China: Prior Public Use Is Not A Necessary Element In Recognizing Bad Faith

Last Updated: 13 March 2018
Article by Cuicui Liang

"OEM" (Original Equipment Manufacturer) is a kind of production mode that many foreign enterprises are keen on. As the name implies, the trademark owners do not produce themselves, but entrust other manufacturers to produce. Many foreign companies have chosen to cooperate with Chinese manufacturers in order to reduce costs, but they did not think of registering trademarks in China before cooperating. It is usually the case that after the breakdown of the cooperative relationship, it was found that the trademark had already been registered by manufacturers, and the position was very passive. The case shared by this article encounters this situation.

The disputed trademark is "CHOPPIES" with the number of 12035146, and the registered goods include "hair lotions, cakes of toilet soap, laundry bleach, laundry detergent, soap, antibacterial hand soap, cleaning preparations, dishwashing liquid, toilet cleaners; cosmetics". The registrant is a Chinese company, who was the manufacturer of CHOPPIES washing powder. The real trademark owner (Botswana company) of the CHOPPIES trademark entrusted a Hong Kong company as an intermediator, who received the manufactured products marked CHOPPIES from the Chinese company and sold them exclusively to Botswana.

The Chinese company was essentially Botswana company's manufacturer, though Botswana and the Chinese company did not have direct business dealings and all business was conducted through the Hong Kong company. All products processed by the Chinese company were exported to Botswana. Botswana company did not make public sales in mainland China.

Botswana company requested for invalidation of the registered trademark arguing that he is the real right owner of the mark "CHOPPIES", which has been registered in many countries including Botswana on washing powder. As the OEM Manufacturer, the Chinese company should have known Botswana company's trademark, and thus the disputed trademark was registered in bad faith.

At issue before the Court is whether the indirect business relationship belongs to the "specific relationship" of Article 15 (2) of the Trademark Law? Is the use in the form of OEM "prior use"? Beijing Intellectual Property Court held a positive attitude.

Article 15 (2) of the China Trademark Law provides: Where a trademark for which a registration is applied is identical or similar to an early used trademark of another party that is not registered, in respect of the same or similar goods, and where the applicant being of contract, business or other relationship except the relationship referred to in the preceding paragraph, is fully aware of the existence of the trademark owned by the other party, the trademark shall not be registered, if the other party raises an opposition.. According to this provision, the following four elements shall be satisfied: 1. The disputed trademark and the cited mark are similar or identical; 2. The goods they cover are similar or identical; 3. The disputed parties have specific relationship; 4. The cited mark has been prior used in China.

The trademarks involved in this case are the same and the goods are similar, so we will not discuss these two elements here. Our focus is whether Botswana and the Chinese companies have such a "specific relationship" that the Chinese company knew the existence of Botswana's trademark before filing the application. In the present case, the court deems this indirect business relationship as a kind of business relationship under the provision of the Chinese Trademark Law, because the evidence provided by Botswana clearly shows that Chinese company knew the existence of Botswana's trademark. Almost all of the correspondences between the Hong Kong company and the Chinese company were copied to Botswana, in which the Chinese company explicitly praised Botswana for its products as perfect and provided Botswana company with a product package marked "CHOPPIES" for Botswana's confirmation. It can be seen that the Chinese company undoubtedly knows that CHOPPIES trademark belongs to Botswana.

Whether public use of the trademark in China is an additional necessity in this case? The Court's answer is "NO". The court made a conclusion based on comparation of several articles of the trademark law, namely Article 13 (2) (protection of unregistered well-known trademarks), Article 15 (1) (protection of trademarks registered by agents or representatives) and (2) (protection of trademarks filed by specific parties), Article 32 (protection of trademarks enjoying certain reputation through use). It is logical that, the scope of protection, the degree of protection, and the requirements for use shall be proportionate. Article 13 (2) provides the largest protection scope based on low standard about similarity of trademarks and goods, so the requirement for use is the highest. Article 15 (1) only protects those whose trademarks are filed by the agents or representatives, so the protection scope is the smallest. Hence, the requirement for use shall be certainly the lowest. Article 15 (2) and Article 32 are among them. From another point of view, the requirement for use shall be proportionate to the defense range. The smaller the defense range is, the lower the requirement for use shall be. This seems to be rationale. If the use of the cited trademark is sufficient to prove the applicant knew the cited mark before application, that is enough. In the subject case, Botswana has used its trademark in the form of OEM, through which the Chinese company obviously knew its trademark. Therefore, such use should have satisfied the prior usage requirements.

A dominant view is that public use of the trademark in the Chinese Mainland is a necessary element when applying Article 15 (2) of the Chinese Trademark Law. However, this provision aims to prevent the bad -faith registrations of those who have specific relation with the trademark owner so as to protect the fairly competitive market. If public use is a must, we are afraid that fairness cannot be achieved in certain situations similar to the subject case. Beijing Intellectual Property Court made a bold attempt for this aim. For the first time the court broke the dominant view, and canceled the bad faith registration of the OEM manufacturer.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
CCPIT Patent & Trademark Law Office
HFG Law & Intellectual Property
HFG Law & Intellectual Property
HFG Law & Intellectual Property
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
CCPIT Patent & Trademark Law Office
HFG Law & Intellectual Property
HFG Law & Intellectual Property
HFG Law & Intellectual Property
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions