The language in Article 5.2 of the Provisions is clearly consistent with the SPC's declared goal of deterring bad faith registrations. In the past few years, the economic value associated with the names of many public figures have skyrocketed. As a result, numerous trademark squatters have been filing applications for the marks identical or very similar to public figures' names with the hope of profiting from the influence that these well-known individuals have with consumers. In some cases, the figures only became aware of the trademarks five years after registration, making them largely powerless against the squatters. Article 5.2 may allow these individuals to fight back and take control over their names regardless of when the marks were registered. This change would thus benefit both the public figures and the consumers who would associate the figures with products bearing their names.

Protection of well-known trademarks

The owner of a registered or unregistered prior trademark often needs to claim for well-known status to obtain broader protection against a later registration, thus putting the reputation of the trademark at the center of the dispute. This issue spans four separate articles in new Provisions: Articles 12, 13, 14 and 25–more than any other individual topic–indicating its importance to the SPC. These articles would certainly provide better guidance to litigants in future cases.

When determining whether an unregistered well-known trademark can prevent later registration of another mark, Article 12 provides that the court should consider the similarity of the two marks, the similarity of the classes of commodities for which both marks are registered, the distinctiveness and popularity of the unregistered well-known trademark, the level of the relevant public's attention, and other related factors. According to the SPC, Article 12 adopts a balancing test with each of these factors considered on a sliding scale. For example, if the prior unregistered well-known trademark has a high degree of distinctiveness and popularity, the later mark that is not very much similar can potentially cause confusion. The SPC also commented that the legal standards articulated in Article 12 would be applicable for situations involving potential conflicts between a trademark registration and other forms of prior right, such as that of trade names or registered trademarks.

It also worth noting that Paragraph 2 of Article 12 provides two “reference factors” for determining the likelihood of consumer confusion: the intention of the trademark applicant and evidence of actual confusion. While the subjective intent of the trademark applicant has been frequently questioned, the argument has generally been framed in relation to the principle of good faith. Article 12 explicitly allows the litigants to argue that consumer confusion becomes more likely if the disputed trademark is registered in bad faith. However, due to the evidence rules, litigants may have to largely rely on circumstantial evidence to prove the intent of the opposing party behind the trademark filing. In light of this practical issue, Article 25 of the Provisions allows the court to find “bad faith registration” under the circumstances in which the prior trademark has high popularity and the applicant of the later mark does not have a reasonable explanation for the similarity. Considering that several recent decisions have signaled the SPC's willingness to determine bad faith registration based on circumstantial evidence, the subjective intent of the trademark applicant may become a key contested issue in certain cases.

In addition, Article 13 of the Provisions sets forth another balancing test of five different factors for determining whether a trademark registration conflicts with a prior registered well-known trademark. According to judicial practice, a registered trademark will be recognized as well known if it is necessary for the adjudication of the case and the recognition would be effective only for the purpose of the underlying dispute.

Other forms of prior rights

Article 32 of the Trademark Law categorically prohibits registration of trademarks that may infringe upon the prior rights of another. The 2010 Opinions define the scope of prior rights broadly, covering all forms of rights protected under laws such as the General Principles of the Civil Law. In recent years, various forms of prior rights have been asserted in trademark administrative cases, and courts require a unified standard in cases arising from Article 32 of the Trademark Law.

Article 19 through Article 22 of the 2017 Provisions address the prior rights most commonly asserted in trademark administrative disputes: copyrights, naming rights, trade name rights, and rights over the name of, or a character in, a copyrighted work. The legal standards in these articles in fact have been established by the SPC through a series of recent decisions.

A copyright owner often has difficulty in proving ownership when asserting its prior copyright against registration of a trademark due to poor record keeping. This problem can be mitigated by Article 19 which lists the type of evidence that can be used to prove copyright ownership. According to this article, in addition to the transcript, the original copy of the work, relevant contract and copyright certificate, the relevant trademark publication and registration certificate for the trademark incorporating the copyrighted work can also be used as preliminary evidence of copyright ownership.

Article 20 deals with the protection of prior naming right. Paragraph 1 provides that the naming right of a person is harmed by trademark registration if the relevant public would consider the trademark refers to the person or likely believe that products bearing the trademark have a special relationship with the person. Paragraph 2 identifies a three-pronged test for determining whether a person is entitled to protection over his or her name: 1) the particular name has certain popularity; 2) a stable association is established between the particular name and the person; and 3) the public refers to the person by the particular name. Similarly, the protection of a company name under Article 21 of the new Provisions also requires the proof of the company name's popularity and the relevant public's confusion.

