China: Trademark Prosecution Case Of "Duck King In Chinese": Prior Rights Protection Shall Coordinate With Maintenance Of Market Order

Last Updated: 25 July 2014
Article by Jason Wang

Beijing High Court rendered the re-trial judgment in December 2010, eventually putting an end to the trademark prosecution case of "Duck King in Chinese", which lasted for almost ten years and has undergone multiple twists and turns. This case fully reflects the administrative and judicial procedures during the trademark prosecution process from trademark application to the final registration. Therefore, this case has critical practical significance to the ongoing third revision of the Chinese Trademark Law. The successful re-trial of this case was initiated by the protest of re-trial presented by the Supreme People's Procuratorate (SPP) to the Supreme People's Court (SPC) and has great importance to the re-trial of trademark prosecution cases, even all types of intellectual property cases initiated by a protest. The re-trial judgment is in conformity with the legislative spirit of the Chinese Trademark Law, properly coordinating the protection of prior right and the maintenance of market order. The author is privileged to represent the re-trial of the trademark prosecution case of "Duck King in Chinese" and hereby offer some comments and analysis regarding the related issues of this case.

I. A Case Reflects Whole Picture of Trademark Prosecution Process

The trademark prosecution process of "Duck King in Chinese" began with the trademark application in January 2001 and ended until the re-trial judgment rendered by Beijing High Court in December 2010. This case underwent the four administrative procedures (the rejection, rejection review, opposition, and opposition review), two judicial procedures (the first and second instances), and the judicial re-trial.

1. Rejection and rejection review

In December 2000, Beijing Duck King Roast Duck Restaurant Co., Ltd (Beijing Duck King) filed a trademark application for "Duck King in Chinese" designating services of "Canteens, etc." in Class 43. In July 2001, the trademark application was rejected by the Chinese Trademark Office (CTMO) for the lack of distinctiveness.1 Beijing Duck King failed to appeal for a review. In January 2001, Shanghai Huaihai Quanjude Roast Duck Restaurant Co., Ltd (the name was later changed into Shanghai Huaihai Duck King Roast Duck Restaurant Co., Ltd, hereinafter as "Shanghai Duck King") filed No. 3083416 trademark application for "Duck King in Chinese" designating services of "Restaurant, etc." in Class 43, which was also rejected by the CTMO for the lack of distinctiveness.2 Shanghai Duck King appealed for a review of the rejection, and the Trademark Review and Adjudication Board (TRAB) reviewed and held that while the trademark "Duck King in Chinese" designating services of "Restaurant, etc." in Class 43 was descriptive to a certain extent, it did not constitute as a general term in the service industry of this category. Besides, the trademark "Duck King in Chinese" of Shanghai Duck King had intensified the distinctiveness through the use and publicity over the past years, therefore the Shanghai Duck King's trademark "Duck King in Chinese" did not constitute the mark that shall not be registered as stipulated in Paragraph 1(2), Article 11 of the 2001 Chinese Trademark Law.3

2. Opposition and opposition review

In May 2005, Beijing Duck King opposed the trademark application "Duck King in Chinese" filed by Shanghai Duck King, which triggered the conflict and confrontation between Beijing Duck King and Shanghai Duck King. In May 2006, the CTMO held that Beijing Duck King's opposition was justified thus the trademark application of "Duck King in Chinese" filed by Shanghai Duck King shall not be approved for registration.4 In June 2007, the TRAB rendered the decision on the opposition review, held that Shanghai Duck King's application for the trademark "Duck King in Chinese" was unlikely to cause confusion with Beijing Duck King's prior trade name to the extent of damaging the interest thereof and did not constitute the "unfair means" under Article 31 of the 2001 Chinese Trademark Law either.5

