Invalidation and Infringement: Michael Jordan's Dual-Pronged Offense in China Trademark Battle

"[The civil case] is the most critical because it asks for an injunction against Qiaodan's future use of all Jordan-related trademarks. The SPC cases… say only whether a mark is invalid or not. The SPC cannot touch on the right of Qiaodan to use those marks, regardless of whether the marks are valid or not," the partner said.

To understand this difference, one needs look no further than Qiaodan's own response to the SPC's March decision to revoke its offending trademark. On social media, the company said that it still retains the bulk of its trademarks and that the rulings "would not… affect normal business operations." The company's website still displays Jordan's transliterated name in Chinese characters.

The main reason Jordan failed to disrupt Qiaodan's normal business operations is that the now-revoked trademarks are not exactly core marks of the company; they have little importance from an operational standpoint. These are known as "defensive trademarks" – trademarks filed across a broad range of classes designed to protect core trademarks from infringement.

Qiaodan had registered these defensive marks relatively late in the company's history. The trademark of Jordan's transliterated name in Chinese characters, for example, was registered in 2010. But the company had registered its core brand marks in the early 2000s. Under Article 45 of PRC Trademark Law ( 中华人民共和国商标法), parties may dispute the validity of registered trademarks within five years of the date of registration.

By the time Jordan petitioned to invalidate Qiaodan's marks in 2012, he was only allowed proceedings against marks that were registered within the five-year period. And those did not include Qiaodan's core trademarks.

Even then, it was not exactly smooth sailing for the trademark appeals that Jordan managed to lodge in time. For several years, all of Jordan's appeals were rejected first by the trademark office appeals board then two lower-level courts. Only in 2016 did Jordan see his first favorable rulings handed down by the SPC for a handful of trademarks relating to Jordan's transliterated name in Chinese characters, although the SPC also rejected his final appeals for other trademarks including his logo and transliterated name in pinyin.

Jordan's civil case circumvents the five-year restriction however because its scope is larger than just the validity of Qiaodan's trademarks. Whereas the invalidation cases are administrative appeals against the decisions by China's trademark office to approve Qiaodan's trademark registrations, Jordan's civil action is predicated on a more fundamental claim: that Qiaodan is infringing his prior name rights.

In its March ruling, the SPC said that Jordan has the right to his name, referring to Article 2 of the PRC Tort Liability Law (中华人民共和国侵权责任法) and Article 99 of PRC General Principles of the Civil Law (中华人民共和国民法通则), which says that "[i]nterference with, usurpation of and false representation of personal names shall be prohibited." The right to one's name is a fundamental protection under civil law, therefore it takes precedence over trademark rights governed by the Trademark Law, said Laura Wen-Yu Young, U.S.-based managing partner at Wang & Wang.

In other words, Jordan's civil suit is not just a trademark dispute; it is an action against all infringement by Qiaodan of Jordan's prior name rights, which in theory encompasses even any non-trademark-related infringement.

In 2009, the SPC issued an Opinion saying that civil suits may be brought against trademarks conflicting with another party's prior rights even if it has been more than five years since the trademarks were registered. For Qiaodan, this means all its trademarks including its core marks are implicated in the civil suit brought by Jordan in Shanghai.

There is some uncertainty however surrounding whether Jordan's civil suit can result in Qiaodan being barred from ever infringing Jordan's prior name rights again. The 2009 SPC Opinion said that courts in a civil suit may not order the end of the use of any infringing trademarks for which the five-year appeals period has passed, even if infringement is found to have occurred.

But various legal scholars have subsequently said that trademarks infringing prior name rights are an exception to this, given their fundamental nature. Zhang Weijun, a law professor at Tongji University, believes that civil suits can result in compensation for the affected party and, most importantly for Jordan, an injunction against future use of the offending trademarks.

"If the court orders the cessation of the use of the 'Qiaodan' trademark because it constitutes infringement of Jordan's prior name rights, this will be tantamount to the 'death penalty' for the trademark," he wrote in 2012. At the 2013 hearing for the civil case in Shanghai, Jordan's lawyers cited "a consensus among Chinese legal scholars" that no time limitation exists for stopping the use of trademarks that infringe prior name rights.

Unfortunately for Jordan, the Shanghai court has yet to make its decision for the case. According to Wu Li, a Beijing-based IP partner at AnJie Law Firm, courts normally take six to 12 months from when a case is accepted to complete a civil trial. Therefore, Jordan's wait for a decision – eight years and counting – is near unparalleled.

"It's extremely rare for the court to keep a case on its docket for eight years," the IP partner familiar with the case said. He believes the court is taking such a long time to make its final ruling because of reasons unrelated to the merits of Jordan's arguments.

"When you have this opponent that is such a huge company that employs tens of thousands of people, it puts lots of pressure on the courts… That's why the Shanghai court is so hesitant to make a decision. It is worried about the impact on a local business that employs so many people and has so many stores. There's no other way to explain it. The court is in a dilemma."

Still, a protracted legal battle with an international sports legend has already done damage to Qiaodan's plans to go public. The company had passed the CSRC's provisional vetting back in 2011 but never received a final approval to list. Last year, it passed another round of provisional approval, but it is unlikely that final approval will be granted prior to a decision being made by the Shanghai court given the questions surrounding Qiaodan's IP. Qiaodan itself might not want its IPO to happen with the Jordan litigation still unresolved given the potentially negative impact on the company's valuation.

As such, Jordan may not be too discontent with having to wait for the court's decision in the civil case some more. Nor might he be too disappointed by the results of the trademark invalidation cases. Even though most of his appeals failed, the trademark invalidation cases were important nonetheless because they support Jordan's civil case to bar Qiaodan from using his name in its daily business operations – the issue at the core of the dispute, says the IP partner familiar with the case.

"In the civil case, if the other side has a valid trademark, they would generally raise the defense that they have legitimate rights to use the marks because they have these government-issued certificates allowing them to use [the marks]. If the invalidation is successful, the plaintiff can use that to further support the infringement argument," the partner said, adding that this is a typical strategy that plaintiffs adopt in trademark disputes in China.

For Jordan, the stature of the Supreme Court, China's top court, is certainly relevant. Its rulings in favor of Jordan accompanied by the underlying legal arguments, all now in the public domain, are likely to add significant sway to his arguments in the eyes of the Shanghai court. Overall, Jordan's successful invalidations of Qiaodan's trademarks, though limited in number and immediate impact, are still beneficial to him, the partner said.

"The litigating itself creates positive feedback. All the reports about the case predominantly favor Jordan. It creates a business atmosphere that's suitable for him."

Click here to listen to our podcast episode on Michael Jordan's trademark invalidation cases.