Article 22 introduces the so-called merchandising right, which covers work that may not be subject to copyright protection, such as the name of a copyrighted work or the name of a character in the work. The party asserting this right would need to prove the name has achieved a relatively high degree of popularity and that the relevant public is likely to believe the products bearing the trademark have a special relationship with the owner of the merchandising right. This appears to have set up a more stringent standard compared with the protection of a person's name or a trade name under Articles 20 and 21. It is also worth noting that the SPC pointed out in its announcement that courts should be careful in adjudicating trademark administrative cases relating to merchandising rights and be mindful of both the interests of the prior right owner and the public to gain access to the copyrighted work through the names. It would be interesting to see the detailed legal standards that courts should develop in merchandising right cases.

The new Provisions signal the SPC's clear attempt to clarify the legal standards in trademark administrative cases and deter trademark squatting and bad faith trademark registrations. Further actions are expected from the SPC and other leading courts in judicial law making in the areas of trademark and other IP laws.

Fang Qi, Partner
Fangda Partners
Beijing

The Provisions on Several Issues Concerning the Trial of Administrative Cases Involving the Granting and Confirmation of Trademark Rights (Provisions) released by the Supreme People's Court (SPC) on January 11, 2017 is likely the single biggest legal development in the trademark regime since the PRC Trademark Law was last amended in 2013. The SPC has taken the unusual step of announcing five recent decisions by itself and the Beijing High Court in which the courts' analyses and reasoning are consistent with certain sections of the Provisions. These cases combined with the SPC's announcement would be helpful for understanding the Provisions and also indicate the SPC's focus on its application in trademark administrative cases.

According to the announcement, the Provisions serve two key goals that would be welcomed by scholars and commentators. They intend to clarify legal standards in different areas of the law governing trademark procurement and opposition/invalidation, as well as deter trademark squatting and bad faith registrations. Due to their importance, the Provisions are expected to provide important guidance for future trademark-related disputes. But there are nonetheless a number of unresolved issues, and it remains to be seen how they will be addressed by the courts.

Invalidation grounds

The interpretation of Article 10.1.8 of the Trademark Law in Article 5 of the Provisions has gained wide attention since its release. This is because Article 10.1.8 has become a popular vehicle for petitioners in invalidation actions against the trademarks that are registered for over five years. As the grounds for invalidation against over-five-year-old trademarks are limited under the Trademark Law, the petitioners frequently resorting to Article 10.1.8 as a ground for invalidation, arguing that the registration has negative influence on the public interest and public order. In practice, the judicial decisions have been largely inconsistent in the application of Article 10.1.8.

Prior to the Provisions, the SPC's 2010 Opinions on Several Issues Concerning the Trial of Administrative Cases Involving the Granting and Confirmation of Trademark Rights (2010 Opinions) define “negative effect” to include any adverse impact on political, economic, cultural, religious, ethnic and other public interests or the public order. While the list is extensive, it in fact makes the application of the 2010 Opinions problematic in the relevant cases, especially in situations where a public figure's name is registered as a trademark without the public figure's knowledge or consent, as it is frequently debated whether such registrations can cause negative effects not only on the public figure personally, but also on the public at large. For example, in the 2011 Deng Yaping case, while the Beijing High Court held that the registration of “亚平 and device” on ping pong paddle products may cause confusion among relevant consumers, it nonetheless deemed there was no negative effect on the public under Article 10.1.8. However, in a similar instance in the 2016 Li Xiaolong case, where “Li Xiaolong” (the Chinese name of martial arts movie star Bruce Lee) was registered on juice products, the Beijing High Court held that the registration would have a negative effect on the public interest and order due to consumer confusion.

The 2017 Provisions appear to have filled in the gap. Article 5.2 specifically provides that “the registration of trademarks of the names of public figures in areas such as politics, economic, culture, religion and ethnicity” constitutes “negative effects” under Article 10.1.8. This provision is expected to make it easier for public figures to bring Article 10.1.8 claims for invalidation against a registered trademark that infringes upon their name, in particular when the figures are in the fields of entertainment or sports who may not point to the supposed harm on national interests or state images.

The language in Article 5.2 of the Provisions is clearly consistent with the SPC's declared goal of deterring bad faith registrations. In the past few years, the economic value associated with the names of many public figures have skyrocketed. As a result, numerous trademark squatters have been filing applications for the marks identical or very similar to public figures' names with the hope of profiting from the influence that these well-known individuals have with consumers. In some cases, the figures only became aware of the trademarks five years after registration, making them largely powerless against the squatters. Article 5.2 may allow these individuals to fight back and take control over their names regardless of when the marks were registered. This change would thus benefit both the public figures and the consumers who would associate the figures with products bearing their names.

Protection of well-known trademarks

The owner of a registered or unregistered prior trademark often needs to claim for well-known status to obtain broader protection against a later registration, thus putting the reputation of the trademark at the center of the dispute. This issue spans four separate articles in new Provisions: Articles 12, 13, 14 and 25–more than any other individual topic–indicating its importance to the SPC. These articles would certainly provide better guidance to litigants in future cases.

