This November issue starts with an article about IP compliance in China with reference to the Letter of Authorization: we explain what a LoA is, its most common use and the basic legal grounds on which it is based.
The following article touches the topic of refusal of registration issued by the Chinese Trademark Office (CNIPA) on the basis of lack of distinctiveness: TOILETPAPER has been rejected because of its similarity to the hygienic paper.
While copyright usually protects the 'original works of authorship', trademark protects items that distinguish or identify a specific product coming from a certain industrial source from other similar ones.
But what happens when copyright is used to fight against trademark squatting? Read the third article to discover the case!
The fourth contribution highlights the controversial decision issued by the Japanese Trademark Office which approved the trademark application for registration for "CUGGL" on clothing and footwear. As you can see from the photo, looks like the brand intentionally chose the wording.
Read then how Penfolds won against its competitor Rush Rich in China, showing that Rush Rich had registered not only their trademark, but also other known foreign brand trademarks, including that of Bentley.
Another case of IP in Asia reveals the victory of Cadbury for its Gems trademark in India, while the next case brings us back to China: Puma recognized as well-known trademark won against PuMah, with a decision that shows China's zero tolerance for 'knock-off' trademark applications.
The last article focuses on a NFT copyright dispute of Xu Beihong's artwork: at the heart of the controversy is whether the platform constitutes copyright infringement by selling the NFT collection of an artist who passed away more than 50 years ago.
Enjoy reading, stay warm and get ready for the festivities to come!
IP COMPLIANCE
Authorization Letters: so common, yet so unknown
An Authorization Letter or Letter of Authorization or Trademark / Brand Authorization Letter (for short "LoA") is a commonly used document in China business practice.
Although a LoA seems to be a very simple legal document, yet its role, functions and effects are not always well understood by managers, companies, entrepreneurs doing business in China.
In this article we will try to explain what a LoA is, its most common use and the basic legal grounds on which it is based.
A LoA is a confirmation issued by the owner of a trademark. It is, therefore, a "unilateral" declaration, different from a contract that (which is a document expressing an agreement executed by two or more parties).
A LoA usually states that a certain trademark is authorized to be used by a certain company (or, sometimes, individual). To this extent a LoA usually includes the name of the trademark owner, the name of the authorized party, the trademark details, the duration, the authorized use and other particulars or limitations.
In our experience, LoAs are commonly required and issued in three main circumstances:
[Export]: a LoA is issued in favor of a supplier that is going to export goods bearing a certain trademark;
[Retail]: a LoA is issued to a distributor that is going to open a retail store in a shopping mall or department store;
[E-commerce]: a LoA is issued in favor a distributor that is going to open an online store.
Duration
Although possible from a legal point of view, it is unusual to issue a LoA without a term. The validity of LoAs is normally limited for a fixed time (which may be long or short) or up to a certain date. However, the validity of a LoA cannot be longer than the duration of the right granted on the trademark to which it relates.
Revocation
Being a unilateral declaration a LoA can normally be revoked by the issuer, unless it was issued in an irrevocable form. The revocation of a LoA must be communicated to the recipient of the letter. It can, and actually should, also be communicated to the third parties mentioned in the letter (example: the management of the store or shopping mall for which the letter was issued).
Identification of the parties
It is important that both issuer and recipient are properly identified by using the correct name and address. We would suggest using the correct Chinese name and also attaching a business license of the relevant parties. A LoA should also bear the contact information of the issuer (which can be added in the header or footer of the LoA) for further identification of the parties involved.
Limitations
Whilst the recipient of a LoA would tend to obtain a simple and potentially wide-open authorization stated in the letter, the issuer and owner of the relevant trademark is understandably more prone to specify the limitations to the use of the trademark in the letter.
Normally, the document in which limitations to the use of a trademark are expressed in the licensing contract, whilst the main purpose of a LoA is to give external visibility to an underlying relationship.
However, if the licensing contract does not permit any "sub-licensing" of the trademark, it may be advisable to state such limitation in the LoA to avoid risks.
Licensing contracts and LoAs are, therefore, closely connected documents, the latter being somewhat the reflection of the former (in that they confirm the authorization to use the trademark).
Relevant substantial contract (trademark license)
Releasing a LoA not based on a preexisting contract is dangerous and not advisable, especially if no limitations are expressed in the letter. It is warmly recommended that a LoA be preceded by the negotiation and execution of a contract, which is usually a supply, distribution or, more often, a trademark licensing contract.
Trademarks registered abroad
Usually, LoAs are based on and issued in relation to trademarks that are registered in China. However, it may also happen that an LoAs are requested in relation to trademarks registered in other countries than China. For example, this may happen in commercial relationships involving of cross-border Ecommerce.
