China: Restriction On Disclaimer To Part Of Exclusive Right To Use The Trademark

Last Updated: 13 August 2014
Article by Jason Wang

*This article is the English translation for Mr. WANG's article in Chinese published on China Trademark magazine (Issue 1, 2011). China Trademark magazine is sponsored by China Trademark Association under supervision of the State Administration for Industry and Commerce (SAIC) overseeing the Chinese Trademark Office (CTMO) and the Trademark Review and Adjudication Board (TRAB).

The earliest Chinese regulations with regard to "examination on the disclaimer to the exclusive right to use the trademark" appeared in Trademark Examination Rules, which was promulgated by the Chinese Trademark Office (CTMO) in 1994. Rules 3 and 4 of the CTMO Notice on Issues concerning Trademark Examination Notification [Shang Biao (2000) No. 80] further stipulated the specific circumstances where the exclusive right to use the trademark should be disclaimed. However, as the Implementing Regulations 2002 of the Chinese Trademark Law deleted the provisions regarding Trademark Examination Notification prescribed in previous Implementing Rules of the Chinese Trademark Law, the specific superordinate legal ground for the system of Trademark Examination Notification was thus deprived, and correspondingly Rules 3 and 4 of Shang Biao (2000) No. 80 were no longer implemented in practice. According to the current practice, during the process of trademark application for registration before the CTMO, the applicant may, or may not, disclaim the exclusive right to use certain part of the subject trademark.

Besides, Article 11 of the Chinese Trademark Law 2001 prescribes that signs which only consist of signs lacking distinctiveness shall not be registered as trademarks. However, this provision does not exclude such signs from registration as part of the trademarks. According to Rule 49 of Implementing Regulations 2002 of the Chinese Trademark Law, for the generic name, shape or model of the goods, or those directly indicating the quality, main raw material, function, use, weight, quantity and other features of the goods contained in a registered trademark, the trademark registrant shall have no right to prohibit others from fair use. Notwithstanding the foregoing provisions in the Chinese Trademark Law 2001 and Implementing Regulations 2002 of the Chinese Trademark Law do not explicitly prescribe the disclaimer to part of the exclusive right to use the trademark, those provisions have laid a legal foundation for the circumstances to disclaim part of the exclusive right to use the trademark. According to the current practice, the part of which the exclusive right to use can be disclaimed is generally the signs prohibited from registration as trademarks for lacking distinctiveness as stipulated in Article 11 of the Chinese Trademark Law 2001. To some extent, disclaiming part of the exclusive right to use the trademark is to abandon the exclusive right to use on certain part of the signs, in exchange for the approval of registration for the trademark as a whole, which excludes said part of the signs from the protection scope of the overall trademark. However, there are restrictions on disclaimer to part of the exclusive right to use the trademark, and not all trademarks may obtain registration as a whole by disclaiming the exclusive right to use part of the signs. For instance, whether a trademark may obtain registration by disclaiming part of the exclusive right to use signs prohibited from use as trademarks? Whether a trademark may obtain registration by disclaiming part of the exclusive right to use signs conflicting with other's prior right? This article intends to comment and analyze such issues regarding restrictions on disclaimer to part of the exclusive right to use the trademark based on relevant cases in practice.

I. Whether a trademark may obtain registration by disclaiming part of exclusive right to use signs prohibited from use as trademarks?

In the rejection appeal case of trademark "Johnson's baby Johnson & Johnson CLINICALLY PROVEN MILDNESS & Design", under which the goods of "Skin care powder; etc." in Class 3 are designated, the applicant disclaimed the exclusive right to use the words of "CLINICALLY PROVEN MILDNESS" and the graph of bottle. The Trademark Review and Adjudication Board (TRAB) held as follows: Descriptive words like "CLINICALLY PROVEN MILDNESS" used on goods of "Skin care powder; etc." in Class 3 directly indicate the functional feature of the goods, which results in lacking distinctiveness. In the meanwhile, such words tend to cause confusion among consumers regarding the quality of the goods. Therefore, such words shall not be deemed as part of which the exclusive right to use can be disclaimed. Beijing First Intermediate Court held as follows: According to Article 8(1)(6) of the Chinese Trademark Law 1993 , "any word or design that directly indicate the quality, main raw material, function, use, weight, quantity or other features of the goods shall be prohibited from use as trademarks." Words of "CLINICALLY PROVEN MILDNESS" fall under said circumstance and can neither be used as trademarks nor be deemed as the part of which the exclusive right to use can be disclaimed. The applicant has no legal ground to disclaim to the exclusive right to use said words. As the subject trademark contains the words prohibited from use as trademarks and thus violates the foregoing provisions, the subject trademark shall not be approved for registration.1

In the above mentioned case, Beijing First Intermediate Court deemed that signs prohibited from use as trademarks do not fall under the circumstances where the exclusive right to use can be disclaimed. Of course, signs prohibited from use as trademarks specified in Article 8(1)(6) of the Chinese Trademark Law 1993 have been amended to read as signs lacking distinctiveness which shall be prohibited from registration as trademarks prescribed by Article 11 of the Chinese Trademark Law 2001. According to the Chinese Trademark Law 2001, if the words of "CLINICALLY PROVEN MILDNESS" were deemed as signs prohibited from registration as trademarks due to lacking distinctiveness, such signs fall under the circumstance where the exclusive right to use can be disclaimed and the trademark may obtain registration by disclaiming the exclusive right to use that part of signs. On the other hand, Trademark Examination Standards jointly promulgated by the CTMO and the TRAB in 2005 prescribed as follows: "For trademarks which consist of signs lacking distinctiveness and other elements, if the trademark on designated goods tends to cause confusion among the relevant public with regard to the features of the goods, such trademark shall be rejected according to Article 10(1)(8) of the Chinese Trademark Law 2001,even if the applicant disclaims the exclusive right to use." According to the TRAB's opinion in the above case, the words of "CLINICALLY PROVEN MILDNESS" not only directly indicate the functional feature of the goods, but also tend to cause confusion among consumers with regard to the quality of the goods, therefore the words do not fall under the circumstance where the exclusive right to use can be disclaimed. Thus, even with reference to the current trademark provisions, it is still possible that words of "CLINICALLY PROVEN MILDNESS" will be deemed not to fall under the circumstance where the exclusive right to use could be disclaimed. While the applicant has disclaimed the exclusive right to use the words of "CLINICALLY PROVEN MILDNESS", the subject trademark is still likely to be rejected for violating Article 10(1)(8) of the Chinese Trademark Law 2001.

In the rejection appeal case of trademark "JIA DUO BAO in Chinese & BEST DRINK& Design", the subject trademark designating goods of "Fruit extracts; Alcoholic; etc." in Class 33 contains the words of "BEST DRINK". However, the applicant did not disclaim part of the exclusive right to use during process of filing the trademark application before the CTMO. It was until the rejection review process that the applicant expressed the willingness to disclaim the exclusive right to use the words of "BEST DRINK". The TRAB held as follows: The subject trademark designates the goods of "Fruit extracts; Alcoholic; etc." Even though the applicant clearly disclaimed the exclusive right to use the words of "BEST DRINK", given the fact that said words constitute the signs having the nature of exaggeration and fraud as specified in Article 10(1)(7) of the Chinese Trademark Law 2001, said signs shall not be used as trademarks. Beijing First Intermediate Court held as follows: The subject trademark designates the goods of "Fruit extracts; Alcoholic; etc.", and the words of "BEST DRINK" constitute signs having the nature of exaggeration and fraud, thus the subject trademark shall not be used as a trademark. Even though the applicant clearly disclaimed the exclusive right to use said words during the administrative procedure, the subject trademark shall not be approved for registration as a trademark, because it contains signs prohibited from use as trademarks. Beijing High Court held as follows: According to Article 10(1)(7) of the Chinese Trademark Law 2001, signs having the nature of exaggeration and fraud shall not be used as trademarks. The subject trademark contains the words of "BEST DRINK", therefore, when used on beverage products, it causes impractical exaggeration effect, which tends to cause confusion and deception among consumers. Although designed in a smaller font than the part of "JIA DUO BAO in Chinese", the words of "BEST DRINK" are still in violation of the Chinese Trademark Law 2001 with its nature of exaggeration and fraud. Therefore, the illegality of the words of "BEST DRINK" shall not be ignored for its smaller font or lacking distinctiveness.2

