China: Comments On DUCK KING Trademark Re-Trial Listed As No. 7 Of China 2013 Top 10 Innovative IP Cases

The DUCK KING trademark re-trial is listed as No. 7 of China 2013 Top 10 Innovative IP Cases (published by the Supreme People's Court on April 21, 2014).

The English translation below [CASE BRIEF and INNOVATIVE SIGNIFICANCE] is prepared by Beijing East IP Law Firm for reference merely, based on Chinese Language Version published by the Supreme People's Court. Beijing East IP Law Firm also provides comments and analysis on this case.

1. CASE BRIEF

Beijing Duck King Roast Duck Restaurant Co., Ltd. v. Shanghai Huaihai Duck King Roast Duck Restaurant Co., Ltd. &Trademark Review and Adjudication Board (TRAB) [Supreme People's Court Administrative Ruling (2012) Zhi Xing Zi No. 9]

Shanghai Huaihai QuanJuDe Roast Duck Restaurant Co., Ltd. ("Shanghai QuanJuDe"), as the predecessor of Shanghai Huaihai Duck King Roast Duck Restaurant Co., Ltd. ("Shanghai Duck King"), filed the trademark application for registration of "DUCK KING in Chinese" ("Opposed Mark" in this specific case) designating services of "restaurant, etc." in Class 43 before the Trademark Office under the State Administration of Industry and Commerce ("CTMO") on January 29, 2002. The CTMO rejected the application based on the ground that the Opposed Mark merely describes the content and characteristics of the services. Shanghai QuanJuDe appealed for review before the Trademark Review and Adjudication Board ("TRAB"), and the TRAB ruled that the Opposed Mark shall be preliminarily published for opposition. During the opposition period, Beijing Duck King Roast Duck Restaurant Co., Ltd. ("Beijing Duck King") filed an opposition on May 31, 2005. Beijing Duck King's main argument was as follows: "DUCK KING in Chinese" is the trade name and the prior used trademark with certain influence owned by Beijing Duck King, and registration of the Opposed Mark violated Article 31 of the Chinese Trademark Law, and thus shall not be approved. The CTMO accepted the opposition grounds raised by Beijing Duck King, and ruled that the Opposed Mark shall not be approved. Shanghai QuanJuDe was unsatisfied with the CTMO decision and appealed to the TRAB, and the TRAB rendered its decision on June 18, 2007, approving the registration of the Opposed Mark. Beijing Duck King brought an administrative litigation against the TRAB decision before the Beijing First Intermediate Court. Beijing First Intermediate Court rendered the decision of the first instance, and held that "DUCK KING in Chinese" is the core part of Beijing Duck King's trade name and the prior used trademark with certain influence, Shanghai QuanJuDe filed the application of the Opposed Mark in bad faith, and thus the Opposed Mark shall not be approved for registration.  Beijing First Intermediate Court revoked the TRAB decision. Shanghai QuanJuDe appealed to Beijing High Court, and Beijing High Court rendered the decision of the second instance, affirming the first instance's decision of revoking the TRAB decision, and ordered the TRAB to render a new decision. Shanghai QuanJuDe appealed to the Procuratorial Organs, and the Supreme People's Procuratorate then counter-appealed to the Supreme People's Court against the the decision of the second instance court. The Supreme People's Court ordered Beijing High Court for a re-trial. On December 8, 2010, Beijing High Court rendered Administrative Judgment (2010) No. 53, revoked both the first instance's decision and the second instance's decision, and maintained the TRAB decision. Beijing Duck King appealed for a second re-trial before the Supreme People's Court, but the second re-trial request was dismissed by the Supreme People's Court after examination.

2. INNOVATIVE SIGNIFICANCE

This case involves the issue of interpreting the provision of "unfair means shall not be used to preemptively register the prior trademark with certain influence another person has used" prescribed by Article 31 of the Chinese Trademark Law. In this specific case, the Supreme People's Court expressly clarified that "unfair means" refers to the situation that the applicant of the later trademark knows or should have known the prior trademark, AND the trademark applicant has the bad faith of obtaining benefits from the reputation of such prior trademark. Generally, if the prior trademark has certain influence, while the applicant of later trademark knows or should have known said prior trademark, and the applicant still files the trademark application for registration, it can be presumed that such applicant has the intention to invade the goodwill of others. That is, the above two factors generally overlap. However, the special circumstances such as this specific case are excluded, namely, although the prior trademark has certain influence, while the applicant of later trademark does not have bad faith, it shall not constitute an "unfair means" prescribed by Article 31 thereof.

3. Beijing East IP Law Firm Comments

On April 21, 2014, the Supreme People's Court published the list of China 2013 Top 10 Innovative IP Cases. These Top 10 Innovative IP Cases are selected from over one hundred thousand (100,000) decisions of nationwide courts, which have significant and innovative contribution to the laws and regulations.  Only two trademark cases are selected as Top 10 Innovative IP cases, both of which are trademark administrative re-trials before the Supreme People's Court. Together with another trademark case, the DUCK KING trademark administrative re-trial case represented by Mr. Jason Wang, Partner at Beijing East IP Law Firm, is on the list.

Mr. Jason Wang represented Shanghai Huaihai Duck King Roast Duck Ltd. and have prevailed both of the two administrative re-trials before Beijing High Court as well as the Supreme People's Court. This case is one of the few IP administrative cases that engaged in re-trials twice. The first re-trial is one of a few IP administrative re-trial cases initiated by the Supreme People's Procuratorate and win the case in the end.

This case lasted for more than a decade, exhausted all possible legal procedures prescribed under the law. It began with all the four administrative proceedings, i.e. rejection, rejection appeal, opposition, and opposition appeal, then both the two judicial proceedings (i.e. first and second instances), and then the first re-trial proceeding protested by the Supreme People's Procuratorate and the second re-trial before the Supreme People's Court against the first re-trial decisions.

In this specific case, the Supreme People's Court established and affirmed for the first time the new standard of "Two Elements", that is, both of the two elements of "the knowledge standard" (knew or should have known) and "riding the goodwill standard" (with intention to free ride or invade other's goodwill) shall be cited as criteria indispensable to determine the bad faith of the trademark applicant. This is a significant supplement and improvement to judicial interpretations of the Supreme People's Court regarding the bad faith filing provision prescribed under Article 31 of the Chinese Trademark Law.  [Note: Article 18 of The Supreme People's Court's Opinion on Issues Regarding to the Trial of Administrative Cases of Trademark Authorization Confirmation (FA FA〔2010〕No. 12) prescribes as follows: "If a trademark applicant filing a preemptive registration knows or should know that the trademark is being used and has certain influence by others, then it should be determined to have used unfair means."]

Before the announcement of the Supreme People's Court listing DUCK KING trademark re-trial case as China 2013 Top 10 Innovative IP Cases, Mr. Jason Wang has already conducted comprehensive and in-depth academic researches and studies and published two influential papers on authoritative media on analysis of the DUCK KING trademark case.

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