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An Overview of Well-known Mark Protection in China

By Our Guest Correspondence

The well-known mark, as a topic that has drawn increasing attention and been frequently covered in the mass media, is a trademark that has relatively high renown and repute, whose role is by no means limited to distinguishing origin of one goods and service from that of another and which has become a sharp edge for market competition.

Origin of Well-known Mark System in China

As a member of the Paris Convention for the Protection of Industrial Property administered by the World Intellectual Property Organisation, China began, in 1987, its the explorative practice of well-known mark establishment according to the conventional requirement and the internationally accepted practice with a view to meeting its obligations under the Convention,.

In August 1987, the Trademark Office of the State Administration for Industry and Commerce (SAIC) established the trademark "PIZZA HUT" and the roof-shaped device of the US Pizza Hut International Inc. as well-known mark in a case of trademark opposition, and refused to register an identical trademark the Australian 鸿图 Co., Ltd, intended to register preemptively. This is the first well-known mark established in China after its accession to the Paris Convention.

Ever since, the Chinese Trademark Office and the Trademark Review and Adjudication Board (TRAB) have established well-known marks in several cases of trademark disputes. Between 1988 and 1991, the Trademark Office and TRAB respectively established such trademarks as well known as the "LUX and 力士"of the UK Unilever Inc. and the trademark "Marlboro and 万宝路"of the US Philips Morris Corporation, the trademark "同仁堂" (pronounced as "tongrentang") of the Beijing Tongrentang Co., Ltd.), the US trademark "SHERWOOD" and the "Butterfly (蝴蝶) trademark of the Shanghai Xiechang Sewing Machine Factory.

In establishing these well-known marks, the world prevalent principle of "ad hoc establishments and passive protection" has been observed. In China, the protection of well-known marks started to meet the need for the protection of foreign well-known marks.

Law Provisions for the Protection of Well-known Marks

The laws and regulations on which the protection of well-known marks is based are mainly: the Chinese Trademark Law, the Implementing Regulations of the Trademark Law, the Provisions on the Establishment and Protection of Well-known Marks, and the three Supreme People's Court's interpretations, namely, the Interpretation relating to the Scope of Jurisdiction over and Application of Law to Trial of Trademark Cases, the Interpretation of the Issues Relating to Pre-trial Cessation of Acts of Infringement of Exclusive Right to Use Trademarks and Evidence Preservation, and the Interpretation of Several Issues Relating to Application of Law to Trial of Cases of Civil Trademark Disputes. Besides, the Chinese Criminal Law and the judicial criminal interpretation have also set forth provisions on the protection of well-known marks.

Trademark Law and Its Implementing Regulations

Three articles of the Chinese Trademark Law and its Implementing Regulations respectively relate to well-known marks. Article 13 of the Trademark Law2 is believed to be the core provision and basic principle of the system for the protection of well-known marks in China; Article 143 has provided for the five considerations for establishment of well-known marks; and Article 41, paragraph two4 of Trademark Law for the time for a well-known mark owner to claim its right.

Rules 55 and 456 of the Implementing Regulations of the Trademark Law have respectively set forth detailed and additional provisions on the proceedings of "refusal of registration" and "prohibition of use" provided for in Article 13 of the Trademark Law. Rules 53 7 of the Implementing Regulations of the Trademark Law has spelt out the provision on issues of conflict between an enterprise name and well-known mark.

The Provisions on the Establishment and Protection of Well-known Marks issued by the SAIC have set forth further detailed provisions relating to the above provisions.

Understanding of these provisions help us work out a summery on the protection of well-known marks in China.

Under the law, there are two groups of trademarks that are under the protection of well-known marks: well-known marks not registered and those registered in China.

In China, the law protects well-known marks in two ways: "refusal of registration" and "prohibition of use".