3. First Instance and Second Instance of the Court

In regard to the TRAB's opposition review decision, Beijing Duck King appealed to Beijing First Intermediate Court and initiated the judicial review procedure. In October 2007, Beijing First Intermediate Court rendered the first instance judgment, holding that Shanghai Duck King's filing of the trademark "Duck King in Chinese" damaged Beijing Duck King's prior trade name right, and Shanghai Duck King's filing of the trademark "Duck King in Chinese" constituted preemptive registration of a prior trademark with certain influence used by another in an unfair means, thus violates the good faith principle. Therefore, the first instance decision revoked the TRAB decision for opposition review and ruled that Shanghai Duck King's application for the trademark "Duck King in Chinese" should not be approved for registration.6 In October 2008, Beijing High Court rendered the second instance decision and affirmed the first instance's decision of revoking the TRAB decision for opposition review, but revoked the decision of disallowing Shanghai Duck King's application for the trademark "Duck King in Chinese," and ordered the TRAB to re-adjudicate on whether to approve and register Shanghai Duck King's trademark application of "Duck King in Chinese."7

4. Re-trial by the SPC

Shanghai Duck King filed a petition for re-trial to Beijing High Court and the SPC respectively, and simultaneously petitioned to the SPP for a re-trial protest. In December 2008, the SPC issued a notice of hearing the re-trial petition and heard the case.8 In November 2009, Beijing High Court rejected the re-trial petition of Shanghai Duck King.9 In January 2009, the SPP rendered a decision for the protest of re-trial, and presented the protest of re-trial to the SPC in July 2009. 10 In November 2009, the SPC ordered Beijing High Court to hear a re-trial.11 In December 2010, Beijing High Court rendered the re-trial decision, revoking both the first and second instances' decisions and reaffirmed the TRAB's opposition review decision. 12

One of the critical reasons for taking almost ten years to reach a final decision for the trademark prosecution of "Duck King in Chinese" is the case's complicated facts and multiple debatable issues. In the meantime, the case reflects that the problems of redundant procedure and lengthy period in China's present trademark prosecution procedure.

II. Successful Re-trial Case Protested by the SPP

China's judicial trial applies the system where the second instance is the final trial and the system of trial supervision. Regarding a legally effective second instance decision, a party to the case has the right to resort to a relief from trial supervision, including presenting a petition of re-trial to a Court and requesting a Procuratorate to raise a protest of re-trial to the Court. In comparison with the cases of first or second instance, the cases retried in accordance with the procedure of trial supervision is relatively few, re-trial cases initiated by the protest of re-trial presented by a Procuratorate is even much fewer. The re-trial case of the trademark "Duck King in Chinese" is a re-trial case initiated by the protest of re-trial presented by the SPP to the SPC.

For many reasons, the public is not quite clear about the protest of re-trial and re-trial initiated by a protest, some may even have doubts. For example, whether the protest of re-trial in only applicable in criminal litigation rather than civil or administrative litigation? Whether the protest of re-trial is only applicable for judicial corruption rather than mistakes made during determination of facts, application of laws, or statutory procedures, etc.? In fact, the Procuratorates have the power to exercise legal supervision over criminal proceedings, civil proceedings and administrative proceedings in accordance with the Chinese Criminal Procedure Law, the Chinese Civil Procedure Law, and the Chinese Administrative Procedure Law. One of the important means of legal supervision is to present a protest of re-trial against the second instance decision rendered by the Court in accordance with the procedure for trial supervision. As early as 2001, the SPP has formulated Rules for Handling Civil and Administrative Protest Cases by the Procuratorate in accordance with the Chinese Civil Procedure Law and the Chinese Administrative Procedure Law, specifically regulating the procedures and rules of a protest of re-trial in civil and administrative proceedings. In addition, in light of Article 64 of the Chinese Administrative Procedure Law and Rule 37 of Rules for Handling Civil and Administrative Protest Cases by the Procuratorate, the conditions under which the Procuratorates have the power to present a protest of re-trial are pervasive, including not only the judicial corruption acts of embezzlement, bribery, or malpractices for personal gain, or bended the law in making judgment committed by the judges, but also the conditions that there is incorrectness in the aspects of the case per se like determination of facts, application of law, or statutory procedures, etc.

