China: Protection Of Well-Known Trademarks

In recent years, more and more trademark owners are confronted with the need to seek protection through well-known trademark status to safeguard their trademark rights in China. The phenomenon not only results from the benefits of broader protection granted to a recognized well-known trademark, but also from the deficiency of remedies provided for trademark protection under the present legal system.

The current Chinese Trademark Law and the related Implementation Regulations are based on the 2001 amendment (the second amendment of the Trademark Law). In this amendment, the legal term of well-known trademark was clearly adopted by the trademark law for the first time, with general protection and recognition principles. Although it is an important progress in the trademark legislation, the amended trademark law at the same time deleted another article, which provided that a trademark registration that was acquired by any other unfair means shall be cancelled. This article, without any specific condition regarding the type of unfair means, had been widely and effectively used by trademark owners to protect their trademark rights in China, especially in respect of dissimilar goods and services. However, with the deletion of this article, in order to obtain protection for a mark on dissimilar goods/services, trademark owners have no other choice but to get their marks recognized as well known. At the same time, the trademark authorities have been adopting extremely strict requirements regarding evidence for well-known status. The burden of proof for trademark owners is substantially increased, while the corresponding examination procedures become complex as well.

Since the amendment of the trademark law in 2001, about 1000 trademarks have been recognized as well-known trademarks by competent authorities, including the China Trademark Office (CTO), Trademark Review & Adjudication Board (TRAB), Administration for Industry & Commerce (AIC) and courts of different levels. The following laws, regulations and legal interpretations constitute the essential legal system of protection of well-known trademarks in China: Trademark Law and its Implementation Regulations; Interpretation of the Supreme People's Court of Several Issues Regarding Application of Laws in Trial of Civil Disputes Involving Computer Network Domain Names; Interpretation of the Supreme People's Court of Several Issues Regarding Application of Laws in Trial of Trademark Civil Disputes. On 11th November 2008, the Supreme Court published the Draft of the Interpretation of Several Issues Regarding Application of Laws in Recognition and Protection of Well-known Trademarks in Trademark-Related Civil Disputes (the Draft), for suggestions and discussions. The existing legal provisions and the Draft represent an effort to make more consist of opinions of different authorities in relation to several primary issues on the recognition and protection of well-known trademarks in China.

General Principles of Recognition of Well-known Trademarks

Passive Recognition: The principle of passive recognition means that trademark authorities and courts can only recognize well-known trademarks upon a definitive claim for such recognition made by an interested party in a trademark dispute case. Otherwise, they should not take the initiative to recognize a well-known trademark.

Case-by-case effectiveness: The status of a well-known trademark as recognized in one case is effective on this case only and will not have a decisive effect on other cases. However, this principle does not conflict with the fact that the record of a mark being protected as well-known trademark in one case can be a strong reference in other cases.

Recognition when necessary only: In the trial of cases and upon the claim of the interested party, trademark authorities and courts could proceed to recognize the well-known status of a trademark only in case that the party's interests cannot be protected through other legal remedies. In practice, recognition of well-known trademarks is mainly necessary in the cases where the interested party claims for protection (1)against other application/registration on dissimilar goods/service, (2) against other application/registration on similar goods/service as covered by an unregistered well-known trademark, (3) for stopping certain infringement actions, and (4) against a domain name or a trade name that is conflicting with the interested party's well-known trademark. For example, in 2005, DELL, INC., famous in the computer industry, sued DELL ENGLISH SCHOOL, for the use of "DELL" and "Dai Er (DELL in Chinese characters)" for education services, and requested the court to recognize its trademarks as well-known marks. Upon examination, the Beijing No.1 Intermediate People's Court found that DELL, INC. had already registered its mark "DELL" on education services, and that the exclusive rights derived from this trademark registration could already prevent DELL ENGLISH SCHOOL from using the sign "DELL" for education services. Under such circumstances, the court reasons that it need not recognize whether the trademark "DELL" is well known and thus did not examine the relevant facts and evidence.

Evidence Requirements for Recognition of Well-known Trademarks

According to the current legal provisions, a well-known trademark is defined as a trademark that is widely known to the relevant public and enjoys a high reputation in China. In general, Article 14 of the Chinese Trademark Law stipulates that the following factors (evidence in support) shall be considered to determine whether a trademark is well known: the degree of knowledge of the relevant public; the duration of use; the duration of time, the degree and geographical range of any publicity of the mark; any record of the mark being protected as a well-known mark. The recently published Draft by the Supreme Court also specifies some other specific factors such as sales volume, profits and taxes, market share, geographical range for sales of the products bearing the mark; market survey reports, market value report issued by professional assessment agencies, documentation provided by industry association.

As far as foreign trademark owners are concerned, a usual situation is that it is often much easier to collect evidence in foreign countries than in China. But from the judgments we received from the CTO and the TRAB, examiners still insist that evidence in China would mostly affect their determination on a mark's well-known status in China. For instance, McLaren International Limited raised a dispute against the registration of the trademark "maclaren" based on its renowned but unregistered trademark "McLaren". In its decision, the TRAB states that the evidence as provided by McLaren International Limited is mainly established in foreign countries, which cannot prove that its mark "McLaren" had been used and obtained certain fame in China before the application date of the disputed mark, neither can it prove that the mark is well known in China. Accordingly, McLaren cannot enjoy broader protection as a well-known trademark, and the disputed registration is maintained. However, there is also some good news for foreign trademark owners. In the recently published Draft of the Supreme Court, it seems that more flexible criteria might be used in this regard. In one provision, it is stated that, pursuant to the situation of specific case and when necessary, the judge can consider the well-known status of the mark outside China to some extent. It will be interesting to see how future cases will apply this new opinion.

