本文首发于 Managing IP 2022年8月8号

Charles Feng, partner at East & Concord in Beijing, explains why filing for a trademark early is still a brand’s best bet.

Since the promulgation of China’s Trademark Law in 1982, the first-to-file principle has been firmlyestablished.

The major benefits of the principle are that it promotes the efficiency of trademark examination by the China National IP Administration (CNIPA), as well as the evaluation of the trademarkablity of new applications.

Nonetheless, the principle has also caused significant problems, in particular those applications that infringe the prior rights of brand owners including their copyright and trademarks.

Fame in a name

In the milestone case of Michael Jordan v TRAB and Qiaodan Sports, the Supreme People’s Court (SPC) ruled that prior rights concerning personal names are granted under Article 32 of China’s Trademark Law.

However, the following conditions must be met;

• The name has a certain degree of fame and is well known to the relevant public;

• The relevant public will use the name to refer to the particular individual and;

• A stable corresponding relationship has been established between the name and the individual

However, the test of “stable relationship” between the name and the individual right owners is not always easy to establish. The reason is because, in order to prove the stable relationship, CNIPA and Chinese courts are traditionally inclined to admit evidence collected domestically only from distribution and advertisements within China.

However, due to the development of internet, pre-emptive registrants file applications for almost every valuable brand they can ever observe from foreign websites. As a result, a large number of foreign brands that suffered from trademark squatting have actually not been used in China at all.

In the meantime, whether evidence regarding use of the mark by distribution and advertising in other jurisdictions can be taken into account when considering the fame of an unregistered mark, remains a disputable and unsettled issue.

In Ryohin Keikaku (Muji) v TRAB, the SPC ruled that the evidence collected on the use of Muji (the Japanese retail store) in Japan and Hong Kong, including evidence on the trademark's fame in those jurisdictions, could not prove that the mark was famous in China.

Because of this, it rejected the plaintiff’s claim to ownership of the mark, which caused huge problems between the Japanese brand and the Chinese applicant which had already registered the name, originally Hainan Nan Hua which later assigned it to a Beijing-based Beijing Mian Tian Fang Zhi.

In the recent Manolo Blahnik v TRAB case, evidence regarding the existing fame of the brand before the disputed mark was applied for was permitted by the SPC and contributed to a fundamental difference in that court's judgment compared to the first and second instance decisions.

However, whether such rulings will be more widely adopted or not remains to be seen.

Mixed picture

The revision of China’s trademark law in 2019, in particular the revision of Article 4 (that marks not intended for use will be rejected), had been expected to act as a new remedy for brand owners to stop rampant pre-emptive registrations.

However, the situation has not fundamentally changed as yet.

On the one hand, we have witnessed an increasing number of cases where the CNIPA has actively quoted Article 4 in the preliminary examination, which resulted in findings against trademark squatters at the very first stage. This will have saved a significant amount of resources for brand owners.

But on the other, pre-emptive registrations when considered in relation to opposition or invalidation proceedings still require huge efforts from brand owners as the good faith principle outlined in Article 7, which states that the principle of good faith should be followed when applying for a trademark, is a theoretical and not applicable provision.

Therefore, whether the Manolo Blahnik case will be admitted by the SPC as a guiding case or merely as a case that is simply worthy of attention is not clear.

To sum up, the earlier a brand files a trademark application remains to be the most cost-effective approach the under current situation if IP owners want to save themselves from the threat of trademark squatting.

In prosecution and judicial proceedings, brand owners should not exclude the evidence of distribution and adverts from other jurisdictions, as they did before, although domestic evidence is still weighted more substantially as a whole.