Xia Junli – Judicial Policies for Prevention of Bad Faith Trademark Registration

Part II

Editor’s Note: This is a translation summarizing the speech by Xia Junli, presiding judge at the Supreme People’s Court’s Intellectual Property Division, at the 2017 annual meeting of the China Intellectual Property Law Association. The speaker herself has approved the content of this article. This article was originally published in Chinese by the Wechat public account: zhichanli. Link to the original here.

Part I of our translation can be found here.

Let us explain?the application of Article 15. It is clarified in the (2013) Zhi-Xing-Zi No. 97 Judgment that anyone who is complicit in preemptive trademark registration with a procurator/representative shall be deemed a procurator/representative as well; complicity in such behavior could be determined with respect to the person’s relationship with the procurator/representative depending on the actual circumstances.

In the (2014) Xing-Ti-Zi No. 3 Judgment, the SPC highlights how Article 15 should apply. It is clearly pointed out that the application of Article 15, which describes a situation where a procurator/representative registers in his/her name a trademark of the principal, shall fulfill the following conditions: the applicant and the opposing party are engaged in procuration/representation; the disputed trademark is owned by the filer; the goods or services at issue are similar; the procurator/representative violates the principle of good faith in registering the disputed trademark in his/her name without authorization.

Procuration/representation is a special legal relationship concerning trust. Thus a procurator/representative should be dedicated to prioritizing the principal’s interests for his/her duty of faithfulness and diligence therein. Article 15 does not necessarily require prior use of a trademark when applying in such a special relationship for the purpose of protecting the filer based on the principle of good faith. The procurator/representative should be faithful and diligent and resist from bad faith registration as long as the trademark is owned by the filer. The Article also includes no requirement of commercial use by the filer of the trademark. This case perfectly illustrates how Article 15 applies.

Let us?explain?the “improper measures” section stipulated in Article 31. The idea has already been defined in the (2013) Xing-Ti-Zi No. 11 Judgment: the party who requests for cancellation of the disputed trademark pursuant to Article 31 should prove two matters. 1. The party has used the same/similar trademark on the same/similar product and the use has left some influence on the public before the date of filing for the disputed trademark. 2. The applicant is applying for the disputed trademark “mala fide” to take advantage of the opposing party’s goodwill. Generally, presumption that the applicant has malicious intention to benefit from others’ trademarks and goodwill can be made when he/she is known filing for registration while “aware of” or “should be aware of” the fact that the trademark has been previously used and left some impact.

However, it is also likely that the applicant is not in bad faith despite the prior trademark’s influence. Our country’s Trademark Law values the principle of “Applicant First”, so it should not be inferred that “common users are supposed to be joint rights holders” without support of other laws or an existing contract. The disputed trademark registration in this case should not be cancelled for it constitutes no infringement on existing legal rights or violation of the principle of good faith.

Let us?explain the “some impact” section stipulated in Article 31. In (2013) Zhi-Xing-Zi No. 80 Judgment it is further illustrated that “some impact” for the purpose of Article 31 should be deemed as a legal effect caused by continuing use of a trademark, and “prior rights” should be the rights existing till the filing of the disputed trademark. A long hiatus in use of a commercial mark will undermine its fame and influence, that Article 31 requires of an unregistered trademark, and in the end render it ineligible for the stipulated “prior use” and “some impact”, or any “prior rights”. In this case, registration of the disputed trademark will not violate the principle of good faith.

Now let’s explain Article 41. As has been defined in the (2013) Zhi-Xing-Zi No. 41 and No. 42 Judgments, to obtain registration by other improper measures for the purpose of Article 41 Paragraph 1 refers to seeking for registration by disrupting administrative order, impairing public interests, or appropriating public resources other than adopting deceptive measures in a way to exploit improper gains. Civil subjects should apply for registration of trademarks based on the intention to use them so that the application can be justified as reasonable and legitimate. In this case, the involved party, Mr. Li, tried to register a number of preemptive trademarks related to Haitangwan Resort District and other relevant projects under construction, taking advantage of their influence inflated by governmental organs. In addition, Mr. Li also hoarded other trademarks in the same way for no reason. The lack of good faith intention in him failed to justify his behavior, which could be seen as appropriation of public resources and disruption of registration order.

The “Jordan” case, (2016) Zui-Gao-Fa-Xing-Zai No. 27, is not to be missed here. The case highlights that business success and market order established on the basis of bad faith operation are not eligible to sustain the registration of a trademark because they have exploited the mistake in identifying the trademark made by the relevant public to some extent. To support such business achievement or market order will prove detrimental to the rights holder in protecting his name. Worse still, it would pose adverse influence on securing consumers’ interests and purifying the environment for trademark registration and use.

(to be continued)

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