Chinese IP Law Updates
June 29, 2018

Interpretation and determination concerning Article 10.1.7 of the Trademark Law

Co-authors: Mandy Wang, Shirley Lin

Parties Concerned:

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

Case Overview:

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.

HFL Comments:

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.

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