CNIPA’s Amended Trademark Examination and Adjudication Guideline on Article 4 of the Chinese Trademark Law regarding bad faith filing without an intent to use the trademark 

by Yan Zhang & Austin Chang

Bad faith trademark filings have been one of the most notorious pains for rights holders in the PRC and worldwide. The amended Chinese Trademark Law 2019 (“Trademark Law 2019”) was adopted with provisions to tackle down on bad faith trademark filings and registrations. Article 4 states that “[a]ny natural person, legal person, or other organizations that needs to acquire the exclusive right to use a trademark in the production and operation activities shall file an application for trademark registration with the Trademark Office. Trademark applications that are filed in bad faith and not filed for the purpose of use shall be refused.” This is the first time the language “purpose of use” is seen in the Chinese Trademark Law.

The legislative intent of Article 4 of the Trademark Law 2019 is to refuse bad faith applications filed without an intent to use from registration, clear sleeping trademark registrations obtained without an intent to use, and to encourage trademark applicants to perform their obligation by using their trademarks. Bad faith applications and trademark hoarding can usually be found in applicants who file in excess of regular business needs and in large quantities, because such filings may indicate that the applications are “not filed for the purpose of use,” which means that the applicant filed the applications either without actual purpose to use the trademark, or without anticipation to use the trademark in the near future, or there is no actual possibility the applicant will use the trademark based on the facts, background information, and evidence submitted. Article 4 specifically target bad faith applications and trademark hoarding because these applications will damage the public interests by depleting public trademark resources and disturbing trademark registration order. Hence, Article 4 does not apply to 1) applicants who file for defensive purpose or 2) applicants who file for use in foreseeable future business. As for trademark filings that only damage a particular entity’s civil rights, other provisions, but Article 4, of the Trademark Law 2019 should be applied.

In determining whether an application constitutes as a bad faith one filed not for the purpose of use, the Trademark Examination and Adjudication Guideline (“Guideline”) specified that in preliminary examination, examiners should pay attention to the facts discovered while examining the application. In oppositions and other adjudication proceedings, examiners should pay attention to the evidence submitted. The Guideline further provided the following six factors to be considered when examining or adjudicating whether an application constitutes as a bad faith application filed not for the purpose of use.

1. Basic information of the applicant that is an entity such as duration of existence, actual capital paid upon registering the entity with the local Administration for Market Regulation, whether there are any unusual signs of the entity’s status, for example, revoked, cancelled, or suspended business license, liquidation in process, etc.

2. Overall status of the applicant’s trademark applications including the accumulative numbers of applications filed and the classes of designated goods and services, the time span among the applications filed, and the trademark applications filed and the classes of designated goods and services in a short time.

3. The composition of the applied trademark, for example, whether the applied trademark is identical or similar to other famous or highly distinctive trademark, whether the applied trademark includes public resources such as administrative district names, names of mountains, rivers, scenic spots, industry terms, etc., whether it contains the names of well-known people, corporate names, business terms, etc., whether the applied trademark includes other famous individual’s name, trade name, e-commerce name, well-known advertising slogans, works of art, designs, etc.

4. The applicant’s behaviors during trademark registration proceedings and after issuance of trademark registration certificate, for example, selling or assigning the trademark to a third-party without evidence proving it had intent to use the trademark before selling or assigning the trademark, actively offering the trademark for sale to others or in public, threatening others to cooperate in business, or demanding high fees to assign the trademark, high license fee, high compensation fee for infringement, or high settlement for litigation.

5. Evidence submitted in opposition and other adjudication proceedings such as the applicant lacked actual intent to use the trademark upon filing, or the applicant did not actually use the trademark after issuance of the trademark certificate and no preparatory work was done towards using the trademark, and the applicant failed to prove its intent to use or explanations for not using the trademark, or the applicant had used the trademark in dispute in an infringement lawsuit to claim for unjustified gains.

6. Other factors to be considered in opposition and other adjudication proceedings include but not limited to 1) effective administrative rulings or judgements or judicial decisions that the applicant was found to have engaged in bad faith trademark filings or infringed upon other’s trademark right, 2) the applicant has been listed in the list of serious violations of law and dishonesty by the National Enterprise Credit Information Publicity System, 3) the cumulative number of trademark applications and the classes of designated goods and services owned by individuals, legal persons, or other organizations that have a specific relationship with the applicant, and 4) actual trademark transactions, offers, and invitations for offers of natural persons, legal persons, or other organizations that have a specific relationship with the applicant.

The Guideline also listed 10 circumstances that would constitute as trademark applications “filed in bad faith and not filed for the purpose of use” as stipulated in Article 4 of the Trademark Law 2019, unless the applicant or other interested party proves otherwise. Note, point 3 and 9 should be primarily applied in oppositions and other adjudications, while the rests can be both applied in examinations, oppositions, and other adjudications.

1. The number of trademark registration applications is large, which obviously exceeds the requirements of normal business activities, lacks real intention to use, and disrupts the order of trademark registration.

2. A large number of copies, imitations, or plagiarisms of multiple entity’s prior trademarks with a certain degree of fame or strong distinctiveness, disrupting the order of trademark registration.

3. Repeated applications for registration of a specific trademark with a certain degree of fame or strong distinctiveness owned by the same entity, disrupting the order of trademark registration. If such repeated applications for registration fall under the circumstances of bad faith registrations regulated by other provisions of the Chinese Trademark Law, these other provisions shall apply.

4. A large number of applications that are identical to others’ business names, abbreviations of business names, e-commerce names, domain names, product names, packaging, decorations that have a certain influence, and identical or similar marks to other well-known and identifying slogans, designs, and other commercial logos.

5. A large number of applications that are identical or similar to public cultural resources such as the name of a well-known person, a well-known work or character name, and a well-known artwork of others that have gained distinctiveness.

6. A large number of applications that are identical or similar to the names of administrative districts, mountains and rivers, scenic spots, and buildings.

7. A large number of applications that are generic names, industry terms, or indicators that directly indicate the quality, main raw materials, functions, uses, weight, and quantity of the goods or services, etc., which lack distinctiveness.

8. The applicant submits a large number of applications, and assigns a large number of trademarks, and the assignees are scattered, which disrupts the order of trademark registration.

9. The applicant has sold in large quantities for the purpose of seeking unjustified interests, demanding commercial cooperation from the prior user of the trademark or others, high assignment fees, license fees, or infringement compensation, etc.

10. Other circumstances that can be deemed as bad faith in applying for trademark registration.

Although the Guideline listed the 10 circumstances for the examiners to consider when determining whether a trademark application “filed in bad faith and not filed for the purpose of use” as stipulated in Article 4 of the Trademark Law 2019, these factors are not limited to bad faith trademark applications filed by the applicant. It also applies to natural persons, legal persons, or other organizations that have a specific relationship or connections with the applicant or have colluded with the applicant to filing the applications. Finally, simply assigning a registered trademark to a third party does not affect the determination of whether an application was filed in violation of Article 4 of the Trademark Law 2019..

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Weekly China Trademark News Updates

November 30, 2021

1. The CNIPA’s reply regarding procedural issues of an allegedly infringing trademark that passed the preliminary examination or is pending in opposition

Paragraph 3 of Article 62 of the Chinese Trademark Law provides that: “where, in the process of investigating a trademark infringement case, there is any dispute over the ownership of the trademark or the right holder files a trademark infringement lawsuit with the people’s court, the Administration for Market Regulation may suspend the investigation of the case. After the reason for the suspension is eliminated, the case investigation and handling procedures shall be resumed or terminated.” Article 81 of the Regulation on the Implementation of the Trademark Law provides that: “where the ownership of a registered trademark at issue is in an adjudication before the Trademark Office or the Trademark Review and Adjudication Board or in a trial by a people’s court, and the outcome of the case may affect the determination of the nature of the case, such a case falls into Paragraph 3 of Article 62 of the Chinese Trademark Law because there are disputes over trademark right ownership.”

Where an allegedly infringing trademark has been preliminarily examined and published or is pending in an opposition, as a general rule, the trial of a case involving such a mark shall not be suspended because the mark has not been registered. However, considering that the status of rights in an allegedly infringing mark may affect the determination of the nature of the case, law enforcement authorities may decide to suspend the investigation of the case in light of the actual use of the allegedly infringing mark, trademark opposition status, and other specific facts.

2. Christian Louboutin prevailed in a trademark infringement against an online reseller

Christian Louboutin is one of the world’s leading designer brands for men’s and women’s shoes, bags, and related accessories created in 1991 by Christian Louboutin himself. The Christian Louboutin brand has become a world-famous manufacturer of luxury shoes and opened retailers in more than 60 countries. Christian Louboutin registered the “CHRISTIAN LOUBOUTIN” mark, the “Louboutin” mark, and the “Louboutin and Design” mark in China. Lanli Co. opened a store named “Guangzhou Lanli International Trade Co., Ltd.” on the 1688 platform, used the said trademarks without Christian Louboutin’s authorization, and sold goods that infringed the said trademarks. Another company, Shiyu, posted a moment story on a WeChat account using the said trademarks without authorization and sold goods that infringed the said trademarks. The infringing activities of Shiyu can be traced back to 2015, which lasted for quite some time.

Lanli Co. and Shiyu jointly sold infringing goods, but did not submit evidence to prove the source of purchase of the infringing goods at issue. In addition, Lanli Co. operated the shop involved in this case as a manufacturer and advertised in details that “the disputed shoes can be customized and all shoes can be made.” Combining with Shiyu’s statements, such as “we are manufacturer” “can start making shoes tomorrow,” etc. the court found both Lanli Co., and Shiyu were manufacturing the disputed infringing goods.

Lanli Co. and Shiyu produced and sold the infringing goods at issue, which infringed upon Christian Louboutin’s registered trademark rights, and the court ordered the defendants to pay the Christian Louboutin RMB150,000 (USD23,540) in damages.

