China: SPC's Changing Attitude To Letters Of Consent In China

Last Updated: 6 June 2018
Article by Jing Zhu

In Google Inc. v. the China Trademark Review and Adjudication Board, the Supreme People's Court of China (hereinafter referred to as SPC) accepted a Letter of Consent as supporting evidence in a trademark administrative case involving nearly identical trademarks [Case No: (2016) Supreme Court Administrative Retrial No. 102]. It is expected that, in the future, if a Chinese trademark application is obstructed by a prior identical or similar trademark, the applicant could consider submitting a LoC issued by the proprietor of the prior trademark to overcome the rejection.

Google Inc. applied for registration of a trademark for "nexus in color" (App. No. 11709161) on "laptop computers and hand-held computers", but it is obstructed by a prior trademark "NEXUS" (Reg. No. 1465863) on "bicycle computers" owned by Shimano Inc. During the review proceedings before China Trademark Review and Adjudication Board (hereinafter referred to as TRAB), Google obtained a notarized and legalized LoC from Shimano, who consented to the coexistence of Google's trademark and Shimano's NEXUS.

However, the TRAB, Beijing IP Court and Beijing Higher People's Court all deem that allowing nearly identical trademarks owned by different parties to coexist on similar goods will disrupt the stable market order and bring about consumers' confusion. Therefore, the TRAB and the Courts refused to accept the validity of the LoC.

During the retrial, SPC overturned the decisions of the TRAB and two lower Courts. SPC ruled that the two lower Courts improperly denied the LoC issued by Shimano, and ordered the TRAB to reissue a new decision, approving Google's application to be registered.

From this case, it is very clear that a LoC issued by the proprietor of a prior trademark is important evidence to be considered in SPC's deciding whether the applied-for trademark violates Article 30 of China Trademark Law [which relates towhether a trademark filed for registration is identical or similar to prior trademarks on same or similar goods/services].

The significance of a LoC lies in the following considerations:

The proprietor has the right to dispose its trademark rights, including issuing a LoC to a younger trademark applicant. A LoC shall be validated when it does NOT damage state interests, public interests and a third party's interests.

The China Trademark Lawaims to protect the interests of both consumers and producers and dealers: neither should be neglected.

In this case, (i)a certain amount of differentiating capability of consumers against similar business symbols should be taken into account. (ii)For specific historical reasons, it is possible that similar business symbols honestly and concurrently registered and used by different businesses coexist in the market. (iii)Shimano's issuance of the LoC indicates it has taken a negative or tolerant attitude towards the likelihood of Google's registration causing consumer confusion.

Although the very function of a trademark is to identify the source of goods or services, other business symbols, such as Google's corporate name, trade name, packaging and decoration of goods etc., also serve the source identifiers. Hence, the actual use of Google's trademark along with other business symbols can effectively avoid consumers' confusion and misrecognition.

Before this case, when the TRAB and the Courts were considering the impact of prior trademarks on an applied-for trademark, they usually determined that the China Trademark Lawshall protect consumers from confusion as to the source of goods or services, and therefore, LoCs or Coexistence Agreements may not much help to reduce a consumer's likelihood of confusion, especially when later-filed trademark and prior-registered trademark(s) are identical or highly similar.

Nonetheless, this SPC judgment will have direct influence on the practices of the TRAB and the Courts in the future, i.e. a proper consent agreement be given substantial weight even for identical or highly similar marks. First, a LoC signed by the proprietor of a prior trademark should be respected, provided there is no harm to state interests or public interests, or to the interests of a third party. Second, if differences exist on the trademarks, goods or services, business scopes, market segments and consumers of the two parties, which means they have no or not direct competition, identical or highly similar marks should be allowed to coexist on the Register.

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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