Summary Analysis of Administrative Litigation Cases of Trademark Review and Adjudication Committee in 2018 (Part 2)

Summary Analysis of Administrative Litigation Cases of Trademark Review in 2018 (Part 2)

Litigation and Review Office

　　According to the data analysis in the first issue of "Review Legal Communication" in 2018, the proportion of cases lost by the review department due to Article 13 and Article 44.1 of the Trademark Law has increased significantly. Through a detailed review of the above-mentioned lost cases, we found that although most cases were lost due to disagreements in fact-finding, including reasons such as the parties submitting new evidence, the legal application paths and attitudes shown in some lost cases are particularly questionable.

　　 I. On the issue of the combined use of Article 44.1 "Obtaining registration by other unfair means" and other substantive clauses

　　According to the provision 17.5 of the "Trial Guide for Trademark Authorization and Confirmation Administrative Cases" issued by the Beijing Higher People's Court, in the cases of invalidation and non-registration review, if other clauses of the Trademark Law can be applied to refuse registration or declare invalidity of the disputed trademark, Article 44.1 of the Trademark Law shall not be applied. From the wording of this provision, it seems that other substantive clauses have priority in application, and under the premise that other clauses are established, Article 44.1 may not be subject to substantive trial. However, in practice, the judicial judgments on the issue of the combined use of Article 44.1 and other clauses show obvious diversity or inconsistency. Some directly do not comment on Article 44.1, while others conduct substantive trials but conclude that it is not established. These two approaches are essentially contradictory. In addition, the following practices are particularly noteworthy.

　　Scenario 1: The prior right of the party has been protected, so Article 44.1 is no longer applicable. For example, in the invalidation case of the trademark "JIPU" No. 9767386 [1] and the invalidation case of the trademark "Leirfu Opai" No. 16693707 [2] the reason why the first-instance judgment no longer applies Article 44.1 is that the plaintiff's prior rights have been protected by Article 13 and Article 30 respectively, so Article 44.1 is no longer applicable. In the invalidation case of the trademark "Lan Meisu" No. 11059128 [3] the first-instance judgment goes a step further, pointing out that the registrant of the disputed trademark applied for registration of a trademark similar to the plaintiff and other well-known liquor brands, which constitutes a situation of damaging specific civil rights. Given that Article 28 and 29 of the 2001 Trademark Law have been applied to protect the plaintiff's prior trademark rights, its claim under Article 44.1 is no longer supported. This type of judgment reflects two issues: First, what is the relationship between the prior right clause and Article 44.1, why can Article 44.1 no longer be applied if the party's prior right is protected, and is this in line with the logic of legal application? Second, it is worth discussing whether the large number of imitative registrations are identified as damaging specific civil rights, which violates the consistent administrative and judicial review practices, and whether the superposition of multiple facts damaging the interests of specific civil entities may lead to a qualitative change in the nature of the application for registration.

　　Scenario 2: On the basis of the establishment of other clauses, it is determined that other unfair means are also established, but Article 44.1 is not applied with reference to previous cases. For example, in the invalidation case of the trademark "McFlurry" No. 12049178 [4] the first-instance judgment first determined that the registration of the disputed trademark violated the provisions of Article 13, paragraph 3 of the Trademark Law, and then commented that the registrant of the disputed trademark and its sole shareholder registered multiple trademarks similar to other well-known trademarks, disrupting the trademark registration order. Finally, given that Article 13 has been applied for protection, with reference to the spirit of the 2015 High Court Final Judgment No. 659, Article 44.1 is no longer applied. We believe that this type of judgment is a compromise approach that, without violating the provisions of the High Court Trial Guide 17.5, still reviews and makes substantive evaluations of imitative registrations. The advantage is that it can play a deterrent role in similar registration situations and provide correct guidance for application for registration, but the disadvantage is that the logic of legal application is still questionable.

　　Scenario 3: On the basis of determining that Article 44.1 is established, the claim of well-knownness under Article 13 is no longer commented on. In the invalidation case of the trademark "Yikalu" No. 9594513 [5] the first-instance judgment first determined that Article 44.1, obtaining registration by other unfair means, was established, and then no longer commented on the claim made by the party under Article 13. This approach also faces the questioning of the logic of legal application, and is completely opposite to the legal application attitude shown in the first scenario, which inevitably makes one wonder: which comes first and which comes second in the application of other substantive clauses and Article 44.1?

　 Scenario 4: Article 44.1 is applied simultaneously with other clauses being established. In the invalidation case of the graphic trademark No. 11194669 [6] the first-instance judgment determined that the registration of the disputed trademark not only infringed the plaintiff's prior copyright, but also constituted the situation of obtaining registration by unfair means as referred to in Article 44.1. In the invalidation case of the trademark "Jianlangchun" No. 10719314 [7] the first-instance judgment determined that the registration of the disputed trademark violated both Article 19.4 and Article 44.1 of the Trademark Law. In the invalidation case of the trademark "Chi Bu Wang Lao E" No. 21682535 [8] the first-instance judgment determined that the registration of the disputed trademark constituted both the infringement of the plaintiff's prior business name right under Article 32, the snatching of trademarks that have been used by others and have a certain influence, and the situation of obtaining registration by other unfair means under Article 44.1. In the invalidation case of the trademark "JIOPPLECHENG" No. 12347780 [9] the first-instance judgment determined that both Article 13 and Article 44.1 were established. In the invalidation case of the trademark "Meizhongyihe and graphic" No. 12138854 [10] the first-instance judgment broke through the distinction table and applied Article 30, and on this basis, continued to determine that Article 44.1 was established. In the fourth scenario, Article 44.1 coexists harmoniously with multiple substantive clauses, which is completely opposite to the legal application attitude shown in the first scenario.