According to the opinions of the TRAB, Beijing First Intermediate Court and Beijing High Court in the case of "JIA DUO BAO in Chinese & BEST DRINK & Design", for those signs having the nature of exaggeration and fraud which shall be prohibited from use as trademarks, even though the applicant disclaimed the exclusive right to use that part of the signs, such signs shall not be contained as part of the trademarks. In fact, in addition to prohibited signs with the nature of exaggeration and fraud as specified in Article 10(1)(7) of the Chinese Trademark Law 2001, other signs prohibited from use as trademarks specified in Article 10 also shall not be used as part of the trademarks, even if the corresponding exclusive right to use are disclaimed. For example, in the rejection appeal case of trademark "China Star in Chinese & CHINA STAR ENTERTAINMENT CROUP & Design", although the applicant disclaimed the exclusive right to use the words of "China in Chinese" and "CHINA", the TRAB, Beijing First Intermediate Court and Beijing High Court all held the view that, the subject trademark, as a whole, is similar to the name of China, violating the Article 10(1)(1) of the Chinese Trademark Law 2001 , and shall not be approved for registration.3 In the rejection appeal case of trademark "Tri-Ring Group Expert of Advance Ceramic in Chinese & CCTC Expert Of Advance Ceramic & Design", although the applicant disclaimed the exclusive right to use the words of "Expert of Advance Ceramic in Chinese" and "Expert of Advance Ceramic", the TRAB and Beijing First Intermediate Court both held that, as the subject trademark contains the words of "Expert of Advance Ceramic in Chinese" and its corresponding English words of "Expert of Advance Ceramic", the relevant public is likely to reckon the goods designated under the subject trademark are ceramic products, while the goods designated under the subject trademark like watch cases and clockworks have not designated the material or quality. Therefore, use of the subject trademark on goods such as the watch cases and clockworks will cause confusion among the relevant public regarding the material and quality thereof, and may further result in misunderstanding or misleading. This type of words are signs having other detrimental influences specified in Article 10(1)(8) of the Chinese Trademark Law 2001 and shall not be approved for registration. 4

Judging from the legislative intention, Article 10 of the Chinese Trademark Law 2001 is the absolute ground for prohibiting signs from registration and use, aiming at protecting public interest and public orders. Therefore, the trademark authorities in China imposed strict requirements on examination in accordance with this provision. Once a sign is deemed as prohibited from use as trademarks, said sign shall not be contained in any trademark under any circumstance. Namely, any signs prohibited from use as trademarks for violating Article 10 of the Chinese Trademark Law 2001 can neither be independently registered or used as a trademark, nor be registered or used as part of a trademark. Even if the exclusive right to use the signs prohibited from use as trademarks has been disclaimed, those signs still shall not be contained as part of a trademark. In other words, signs prohibited from use as trademarks for violating Article 10 of the Chinese Trademark Law 2001 do not fall under the circumstance where the exclusive right to use can be disclaimed, and the trademark may not obtain registration as a whole by disclaiming part of the exclusive right to use the signs prohibited from use.

II. Whether a trademark may obtain registration by disclaiming part of the exclusive right to use signs conflicting with other's prior right?

In the dispute cancellation case of trademark "banny OFFICE DEPOT", the disputed trademark is "banny OFFICE DEPOT" designating goods of "Chronographs; Weighing apparatus and instruments; etc" in Class 9, and the exclusive right to use "OFFICE DEPOT" is disclaimed. Beijing First Intermediate Court held as follows: The disputed trademark "banny OFFICE DEPOT" completely contains the cited trademark "OFFICE DEPOT", and fails to establish a meaning distinctively distinguished from the cited trademark. Although the applicant of disputed trademark disclaims the exclusive right to use "OFFICE DEPOT" as manifested in the trademark record, the relevant public will identify the trademark as a whole. Therefore, the disputed trademark and the cited trademark constitute similar trademarks.5

Based on the view of Beijing First Intermediate Court in "banny OFFICE DEPOT" case, the fact that the exclusive right to use "OFFICE DEPOT" contained in the disputed trademark is disclaimed does not affect the judgment on similarity between the cited trademark and the disputed trademark. The author totally agrees with this.

