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

Concerned Parties

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”)

Introduction

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.

Case Overview

Main arguing points with this case:

  1. Which are the designated goods under the disputed trademark?
  2. Does “drinking water” belong to the same scope as “liquid drink”?
  3. Can a trademark use on similar goods but out of its designated goods be deemed standard use?
  4. 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.

HFL Comments

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.

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