The protest of re-trial by the Procuratorate is different from the petition of re-trial directly presented to the Court by an interested party. With respect to a case petitioned of re-trial directly by an interested party, the Court does not necessarily docket the case for re-trial and initiate a re-trial proceeding, it may also reject the petition of re-trial. However, with respect to a case protested of re-trial by the Procuratorate under Rule 75 of the SPC Interpretations on Several Issues concerning Implementation of the Chinese Administrative Procedure Law, the Court "shall" docket and retry the case. In other words, different from the petition of re-trial directly presented by an interested party, the protest of re-trial by the Procuratorate directly facilitates the filing of a case for re-trial and initiates the re-trial proceeding. In regard to the decision of the trademark prosecution case, following the protest of re-trial presented by the SPP to the SPC, the SPC may order Beijing High Court to conduct a re-trial. Under Article 76 of the SPC Interpretations on Several Issues concerning Implementation of the Chinese Administrative Procedure Law, a new collegial panel shall be formed for the re-trial of a case by the Court. Since the second instance of the trademark prosecution case is generally prosecuted by the No. 5 Civil Tribunal (the Intellectual Property Tribunal) of Beijing High Court, the re-trial of the trademark prosecution case shall be prosecuted by the Trial Supervision Tribunal of Beijing High Court.

In fact, there has already been certain judicial practice with respect to the trademark prosecution case retried based on the protest of re-trial presented by the Procuratorate before the trademark case of "Duck King in Chinese." For instance, in March 2007, Beijing High Court rendered its re-trial judgment of disputed cancellation case of the trademark "JIA JIA in Chinese," affirming the decisions of the first and second instances as well as the TRAB decision not approving the registration of the disputed trademark. 13 In October 2007, Beijing High Court rendered the re-trial decision of the disputed trademark cancellation case of "TAI YANG SHEN in Chinese," affirming the decisions of the first and second instances as well as the TRAB decision that the disputed trademark shall be cancelled.14 Of course, the number of the successfully protested cases of trademark prosecution or even the administrative dispute cases of intellectual property is still quite limited so far. In August 2008, Beijing High Court rendered the re-trial decision of a patent invalidation case, revoking the decision of the second instance but affirming the decision of the first instance as well as the adjudication of invalidating the patent rendered by the Patent Re-examination Board.15 The case is the first re-trial case of patent invalidation successfully protested by the SPP. In December 2010, Beijing High Court rendered the re-trial decision of the case regarding the opposition review of the trademark "Duck King in Chinese," and revoked both the decisions of the first and second instances, while affirmed the TRAB decision for opposition review of approving the trademark for registration. The trademark prosecution of "Duck King in Chinese" is another intellectual property administrative dispute case successfully protested by the SPP following the re-trial case of patent invalidation in 2008.

The re-trial decision of the trademark prosecution case of "Duck King in Chinese" rendered by Beijing High Court not only further reinforces the public's knowledge and awareness of the protest of re-trial and re-trial initiated by a protest, but also has great significance to the re-trial of trademark prosecution cases, even all types of intellectual property cases initiated by a protest.

III. Coordination between Protection of Prior Rights and Maintenance of Market Order

The decision of the "Duck King in Chinese" trademark prosecution case considered that "Duck King in Chinese" is the trade name of Beijing Duck King, and the registration and date of use are prior to the trademark application date of Shanghai Duck King. Even through "Duck King in Chinese" bears a weak inherent distinctiveness as a trade name, "Duck King in Chinese" possesses distinctiveness and fame to some extent after the continuous operation and use by Beijing Duck King, where its prior rights and interests should be protected. On the other hand, according to the legislative spirit of the Chinese Trademark Law, and from the perspective of maintaining the operation of the enterprise and the order of market, protect the productivity of the market, where the subject trademarks have been used for an extensive period of time, have established higher market reputations and have formed relevant public groups of their own, then the protection of prior rights and maintenance of the market order shall be coordinated, respecting the market fact that the relevant public have distinguished the trademark between the relevant trademarks objectively, and focusing on maintaining the steady market order that has been formed. Shanghai Duck King applied "Duck King in Chinese" as the enterprise name to the local Administration for Industry and Commerce in September 2000, and the business has developed rather quickly since 2002, where it opened several branches in Shanghai. Shanghai Duck King launched massive advertising campaigns of their "Duck King in Chinese" trademark through newspapers, magazines, and other media that conferred considerable economic benefits and greater scale of operation. In addition, Shanghai Duck King and its affiliated enterprises were rewarded with various honors and prizes, and formed corresponding consuming group. Accordingly, the relevant consuming group can distinguish between Shanghai Duck King and Beijing Duck King on food and beverage service. Therefore, it is inappropriate to cancel Shanghai Duck King's "Duck King in Chinese" trademark now.