3. Starbucks was sued by an animation company after its popular bear-styled cake gone viral on the Internet

After Starbucks’ “Cub-styled Caramel Hazelnut Cake” became a popular hit food item, the Cub Animation Co., Ltd. (“Cub Animation”) filed a lawsuit in the Quanzhou Intermediate Court of Fujian Province on the grounds that the Quanzhou branch of Starbucks infringed upon its exclusive right to use the “Cub in Chinese and xiongzai” trademark in Class 30 and the “Cubs in Chinese” trademark for “Cookies; pastries; instant noodles; candies.” The Quanzhou Intermediate Court dismissed Cub Animation’s claims. Cub Animation appealed to the Fujian High Court. On September 29, 2021, the Fujian High Court rendered a second instance judgment rejecting Cub Animation’s appeal and affirmed the first instance judgment.

The Fujian High Court found that the trademark use in the Chinese Trademark Law meant using a trademark in commercial activities and can be used to identify the source of a product. Therefore, descriptive use to indicate the shape, quality, main raw materials, functions, means of use, weight, quantity or any other feature of a product shall not fall within the scope of trademark use in the Chinese Trademark Law. The disputed goods in this case was a cartoon cub-style cake containing hazelnuts. Therefore, the Quanzhou branch of Starbucks named it “Cub in Chinese Caramel Hazelnut Cake,” which was used to indicate the shape of the goods and was a descriptive use of the goods. This kind of behavior also complied with the people’s habit in their daily life to indicate food and other relevant goods by using the name of an animal. As long as such indication did not exceed the scope of proper and reasonable use, and did not cause the relevant public to confuse the source of the goods, it could be determined as a legitimate use. Therefore, the Fujian High Court dismissed Cub Animations’ claims.

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Weekly China Trademark News Updates

November 23, 2021

1. McDonald’s invalided the “Mai Ke Shi in Chinese & MKS” mark

The Beijing High Court recently issued a second instance judgment of the administrative dispute over the invalidation of the trademark with registration number 9631046 “Mai Ke Shi in Chinese & MKS” (“Disputed Mark”), rejecting the appeal of the CNIPA and upholding the first instance court’s finding that the Disputed Mark and the Cited Marks 1 to 4 constituted as similar trademarks on identical or similar goods. Therefore, the Disputed Mark should be declared invalid.

Disputed Mark	Cited Mark 1	Cited Mark 2	Cited Mark 3	Cited Mark 4

The Beijing High Court found that the Disputed Mark consisted of the English letters “Mks” and the Chinese character “Mai Ke Shi in Chinese” of which the initial letter “M” was a double arch graphic and prominently displayed. The Disputed Mark was almost identical in appearance to the highly distinctive and well-known “double arches” graphics of Cited Marks 1 to 3. The Cited Mark 4 was only composed of the Chinese character “Mai Ke in Chinese” and the Chinese character part of the Disputed Mark contained the Cited Mark 4 in its entirety, both of which have no specific meaning. The evidence on file is sufficient to prove that McDonald’s Cited Marks have certain popularity in burgers and other goods, and the Disputed Mark and the Cited Marks were similar in word composition, pronunciation, appearance, etc. When simultaneously using the said marks on similar goods on the market was likely to cause and misunderstanding of the source of goods by the relevant public. Therefore, the Disputed Mark and the Cited Mark 1 to 4 constituted as similar marks use on identical or similar goods as stipulated in Article 28 of the Trademark Law. The first instance judgment was correct, and the CNIPA’s appeal’s claim lacked legal basis and was not supported.

2. The “STOKKE” trademark was invalidated in a second instance judgement

The Beijing High Court rendered a trademark invalidation dispute decision between STOKKE AS (“Stokke”), the CNIPA, and the original third party Situoke (Shanghai) Biotechnology Co., Ltd. (“Situoke”). The judgement vacated the first instance court’s decision and ordered the CNIPA to reissue its decision regarding the Disputed Mark.

Regarding the first issue of this case, whether the registration of trademark with registration number 11102646 “STOKKE” (“Disputed Mark”) constitutes a situation stipulated in Article 13(3) of the Trademark Law 2013, the Beijing High Court found that although the evidence submitted by Stokke could prove that its “STOKKE” trademark with registration number G891394H (“Cited Mark”) in Class 12 on baby stroller goods had a certain degree of fame, it was not sufficient to be recognized as a well-known mark. The Disputed Mark’s registration would not likely to mislead the public and possibly damage Stokke’s interests. The Disputed Mark’s application did not fall into the situation stipulated in Article 13(3) of the Trademark Law of 2013. The first instance court judgment regarding this issue was correct.

Regarding the second issue, whether the Disputed Mark’s registration constitutes the situation of “obtaining trademark registration by other improper means” under Article 44(1) of the Trademark Law of 2013, the Beijing High Court found that, according to the evidence submitted by Stokke, before the Disputed Mark’s application date, the Cited Mark “STOKKE” had obtained a high degree of fame. The original owner of the Disputed Mark had applied for more than 600 trademarks including the Disputed Mark, among which a number of trademarks were identical or similar to the trademark “STOKKE,” which has been made highly known by Stokke, in Classes 11, 15, and 29, as well as in other classes. Other trademarks such as “Guo Long in Chinese,” “Mickey Mouse in Chinese,” “Alpha Dog in Chinese,” “Magic Monkey in Chinese” etc. were identical or highly similar to other trademarks with strong distinctiveness or with high fame. Such behavior had the obvious intention of copying and imitating others’ trademarks, and had exceeded the normal production and operation needs. On this basis, the intention of Situoke to free-ride on the popularity of the trademark “STOKKE” by receiving the Disputed Mark for improper benefits was obvious, which was contrary to the legislative intent of the Trademark Law. Accordingly, the Court has reason to believe that the Disputed Mark’s registration had disturbed the order of trademark registration management and constituted the situation of “obtaining registration by other improper means” as stipulated in Article 44(1) of the Trademark Law of 2013. The first instance judgment erred in the second issue and shall be revoked. New Balance Athletics, Inc and New Balance Trading (China) Co., Ltd. (together as “New Balance”) sued Putian Shengfengsheng Shoes Co., Ltd. (“Shengfengsheng”), Putian Wobaili Trading Co., Ltd. (Wobaili”), Wang Jinbiao, Gusu District Meibailu Shoe Store (“Meibailu”) for infringing its registered trademark the “N” logo with registration number 5942394 on Class 25 for “sneakers” (“Cited Mark”) in Suzhou Intermediate Court. The defendants cited its registered trademark “N & design” with registration number 10214341 (“Disputed Mark”).

3. The “Dior” trademark was recognized as a well-known mark and “Dike Diao in Chinese & DikeDior” was not allowed to be registered as a trademark

The Beijing High Court rendered a second instance trademark invalidation decision between the appellant Putian Changli Industry and Trade Co., Ltd. (“Putian Changli”) and the appellee, the CNIPA, and the third party in the original case, Christian Dior Fragrance Company (“Dior”), which the court upheld the first instance court judgment.

Disputed Mark	Cited Mark 1	Cited Mark 2

The Beijing High Court held that when the Disputed Mark was filed for registration, the Cited Mark 1 had been approved for registration and the Cited Mark 2 had not yet been approved for registration. Therefore, Article 13(2) of the Trademark Law 2001 should be applied to the Cited Mark 1, Article 13 (1) of the Trademark Law of 2001 should be applied to the Cited Mark 2.

The evidence submitted by Dior during the trademark administration proceeding and the first instance court can prove that before the Disputed Mark’s filing date, the Cited Marks 1 and 2 had been widely and extensively used and publicized in the China market for a long time and were widely known among the relevant public with a high fame. Dior submitted a prior ruling, which found that the Cited Marks 1 and 2 constituted as well-known marks on cosmetics and perfume goods before January 9, 2012. Therefore, the evidence on file was sufficient to find that the Cited Marks 1 and 2 constituted as well-known marks used on “cosmetics and perfume” and other goods. In the original case, Putian Changli also expressly recognized that the Cited Marks 1 and 2 constituted as well-known marks on cosmetic goods before the Disputed Mark’s filing date that was confirmed by the first instance court.

The Disputed Mark was a word mark consisted of “Dike Diao in Chinese & DikeDior” the Cited Mark 1 was the word mark “DIOR” and the Cited Mark 2 was the word mark “Dior in Chinese” The Disputed Mark included the Cited Marks 1 and 2 in its entirety. The Disputed Mark’s approved foods for facial cleaners, etc. were similar to the approved goods of the Cited Marks 1 and 2 for cosmetic goods, which the Cited Marks 1 and 2 were famous for, in terms of target consumer, sales place, function, and use. The approved goods for the Disputed Mark and the Cited Marks were similar goods or closely related goods. The Disputed Mark was a copy and imitation of the Cited Marks. Putian Changli also applied for trademarks similar to other famous brands, and its application for registration of the Disputed Mark was in bad faith. The registration and use of the Disputed Mark was likely to cause the relevant public believe that there was a specific connection between the Disputed Mark and the provider of goods of the Cited Marks, which improperly use the market reputation of the Cited Marks, and take up the Cited Marks of Dior’s fame without compensation for its efforts and substantial investments, cut off the relevant public to the association between Dior’s Cited Marks and Dior’s cosmetics and perfume related goods, weakened the Cited Marks’ well-known status, and caused damage to Dior’s interests as a well-known mark owner. Therefore, the Disputed Mark’s registration constituted the circumstances stipulated in Article 13(1) and (2) of the Trademark Law 2001 and should not be registered according to law. The first instance court did not err in its judgment and Putian Changli’s claims cannot be supported.

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Weekly China Trademark News Updates

November 17, 2021

1. MUJI prevailed against Wuyinliangpin in a trademark infringement lawsuit

Based on its “Wuyinliangpin (MUJI in Chinese)” registered trademark with registration number 4471268 in Class 20 for “pillow” related goods (“Cited Mark”), MUJI sued Beijing Wuyinliangpin Investment Co. Ltd. (“Wuyinliangpin”) for using the Disputed Mark on its u-shaped pillow product without authorization and infringed upon MUJI’s trademark rights. Wuyinliangpin defended by citing its licensed trademark “Wuyinliangpin” with registration numbers 1561046 and 74942391 in Class 24 for “fabrics; pillowcase, duvet.”