Under the Chinese law, the precondition for acquisition of the well-known mark protection are: (1) a well known trademark has been reproduced, imitated or translated for application for registration and use thereof, and (2) the use is likely to cause confusion or mistaking on the part of the public, so that injury is likely to be incurred to the interests of the well-known mark registrant.

The special protection accorded to well-known marks under the Chinese law may be generalized as the following:

1. The trademark protection under the Chinese law is based on the principle of registration; hence non-registered ordinary trademarks are not protected under the law, with the exception to well-known marks which are protected under the Trademark Law even if they are "not registered in China".

2. In the registered trademark dispute proceedings, the time for an owner of an ordinary trademark or an interested party to make its clam is 5 years from the date of registration of a trademark in violation of the relevant provisions of the Trademark Law, while the owner of a well-known trademark is not subject to the 5-year limitation if another party's registration is in bad faith. That is, trademarks do not have to be registered in China, nor are they subject to any limitation for making a claim.

3. When a well-known mark runs into conflict with an enterprise name, the well-known mark owner may apply to the competent authorities for canceling the enterprise name if it believes that another person's registration of its well-known mark as an enterprise name is likely to deceive or confuse the public, and the competent authorities must examine the enterprise name under the Provisions on Registration and Administration of Enterprise Names to find out the circumstance of "being likely to deceive or confuse the public".

4. An ordinary registered trademark can be exclusively used only on identical or similar goods or services covered by its registration, but a well-known mark registered in China has the exclusive right to be used on identical or similar goods or services, and, as well, are protection under the law in relation to dissimilar and non-identical goods or services.

5. In treating cases of trademark disputes, the people's court specifies that "prohibition of use" is one of the modes for protecting the exclusive right to use a registered trademark, thus increasing the liability for infringement by anyone who is prohibit to use the trademark involved.

The Supreme People's Court's Judicial Interpretations

The Supreme People's Court's three judicial interpretations on trademark protection have set forth provisions for the protection of well-known marks mainly as follows:

1. Well-known marks registered in China expressly fall within the scope of protection of the exclusive right to use registered trademarks;

2. The people's court may establish whether a registered trademark is well known or not and has provided for the levels and regions of jurisdiction over the establishment of well-known marks (people's courts at or above the intermediate people's courts and the grassroots people's courts approved by the Supreme People's Court); and

3. The scope of protection of well-known marks varies depending on registration in China; so do the legal liabilities for infringement of the well-known mark right. Infringement of a non-registered well-known mark is imposed the civil liability for ceasing the infringement while infringement of a registered well-known mark is imposed all sorts of the civil liabilities, including that for damages.

Ways to Apply for Establishment of Well-known Marks

Under the current laws, regulations and judicial interpretations, application for establishment of well-known marks may be made in four ways:

1. In the trademark opposition proceedings, an interested party who believes that another person's trademark preliminarily examined and published is in violation of Article 13 of the Trademark Law, may, while raising opposition, applies for establishment of well-known mark, and submit the relevant documents proving that its trademark is well known.

2. In the case of trademark dispute, an interested party who believes that another person's registered trademark is in violation of Article 13 of the Trademark Law, applies, while applying to the TRAB for revocation of said trademark registration, for establishment of well-known mark and submit the relevant evidence.

3. In the process of trademark administration, an interested party who believes that a trademark used by another person is in violation of Article 13 of the Trademark Law and requests for protection of its well-known mark may file a request in writing with and submit relevant proofs to the administrative department for industry and commerce at or above the city (prefecture) level of the place where the case arises for prohibition of use. If the department receiving the case believes that the case is of one of the circumstances provided for in Article 13 of the Trademark Law, it transfers the case to the Trademark Office. The time from a party's filing a request for "prohibition of use" to the Trademark Office's establishment of the well-known mark usually does not exceed 8 months.

4. In a trademark lawsuit, an interested party may take its claimed well-known mark as the reason for or evidence of its counterclaim, and the people's court decides on whether the involved registered trademark is well known or not at the request of the interested party and according to the specific circumstance of the case.

