Supreme Court Interpretations on Handling Disputes Between Registered Trademarks, Enterprise Name and Prior Civil Rights

At present, these conflicts are between registered trademarks, registered trademarks and enterprise names, registered trademarks and copyright, as well as non-standard use of registered trademarks and names of enterprises using overseas registered enterprise names inside China. The settlement of these conflicts will not only protect legitimate rights and interests of the related parties, but will also stop unfair competition, as well as meeting the urgent requirements for standardizing the market order.

In recent years, the courts in China have conducted in-depth research in hearing cases concerning conflict between different kinds of rights and accumulated related experiences. Hence, the Supreme People's Court has issued the Provisions with the aim to further handle such disputes and unify the judicial standards.

Introduction and Key Points of the Regulations

Main Contents of the Regulations

Article 1 and Article 2 of the Provisions mainly stipulate the scope of admission of such kinds of disputes and civil liabilities. With respect to the scope of admission of cases by the court, the Provisions set-out the following situations: the letter and design of a registered trademark infringes upon others' prior rights; the use of trademark is beyond the designated scope or the user changes the main characteristics of his registered trademark or splits the trademark, which causes conflicts with prior registered trademarks; the enterprise's name is identical or similar to a prior enterprise's trademark, which shall cause confusion among the consumers. Article 3 of the Provisions stipulates the governing law to cases of IP rights disputes. Article 4 of the Provisions stipulates the civil liabilities constituting unfair competition or infringing upon exclusive trademark rights by the enterprise's name. In the case that an enterprise's name is accused of infringing on exclusive rights of registered trademarks or constituting unfair competition, the court, in accordance with the law, shall require the defendant to stop using the name or standardize its use.

Admission to the Cases on Conflict Between Registered Trademark and Prior Civil Rights

The prior civil rights herein include copyrights, design patent rights, and rights of an enterprise's name. It is a civil infringement to use others' works, including letters and designs, in trademark registration without permission. These kinds of cases will be admitted by the court.

With regard to cases involving conflict between two registered trademarks, current trademark law sets up resolution procedures for trademark disputes, and parties may obtain appropriate relief through such procedures. In the case that any party is not satisfied with the judgment, the party should bring administrative litigation to the court. Currently, the court will not treat such disputes as civil infringements. Furthermore, the criterion on judging trademark similarity is flexible. The governing principle might not be unified when such a dispute is admitted by civil procedure law. Hence, it is not easy to avoid the tendency of local protectionism, as well as being not conducive to safeguarding the trademark registration system. In view of this, Article 1(2) stipulates that in the case that a plaintiff brings a lawsuit to the court on the basis that another's registered trademark is identical or similar to its prior registered trademark, the court shall, in accordance with Article 111(3) of the PRC Civil Procedure Law(中华人民共和国民事诉讼法), inform the plaintiff to seek a solution from the competent administrative authority.

Unauthorized Registration and Use of Famous Brand Names

Due to the fact that enterprise names are also registered, it is controversial as to whether this type of dispute should be admitted by the court. Hence, the legitimate interests of rights-holders cannot obtain timely protection. The PRC Anti-Unfair Competition Law holds that using another person's or enterprise's name in a way that causes confusion among the public on the origin of the product shall constitute unfair competition. Therefore, Article 2 of the Provisions stipulates that the plaintiff should bring a lawsuit on the basis that others have used its previously-registered enterprise name and have caused confusion among the public on the origin of products, which violates Article 5(3) of the PRC Anti-Unfair Competition Law. If such a lawsuit is in line with Article 108 of the PRC Civil Procedure Law, the court should accept it.

Article 2 of the Provisions presents a guideline to the parties on bringing a lawsuit, as well as providing a legal basis for the adjudication of cases.

Confirmation on Cause of Civil Rights Conflicts and Governing Law

“Cases on conflict between trademarks, enterprise names and prior civil rights” is the common feature of such disputes, which do not reflect the property of their legal relationship. Therefore, such conflicts should not be treated as a cause of legal action. Furthermore, the newest regulations on causes of legal actions issued by the Supreme People's Court have comprehensive provisions on various types of intellectual property cases. Thus, the court shall, in accordance with the plaintiff's claim and the nature of civil relationship, confirm the cause of legal action and apply the law accordingly. For example, in cases where such disputes concern the infringement of exclusive rights of trademark, trademark law should be applied; in cases of unfair competition, anti-unfair competition law should be applied.

Civil Liabilities of the Accused's Enterprise Name Constitutes Unfair Competition or Trademark Infringement

Based on the PRC General Principles of Civil Law and other relevant laws, depending on the circumstances of the cases, the court may order economic compensation and other methods of enforcing civil liabilities. However, in addressing the view of that improper use of an enterprise's name should be corrected in such cases, and in order to stop infringement, Article 4 of the Provisions stipulates that the court shall require the defendant to stop using others' enterprise name or to correctly use the name. “Correctly use” mainly aims at prominent use of famous enterprise names. The court shall order the accused to use the name within a provisional scope and not to use it prominently.

Enactment of the Provisions

According to Ning Wanglu, the director-general of the Fair Trade Bureau of the State of Administration of Industry and Commerce of PRC (SAIC), the enactment the Provisions provides a persuasive legal basis for hearing such cases in the future. He also pointed out that the Provisions would greatly support the SAIC's actions in handling unfair competition cases.

In 2007, the SAIC took tough action against unfair competition activity in the form of illegally using a famous brand name. In the case of Henan Wal-Mart Beverage Co., Ltd, the SAIC ordered it to immediately cease the use of “Wal-Mart” in its products. With regard to its registered trademarks in Class 32 and 33 of the designated commodity, they are permitted to use products made before the SAIC delivered its decision on revoking their registration, but are prohibited from further use of the name. The SAIC's order is consistent with civil liabilities of cease use and standardize use, which are stipulated in the Provisions. According to the Provisions, if using an enterprise name constitutes trademark infringement, the court shall order the infringer to stop using the name, or to use the enterprise name within a certain scope and restrictions.

Liu Jixiang, judge of the Beijing Higher Court, considered that the implementation of the Provisions is the key. It is important to have smooth communication between administrative authorities and the court, which will serve as the basis for effective implementation of the Provisions.

To sum up, the implementation of the Provisions will greatly support the SAIC's actions against illegally using famous brand names. In particular, the Provisions will serve as a supplement to the current PRC Anti-Unfair Competition Law as well as providing a more specific legal basis for handling cases on conflict between intellectual property rights. Finally, it should be emphasized that communication and coordination between judicial organs and administrative organs shall be crucial in order to have effective IP protection.

*About the Author

Mike Chen specializes in IP litigation and dispute resolution. He counsels clients on IP litigation in a wide range of industries, including mechanical engineering, electrical and electronic engineering, telecommunication, chemistry and biotechnology. After graduating from Beijing Mechanical Engineering University with a Bachelor of Science degree in Mechanical Engineering, he gained his Bachelor of Law degree from University of Political Science and Law of China in 1995. He has served as a judge at the Intellectual Property Tribunal of Beijing First Intermediate Court and later served as legal counsel for Beijing Founder Electronics Co Ltd, where he successfully litigated the famous Trap Evidence Collection case. In 2004, Chen obtained his Master of Law degree from London Metropolitan University in the United Kingdom. He then joined Kangxin Partners, and became a partner at Kangxin in 2008.