Disputed Mark	Cited Mark

The court found that the said goods in Class 20 and Class 24 largely overlapped in function, use, and target consumer. Given that both parties have its registered or licensed trademarks, both parties should use its trademarks within the scope of its approved goods. The alleged infringing products in this case were labeled as “u-shaped pillowcase” or “neck pillowcase,” but the products photo showed “u-shaped pillow with filler.” The invoice showed the product name as “textile product*neck cushion.” Thus, the alleged infringing product was in fact a neck pillow product, which falls into the same product category as the Cited Mark’s approved goods “pillow.” Meanwhile, Wuyinliangpin prominently used its licensed mark “Wuyinliangpin” on the alleged infringing product’s hangtag, packaging, washing labels. Wuyinliangpin’s licensed mark and MUJI’s registered trademark had identical composition, pronunciation, and meaning, and the only differences were the use of simplified and traditional Chinese. The two marks were similar marks. Accordingly, the first instance’s decision against Wuyinliangpin was affirmed.

2. New Balance prevailed again in the second instance court winning RMB18 million in damages

New Balance Athletics, Inc and New Balance Trading (China) Co., Ltd. (together as “New Balance”) sued Putian Shengfengsheng Shoes Co., Ltd. (“Shengfengsheng”), Putian Wobaili Trading Co., Ltd. (Wobaili”), Wang Jinbiao, Gusu District Meibailu Shoe Store (“Meibailu”) for infringing its registered trademark the “N” logo with registration number 5942394 on Class 25 for “sneakers” (“Cited Mark”) in Suzhou Intermediate Court. The defendants cited its registered trademark “N & design” with registration number 10214341 (“Disputed Mark”).

Disputed Mark	Cited Mark

The court found that New Balance is the registrant of the Cited Mark and New Balance is the authorized party in China, which gave New Balance the exclusive right to use the trademark and its rights should be protected under the law. The alleged infringing product are sneakers, which prominently used the N logo on two sides of the shoe and significantly weakened the arrow design appeared at the lower portion of the Disputed Mark. When paying ordinary attention, consumers could recognize the Disputed Mark as used appeared as an “N” logo in bold font, which was highly similar to the Cited Mark. Considering New Balance have been selling sneakers with the N logo for many years through continuous promotion and publicity, its N logo has obtained relatively high fame. Thus, the Disputed Mark was likely to cause confusion and mistake the public regarding the source of the goods of the two marks. The evidence also proves that there were actual confusions on the market. Therefore, the Disputed Mark constituted as an infringement on the Cited Mark. Meanwhile, the New Balance sneakers have been using the N logo on two sides of the shoes as its decoration for a fairly long time. With extensive publications, the N logo can be seen as a special decoration of New Balance’s sneakers. Wobaili and Shengfengsheng, as competitors in the industry, knowing the popularity of New Balance sneakers and the distinctiveness of using the N logo on both sides of the shoes, they still used the unique decoration of well-known goods without authorization. Their actions showed subjectively malicious to free-riding others fame, and objectively crouching a large number of New Balance sneakers market share, which violated the good faith principle and amounted to unfair competition. Comprehensively considering the circumstances of the case, the first instance court ruled that the three defendants should compensate New Balance for economic losses and reasonable expenses of RMB18 million. The second instance court upheld the judgment of the first instance court.

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Weekly China Trademark News Updates

November 10, 2021

1. Hyatt won well-known mark recognition in court appeals

Recently, the Beijing High Court rendered a second instance judgment, affirming “Hyatt in Chinese” in respect of hotel services has constituted a well-known mark and accordingly invalidated the registration of “凯悦森HyattSen” on clothing and other goods in class 25.

Zhi-Peng Corporation applied the mark “凯悦森HyattSen” (“Disputed Mark”) in 2014 on clothing, belts, gloves, swimming suits, tops, pants, shoes, hats, hosiery, and ties. Hyatt cited its registrations of “Hyatt in Chinese” and “HYATT” in class 43 in an opposition and later an invalidation against the Disputed Mark, but received unfavorable decision on both proceedings.  The mark matured to registration in 2015 after the opposition and was sustained in the invalidation in 2018.

Hyatt brought the invalidation case to the Beijing IP Court and obtained a favorable judgment based on the well-known mark clause.

The court found that: Hyatt submitted publicity reports on many newspapers, magazines, and websites from 2000 to 2013, award rankings, hotel introductions, protected records, and other evidence which can prove that through continuous use and extensive promotion, the cited mark “Hyatt in Chinese” has gained high reputation in hotel services and is widely known by the relevant public. Therefore, the evidence in the case can prove that the cited mark “Hyatt in Chinese” has constituted a well-known trademark on hotel services. The Disputed Mark contains the cited mark “Hyatt in Chinese” in its entirety, the two marks are similar in terms of composition, pronunciation, and overall appearance. So the disputed trademark has constituted a copy and imitation of the cited mark. Although clothing and other goods designated under the Disputed Mark fall into a different class from the hotels services under the cited mark “Hyatt in Chinese,” those goods and services all belong to the field of daily consumables and the target consumers are also related in a certain extent. In the case that the Disputed Mark has constituted a copy and imitation of the cited mark, the relevant public could easily deem the registrant of the Disputed Mark is closely related to the registrant of the cited mark, thereby weakening the distinctiveness of the cited mark or improperly taking free ride of the goodwill of the cited mark. Such misleading is likely to damage Hyatt’s rights based on its well-known mark. Accordingly, the application for registration of the Disputed has violated Article 13 of the Trademark Law and.

The CNIPA disagreed and further appealed the case to the Beijing High Court. The second instance court affirmed the first instance judgment, holding that:

According to the evidence, it can be determined that before the application date of the Disputed Mark, the cited mark “Hyatt in Chinese” had been widely known by the relevant Chinese public in hotel and other services and had constituted a well-known mark. The Disputed Mark is composed of the Chinese characters “凯悦森” and the English letters “HyattSen,” of which “凯悦” is the distinctive and recognizable part for the mark; the two marks are similar in terms of composition and pronunciation. Given the fame of the cited mark and the recognition sensitivity of the public, the Disputed Mark has constituted a copy or imitation of the cited mark. Although the clothing goods under the Disputed Mark and the hotel services fall into different classes in the Similar Goods and Services Classification Table, these goods and services are closely related in terms of target consumers. As the mark “Hyatt in Chinese” has been widely known to the public, upon seeing the Disputed Mark being used on the above-mentioned goods, the public is likely to associate it to the well-known mark of Hyatt. Based on such association, the relevant public may mistakenly believe that the Disputed Mark has a certain connection with the well-known mark of Hyatt, thereby misleading the public and splitting the inherent connection between the cited mark and Hyatt’s services in hotels, which would further lead to the detrimental consequences of weakening the distinctiveness of the Hyatt’s well-known mark and harming the legitimate rights and interests of Hyatt.

2. Angel Dear secured favorable court judgments and invalidated a copycat on toys

Angel Dear, a US brand for baby clothing and blankies (comfort towels), newly received a favorable judgment from the Beijing High Court, which upheld the first instance court judgment to invalidate the trademark “ANGELDEAR” in class 28.

The disputed trademark survived an opposition and matured into registration in respect of toys, fishing tackle, exercise equipment, roller skates, chess, game consoles, etc. and was later sustained in the invalidation action.

Angel Dear further pursued the case to the Beijing IP Court, arguing based on well-known mark, prior trade name, good faith principle, agency relationship, etc. The Beijing IP Court did not support the claims based on absolute grounds and prior right in trade name, but the court upheld the argument based on Article 15 the clause for agency relationship that:

The prior use evidence submitted by Angel Dear is in relation to baby clothes and blankie, which have high relevance with toys and other goods under the disputed trademark in terms of function and use, sales channels, and consumer groups. Taking into consideration of the email correspondence between the legal representative of the disputed trademark registrant and Angel Dear regarding the brand “ANGEL DEAR,” the fact that the disputed trademark registrant registered multiple trademarks similar to “ANGELDEAR” in various classes, and that the legal representative of the disputed trademark registrant required transaction counterparties, in the business email correspondence, to annotate the goods in the invoices as toys when the goods actually sold were blankies, the Court can affirm that the goods under the disputed trademark are similar to the goods provided by Angel Deer bearing the mark “ANGELDEAR,” so the registration of disputed trademark has constituted the situation stipulated in Article 15 of the Trademark Law 2013. Accordingly, the invalidation decision should be revoked.

Both the CNIPA and the disputed trademark registrant were unsatisfied with the judgment and appealed to the Beijing High Court. The Beijing High Court supported the ruling on Article 15, stating that:

Angel Dear submitted e-mails with manufacturers and sellers, e-mails with relevant people in the company of the disputed trademark registrant, materials of e-stores on JD and Taobao, company files, etc. These materials could prove the registrant of the disputed trademark had awareness of the brand “ANGELDEAR.” The trademark registration certificates and other relevant evidence submitted by Angel Dear could prove that, prior to the application date of the disputed trademark, Angel Dear had registered trademarks in the United States on stuffed plush toys. At the same time, the prior use evidence submitted by Angel Dear covered baby clothing, comfort towels and other products, which are closely related to the toys and other goods under the disputed trademark in terms of function and use, sales channels, and consumer groups. Combined the said evidence with the factfinding in the first instance court, it can be concluded that the first instance court has not erred to determine the registration of the disputed trademark constituted the situation stipulated in Article 15 of the Trademark Law 2013.

According to the Trademark Office online database, a parallel non-use action has also been taken against this disputed trademark. Before the second instance judgment was rendered, a trademark gazette officially cancelling the disputed trademark on all designated goods except for toys had been published.

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Weekly China Trademark News Updates

November 3, 2021

1. KFC’s “KFC Zhaijisong in Chinese” mark application was rejected

On October 18, 2021, the Beijing High Court made a second-instance judgment that rejected KFC’s trademark application for the “KFC Zhaijisong in Chinese (fast home delivery)” mark with application number 22264630 in Class 39 (“Disputed Mark”).

Disputed Mark	Cited Mark 1	Cited Mark 2	Cited Mark 3	Cited Mark 4

The court found that the Disputed Mark consisted of the distinctive parts of the Cited Mark 1 and 2, and Cited mark 4, namely “Zhaijisong in Chinese.” The Disputed Mark also shares the identical first three Chinese characters of the Cited Mark 3. The Disputed Mark was similar in letter composition, pronunciation, meanings, and overall appearances with the Cited Marks 1 to 4. If the Disputed Mark was allowed to be used on identical or similar services with the Cited Marks 1 to 4, it would easily cause the relevant public when paying general attention to be confused and believe that the Disputed Mark and the Cited Marks 1 to 4 were owned by the same party or had particular associations.