Trademark Licensing Recordation
Chinese Trademark Law also regulates the recordation on the trademark license stating that such recordation is "mandatory". However, the Trademark Law only provides that "without (recordation) filing, the trademark licensing shall not be used against a bona fide third party". In the practice, trademark license recordation is mostly considered as arbitrary.
Yet we noticed in recent year that local MSA starting to enforce this regulation, by issuing "Notice of Minor Illegal Behaviors" to the licensee.
Joint Liability on Multiple Claims
Trademark Law imposes a supervising liability on the trademark owner for quality of commodity, and a civil claim on product quality issues might also extend to trademark owner. In such scenario, in the lack of trademark license contract and/or recordation, the Authorization Letter Trademark might constitute the evidence and/or the link between the two parties.
Management of LoAs
Given the importance of LoAs, issuers and trademark owners are recommended to establish a management system of their LoAs. Such management system may include adding serial numbers on the LoAs, compiling record forms of LoAs, publishing lists of authorized parties on their official website or official wechat account to allow third-party verification. Defining coherent contents of the LoAs, together with an orderly management of the same, contribute to a better protection of trademarks in China.
Fabio Giacopello*
HFG Law & Intellectual Property
IP CHINA
TOILETPAPER: the "new" lack of distinctiveness
The present article touches the topic of refusal of registration issued by the Chinese Trademark Office (CNIPA) on the basis of lack of distinctiveness (art. 10 Chinese Trademark Law – "TML").
In recent times we are indeed experiencing an increase in provisional refusals of trademarks that are not only based on the usual ground of art. 30 TML (prior similar trademarks), but they are based on lack of distinctiveness (art. 10 TML).
This is the case - for example - of "TOILETPAPER".
Founded in 2010, - as reads on the official website - TOILETPAPER is an artist's magazine created and produced by Maurizio Cattelan, a leading figure in international contemporary art known for his fondness for humor and provocation, and Pierpaolo Ferrari, famous photographer and artistic director.
Since the first issue of TOILETPAPAER was published in 2010, Cattelan and Ferrari have created a quirky and audacious universe where ambiguous stories and disturbing imagination are presented, combining commercial photography with a surrealist visual approach. Inspired by a popular culture, the world of advertising, religious iconography and art history. TOILETPAPER investigates the current phenomenon of hyperconsumption of images, all with a delicious dose of irony.
Nowadays TOILETPAPER organizes art exhbitions and artistics events, but has also developed an interesting collection of lifestyle objetcs that are sold via the website and in retail stores worldwide.
As any operator doing business in China the company approached us and appointed HFG for the trademark registration in China. Clearance done, we optimisticallyfiled the trademark in 2021 designating several classes in relation to lifestyle products. Unfortunately, the trademark application were all rejected due to lack of distinctiveness.
Well, why lack of distinctiveness?
"Toilet paper / hygienic paper" (in Chinese: 卫生纸) is listed Nice Classification and in the Chinese classification in class 16, sub-class 1603, basic number 160094.
I do agree that if someone attempt to register TOILETPAPER for distinguishing the product "toilet paper / hygienic paper" the trademark is not assolving its dstinctive function and shall not be registered.
However, in the present case the trademark is not use for that kind of hygienic paper used in the toilet to accomplish post-event cleaning activity, thus we don't understand what kind of lack of distinctiveness the examiner saw missing. We did not designate class 16 and any product in relation to that hygienic toilet paper. We filed the trademark in classes 18, 20, 21, 27 and 35 (lifestyle objects).
Optimistically, we then made appeal and explained the usage of the trademark (art magazine, art events and artisctic lifestyle objects) and that the lack of distinctiveness cannot simply derive from the fact that the words chosen as trademark have a meaning in English language. This is simply against the most basic principles of trademark law.
Herein the reasoning from CNIPA-TRAB:
The applicant has filed many pieces of evidences such as brochures, relevant reports, outdoor displays, official websites, licensing agreements, orders, sales invoices, customs declarations, relevant search results, trademark registration information in foreign countries, etc.
After appeal, the CNIPA held that the applied trademark being used on designated goods cannot distinguish the origin of goods, and lacking distinctiveness as a trademark. Thus, the applied trademark has constituted the situation prescribed by Article 10.1.3 of the Trademark Law.
We tend to believe that the Trademark Office is flooded with millions of trademark applications and the judgement of the examiners is currently very severe not only on the similarity with prior trademarks but also on the absolute ground, such as the lack of distinctiveness and/or the misleading effect.
However, we tend to - respectfully but firmly - disagree with their decision in considering TOILETPAPER lacking distinctiveness in relation to art magazine and lifestyle goods.
Fabio Giacopello
HFG Law & Intellectual Property
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Footnote
[*] Despite the article is quite simple I wish to thank Marco Vinciguerra, Fredrick Xie and Ashely Jia for the contributions. Amazing teamwork.
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.
