed trademark is possible to mislead consumers to relate the designated goods under ‘MONET GARDEN’ to the famous painter Oscar-Claude Monet”. The shift in the Trademark Office’s attitude was contributed by another fact: In yet another opposition review case involving “WEI XIN”, which means WeChat, the Beijing Supreme People’s Court further clarified the “ill effects” in Article 10.8 as “passive and negative impacts on social interests and order concerning politics, economy, culture, religion and ethnicity”. The narrower interpretation has limited the application of Article 10. As a result, the Trademark Office eschewed the article but resorted to confirmation of trademark similarity based on possible confusion when faced again with relevance between the opposed trademark and the name of the famous deceased.
- Note-worthily, there is still an open window in Article 5 of the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Administrative Cases on Granting and Affirming Trademark Rights that, “Where a trademark sign or its constituent elements may cause passive and negative impacts on the social and public interests and public order of China, the people’s court may determine that it falls under the circumstance of “having other ill effects” as prescribed in Article 10.1.8 of the Trademark Law. Applying for registration of a name of a public figure in the political, economic, cultural, religious, ethnic and other areas as a trademark falls under the circumstance of “having other ill effects” as prescribed in the preceding paragraph.” Highlighting the names of public figures, the provisions have been effective since March 1, 2017. Given such guidance, the Trademark Office and the Trademark Review and Adjudication Board might as well cite Article 10 when dealing with infringement on names of deceased public figures in a more proactive spirit so as to render ever more sufficient and powerful protection in this regard.
HongFangLaw ~ Chinese IP Law Updates ~ n’ 43
11 January 2018
Invalidation of the “PRINS” preemptive trademark
Trademark Rights Confirmation case based on the application of Trademark Law art. 32 [“copyright” as a “prior right”]
TRAB Decision: SPZ  No. 0000114762 on the Application for Invalidation of No.13042896 “PRINS” Trademark
TRAB Decision: SPZ  No. 0000114765 on the Application for Invalidation of No. 13042897 “PRINS” Trademark
Applicant: Verkade Veenendaal B.V.
Respondent: Zhuhai Duopu Kang Food Science and Technology Co., Ltd. (referred to as “Duopu Kang”)
Case Handled by:
Kayla Sun, HongFangLaw
Applicant Prior Mark
In many cases, for determining whether a copyright is considered as a prior right for trademark opposition and invalidation, the standards of trials run by the Trademark Office and the TRAB differ from one another. In the latest judicial interpretation of how to determine trademark rights, during the trademark application, prior copyright evidence is clearly taken into consideration. Yet currently, how the Trademark Office, the judges, and the court apply the law in this situation remains divisive. In this particular case, the TRAB took as an important evidence of copyright ownership the “Benelux trademark application records” and the “Global Trademark Application” of the design works of the applicants, instead of limiting the evidence to “design of manuscripts, originals, acquisition of rights contract” and so on. Compared with precedents, this is an important breakthrough in this case, reflecting the TRAB’s position on whether trademark applications can be evidence of copyright ownership.
In the invalidation procedure of this case, HongFangLaw, assisting Verkade Veenendaal B.V. with the support of the Trademark Review and Adjudication Board, successfully invalidated the trademark registrations stolen by Duopu Kang, also a pet product manufacturer.
The TRAB holds that:
The proof of ownership, works specification, designer’s statement, Benelux trademark application and global trademark application registration, and the evidence of the work published, prove that the PRINS design owned by Verkade Veenendaal B.V., is in line with China’s “Copyright Law” provisions of the work of originality requirements. The recently applied controversial trademark and the original graphic logo copyright of the applicant display several relevant similarities, with its composition of the elements involved, and its overall appearance. Considering then, that the respondent did not submit evidence to prove that it had the prior right to the trademark during the dispute and did not state any reasonable source of creation, it should be concluded that the applicant’s earlier copyright was infringed upon.
- Currently, in many cases copyright is judged on whether it counts as a prior right for trademark opposition and invalidation, the standard trial application of such consideration from the Trademark Office and the Commercial Judging Committee is usually diverse. Taking into account the ownership of copyright contains a certain degree of difficulty, and the Trademark Office and the TRAB’s rarely decide based on copyright infringement in administrative confirmation of trademark rights, this case is a significant breakthrough in that sense. It’s also interesting to note that, the important evidences of the ownership of copyright by foreign companies and the fact that the “Benelux trademark application records and the application of global trademark applications” where considered in the ruling, helped conclude that ownership can be proved by more than “design draft, the original, the right to obtain the contract” and so on. Compared with the previous precedents, there was an important breakthrough in this case.
- Article 19 of the Regulations on Several Issues Concerning the Trial of Administrative Cases Involving the Granting and Confirmation of Trademark Rights states in the latest version that: “… Where a trademark representation constitutes a work that is subject to copyright protection, and a party provides design drawings, original documents, contracts for the acquisition of rights, and copyright registration certificates from before the application date for the disputed mark, etc., involving the said trademark representation, these can all be used as ‘prima facie’ evidence of copyright ownership.” It is also clear from the legislation that “trademark gazettes, trademark registration certificates”, i.e., trademark application records, can be used as preliminary evidence in determining whether a trademark applicant is entitled to claim copyright, which greatly increases the possibility of identifying a copyright owner. Of course, when examining and hearing the case, it is necessary to combine the