Whether “Zhaijisong in Chinese” indicates a delivery method and its level of distinctiveness is not a factor in determining whether the Disputed Mark constituted as a similar mark to each of the Cited Marks. If the issue of the distinctiveness of a cited trademark is overemphasized, subsequent trademark applicants are allowed to register a new trademark by adding other elements to a trademark that has been approved for registration by others is actually a direct denial of the validity of that registered trademark. This practice of not protecting a prior trademark and making it indirectly invalid not only directly damages a prior trademark owner’s rights but also affects the order of trademark registration and obscures the functional positioning between various legal provisions.

2. Ferrero’s 3D trademark application for Kinder Surprise egg is finally approved for registration on chocolate goods

Ferrero & Co., Ltd. (“Ferrero”) filed a trademark application for 3D packaging of the Kinder Surprise egg with designated color with application number 32315366 (“Disputed Mark”) was rejected by the CNIPA for lack of distinctiveness. Upon rejection appeal, the CNIPA allowed the Disputed Mark to be registered on chocolate goods.

In the rejection appeal, the CNIPA reasoned that the Disputed Mark consisted of an eggshell-shaped 3D logo in designated colors red, blue, and white with the word “Kinder.” The eggshell-shaped 3D logo with designated colors had distinctiveness when used on chocolate goods. The word “Kinder” also had distinctiveness when used on chocolate goods. Meanwhile, the applicant submitted sufficient evidence to prove that since the Disputed Mark entered the China market, the applicant had extensively promoted the Disputed Mark and allowed it to obtain certain fame on chocolate goods and formed a one-to-one corresponding relationship. Accordingly, the Disputed Mark had distinctiveness on chocolate goods and had increased its identification through actual use in order to be used to distinguish the source of the goods.

The “dessert” goods designated for the Disputed Mark covered wider range of goods and was not specific, which could be seen as a food container when used on “dessert” goods and lacked distinctiveness. Meanwhile, the applicant failed to submit sufficient evidence to prove that the Disputed Mark has become distinctive through use on dessert goods. Accordingly, the Disputed Mark’s application on dessert goods constituted the situation referred to in Article 11(3), Paragraph 1 of the Chinese Trademark Law.

3. 48 Defendants were sentenced for counterfeiting name brand products

Recently, in order to crack down on infringement and counterfeiting, the Intellectual Property Tribunal of Shanghai Pudong Court has convicted several intellectual property criminal cases involving well-known brands such as Chanel, Cartier, Gucci and etc.

In a series of cases, the defendants processed and produced counterfeit clothing of brands such as Chanel, Gucci, Balenciaga, Dior, Fendi, Loewe, and LV, with sales amounting to more than RMB 42.4 million (USD 6.63 million). After the trial, the Shanghai Pudong Court held that the defendant Liu employed a large number of people to produce and sell counterfeit clothing of a number of internationally renowned brands in order to obtain illegal benefits. His actions constituted the crime of counterfeiting registered trademarks and had subjective bad faith and had serious negative impacts to the society. Therefore, Liu was sentenced to five years and nine months’ imprisonment and a fine of RMB 11.7 million (USD 1.83 million). The three other defendants, Zhang, Wang, and Li were also sentenced and fined.

4. The CNIPA rejected 20,700 bad faith trademark applications in the first half of 2021

In the first half of 2021 alone, the CNIPA rejected 20,700 bad faith trademark applications. Last year, the intellectual property departments within the Chinese government concentrated on meeting and rectifying large-scale trademark trading platforms and removed more than 1.6 million trademark applications that were suspected of trading with bad faith intent.

At the same time, the overall trademark registration cycle has been further reduced. The average examination cycle of trademark registration has been reduced from 9 months to less than 4 months. By the end of 2021, the average examination time for trademark assignment, opposition, rejection, and invalidation will be reduced to 1.5 months, 12 months, 5.5 months, and 9 months, respectively. The examination cycle for trademark changes and renewals for electronically filed applications will be further reduced to 4/5 of the current examination time.

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Weekly China Trademark News Updates

October 26, 2021

1. Theory was awarded RMB 3.2 million in trademark infringement and unfair competition lawsuit

The Shanghai IP Court recently rendered the final decision for a trademark infringement and unfair competition lawsuit for Theory LLC (“Theory”) against  defendants Xierrui (Shanghai) Apparel Co., Ltd. (“Xierrui”), Shaanxi Wangfujing Outlets Commercial Co., Ltd. (“Shaanxi Outlets”), Xi’an Xien Hot Spring Outlets Cultural Tourism Co., Ltd. (“Xi’an Outlets”), Shandong Bailian Haina Commercial Co., Ltd. (“Shandong Bailian”), Beijing Saite Outlets Trading Co., Ltd. (“Beijing Outlets”), Wuxi Bailian Outlets Commercial Co., Ltd. (“Wuxi Outlets”), and Nanjing Tangshan Bailian Outlet Commercial Co., Ltd. (“Nanjing Outlets”). The court revoked the first instance’s decision, ordered the defendants to immediately stop infringements, and compensate Theory for RMB 3.2 million (USD 501,500).

The Shanghai IP Court held that although the alleged infringing mark was a graphic and word mark, its distinguishing part was the word “TheoryLuxe,” and “TheoryLuxe” completely includes the word “THEORY,” which was similar to “Theory” in terms of text composition, pronunciation, and meaning. And the said mark was used on apparel products, packaging, and related commercial activities. Therefore, Xierrui’s use of the alleged infringing logo may easily cause the relevant public to confuse the source of the goods or misunderstand that there was an association between the two, and infringe upon Theory’s trademark right. Xierrui claimed that it had obtained the exclusive right to use the “TheoryLuxe” mark in Class 35 as a service mark on shop signboard, apparel product packaging, hangers, store decorations, etc. The court found that although Xierrui had the right to use “TheoryLuxe” in Class 35 as a service mark, the approved services, promotion of apparel, shoes, hats, etc. (for others), etc., promotion (for others), were services to provide assistive services to other’s sales but not for the mark owner itself. In this case, however, Xierrui promoted its own apparel products but not the service approved. Given that Xierrui’s use of the “TheoryLuxe” logo was able to allow its apparel products to be recognized, Xierrui had infringed upon Theory’s rights. Moreover, Xierrui’s domain name theoryluxe.com completely included Theory’s registered trademark. Xierrui used its website to introduce and promote its apparel products to the public. Xierrui used the “theory” logo on its packaging. These uses can easily cause relevant consumers to be confused regarding the source of the goods and infringe upon Theory’s rights. Likewise, Shaanxi Outlets, and Xi’an Outlets, Shandong Bailian, Beijing Outlets, Wuxi Outlets, and Nanjing Outlets all used the marks “TheoryLuxe,” “TheoryLuxe Xierrui in Chinese,” “THEORY and Xierrui in Chinese,” and “THEORY” in its respective shop’s directory and guides. Among them, Beijing Outlets also used “TheoryLuxe” and “Theory” on its Weibo. These uses infringed upon Theory’s trademark rights.

2. The Beijing Chaoyang District Court issued an injunction for the first direct one-sided price comparison case in China

In October 2021, the Beijing Chaoyang District Court rendered a favorable decision for Markor International Home Furnishings Co., Ltd. (“Markor”) against the defendants Baichuan Times (Beijing) Trading Co., Ltd. (“Baichuan Times”), Beijing Baichuan United Technology Development Co., Ltd. (“Baichuan United”), and Baichuan Wujie (Beijing) Technology Co., Ltd. (“Baichuan Wujie”) for behavior preservation in a trademark infringement and unfair competition dispute. The court ordered the defendants to immediately stop one-sided price comparison of the Markor brand and stop using the slogans “remove the undue price bubble,” “restore the original price,” and “the product price is the lowest in the industry.”

Markor and the three defendants are owners of American styled furniture companies. Markor owns the trademarks “Meike Meijia in Chinese and MarkorFurnishings,” “Palaluoli in Chinese.” The three defendants are affilated companies who promoted as a whole through brick and mortars, websites, WeChat public accounts, Weibo, and exhibitions. In its promotions, the defendants did not fully disclose its products’ quality, size, raw materials, production technology, and after sale services but excessively focusing on price comparison against Markor’s products while claiming its “products have the lowest price in the industry” because it has “removed the undue price bubble” and “restore the original price” of the products. Such promotions would easily cause confusion to the public that Markor’s prices were marked up. The defendants’ actions amounted to false advertisement and commercial slander of unfair competition.

The defendants promote online and offline within a broad peripheral, if the said actions were left untreated, the relevant public was likely to continue to be mistaken and falsely believe that Markor’s products prices were marked up, which would increase the popularity of the defendants’ products on the market and harm Markor’s goodwill and market share. If such actions were not stopped, the potential harm to Markor would be irreparable. Accordingly, the court supported Markor’s request to have the defendants remove the said slogans and order Baichun Times to stop using “Palaluooli in Chinese” as a slogan in selling its furniture.

3. Report of the Supreme People’s Court on the People’s Courts’ Intellectual Property Trial Work

On October 21, Zhou Qiang, President of the Supreme People’s Court, represented the Supreme People’s Court at the 31st meeting of the Standing Committee of the Thirteenth National People’s Congress to deliver the “Report of the Supreme People’s Court on the People’s Courts’ Intellectual Property Trial Work.”

The report pointed out that the current intellectual property cases presented the following traits: First, the number of cases is rising rapidly. The number of first-instance IP cases accepted by courts across the country increased from 101,000 in 2013 to 467,000 in 2020, an average annual increase of 24.5%, which is 12.8 % higher than the average annual increase in the total number of cases accepted by courts across the country. The second is the emergence of a large number of new disputes. The number of new cases involving core Internet technologies, genetic technologies, information and communications, integrated circuits, artificial intelligence, and platform economy is increasing, making it more difficult to determine complex technical facts and to apply laws. Third, online infringements are prone to occur frequently. The Internet has become one of the most important places where intellectual property infringements and illegal activities occur. Compared with offline infringements, online infringements are easier to implement, more concealed, and more complex, with a wider range of impacts, more difficult to collect fixed evidence, and more difficult for rights holders to defend their rights.

