A recent decision by the Beijing Higher People’s Court
signals official recognition of merchandising rights. In
DreamWorks Animation L.L.C vs Trademark Review and Adjudication
Board (TRAB), the Higher Court recognised the right of
DreamWorks to exploit its merchandising rights in the title of its
popular Hollywood film Kung Fu Panda and ordered the TRAB
to re-examine a trade mark opposition on the basis of these
Merchandising rights allow the rights holder to commercialise a
specific name or image often associated with a work of literary
fiction, a motion picture film, a sportsman or some other real or
fictional character. While such rights have been recognised and
afforded protection in other jurisdictions, they have not until now
been officially recognised in Chinese jurisprudence. In past cases
involving the imitation of names or images in China, the rights
holder has found it difficult to prevent third party
In 2008, shortly after the release in China of the successful
Kung Fu Panda film by DreamWorks, a Chinese individual
applied to register Kung Fu Panda as a trade mark for
goods such as steering wheel covers, vehicle seat covers and car
seats for infants. DreamWorks opposed the application claiming,
inter alia, that the published mark was identical to its
registered trade mark (although its registrations did not cover the
same/similar goods); that it should enjoy an exclusive
“merchandising” right to commercialise the title of its
own movie; and that registration or use of the applied-for mark
would be against the public interest. The opposition was dismissed
by the China Trademark Office (CTO) and by the TRAB on appeal. The
TRAB held that the goods covered by respective marks were
dissimilar, coexistence would not give rise to confusion, and a
“merchandising right” was not an established legal
right in China.
DreamWorks appealed the case to the Beijing No. 1 Intermediate
People’s Court for judicial review. It lost at first
instance, but then appealed to the Beijing Higher People’s
Court. This finally resulted in the groundbreaking support from the
The Higher Court found that once a film becomes sufficiently
well-known, its title and characters are no longer confined to the
specific film itself but can be associated with other business and
commercial activities. The audience may transfer affection for the
film and its characters to other goods and services and this
generates commercial value for the film makers beyond film
distribution and exhibition. Thus, it gives rise to
“merchandising rights” to commercially exploit the
title and characters of the film on non-film related goods and
The Court explained that while “merchandising rights”
may not be expressly recognised by law, to exclude such rights from
legal protection, and to allow others to willfully register film
titles and characters as trade marks for the purpose of trading on
the reputation and goodwill established by the film producers,
would encourage trade mark squatting and “disturb market
order” which is contrary to the legislative intent of the
trade mark law. As DreamWorks had made a significant investment in
producing its film, it should be allowed to enjoy the right to
commercialise the film title and character names and images and,
importantly, that such rights should constitute one of the
“earlier rights” prescribed in the trade mark
The Court observed that “merchandising rights” will
not automatically cover all goods and services. The scope shall be
determined on a case-by-case basis and will depend to a large
degree on the extent of reputation and goodwill attached to the
subject of the merchandising rights. In this case the Court did not
comment on whether the applied-for goods fell within the scope of
the goods/services covered by DreamWorks’ merchandising
rights. It left the question open for the TRAB to decide on its
re-examination of the opposition.
This brave recognition of merchandising rights, and the expansive
interpretation of the trade mark law, by the Beijing Higher
People’s Court may have an impact on administrative and
judicial practice regarding the protection of the names and images
associated with well-known films, books, sporting figures and other
celebrities. Although China has no common law tradition, it is
hoped that the prestige of Beijing Higher People’s Court in
the IP arena will mean that its decision will be followed by other
courts and may persuade the CTO and TRAB to revise their
examination criteria in trade mark disputes. The decision also
offers encouragement to rights holders who have been waging a long
and difficult battle in China to protect important trade mark
rights against unauthorised third party exploitation.
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