Point in Time of Effective Evidence in Recognition of Well-known Trademark

Based on the principle of recognition only when necessary, the recognition of a well-known trademark has to be indispensable to protect the trademark owner's rights in an individual dispute case. On the other hand, whether a mark can be recognized as well known essentially depends on the specific situation of each case as well, including the point in time of its well-known status. In principle, the point of time should be on or before the occurrence of the disputed fact, which means the mark should have already become well known by the occurrence of the disputed fact. As far as the registration of trademark is concerned, this point in time is the application date of the disputed trademark; regarding the dispute cases in relation to trademark infringement or unfair competition, it is the occurrence date of disputed infringing actions, or the registration date of the disputed domain name / trade name with the related authorities. Generally, the evidence formed during the three years prior to the point of time is required to establish the mark's well-known status.

In the lawsuit between DELL, INC. and DELL ENGLISH SCHOOL, the judgment states that the other trademark "Dai Er (DELL in Chinese characters)" as cited by DELL, INC. had not become well known before the trade name registration date by DELL ENGLISH SCHOOL on 23 November 2000. Therefore, the use of the trade name by DELL ENGLISH SCHOOL does not infringe the exclusive trademark rights of DELL, INC. and the court need not recognize whether the trademark is well known after 23 November 2000. So in this case, if DELL, INC. wants to challenge the trade name of DELL ENGLISH SCHOOL, the useful time period for evidence to prove DELL, INC.'s well-known status should be 1997-2000.

Extent of Protection of Well-known Trademark

Protection of a well-known trademark is broader, than regular marks, but still has certain limitations. Concerning a non-registered well-known trademark, the granted protection is limited to identical or similar goods/services. In practice, however, we rarely see successful cases of this sort. Also, considering the Intellectual Property Right environment in China, very few trademark owners will take the risk to firstly use a mark without having it registered or at least, applied for registration. When such situation does occur, it is often the case that another entity, almost always a pirate, has registered the trademark earlier. The pirate will most likely try to negotiate with the real owner for sale of the well-known mark. In other words, neither the real owner nor the pirate will allow such loophole that a well-known mark is left "unregistered".

With regard to a well-known trademark that has been registered, according to Article 13 of the Chinese Trademark Law, it will be protected on dissimilar goods/services on condition that the disputed mark would mislead the public and damage the interests of the owner of the well-known mark. In other words, if the registration/use of the disputed mark would not mislead the public, it should not be decided as infringing upon the exclusive rights of the well-known mark. The criteria are applied by the TRAB in the dispute involving the mark "XI LI in Chinese," which is identical to the mark "HEINEKEN in Chinese characters," but registered and designated on "spectacles". The TRAB decides that the disputed mark is used on "spectacles" in Class 9 while the cited mark of HEINEKEN BROUWERIJEN B.V. is used on "beer" in Class 32. The goods of the two marks belong to different industries without any necessary connection. Although the cited mark of HEINEKEN BROUWERIJEN B.V. enjoys high reputation in respect of beer, their designated goods are different enough and there is no sufficient evidence showing that the registration of the disputed mark on "spectacles" will mislead the public or damage the benefits of HEINEKEN BROUWERIJEN B.V. and consumers. Therefore, the disputed mark remains valid.

The above principles have been widely accepted by different trademark authorities theoretically, and have been applied to different kinds of cases involving well-known trademarks. However, the present situation of recognition and protection of well-known trademarks is still controversial, and is criticized particularly by trademark owners.

One of the most important factors is that recognition as a well-known trademark is almost always the only effective approach to protect a trademark on dissimilar goods/services under the present legal system. This fact pushes trademark owners to claim for well-known trademarks in every case where they encounter infringement or registration in bad faith on dissimilar goods/services. Since the second amendment of the trademark law in 2001, trademark authorities have accepted about 40000 cases where a claim for recognition of well-known trademark was made. This has put tremendous burdens on trademark owners, as well as the relevant authorities. One the one hand, due to the strict requirements of well-known trademark protection system, trademark owners have substantial burdens of proof, especially regarding evidence. On the other hand, with more documents complex examination proceedings, the relevant trademark authorities are taking longer and longer in deciding cases. Furthermore, local AICs and courts of different levels may and often do have different interpretations regarding the criteria for recognizing well-known trademarks. Therefore, selecting the right case and the right jurisdiction and gathering the necessary evidence are vital to a trademark owner's effort in seeking the well-known recognition.

Among the 1000 or so trademarks that have been recognized as well known, less than 100 are foreign marks. Many people think it presents a discrepancy to the quantity of domestic/foreign trademarks that are known to the public in fact, as well as to their actual well-known status. The situation makes trademark owners, especially those of foreign famous brands, face higher risks of unfair competition and dilution of distinctiveness of trademarks. Some trademark owners had been obliged to register their mark in all 45 classes on their own, despite the high registration and maintenance costs. Others, having not registered the mark in time, have to pay sometimes considerable amount of money to get back their own mark, which had been registered by a third party.

The current trademark system with regard to protection through well-known trademark recognition is complex and often quite demanding to trademark owners. While some trademark owners have found effective strategies of working with the system, others are struggling to safeguard their rights. Many people are looking to the proposed third amendment to the Chinese Trademark Law, which is under discussion at present, for more effective provisions in relation to well-known trademarks, as well as other remedies against actions in bad-faith.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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