In 2020, 16,000 first-instance administrative cases of trademark authorization and confirmation were concluded, which effectively promoted the standardization of trademark registration order.

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Quarterly China Trademark News Updates

July – September 2021

1. Notable trademark and anti-unfair competition cases

a. The Beijing High Court rejected a retrial petition filed by Beijing Wuyinliangpin against MUJI

On July 13, 2021, the Beijing High Court rejected a retrial petition filed by Beijing Miantian Textile Co., Ltd. (“Beijing Miantian”) against Muji (Shanghai) Commercial Co., Ltd. and Beijing Chaoyang Third Branch of Muji (Shanghai) Commercial Co., Ltd. (together as “MUJI”).

Beijing Miantian owns registered trademarks “Wuyinliangpin in Chinese” in class 24 for “cotton textiles and towels.” These trademarks were licensed to Beijing Wuyinliangping Investment Co., Ltd. for use in China. Ryohin Keikaku Co., Ltd. owns the “MUJI” registered trademark in class 24, the “Wuyinliangping in Chinese” registered marks in class 16 and class 35, and the “Wuyinliangping in Chinese and MUJI” registered mark in class 35. Ryohin Keikaku Co., Ltd. licensed the said trademarks to MUJI for use in China. Beijing Miantian sued MUJI alleging that MUJI’s use of the “Wuyinliangpin in Chinese” mark on store signboard, header of the shopping receipt, and shopping bags infringed upon its registered trademarks “Wuyinliangpin in Chinese” in class 24 for “cotton textiles and towels.”

The court found that MUJI’s use of the “Wuyinliangpin in Chinese” mark on its signboard shall be considered as use on selling general merchandise goods. The use of the “Wuyinliangpin in Chinese” logo on the header of the shopping receipt was the unified format of the shopping receipt provided by the store when selling goods, and did not specifically point to towels, quilts or other specific products. Such use still constituted as trademark use in providing general merchandise sales services. Except for the “Wuyinliangpin in Chinese and MUJI” logo on the outside, no other words were printed on the body of the disputed shopping bag. From the appearance, the disputed shopping bag cannot be seen to have a specific connection with the goods approved for use under Beijing Miantian’s trademarks in this case. Meanwhile, MUJI was authorized by its parent company, Ryohin Keikaku Co., Ltd., the right to use the “Wuyinliangpin in Chinese” trademark in class 16 for packaging paper bags and other goods. The court found that MUJI’s uses of the disputed trademarks on its store signboard, head of the shopping receipts and shopping bags were trademark use in the process of sales services, which were not identical with or similar to approved goods under Beijing Miantian’s trademarks and did not constitute as trademark infringement.

b. Schneider China won a RMB 3 million judgement against malicious and repeated trademark infringement

On July 21, 2021, the Beijing Chaoyang District Court heard a trademark infringement case involving Schneider China and fully supported Schneider China’s economic losses claim of RMB 3 million (USD 462,600).

In January 2013, Schneider China filed a complaint against the defendant Hangzhou Dongheng Company’s predecessor Hangzhou Schneider Electric Co., Ltd. (“Dongheng”) for trademark infringement, and using the “Schneider” brand name in corporate names and publicity before the Hangzhou Xiacheng District Court. Through mediation by the court, Dongheng ceased its infringement, changed its company name, and compensated Schneider China for economic losses and reasonable expenses of RMB 100,000 (USD 15,419).

The Beijing Chaoyang District Court’s investigation revealed that after the mediation was concluded, Dongheng had since continued to use the “Schneider” trademark extensively throughout its official website. Meanwhile, in the “China Supplier Network” operated by a technology company in Beijing, Dongheng also had a product display page which used a large number of Chinese and foreign trademarks of “Schneider/Schneider in Chinese” in the company and products introductions. The said use continued until 2019.

The Beijing Chaoyang District Court found that Dongheng’s use of the “Schneider” and “Schneider/Schneider in Chinese” logos on its website and web pages constituted trademark infringement. Considering that Dongheng was a repeated infringer, its subjective malice was obvious, the infringement duration was long, and the fame of Schneider’s trademark, the court fully supported its compensation claim of RMB 3 million (USD 462,600).

c. Ralph Lauren was found not infringing in a second instance decision

Guangzhou Aichi Leather Co., Ltd. (“Aichi”), the owner of the “POLO” mark in class 18 “wallets, school bags, small wallets, handbags, travel bags (cases), etc.,” sued Ralph Lauren to the Beijing Chaoyang District Court, requesting an order to stop the infringement and compensate for economic losses and other legal expenses.

The Beijing Chaoyang District Court found that Ralph Lauren’s prominent display or independent use of “POLO” on the alleged infringing products and tags could easily cause relevant consumers to be confused and misidentify the source of the goods, which infringed on Aichi’s trademarks rights. Considering factors such as the location, scale, quantity, and duration of the stores operated by Ralph Lauren, the unit price of the alleged infringing goods, and the degree of subjective fault of Ralph Lauren, the Beijing Chaoyang District Court ordered Ralph Lauren to compensate Cichi for economic losses of RMB 3 million (USD 462,900).

Ralph Lauren appealed to the Beijing Intellectual Property Court. The court recently made a final judgment in favor of Ralph Lauren’s appeal request, revoked the first instance judgment and dismissed Aichi’s request. The court found that: although the word “POLO” was embroidered or highlighted on some of the goods, from the perspective of the specific usage and usage scenarios of the alleged infringing mark, the said allegedly infringing goods were all displayed and sold at Ralph Lauren shops, and all labeled with “RALPH LAUREN” and “Ralph Lauren Trading (Shanghai) Co., Ltd.,” which clearly indicated the provider of the alleged infringing goods. On the contrary, Aichi did not provide evidence of use of the disputed trademark on the allegedly infringing goods and its trademark had obtained certain influence through use. Therefore, when consumers entered Ralph Lauren stores to purchase related goods, they would clearly recognize that the goods they bought were from Ralph Lauren without associating them with Aichi, or mistakenly believing that there is specific relationship between the two entities. Accordingly, the use of the alleged infringing mark would not cause the relevant public to confuse or mistake the source of the goods.

As far as the subjective intention of taking advantage of other’s goodwill, the evidence in the case proved that Ralph Lauren’s registration of multiple “POLO” and “POLO RALPH LAUREN” trademarks in multiple related classes, and the extensive promotion and use of “POLO” and “RALPH LAUREN” on clothing and other goods has established a stable correspondence between the “RALPH LAUREN” logo with Ralph Lauren and its affiliates and has gained a certain degree of popularity and influence. Therefore, Ralph Lauren’s selling of the allegedly infringing goods in its stores did not have subjective bad faith in taking advantage of Aichi’s goodwill.

Accordingly, although Aichi had the right to claim trademark rights as the legal rights holder, Ralph Lauren’s use of the alleged infringing mark will not cause market confusion. The Beijing Chaoyang District Court erred in its findings and should be amended.

d. The “BVLGARI and BVLGARI in Chinese” mark was recognized as a well-known mark

Bulgari S.P.A. (“Bulgari”) filed an invalidation request against Cai Qinghe’s trademark (“Disputed Mark”) based on its prior trademark in Class 14 and International trademark in Class 42.

Disputed Mark	Bulgari Prior Mark in Cl. 14	Bulgari Prior Mark in Cl. 42

Upon hearing, the Beijing High Court found that the invalidation request was filed on April 2, 2017, more than five years after the Disputed Mark’s registration date (November 6, 2011). Therefore, Bulgari’s invalidation request based on Article 28 and Article 31 of the Chinese Trademark Law 2001 (“TM Law 2001”) shall be rejected. However, combined with the journals and magazines submitted by Bulgari and various media reports on Bulgari regarding its “BVLGARI and BVLGARI in Chinese” brand jewelries and watches, national library search reports, award certificates and materials, introduction to the distribution of Bulgari specialty stores, and the lease contract of its China retail stores, lease contracts and photos of its China franchised stores and watch counters, sales invoices and bank card slips, records of administrative and judicial protection of the “BVLGARI and BVLGARI in Chinese” trademark, and other evidence can prove that Bulgari has carried out long-term and continuous promotion and sales of its “BVLGARI and BVLGARI in Chinese” jewelries and watch products in China. Bulgari had obtained a wide range of publicity and high sales income. Based on the foregoing, it can be determined that Bulgari’s prior mark in Class 14 had obtained a great reputation and influence on “decoration (jewelry); watch” related goods and had been widely known to the public, which constituted as a well-known trademark under Article 13 Paragraph 2 of the TM Law 2001. The Beijing High Court concluded that the Disputed Mark’s registration improperly took advantage of Bulgari’s well-known trademark’s market reputation and damaged its rights, which violated Article 13 Paragraph 2 of the TM Law 2001.

e. Dr. Martens’ “Marten Boots in Chinese” was found to be lack of distinctiveness

Dr. Martens International Trading GmbH is the owner of the well-known footwear brand “Dr. Martens.” Its Chinese trademark “Marten boots in Chinese” in Class 26 was rejected by the China National Intellectual Property Administration (“CNIPA”) because the mark directly referred to the function and purpose of the goods. After the first and second instances, both the Beijing Intellectual Property Court and the Beijing High Court found that “Marten boots” is a type of leather shoes, and when such mark was used on “shoelaces” and related goods in Class 26, it directly indicated the function and purpose of the goods. Such use was difficult to distinguish the mark and the source of goods based on the relevant consumer’s knowledge. Moreover, Dr. Martens did not submit sufficient evidence to prove that the “Marten Boots in Chinese” mark had obtained distinctiveness through its use (Beijing East IP’s search of the prosecution history of “Marten Boots in Chinese” revealed that the mark in Classes 25 and 35 was also rejected based on the same reasoning).

f. Universal Pictures was awarded RMB 5.1 million in compensation in a “Minions” copyright dispute

Recently, the Jiangsu High Court rendered a favorable decision for Universal Pictures against defendants Cangzhou Qianchixue Food Co., Ltd. (“Qianchixue”), Jingbaojiang, Jingshusong, Wangzi Beverage (Guangzhou) Group Co., Ltd. (“Wangzi”), Guangdong Tainiu Vitamin Beverage Co., Ltd. (“Tainiu”), Wuxi Weiwei in a copyright dispute involving the “Minions” copyright. The court affirmed the first instance court’s decision and ordered the defendants, except Wuxi Weiwei, to pay RMB 5 million (USD 788,400) altogether and ordered Wuxi Weiwei to separately pay RMB 100,000 (USD 15,458) in compensation to Universal Pictures.