Authorities, Administrative Power and Procedure for Establishment of Well-known Marks

To date, in the system of well-known mark protection in China, the SAIC, Trademark Office, TRAB and the people's court (the Beijing Municipal No. 1 Intermediate People's Court, the Beijing Municipal Higher People's Court and the Supreme People's Court) may decides on whether an involved registered trademark is well known or not according to the specific circumstance of the case in respect of the matter of "refusal of registration"; the Trademark Office of the SAIC and the people's court (the grassroots people's courts approved by the Supreme People's Court) may decides on whether an involved registered trademark is well known or not according to the specific circumstance of the case in respect of the matter of "prohibition of use".

"Refusal of registration" is embodied as rejection of application for registration or revocation of a registered trademark. A registration application can be rejected in the proceedings of three levels, namely, the opposition proceedings, the reexamination proceedings and the administrative legal proceedings; a registered trademark may be revoked in the proceedings of two levels; namely the TRAB's revocation proceedings and the administrative legal proceedings. "Prohibition of use" often arises in civil trademark disputes, to which the civil legal proceedings apply.

Standards and Proofs Needed for Establishment of Well-known Marks

Under Article 14 of the Trademark Law, five factors should be considered in establishing well-known marks:

(1) the degree of knowledge of the relevant section of the public;

(2) the duration of use;

(3) the duration of time, degree and geographical area of any publicity of the mark;

(4) any record of the mark being protected as a well-known mark; and

(5) other factors which makes the mark well-known.

and following proofs should be submitted for the purpose:

(1) the relevant proofs as to the extent of the well-knownness of said mark to the relevant section of the public;

(2) the relevant proofs as to the duration of the use of said mark, including those relating to the history and scope of the use and registration of said mark;

(3) the relevant proofs as to the duration, extent and geographic area of any advertisement and publicity for said mark, including those concerning the approach to, geographic area of and media for the advertisement and promotion and the scale of the advertisement;

(4) the relevant proofs as to the record of protection of said mark as a well-known mark, including those certifying that said mark was protected as a well-known mark in China or any other country and region; and

(5) other proofs as to the well-knownness of said mark, including the relevant profits of the output, volume of sales, sales income, profit and tax and regions of sales of the principal goods using said mark over the last three years.

Present Basic Situation of Establishment of Well-known Marks

From China's accession to the Paris Convention to the end of July 2004, the competent authorities in China had established 384 well-known marks, of which 293 were established between 1989 and 2000, and 91 after the entry into force of the newly-revised Trademark Law.

As for the 91 trademarks established after the entry into force of the current Trademark Law in December 2001, 69 well-known marks were published in two batches by the Trademark Office, of which 13 belong to foreign enterprises, including 8 from the United States, 1 from France, United Kingdom, Switzerland, Italy and Germany each; 11 were established by the TRAB, of which 6 belong to the domestic businesses and 3 belong to foreign companies (all from the United States), and 11 by the people's court.

Since coming into force of the Provisions for the Establishment and Protection of Well-known Marks on 1 June 2003, 14 of all the applications for the establishment of well-known marks filed with the Trademark Office have been rejected for non-compliance with Article 13 of the Trademark Law, and 33 not granted the establishment for lack of evidence to show that the trademark to be established as well-known marks are widely known to the relevant section of the public and enjoy relatively high reputation. Under the Provisions for the Establishment and Protection of Well-known Marks, no application should be filed within one year from the date on which decision is made that the related trademark is not established as well known.

Well-known Mark Establishment vs. Famous Brand Selection in China

Whenever a well-known mark is mentioned, people would naturally associate it with "a famous brand" in China. The "famous brand in China" is a title granted to a product meeting the evaluation requirement by the China Famous Brand Strategy Promotion Commission authorised by the State Administration for Quality Inspection. Many treat the "China's well-known marks" and "China's famous brands" equally because before the Provisions for the Establishment and Protection of Well-known Marks came into force, establishment of well-known marks, like selection of the famous brands, was very much administratively coloured. However, after the Provisions were revised, the establishment of well-known marks does not imply grant of any qualification at all.

In essence, "famous brands in China" are not the same as well-known marks. The title of famous brand is an honour given to an enterprise as part of the State reward. To date, the selection has drawn much criticism. For many, the selection of the "famous brands in China" is use of the governmental resources to carry on unfair competition. What's more, it is a government involved unfair competition. The grant of a "famous brand in China" is more embodied as an honour, using which enterprises decorate their products to win acceptance thereof from the consumers. It is very instrumental to quick sale of the products.

In fact, a product's entry into the market should depends on its own factor. Since acquiring a title is much easier than developing a good product, many enterprises make too much efforts to have their products selected famous brands or to acquire well-known marks in China. As a result, a trade has come into being, and some law firms have been appointed by enterprises to provide service to acquire the title of famous brands and well-known marks for them.

Practice of Well-known Marks Protection

It has been 13 years of practice in establishment of well-known marks. Nearly 400 well-known marks have been established, whereby the facts that these trademarks "are widely known to the relevant section of the public and enjoy relatively high reputation in China". The well-known mark establishment has made it possible for the established well-known marks to be directly protected in on-going or subsequent lawsuit, and establishment of trademark reputation is of significance to and has an impact on an enterprise and even the public. Reviewing what China has been doing in this aspect will help us further understand and amplify the well-known mark system in China.

Co-existence of Identical Well-known Marks: Impossible Cross-class Protection

It is not difficult to find in the list of well-known marks in China that several established well-known marks are trademarks made up of identical words, for example, three well-known marks of "Dongfeng" (东风) owned by different rightholders and used respectively on products of automobiles, diesel engines and hand tractors. Likewise, there are two "Great Wall" (长城) trademarks: one for computers and the other for lubricant oil; two "phoenix" (凤凰）trademarks: one for bicycles and the other for camera, to mention just a few. The co-existence of identical trademarks has made it impossible for these registered well-known marks to be given the protection of "cross-class" products they are entitled to under the law. As for how this problem has arisen, Huang Hui, the first Ph.D. Laureate in the study of trademark in China, believes that it is because the principle of registration of trademarks on the basis of classification of goods is observed in China. When an enterprise first creates a trademark, it registered it for goods of limited or relevant classes, rarely considering to register a defensive trademark. Many enterprises use such non-distinctive words as "great wall" or "phoenix" as trademarks, which would inevitably give rise to identical trademarks. Under this situation, all well-known marks cannot secure protection cross all classes of goods.

Well-known Marks v. Trade Names: a Line Dividing the Two Different Rights

In protecting well-known marks, to avoid conflict between a well-known mark and an enterprise name is one of the essential ways to prevent dilution and confusion of well-known marks. In practice, use of a well-known mark in an enterprise name weakens the protection of the well-known mark.

Recently, in Hangzhou Zhang Xiaoquan Group Co., Ltd. v. the Shanghai Zhang Xiaoquan Knives and Scissors General Shop, the former owns the established well-known mark "Zhang Xiaoquan", and the latter the first registered enterprise name. Since "Zhang Xiaoquan" is a trade name used for more than a hundred years and also very much known in China. In the judgment of the case, the Shanghai No. 2 Intermediate People's Court believes that according to the principle of protection of a prior right, the Hangzhou Zhang Xiaoquan Group Co., Ltd. should not use the later acquired trademark right and the well-known mark right to counter against the prior enterprise name right of the defendant. In the appeal, the Shanghai Higher People's court upheld the judgment, but in its judgment gave a warning to the Shanghai Zhang Xiaoquan Knives and Scissors General Shop and its invested Shanghai Zhang Xiaoquan Knives and Scissors Manufacturing Co., Ltd. that to regulate the market order, the two enterprises should respect the trademark right and the well-known mark right of the "Hangzhou Zhang Xiaoquan", and should not use the trade name of "Zhang Xiaoquan" in a expanded way in its activities of corporate transfer or investment. When the Shanghai Zhang Xiaoquan Knives and Scissors General Shop has no share in the Shanghai Zhang Xiaoquan Knives and Scissors Manufacturing Co., Ltd, the latter should not use "Zhang Xiaoquan" in its enterprise name.