For the conflict and confrontation between Beijing Duck King and Shanghai Duck King, the decisions of the TRAB, the Court of first instance, and the Court of second instance were based on Article 31 of the Chinese Trademark Law, the industry and the academy also hold different opinions, both engaging in hot debate and holds their own views. The non-disputable fact in the "Duck King in Chinese" trademark prosecution case is that the inherent distinctiveness of "Duck King in Chinese" is weak, however, Shanghai Duck King has established a high reputation in the market through use, and formed a corresponding consuming group. Under such circumstances, it would be truly unfair if the decision ruled that Shanghai Duck King's "Duck King in Chinese" trademark registration shall not obtain registration. The re-trial decision was based on identifying and fully considering the facts above, not limited to the specific provisions of Article 31 of the Chinese Trademark Law, and properly handling the problem of coordinating protection of prior rights and the maintenance of the market order, according to legislative spirit of the Chinese Trademark Law.

According to Article 1 of the Chinese Trademark Law, protecting the public interests and the interests of producers and operators is the basic guiding principle of the Chinese Trademark Law. Throughout the Chinese Trademark Law, there are two legislative intents of the law: First, protecting the interests of the relevant public, maintaining market order, preventing the relevant public from confusion about the producers of goods and the providers of services; Second, protecting the legitimate rights and interests of prior right holders, avoiding the conflicts between the latter applied trademark and prior rights. The two aforementioned complementary legislative intents reflect the natures of private and public law of the Chinese Trademark Law. Moreover, the basic function of trademark is to distinguish the source of the goods and services, and to prevent the relevant public from confusion and misidentification of producers of goods and providers of services. Therefore, the protection of the relevant public's interests and maintenance of market order are the basic legislative intents of the Chinese Trademark Law. Obviously, properly handling the problem of coordinating the protection of prior rights and maintenance of market order reflects the legislative spirit of the Chinese Trademark Law.

The problem of coordinating the protection of prior rights and maintenance of market order is that, shall the latter applied trademark obtain distinctiveness which can be distinguished from the prior commercial signs through use? In other words, shall the latter applied trademark be registered when the latter applied trademark and prior commercial sign would not cause confusion and misidentification among the relevant public? Article 8 of the Chinese Trademark Law stipulates that any visible sign capable of distinguishing the goods of a trademark applicant from those of others may serve as a trademark for registration application. Article 9 of the Chinese Trademark Law stipulates that the trademark for registration shall be distinctive for easy identification. The aforementioned articles serve as the leading rules not only to include circumstances of distinctiveness of a prior mark in Article 11, but also cover all circumstances obtaining the distinctiveness from prior commercial signs through use. Moreover, according to the Article 11 of the Chinese Trademark Law, signs lacking inherent distinctiveness may acquire secondary meaning which is different from the original meaning through use. Based on the same logic and jurisprudence, a latter applied trademark can obtain distinctiveness which can be distinguished from prior commercial signs through use.