Universal Pictures is a world-renowned film and television studio. After being released in China, the Minions film series gained enormous reputation. Without the authorization of Universal Pictures, Qianchixue mass-produced and sold dairy beverages with a graphic that was substantially similar to the “Minions.” Before the alleged infringing products were put on the market, other beverage companies had obtained authorization to use the “Minions” image from Universal Pictures. Qianchixue’s infringing products affected the sales of licensed products by other legal licensees. The court ruled that although the alleged infringing image used by the alleged infringing product was slightly different from the artwork involved, it included many main original features of the “Minions,” which constituted as substantially similar.  Without the permission of Universal Pictures, Qianchixue used the involved artwork on the alleged infringing products, manufactured, sold, publicized and promoted the alleged infringing products, infringing the reproduction and distribution right of the involved artwork. The defendants Jingbaojiang and Jingshusong facilitated Qianchixue’s alleged infringing activities, which constituted as joint infringement. The defendants, Tainiu and Wangzi, as the trademark owners and licensees of the alleged infringing products involved in the case, had a close interest and cooperation relationship with Qianchixue, which constituted joint infringement. Wuxi Weineng sold the alleged infringing products online, which constituted as infringement, and was ordered to separately compensate Universal Pictures for RMB 100,000 (USD 15,458).

g. “NEW BALANCE” ousted “New bunren”

On August 13, 2021, the Beijing High Court affirmed the first instance court decision in favor of the CNIPA over a trademark invalidation dispute.

Disputed Mark	Cited Mark

The Disputed Mark was approved for registration on January 7, 2011, and New Balance filed an invalidation petition on June 28, 2018, after the five-year statute of limitation on filing an invalidation petition against a registered trademark. The CNIPA, however, found that the Disputed Mark constituted as maliciously imitating other’s well-known registered trademark under Article 13(3) of the Chinese Trademark Law, and concluded that New Balance’s invalidation petition was not limited by the five-year statute of limitation.

The Beijing High Court affirmed the first instance court decision finding that New Balance had submitted sufficient evidence proving that the Cited Mark was widely known and enjoyed high fame among the relevant public on “shoes” related goods and constituted as a well-known mark.

Article 13(3) of the Chinese Trademark Law protects well-known trademarks in China and is applicable to registered trademarks. The legislative intention of Article 13(3) is to provide stronger protection to well-known trademark than general registered trademarks. If identical or similar trademarks are registered or used on identical or similar goods approved for the well-known trademark, the consequential damage on the well-known trademark is obviously higher than those trademarks registered or used on different or dissimilar goods. Therefore, applying for trademark registration by copying, imitating, and translating other’s registered well-known trademark on “identical or similar goods” shall be regulated by Article 13(3).

In this case, both the Disputed Mark and the Cited Mark contained “NEW,” while the pronunciation of “BALANCE” and “bunren” was similar, thus, the Disputed Mark and the Cited Mark were similar in terms of word compositions, pronunciations, overall appearances, and visual effects. The Disputed Mark constituted as an imitation of the Cited Mark. The goods approved for the Disputed Mark were identical or similar to the shoes related goods approved under the Cited Mark in terms of function, use, production department, sales channels, consumers, etc., which constituted as identical or similar to the Cited Mark’s approved goods. Where the Cited Mark has constituted a well-known trademark and the Disputed Mark is an imitation of the Cited Mark, when purchasing goods approved for use by the Disputed Mark, the relevant public would easily believed that such goods had certain association with the Cited Mark, which would weaken the Cited Mark’s distinctiveness and damage New Balance’s interests obtained through its well-known Cited Mark. The Court concluded that the Disputed Mark violated Article 13(3) and shall be invalidated.

h. The mark “MOPIDICK in Traditional Chinese” was maintained on cosmetic goods

IKEDA MOHANDO CO., LTD. (“IKEDA”) registered the MOPIDICK in Traditional Chinese mark (“Disputed Trademark”) on August 28, 2014, in Class 3 for “cosmetics, soaps, fragranced soaps, fragrances, cosmetic nails, cosmetic eyelashes, perfume, toothpaste.”

A individual filed a non-use cancellation and later a cancellation appeal against the Disputed Trademark. The CNIPA concluded that the evidence submitted by IKEDA showed that the Disputed Trademark was used on anti-mosquito and anti-itch liquid products, which were closely related to cosmetic products in function, sales location, consumer, etc., and the trademark shall be maintained on cosmetic goods. However, the evidence did not show that the Disputed Trademark was used for soaps, fragranced soaps, fragrances, cosmetic nails, cosmetic eyelashes, perfume and toothpaste, and the mark’s registration on these goods shall be cancelled accordingly.

IKEDA appealed to the Beijing Intellectual Property Court and the court found that the online sales and publicity evidence submitted by IKEDA could prove that it had actually used the Disputed Trademark on the “anti-mosquito and anti-itch liquid” products within the specified period. In view of the strong correlation between the “anti-mosquito and anti-itch liquid” products and the “cosmetics” goods approved for the Disputed Trademark in terms of function, use, sales location, and consumers, the Disputed Trademark shall be maintained on the “cosmetics” goods. According to the Classification of Similar Goods and Services, “fragrance, cosmetic nails, cosmetic eyelashes, soap, fragranced soap” and “cosmetics” goods belong to the same subclass, and the Disputed Trademark shall be maintained on these goods as well. In addition, the Disputed Trademark’s approved goods of “toothpaste, perfume” and “cosmetics, soaps, fragrance” were all daily washing and chemical goods, and they were highly similar in terms of function and use, production department, sales channel and consumers. According to Article 2 of the Regulations on Hygiene Supervision of Cosmetics and relevant regulations, cosmetics refer to daily chemical industrial products that are spread on skin, hair, nails, lips and other parts of the human body by wiping, spraying or other similar methods to achieve the purposes of cleaning, eliminating bad smell, skin care, beauty and decoration. Therefore, the Disputed Trademark’s approved use of “toothpaste and fragrance” products should also be covered by cosmetics in terms of function and use. Therefore, “toothpaste and fragrance” and “cosmetics” should be deemed as similar goods, and the Disputed Trademark’s approved use for “toothpaste and fragrance” shall be maintained.

The CNIPA appealed the first instance decision to the Beijing High Court. The Beijing High Court recently affirmed the first instance court decision that the disputed trademark “MOPIDICK in Traditional Chinese” shall be maintained for its registration on cosmetics, toothpastes, fragrances, and other designated goods.

Guangzhou Xinbailun and Jiangxi Xinbailun were unsatisfied with the judgment, and NB was unsatisfied with the court’s findings of “New Balance in Chinese” and the compensation amount ordered. All parties appealed the first instance judgment to the second instance court, the Beijing IP Court. The Beijing IP Court affirmed the first instance court’s judgment.

i. The Beijing High Court: Trademark co-existence agreement does not automatically equal to grant of trademark protection

Volkswagen applied the “TAYRON” mark which was blocked by the prior registered trademark “TYRON.” Volkswagen submitted a trademark co-existence agreement issued by the owner of the prior trademark, however, the Beijing High Court found that the disputed mark “TAYRON” was almost identical to the prior trademark “TYRON,” thus, even if the co-existence agreement is legal, authentic, and effective, it would not be enough to eliminate the possibility to confuse or to mislead the relevant public regarding source of the goods. Therefore, the trademark co-existence agreement could not be the basis for the registration of the disputed mark “TAYRON” and the court rejected Volkswagen’s appeal.

2. Notable trademark laws, regulations, and news updates

a. Summary analysis of administrative litigation of trademark review and adjudication cases in 2020

In 2020, the Trademark Office’s review and adjudication departments have ruled a total of 358,300 cases and received a total of 14,977 first instance response notices. The number of first instance responses received accounted for 4.18% of the total number of adjudications, which basically leveled with the previous year. A total of 5,933 second instance response notices were received, a slight increase from last year.

The overall review cases loss rate of the Trademark Office’s review and adjudication departments in 2020 was 24.62%, and the actual loss rate after excluding cases with change in circumstances is only 9.8%, which was a significant drop from the actual loss rate of 13.9% in the previous year.

b. The CNIPA publicly solicits opinions on the “General Trademark Violation Judgment Standards“

To strengthen trademark management, improve trademark enforcement guidance, and unify enforcement standards, the CNIPA has drafted the “General Trademark Violation Judgment Standards (Draft for Comment) (“Standards”),” which the CNIPA publicly solicited opinions until October 1, 2021.

The Standards stipulates ten general trademark violations, including: violation of Article 6 of the Chinese Trademark Law, that is, must use a registered trademark but failed to use it; violation of Article 10(i) of the Chinese Trademark Law, that is, use logos that are not allowed to be used as a trademark; violation of Article 14(5), that is, use the words “well-known mark” during business activities; violation of Article 49(i) of the Chinese Trademark Law, that is, in the process of using the registered trademark, the registrant changes the registered trademark, registrant’s name, address or other registration matters by himself; violation of Article 52 of the Chinese Trademark Law, that is, uses unregistered trademarks as registered trademarks; violation of Article 3 of the Several Rules on the Regulation of Trademark Registration, that is, applying for trademark registration in bad faith and etc.

c. From September 1, 2021, intentional IP infringements, filing irregular patent applications, bad faith trademark applications, and serious violation of patent and trademark agency will be included in the serious violations of law and dishonest list

The Administrative Measures for Lists of Parties with Seriously Unlawful and Dishonest Acts for Market Regulation Authorities (“Administrative Measures”), passed on July 22, 2021, came into force on September 1, 2021.