As for the conflict between well-known marks and enterprise names, Cheng Yongshun, Deputy Presiding Judge of the Intellectual Property Tribunal of the Beijing Higher People's Court, believes that there is no adequate harmony in the law as a whole in the protection of well-known marks, nor consistence in the goal of well-known mark protection. When the laws are to be revised, provisions on prohibition should be added. For example, at the time of registration of an enterprise name, use of another person's well-known mark should be prohibited or restricted, otherwise, conflict is inevitable. Besides, the more conflicts will affect the creation and development of well-known marks. Before these trademarks are used in the international market, they are certain to cause confusion in the domestic market if used in the regional enterprise names, which would make it impossible for them to be used for international competition, let alone for them to become trademarks well known internationally.

Well-known Mark: a Litigation Ground Not Accepted as Priority

Establishment of a well-known mark is in fact an determination of a fact, and for mark to be well-known is a dynamic fact.

The people's court establishes a well-known mark strictly according to the relevance to a particular case. When the very fact of ad hoc establishment of a well-known mark is more favourable to the protection of a plaintiff's rights and interests, the people's court will make the establishment at the request of the interested party.

According to Chang Yongshun, in the cases of second instance handled by the Beijing Higher People's Court, a strict standard is followed. So far, the Court has only established the trademark "DU PONT" as a well-known mark, because in a dispute of registration on the Internet, the trademark "DU PONT" became well known earlier than the domain name registered by the Guowang Company. The latter's pre-emptive registration of the domain name "DU PONT" is legally groundless and has taken up the business benefits brought by the well-known mark of "DU PONT". In the case of preemptive registration of the domain name "ikea", the first-instance court decided that "IKEA" is a well-known mark, but the second instance court believes that sufficient evidence shows that the other party has registered the domain name in bad faith. Besides, the trademark "IKEA" was registered years before the registration thereof as a domain name. The bad-faith in the defendant's registration is obvious, and whether the trademark is well known or not has nothing to do with the present case. For that matter, the second-instance court did not establish "IKEA" as a well-known mark.

Now, the situation is that under the Supreme People's Court's judicial interpretation, trademark disputes are under the jurisdiction of intermediate people's court or above; hence it is believed that in China over 400 intermediate people's courts have the power to establish well-known marks. Since the legal standards for establishment of well-known marks are not clearly defined and cases of the kind are scattered among all these courts, inconsistence of the standards is something inevitable. The establishment standards should be integrated as soon as possible so as to avoid too much difference in and lack of objectivity of the standards owing to the existence of too many establishment authorities.

Conclusion

Protection of well-known marks in China began in 1985 when China acceded to the Paris Convention. Over the years the relevant Chinese administrative and judicial authorities have accorded protection of well-known marks of quite a number of Chinese and foreign rightholders. From 1996, the competent trademark department in China began to establish domestic well-known marks in batches, which has been questioned by people from the industry and foreign rightholders, and deemed to have violated the "national treatment" principle. By 2003, this practice of establishing well-known marks in batches was abolished, and replaced by the internationally prevalent practice of ad hoc establishment of well-known marks. That is, when an infringement of or a conflict with a right arises, the relevant Chinese administrative or judicial authorities determine whether a trademark is well known or not in order to decide on grant of the extended protection. It should be said that protection of the well-known marks in China has been moving along a right track. Predictably, China's future legislation will give more attention to the protection of well-known marks, and issues of the currently existing conflicts between other lawful rights and well-known marks and conflicts between well-known marks will be addressed through legislation.