In practice, China's trademark examination authority have already begun to adopt the viewpoint that the latter applied trademark creates its distinguishable characteristics from the prior commercial sign through use, therefore, it does not cause confusion and misidentification among the relevant public. For example, in a trademark rejection review case of the "Yunfeng Wine Industry YUNFENG and design" trademark in 2007, Beijing First Intermediate Court found that the registration of the latter applied trademark should be approved for the important reason that it enjoys a certain fame in relevant public through long-term use and the relevant public are able to identify the source of the latter applied trademark.16 In April 2009, the SPC Opinions on Several Issues concerning Intellectual Property Trials Serving the Overall Objective under Current Economic Situation stipulates based on the summary of practical experience as follows: "Trademarks, which have been registered and used for a long time, which have established higher market fame and have had relevant public groups formed on their own, shall not be recklessly cancelled. We shall, while legally protecting the prior rights, respect the market fact that the relevant public have objectively distinguished between the relevant trademarks. We shall apprehend the legislative intent of the trademark law on coordinating the protection of prior rights and maintaining the market order, focus on maintaining the market order that has been formed and stabilized." Hereafter, more and more trademark rights cases, including the "Duck King in Chinese" trademark prosecution case, which follows the rules stipulated in the aforementioned judicial opinions promulgated by the SPC and the legislative intent of the Chinese Trademark Law on coordinating the protection of prior rights and maintenance of the market order. For example, in the disputed cancellation case of "YI ZHENG in Chinese" trademark and the opposition review case of "FAN JI and design" trademark, Beijing First Intermediate Court found as follows: The latter applied trademark has established a high fame in the market and formed a relevant public groups through use, or the latter applied trademark has established a high reputation in the market, formed a unique corresponding relation to the relevant public. The relevant public can distinguish the latter applied trademark from the prior one. Therefore, the latter application should be approved for registration.17 In the rejection review case of "YONG HE Soy Milk in Chinese and design" trademark, Beijing First Intermediate Court held that, generally, the latter applied trademark constitutes similar to the cited mark on similar goods should be rejected. However, where the latter applied trademark has formed a stable market order, and can be objectively distinguished from the cited mark by the relevant public, then the latter applied trademark should be approved for registration. 18

The re-trial decision of the "Duck King in Chinese" trademark prosecution case declared as follows: When judging the conflict between latter applied trademark and prior commercial signs, the objective fact, including the actual market condition and the actual perception of the relevant public, shall be respected, and both the legal rights and interests of prior right holder and the interests of the relevant public shall be taken into account; When the latter applied trademark has obtained the distinctiveness through use that can be distinguished from the prior commercial signs and the relevant public would not be confused and misled, the latter applied trademark shall be approved for registration. The re-trial decision of the "Duck King in Chinese" trademark prosecution case will undoubtedly have a positive influence and play a guiding role in similar cases in the future.

* This article is the English translation for Mr. Wang's article in Chinese published on China Trademark magazine (Issue 3, 2011).

Footnotes

1 CTMO Refusal Notice (2001) Biao Shen San Bo Zi No. 1015

2 CTMO Refusal Notice No. ZC3083416

3 TRAB Decision (2005) Shang Ping Zi No. 0478

4 CTMO Opposition Decision (2006) Shang Biao Yi Zi No. 00926

5 TRAB Opposition Review Decision (2007) Shang Ping Zi No. 2831

6 Beijing First Intermediate Court Administrative Judgment (2007) Yi Zhong Xing Zi No. 966

7 Beijing High Court Administrative Judgment (2008) Gao Xing Zhong Zi No. 19

8 The SPC Hearing Notice (2008) Xing Jian Zi No. 299

9 Beijing High Court Notice on Rejection of Re-trial Petition (2009) Gao Xing Zhong Zi No. 00169

10 The SPP Administrative Protest (2009) Gao Jian Xing Kang No. 1

11 The SPC Administrative Order (2009) Xing Kang Zi No. 1

12 Beijing High Court Administrative Judgment (2010) Gao Xing Zai Zhong Zi No. 53

13 Beijing High Court Administrative Judgment (2006) Gao Xing Kang Zhong Zi No. 474

14 Beijing High Court Administrative Judgment (2007) Gao Xing Kang Zhong Zi No. 65

15 Beijing High Court Administrative Judgment (2007) Gao Xing Kang Zhong Zi No. 135

16 Beijing First Intermediate Court Administrative Judgment (2007) Zhong Xing Chu Zi No. 1619

17 Beijing First Intermediate Court Administrative Judgment (2010) Zhi Xing Chu Zi No. 2475, Beijing First Intermediate Court Administrative Judgment (2010) Zhi Xing Chu Zi No. 1650

18 Beijing First Intermediate Court Administrative Judgment (2010) Zhi Xing Chu Zi No. 3037

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