Article 2 of the Administrative Measures states where a party violates laws and administrative regulations, who’s conduct has a bad nature, under serious circumstances, imposes great social harm and is subject to heavy administrative punishment by the market regulation authorities, the relevant market regulation authorities shall list violators in the Lists of Parties with Seriously Unlawful and Dishonest Acts in accordance with the provisions of the Administrative Measures, publish it through the national enterprise credit information publicity system, and implement corresponding management measures.

Article 9 of the Administrative Measures states those who commit the following illegal acts that undermine the order of fair competition, disrupt the market order and fall under the circumstances specified in Article 2 of the Administrative Measures shall be included in the Lists of Parties with Seriously Unlawful and Dishonest Acts:

• Unfair competition actions that seriously undermine the order of fair competition, such as infringing trade secrets, business slander, organizing false transactions, etc.;
• Intentional infringement of intellectual property rights; submitting irregular patent applications and bad faith trademark applications that damages the social and public interests; and engage in serious violation of patent and trademark agency.

d. China’s trademark registration cycle will be further reduced

On August 26, 2021, the CNIPA specially held a mobilization and deployment meeting to shorten the trademark registration cycle. The CNIPA pointed out that the State Council had decided that the general trademark registration cycle will be reduced to 7 months. It is one of the important measures to deepen the reform of the “delegation of administration and decentralization” (simplification of administration and decentralization, combination of delegation and regulation, and optimization of services) in the field of intellectual property rights. The CNIPA’s most important task of the year.

The CNIPA issued a notice on September 14, 2021, in accordance with the “Working Plan for Reduction of the Trademark Registration Cycle in General Situations,” stating that from September 29, 2021, the deadline for payment shall be adjusted from within 15 days from the date of receipt of the payment notice to within 7 days. If the payment is not made within the time limit, the CNIPA will not accept the application.

It can be seen from the above that the CNIPA has shortened the trademark registration cycle in an all-round and multi-stage manner, not only speeding up the formal and substantive examination, but also furthering the process in terms of processing. According to our recent experience, if it all goes well, it will take about 3 to 4 months from submission of an application to preliminary approval; and if excluding the office action for the non-standard goods and services and the payment duration, it will take as short as about one month from the issuance of official filing receipt to preliminary approval.

3. Trademark Practices Series – Bad Faith Application in China and Protection of Chinese Equivalents of Foreign Trademarks

Previously, we shared our insights on the application of bad faith clause with exemplary cases. This time, we are going to share cases to show how we identify the bad faith and how we present the evidence to convince the CNIPA and the courts to achieve favorable outcomes. In the last part of this series, Part IV, we will share cases and our suggestions on two issues, one is the impact on bad faith assessment in the event of later trademark assignment, the other is the necessity to assess bad faith if the right holder’s interests have already been protected by applying other clauses of the Trademark Law.

1. Tackling Bad Faith Trademark Applications or Registrations In China – Part III
2. Tackling Bad Faith Trademark Applications or Registrations In China – Part IV

When an oversea brand enters Chinese market, selecting a Chinese equivalent of the oversea brand is crucial because native Chinese pronounce and remember the Chinese language much easier than any foreign language. This is precisely why nearly all famous international brands have and use its Chinese equivalent names in China. Our article aims to shed light on how foreign brand owners can protect their Chinese equivalent trademarks.

1. Protection of Chinese Equivalents of Foreign Trademarks

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Weekly China Trademark News Updates

October 19, 2021

1. Starting January 1, 2022, the CNIPA will no longer issue paper trademark certificates

Recently, the CNIPA announced that starting from January 1, 2022, applicants who filed paper trademark applications will receive a “Notice of Issuing a Trademark Registration Certificate,” and the trademark registrant can use the web address and access code provided to retrieve electronic trademark registration certificate from the Trademark Office’s website. Applicants who filed trademark applications electronically can log into the Trademark Office’s online platform to view, download, and print electronic trademark registration certificate. The CNIPA will no longer issue paper trademark registration certificates.

2. Mary Kay lost in a trademark infringement and unfair competition dispute

Recently, the Zhejiang High Court rendered a second instance judgement against Mary Kay Inc. (“Mary Kay”) in a trademark infringement and unfair competition dispute. The court found that even if barcodes were scratched, such action cannot be seen as a trademark infringement because Mary Kay’s trademark right was exhausted on first sale.

Mary Kay registered the trademarks “Mary Kay in Chinese” with registration number 594710 and “MARY KAY” with registration number 1275186 in Class 3 for “cosmetics” related goods. Since Mary Kay entered China in 1995, it has continued to use and extensively publicize the said trademarks. The “Mary Kay in Chinese” trademark had relatively high fame. The defendant, Ma Shunxian, was the operator of the Taobao shop “Pink Shop Authentic Beauty Mall.” Various pictures of beauty and skin car products marks with the “Mary Kay” logo were found in the shop’s page. The shop’s front page indicated that all products sold were authentic and had explanations regarding reasons for scratched barcodes. Mary Kay sued Ma’s shop for trademark infringement and unfair competition based on the scratched barcodes to the Zhejiang Intermediate People’s Court and requested relief to immediately stop infringement actions and pay compensation for economic loss of RMB 500,000 (USD 77,971). The Zhejiang Intermediate Court found for Mary Kay and Ma appealed to the Zhejiang High Court.

The Zhejiang High Court reasoned that in a trademark infringement case, if the alleged infringing product was a genuine product, it would be an objective fact that the product originated from the right holder, although some of the barcodes and production batch numbers of the alleged infringing product that can be traced back to the dealer’s partial information were scratched, but if the seller had fully notified the code scratching, it would not harm Mary Kay’s trademark function as to identify the source of the goods, nor would it cause confusion or misunderstanding to the relevant public. It would certain not affect consumers’ perception of Mary Kay’s product and Mary Kay’s reputation. Therefore, the trademark exhaustion principle could be applied in this case and the defendant did not infringe upon Mary Kay’s trademark.

3. Ikea was awarded RMB 600,000 in compensation in a trademark infringement dispute

Recently, the Henan High Court affirmed the first instance court’s decision regarding a trademark dispute involving “Ikea in Chinese,” “Ikea,” and “Jiyou Yi Jia in Chinese.” The court found that the owner of “Jiyou Yi Jia in Chinese” infringed upon Ikea’s trademark rights and shall compensate Ikea’s economic loss of RMB 600,000 (USD93, 581).

Ikea is the right holder of the trademarks “Ikea in Chinese” with registration number 772439 and “IKEA” with registration number 772441 in Class 43 for “restaurant” related services. Ikea’s trademarks “Ikea in Chinese” had rather strong distinctiveness on restaurant related services, and had obtain relatively high fame through use. The owner of the mark “Jiyou Yi Jia in Chinese,” Henan Banmutian Co., Pengfei Lv, and Xiaoting Lv, applied for the “ikea” domain name and trademarks similar to Ikea’s registered trademarks. Additionally, they have promoted and advertised franchise opportunities on WeChat, Weibo, Tik Tok, and its website using marks that were similar to “Ikea in Chinese” and “IKEA.” Such actions would be likely to cause confusion and mistaken the relevant public, which constituted as a trademark infringement upon Ikea’s trademark rights and disturbed the normal market competition and order.

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Protection of Chinese Equivalents of Foreign Trademarks

by Yan Zhang & Austin Chang

When an oversea brand enters China market, selecting a Chinese equivalent of the oversea brand is crucial because native Chinese pronounce and remember the Chinese language much easier than any foreign language. This is precisely why nearly all famous international brands have and use its Chinese equivalent names in China. For example, the well-known tech company APPLE has its Chinese name of “PING GUO in Chinese (苹果)” and MICROSOFT uses “WEI RUAN in Chinese (微软).” Both APPLE and MICROSOFT used literal translation as their Chinese equivalent. Literal translation is one of the three ways in selecting a Chinese equivalent. The famous hotel brand HILTON uses “XI ER DUN in Chinese (希尔顿)” and the fashion brand ARMANI uses “A MA NI in Chinese (阿玛尼).” Hilton and Aermani used transliteration, which is another popular way of creating a Chinese equivalent that could be highly distinctive and have a similar pronunciation to its foreign counterpart. Literal translation or transliteration, it is critical that the Chinese equivalent has no negative meanings.

A combination of literal translation and transliteration is also used in creating Chinese equivalents. For example, STARBUCKS uses “XING BA KE in Chinese (星巴克).” The first character “XING in Chinese (星)” is the literal translation of “STAR,” and the last two characters “BA KE in Chinese (巴克)” are the transliteration of “BUCK.” Another great example is “LOCK & LOCK,” a Korean household brand. Its Chinese name sounds like “Le kou Le kou” and means “happily locked or buttoned.”

As Chinese equivalents could involve various Chinese translations or non-exclusive transliterations, in China trademark prosecution, a foreign language trademark will not automatically be deemed similar to its Chinese equivalent. So registering the foreign language trademark alone may not be sufficient to establish priority over all Chinese translations, nor prevent others from registering various transliterations.

More importantly, China adopts the first-to-file trademark system. If a Chinese equivalent of a foreign language trademark is not promptly selected, it is likely that distributors, consumers, or media may “self-select” a Chinese name for that foreign language trademark and even have it registered to block that oversea brand owners from using its Chinese marks in China. So it is vital for an oversea brand owner to create and timely protect its Chinese equivalent.

1. Factors considered in prosecution and litigation

Determining whether or not a foreign language trademark is similar to a prior Chinese language trademark, the general understanding of Chinese relevant public shall be considered, and the following factors should be taken into account according to the Beijing High Court Guidelines for the Trial of Trademark Right Granting and Verification Cases: (i) the ability of Chinese consumers to recognize the foreign language trademark; (ii) the relevance or correspondence in meaning and pronunciation between the foreign language trademark and the Chinese language trademark; (iii) the distinctiveness, popularity and ways of use of the cited trademark; and (iv) the actual use of the trademark in dispute. These factors should be comprehensively considered in different proceedings and evaluated on a case-by-case basis.

For the factor “the ability of Chinese consumers to recognize the foreign language trademark,” two elements should be considered, the type of foreign language and the frequency of use of foreign words.