When determining whether an unregistered well-known trademark can prevent later registration of another mark, Article 12 provides that the court should consider the similarity of the two marks, the similarity of the classes of commodities for which both marks are registered, the distinctiveness and popularity of the unregistered well-known trademark, the level of the relevant public's attention, and other related factors. According to the SPC, Article 12 adopts a balancing test with each of these factors considered on a sliding scale. For example, if the prior unregistered well-known trademark has a high degree of distinctiveness and popularity, the later mark that is not very much similar can potentially cause confusion. The SPC also commented that the legal standards articulated in Article 12 would be applicable for situations involving potential conflicts between a trademark registration and other forms of prior right, such as that of trade names or registered trademarks.

It also worth noting that Paragraph 2 of Article 12 provides two “reference factors” for determining the likelihood of consumer confusion: the intention of the trademark applicant and evidence of actual confusion. While the subjective intent of the trademark applicant has been frequently questioned, the argument has generally been framed in relation to the principle of good faith. Article 12 explicitly allows the litigants to argue that consumer confusion becomes more likely if the disputed trademark is registered in bad faith. However, due to the evidence rules, litigants may have to largely rely on circumstantial evidence to prove the intent of the opposing party behind the trademark filing. In light of this practical issue, Article 25 of the Provisions allows the court to find “bad faith registration” under the circumstances in which the prior trademark has high popularity and the applicant of the later mark does not have a reasonable explanation for the similarity. Considering that several recent decisions have signaled the SPC's willingness to determine bad faith registration based on circumstantial evidence, the subjective intent of the trademark applicant may become a key contested issue in certain cases.

In addition, Article 13 of the Provisions sets forth another balancing test of five different factors for determining whether a trademark registration conflicts with a prior registered well-known trademark. According to judicial practice, a registered trademark will be recognized as well known if it is necessary for the adjudication of the case and the recognition would be effective only for the purpose of the underlying dispute.

Other forms of prior rights

Article 32 of the Trademark Law categorically prohibits registration of trademarks that may infringe upon the prior rights of another. The 2010 Opinions define the scope of prior rights broadly, covering all forms of rights protected under laws such as the General Principles of the Civil Law. In recent years, various forms of prior rights have been asserted in trademark administrative cases, and courts require a unified standard in cases arising from Article 32 of the Trademark Law.

Article 19 through Article 22 of the 2017 Provisions address the prior rights most commonly asserted in trademark administrative disputes: copyrights, naming rights, trade name rights, and rights over the name of, or a character in, a copyrighted work. The legal standards in these articles in fact have been established by the SPC through a series of recent decisions.

A copyright owner often has difficulty in proving ownership when asserting its prior copyright against registration of a trademark due to poor record keeping. This problem can be mitigated by Article 19 which lists the type of evidence that can be used to prove copyright ownership. According to this article, in addition to the transcript, the original copy of the work, relevant contract and copyright certificate, the relevant trademark publication and registration certificate for the trademark incorporating the copyrighted work can also be used as preliminary evidence of copyright ownership.

Article 20 deals with the protection of prior naming right. Paragraph 1 provides that the naming right of a person is harmed by trademark registration if the relevant public would consider the trademark refers to the person or likely believe that products bearing the trademark have a special relationship with the person. Paragraph 2 identifies a three-pronged test for determining whether a person is entitled to protection over his or her name: 1) the particular name has certain popularity; 2) a stable association is established between the particular name and the person; and 3) the public refers to the person by the particular name. Similarly, the protection of a company name under Article 21 of the new Provisions also requires the proof of the company name's popularity and the relevant public's confusion.

Article 22 introduces the so-called merchandising right, which covers work that may not be subject to copyright protection, such as the name of a copyrighted work or the name of a character in the work. The party asserting this right would need to prove the name has achieved a relatively high degree of popularity and that the relevant public is likely to believe the products bearing the trademark have a special relationship with the owner of the merchandising right. This appears to have set up a more stringent standard compared with the protection of a person's name or a trade name under Articles 20 and 21. It is also worth noting that the SPC pointed out in its announcement that courts should be careful in adjudicating trademark administrative cases relating to merchandising rights and be mindful of both the interests of the prior right owner and the public to gain access to the copyrighted work through the names. It would be interesting to see the detailed legal standards that courts should develop in merchandising right cases.

The new Provisions signal the SPC's clear attempt to clarify the legal standards in trademark administrative cases and deter trademark squatting and bad faith trademark registrations. Further actions are expected from the SPC and other leading courts in judicial law making in the areas of trademark and other IP laws.

Fang Qi, Partner
Fangda Partners
Beijing