First , disclaiming the exclusive right to use part of the signs in the trademark does not mean that the trademark examination authority shall abandon the examination regarding said part of signs, and it does not mean that said part of signs of which the exclusive right to use is disclaimed is not a part of the whole trademark, either. The TRAB and the courts held similar views in other cases. For example, in the rejection appeal case of trademark "ADVANCED MEDICAL OPTICS", Beijing First Intermediate Court held as follows: Although the exclusive right to use the word of "MEDICA" in the trademark application of "ADVANCED MEDICAL OPTICS" is disclaimed, it does not mean the word shall be regarded as not existing in the trademark application, and it does not mean that the meaning of "MEDICA" can be ignored in comprehending the whole meaning of the trademark application.6 In the rejection appeal case of trademark "Tri-Ring Group Expert of Advance Ceramic in Chinese & CCTC Expert Of Advance Ceramic & Design", the TRAB held as follows: The fact that the applicant disclaims the exclusive right to use the words of "Expert Of Advance Ceramic in Chinese" and "Expert Of Advance Ceramic" does not constitute the ground for the approval of registration for the trademark. Beijing First Intermediate Court held as follows: No matter whether the applicant disclaims the exclusive right to use the words of "Expert Of Advance Ceramic in Chinese" and "Expert Of Advance Ceramic" or not, it will not affect the fact that the relevant public would identify and recognize the applied trademark as a whole with the foregoing words as a part thereof. Therefore, the applicant's disclaimer to the exclusive right to use the foregoing words is insufficient to avoid misunderstanding or misleading among the relevant public. In the "banny OFFICE DEPOT" case, the disputed trademark "banny OFFICE DEPOT", which consists of "banny" and "OFFICE DEPOT", is filed for application and approved of registration as a whole. Although the exclusive right to use the sign of "OFFICE DEPOT" in the disputed trademark has been disclaimed, it does not mean the sign of "OFFICE DEPOT" has been deleted from the disputed trademark. Rather, the sign of "OFFICE DEPOT" is still a component of the disputed trademark. In comparison with "banny", the font of "OFFICE DEPOT" is smaller, but it is insufficient to distinguish the disputed trademark from the cited trademark.

Second, disclaiming the exclusive right to use part of the signs contained in a trademark does not mean the relevant public are aware of said disclaimer in the process of identifying the trademark, and it does not mean said signs would not cause confusion or misleading as the exclusive right to use the part of signs has been disclaimed. According to the current practice, information about the disclaimer to part of the exclusive right to use a trademark will usually be recorded in the trademark gazette, trademark registration certificate and trademark archives. However, information in relation to disclaimer to part of exclusive right to use a trademark disclosed via foregoing documents or media is quite limited to the relevant public. In addition, generally, trademark users will not illustrate or point out the above information and fact of said disclaimer when using the trademark in business operation. For the above reasons, even if part of the exclusive right to use a trademark is disclaimed, the relevant public cannot easily obtain the information thereof, and may still actually identify the trademark as a whole. In the rejection appeal case of trademark "BIAN MI SHU in Chinese & Design" ("BIAN MI in Chinese" means "Constipation", and "SHU in Chinese" means "Comfort"), Beijing First Intermediate Court held as follows: Although the applicant has disclaimed the exclusive right to use the word of "BIAN MI in Chinese" in the process of application for the subject trademark, the disclaimer only means that said part of "BIAN MI in Chinese" will not be taken into consideration during the process of protection for the applied trademark. However, said part will still be contained in the applied trademark when the applied trademark is used. As there is no way for the relevant public to get aware of the applicant's intention of the disclaimer to exclusive right to use a trademark, the relevant public generally will still identify the words of the disclaimed part of signs as component of the trademark. Therefore, said part of signs is still the object of examination in the trademark review and adjudication.7 In the "banny OFFICE DEPOT" case, although the exclusive right to use the words of "OFFICE DEPOT" has been disclaimed, the relevant public will still identify "OFFICE DEPOT" as a part of the disputed trademark. Therefore, disclaiming the exclusive right to use "OFFICE DEPOT" can neither lower the degree of similarity between the disputed trademark and the cited trademark, nor avoid confusion and misunderstanding among the relevant public.

