In a recent trademark opposition case involving the famous film
Kung Fu Panda, the Beijing Higher People's Court has confirmed
that DreamWorks Animation SKG Inc had prior "merchandising
rights" in the name of the film and refused to register the
trademark KUNGFU PANDA. DreamWorks' success
highlighted the possibility of using merchandising rights to block
bad-faith trademark applications in China.
This case is a typical example of pirated trademarks and the
facts were simple. A Chinese individual applied for the
registration of the trademark KUNG FU PANDA for "car steering
wheel covers" in Class 12. DreamWorks filed an opposition
against the application as producer of the film Kung Fu Panda. The
main ground for the opposition was that the trademark infringed its
prior "merchandising rights".
DreamWorks' success did not come easily. In the opposition
and following appeals, the China Trademark Office, the Trademark
Review and Adjudication Board and the Beijing Number 1 Intermediate
People's Court all decided that "merchandising
rights" were not among the "Iegitimate rights"
pursuant to the Chinese laws, and did not uphold the
However, the Beijing Higher People's Court disagreed. The
court held that the name of a movie or movie character with a high
reputation shall benefit from "merchandising rights", if
the following conditions are met:
the relevant public identifies the
name of the movie or character with a particular business entity;
the business entity may derive
additional commercial value or business opportunities from such
The judgment also specified two essential factors when
determining the scope of protection of Merchandising rights: fame
and the likelihood of confusion. It was suggested that the courts
should evaluate whether the registration and use of the pirated
trademark on the designated goods or services may cause damage to
the real rights owner by taking away trading opportunities.
The judgment is significant as it is the first time that
"merchandising rights" have officially been recognised as
a type of "prior rights" that can be used to block
bad-faith trademark applications. Article 32 of China's
Trademark Law stipulates that a trademark should not infringe any
prior rights owned by a third party. The current practice
recognises that "prior rights" include trade names,
copyright, design patents and the names of famous persons, but
merchandising rights had never been included - until now.
In fact, the Kung Fu Panda case is not the first case
in which an IP rights owner has fought for the recognition of
merchandising rights. In an earlier similar opposition case against
the trademark 驯龙高手 ('how to train
your dragon' in Chinese) the Beijing Number 1 Intermediate
People' s Court upheld the opposition by confirming that
DreamWorks had "Iegal interests" in the movie name, but
insisted that "merchandising rights" were not "prior
rights" for the purpose of Article 32. In 2011, in a
cancellation action against the trademark CRAYON SHIN-CHAN, the
Beijing Higher People's Court confirmed the cancellation of the
mark on the grounds of bad faith, without any comments on
merchandising rights. In other earlier cases, the Chinese courts
had ruled against infringers who had copied the name of a movie or
movie character on the grounds of "unfair
There is no doubt that the present case is a welcome development
in the battle against pirated trademarks. The judgment means that
rights owners have an additional weapon to crack down on trademarks
that copy or imitate the names of famous movies, characters, actors
What is interesting, though, is that the case itself is still
being debated in China. After the judgment was published, some
scholars questioned whether judges were in fact "making"
the law, because "merchandising rights" have not been
recognised by the Chinese laws. The debate is likely to continue
for a while, and IP owners should keep monitoring the issue.
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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