If Chinese consumers cannot recognize a foreign word, it would be unnecessary to discuss similarity between the foreign language trademark and Chinese language trademark. Like in the “Little Black Dress” case, the Court held that the refused mark “Little Black Dress in Chinese” and the cited mark “LA PETITE ROBE NOIRE” do not constitute similar marks, because most Chinese consumers cannot read French, nor do they know the Chinese meaning of the cited French trademark. They would only recognize the cited French trademark as a combination of Latin alphabets and not associate it with a Chinese language trademark.

For the factor “relevance or correspondence between the foreign language trademark and the Chinese language trademark,” as one foreign word can be translated or transliterated into different Chinese characters, and vice versa, when identifying similarity between a foreign language trademark and a Chinese language trademark, correspondence can be considered from either of the two perspectives – translation from Chinese into English and vice versa.

Taking the “FOREVERMARK” case for example, “FOREVERMARK” can be translated into “永恒印记, ” while “永恒印记” can also be translated into “FOREVER MARK.” As “FOREVER” and “MARK” are both frequently used English words, Chinese consumers can readily understand the Chinese meaning of the trademark and will likely associate the trademark with its corresponding Chinese translation.

Based on current practices in China, the substantial examination of a foreign language trademark at the Trademark Office is straightforward. The examiners mainly focus on the literal meaning of the trademark, and refer to the online dictionaries, such as Kingsoft dictionary for direct translation. Hence, the transliterations of a trademark or phonetically similar trademarks will not be cited by the examiners to block the new application of foreign language trademark.

While in refusal appeal procedure, the examiners apply a broader scope in examining the similarity between a foreign language trademark and a Chinese language trademark, not merely relying on the dictionary meanings. Their broader scope of examination focuses on the two aspects: the general understandings of Chinese consumers and the correspondence in meanings between the foreign language trademark and the Chinese language trademark. The use and reputation of refused marks would also be deemed as a supporting factor but cannot carry much weight.

In reviewing opposition and invalidation cases, however, the Trademark Office and courts apply a more comprehensive analysis using “likelihood of confusion” as the judging standard. In addition to comparison of trademarks per se, other influential factors may be considered when assessing “likelihood of confusion,” such as the cited trademark’s distinctiveness, the use and reputation of the cited trademarks, the relatedness of goods and services, and the applicant’s bad faith.

Chinese courts also apply the “likelihood of confusion” analysis in trademark infringement cases involving Chinese equivalents, requiring only a “stable,” as opposed to “sole” corresponding relationship be established between a foreign language trademark and its Chinese equivalent. However, to achieve the “stable” status, brand owner must provide substantial evidence to prove that its foreign language trademark and its Chinese equivalent have been widely used over a long period of time, and the corresponding relationship has been established and known to the relevant public.

2. Typical cases regarding Chinese equivalents of foreign trademarks

The most common mistake in business practice is that the brand owner does not have an “official” Chinese equivalent for its foreign language trademark, nor does it attempt to use and promote the trademark in Chinese. When a brand owner does not have a Chinese equivalent for its foreign language trademark, its Chinese distributors, public, or media will often self-create and use a Chinese version to refer to the brand owner and its products. This is considered as “passive use” in contrast to the “active use” by the brand owner. In practice, when an issue of determining whether a use is an active one or a passive one is presented to Chinese courts (usually in cancellation actions), the courts will examine whether the asserted “passive use” in the case at hand is used against the brand owner’s will, and whether a corresponding relationship between the foreign language trademark and its Chinese equivalent has been established. Please see below an example case.

In the FREDDIE MAC case, the China Supreme Court held that “FANG DI MEI in Chinese,” as one of the Chinese translations of “FREDDIE MAC,” has been widely used by media reports to refer to Freddie Mac, and “FANG DI MEI in Chinese” has established a corresponding relationship with “FREDDIE MAC” in the field of financial services, although there exists several other translations, like FANG DAI MEI (房贷美) and FU LEI DE MA KE (弗雷迪马克). The FREDDIE MAC case highlights that the existence of several Chinese translations does not affect the establishment of corresponding relationship between the major Chinese translation and the foreign language trademark.

An equally important issue is that the corresponding relationship shall be identified in connection with the specific goods or services used. Taking the FACEBOOK case for example, the Beijing High Court held that, based on the third party evidence including Chinese media reports, and general understanding of Chinese relevant public, the “LIAN PU in Chinese” mark was the corresponding translation of the FACEBOOK mark when used on networking services. Although “LIAN PU in Chinese” has its fixed meaning in Chinese, which means facial makeup in operas, when used in connection with networking services, it refers to Facebook, rather than other entities.

The FREDDIE MAC case and the FACEBOOK case are typical passive use cases where the courts protected the Chinese equivalent of the foreign language trademark. For the passive use, the worse scenario happens when the Chinese distributor created the Chinese name for the oversee brand and registered the Chinese trademark under its own name. Upon the termination of business cooperation, the Chinese distributor may start supplying identical products using the Chinese trademark, which may inevitably mislead consumers about the source of products.

As in the EVOLON case, a Nanjing Company, which was a distributor of Freudenberg, registered the Chinese mark “YI WO LONG in Chinese (依沃珑)” and used it in the sales of Freudenberg’s nonwovens products with the English mark “EVOLON.” The Nanjing Company insisted that the Chinese mark was created by themselves, and it was their efforts that contributed to the reputation of the Chinese mark. The China Supreme Court affirmed the corresponding relationship between the Chinese mark “YI WO LONG in Chinese” and the cited English mark “EVOLON,” and further held that the Nanjing Company used the Chinese mark alone or together with the English mark to promote Freudenberg’s products, which inevitably associated the Chinese mark with Freudenberg and its products.

Despite more and more positive outcomes from Chinese courts, there are cases where Chinese equivalents of foreign language trademarks were not protected because brand owners expressly denied the corresponding Chinese equivalents. The VIAGRA case and SONY ERICSSON case are typical examples. In the VIAGRA case, Pfizer adopted a Chinese name “WAN AI KE in Chinese” for its blue pills, Chinese public and media, however, had already created a Chinese name “WEI GE in Chinese” for VIAGRA. Pfizer opposed a third party’s filing for the “WEI GE in Chinese” mark but failed. The court found that, Pfizer had never promoted their products under the name “WEI GE in Chinese,” and on the contrary, claimed that the Chinese equivalent of VIAGRA was “WAN AI KE in Chinese.”  In the SONY ERICSSON case, Sony Ericsson used “SUO NI AI LI XIN in Chinese” as the official translation of its mobile phone brand, but Chinese public and media called it “SUO AI in Chinese” for short. The court held that, Sony Ericsson had no evidence proving their use of “SUO AI in Chinese” and even denied that “SUO AI in Chinese” was the abbreviation for “SUO NI AI LI XIN in Chinese.”

One final important point, the evidence proving the corresponding relationship shall be prior to the application date of the disputed mark or prior to the first use date of the accused mark.

In the New Balance case, New Balance registered its English trademark “New Balance,” but neglected to register the Chinese version. A Chinese individual, Mr. Zhou, registered the trademarks “BAI LUN in Chinese” and “XIN BAI LUN in Chinese” for footwear and later brought an infringement action against New Balance’s use of “XIN BAI LUN in Chinese” mark. The first instance court affirmed trademark infringement and ordered New Balance to pay damages for around USD 15 million. This astonishing high damage was significantly reduced to around USD 770,000 by the second instance court, that said, the finding of trademark infringement is an important lesson to oversea brand owners doing business in China to have a Chinese equivalent trademark.

On the other hand, New Balance attempted to invalidate Mr. Zhou’s registered trademark “XIN BAI LUN in Chinese,” claiming “XIN BAI LUN in Chinese” is a Chinese equivalent of “NEW BALANCE,” but the Beijing High Court recently made the final decision denying New Balance’s appeal, because New Balance used “XIN BAI LUN in Chinese” as the Chinese equivalent of NEW BALANCE later than the application date of Mr. Zhou’s “BAI LUN in Chinese” trademark. And no sufficient evidence was provided to prove the corresponding relationship between “XIN BAI LUN in Chinese” and “NEW BALANCE” prior to the application date of the disputed mark.

Similarly, a famous Australian wine brand Penfolds got involved in a trademark dispute with a Chinese squatter Mr. Li, who registered the mark “BEN FU in Chinese,” which is the Chinese equivalent of PENFOLDS. This registration blocked the Australian brand owner using the “BEN FU in Chinese” mark in China, despite doing business in China for over twenty-five years. In the PENFOLDS case, the Beijing High Court held that the submitted evidence was sufficient to prove the corresponding relationship established between the disputed mark “BEN FU in Chinese” and the cited English mark “Penfolds” prior to the application date of the disputed mark.

Fortunately for Penfolds, before successfully securing the registration of its own Chinese mark “BEN FU in Chinese,” it landed a victory in an infringement action against a Chinese brewing company and its distributor. The local court affirmed the well-known status of “BEN FU in Chinese” as an unregistered mark, based on its corresponding relationship with the English mark “Penfolds,” and held the defendants’ use of the accused “BEN FU in Chinese” mark constitutes trademark infringement. In this case, “BEN FU in Chinese” was protected as unregistered well-known mark based on the evidence prior to the first use date of the accused mark.

The key issue in the New Balance case and the Penfolds case is the cut-off time for collecting evidence. On top of that, sufficiency of evidence is crucial in swinging the outcome of a case.

3. Takeaways

1) It is highly recommended that oversea brand owners create their own Chinese equivalents before entering the China market. If not, Chinese consumers or media will create Chinese versions in different ways and squatters may even register them.

2) Oversea brand owners should not only register the foreign language trademark, but also file for the Chinese equivalent as soon as possible. Those Chinese equivalents created by the media and public shall be considered and registered as trademark as well, at least for defense purposes.

3) In addition to clearance search, regularly monitoring similar Chinese translations in key classes will help in discovering questionable marks, which allows brand owners to address squatting or counterfeiting problems in a timely manner.

4) Better evidence management is crucial because sufficiency of evidence, especially evidence related to the use and fame of the foreign language trademark as well as the corresponding relationship between the foreign language trademark and its Chinese equivalent, is always a core factor affecting chances of success.

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China