The "banny OFFICE DEPOT" case involves the issue whether a trademark may obtain registration as a whole by disclaiming part of the exclusive right to use the signs conflicting with other's prior registered trademark. If it is extended to other cases, the issue will be whether a trademark may obtain registration by disclaiming part of the exclusive right to use the signs conflicting with other's prior right. The significance of "banny OFFICE DEPOT" case is to declare through the form of court judgment that disclaiming part of the exclusive right to use a trademark does not affect the determination on whether the trademark conflicts with other's prior right; and a trademark may not obtain registration as a whole by disclaiming part of the exclusive right to use the signs conflicting with other's prior right.

III. Summary

Based on the current laws and practice in China, there are certain restrictions on disclaimer to part of the exclusive right to use a trademark, and not all signs of which the exclusive right to use can be disclaimed. The part of which the exclusive right to use a trademark can be disclaimed are generally the signs prohibited from use as trademarks for lacking distinctiveness as stipulated in Article 11 of the Chinese Trademark Law 2001. However, the trademark may not obtain registration by disclaiming part of exclusive right to use the signs prohibited from use as trademarks, and the trademark may not obtain registration by disclaiming part of the exclusive right to use the signs conflicting with other's prior right, either.  In practice, regarding the restrictions on disclaimer to part of the exclusive right to use a trademark, the following two issues shall be paid attention to.

First, disclaiming the exclusive right to use part of signs does not mean that said part has been removed from the trademark, and it does not mean that the disclaimer to part of the exclusive right to use a trademark certainly complies with the rules of trademark registrability. Some applicants are not clearly aware of the Chinese trademark application system, who mistakenly believe that disclaiming part of the exclusive right to use trademarks may circumvent the mandatory regulations on the signs prohibited from use as trademarks, and may circumvent the conflict with other's prior right. Thus, when selecting the proposed trademarks, the applicant shall examine and evaluate the trademarks in advance, and make a judgment on whether the exclusive right to use part of the signs contained in the trademark can be disclaimed.

Second, disclaiming the exclusive right to use part of signs does not mean the trademark examination authorities shall abandon the necessary examination, and it does not mean that the owners of prior right shall abandon legal relief to claim their right, either. Trademark examination authority shall adhere to comprehensive adjudication on whether the signs of which the part of the exclusive right to use has been disclaimed fall under to the circumstances where said signs can be disclaimed. The examination scope covers the following: Whether the signs of which the part of the exclusive right to use has been disclaimed are the signs prohibited from registration as trademarks for lacking distinctiveness as stipulated in Article 11 of the Chinese Trademark Law 2001; Whether the signs are those prohibited from use as stipulated in Article 10 of the Chinese Trademark Law 2001; and whether the signs conflict with others' prior right as stipulated in provisions like Articles 28 and 31 of the Chinese Trademark Law 2001 and other laws and regulations.

Footnotes:

1 Beijing First Intermediate Court Administrative Judgment (2004) Yi Zhong Xing Chu Zi No. 1006

2 Beijing High Court Administrative Judgment (2005) Gao Xing Zhong Zi No. 13

3 Beijing High Court Administrative Judgment (2005) Gao Xing Zhong Zi No. 82

4 Beijing First Intermediate Court Administrative Judgment (2010) Yi Zhong Zhi Xing Chu Zi No. 522

5 Beijing First Intermediate Court Administrative Judgment (2010) Yi Zhong Zhi Xing Chu Zi No. 1646

6 Beijing First Intermediate Court Administrative Judgment (2006) Yi Zhong Xing Chu Zi No. 199

7 Beijing First Intermediate Court Administrative Judgment (2010) Yi Zhong Zhi Xing Chu Zi No. 1894

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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