　　We believe that the above-mentioned contradictions in legal application mainly stem from a lack of understanding of the nature and function of Article 44.1, thus leading to a misunderstanding of the relationship between this clause and other substantive clauses.

　　First, Article 44.1 is an absolute ground clause, and there is no mutual exclusion in its application with relative ground clauses.

　　First, judging from the position of Article 44.1 and the fact that it is not subject to a 5-year time limit, the nature of this clause is undoubtedly an absolute ground. Under the premise that the parties simultaneously claim absolute and relative grounds, the establishment of relative grounds should not affect the trial of absolute grounds. This is because: firstly, the trademark itself may simultaneously constitute the circumstances referred to by relative and absolute grounds, similar to the comprehensive review of relative and absolute grounds in opposition cases; in cases of invalidation or declaration of invalidity, a comprehensive review of the registrability of the trademark in question should also be conducted under the principle of application. This can maintain the consistency of the legal application standards in the entire trademark authorization and confirmation procedure. In particular, the so-called other substantive clauses include relative ground clauses such as Articles 30 and 32, as well as absolute ground clauses such as Articles 10 and 11. In judicial practice, both absolute and relative grounds raised simultaneously by the parties will be reviewed. So, what reason is there to exclude Article 44.1, as one of the absolute grounds, from the scope of review? Secondly, the complexity of legal fact determination determines that, without violating the principle of application, both relative and absolute grounds should be included in the scope of trial; otherwise, it may lead to a decline in the efficiency of trademark authorization and confirmation. For example, in the "Go Pro" trademark invalidation case No. 13431834 [11] In this case, the review department did not comment on Article 44.1 after determining that Article 31 of the Trademark Law was established. After entering the judicial process, the first-instance judgment determined that the goods were not similar, so Article 31 was not established, and the review department should comment on Article 44.1. Similar situations may also occur between the first and second instances, and between the second instance and the administrative procedure. Allowing simultaneous application can avoid this unnecessary procedural waste.

　　Secondly, some believe that a large number of or repeated registrations of others' trademarks still infringe the interests of specific individuals, which is an act of infringing rights. The addition of multiple "rights" will not "qualitatively change" into public interest, so it still belongs to a relative ground. [12] The aforementioned "Lan Meisu" case is a judgment based on the above theory. We believe that the simple addition of multiple private interests will not qualitatively change into public interest, but the situation of a large number of imitative registrations is not simply the addition of multiple infringements of private interests; some situations do not even constitute damage to private interests. [13] In a large number of imitative registrations, the registrant's target is not a specific subject, which is different from the situation of grabbing registration targeting a specific subject. The latter has almost no impact on other irrelevant right holders, while the former's behavior, if not stopped in time, will cause panic among most right holders on the register, leading to blind defensive registration and serious waste of resources. In addition, the application fee for trademarks in China is low and does not require providing evidence of use or intent to use, which has led to a large number of imitative registrants abusing their trademark application rights, distorting the function of trademarks, and distorting the trademark registration system. The non-specificity of the target of such grabbing registration and the seriousness of the results cannot be explained by the damage to private interests.

　　Thirdly, the regulation of a large number of hoarding and imitative registrations by applying Article 44.1 has reached a consensus in practice and has formed a relatively stable legal order. The revised Trademark Law in 2019 affirmed this consensus and made the legal basis for regulating hoarding and imitative registrations clearer by amending Article 4. The nature of Article 4 as an absolute ground clause is unquestionable, and Article 44.1, which corresponds to its content, should naturally have the same nature. If the parties cite Article 4 and other substantive clauses simultaneously in the invalidation or declaration of invalidity, according to the current legal provisions and rules of application, whether it is an administrative organ or a judicial organ, even if other substantive clauses are established, it is probably impossible to avoid the trial of Article 4. Considering the principle of non-retroactivity of laws, Articles 4 and 44.1 may coexist and apply for a long time in invalidation cases. If Article 4 can be used with other substantive clauses, but Article 44.1, which regulates the same situation, cannot be used, the uniformity of legal application standards will be destroyed.

　　Second, Article 44.1 and other substantive clauses are not generally in a relationship of general and specific, so other substantive clauses do not have priority in application.

　　This is because: firstly, Article 44.1, as one of the absolute grounds, does not have a general and specific relationship with other relative ground clauses. Therefore, other relative ground clauses do not have priority in application compared to Article 44.1. Secondly, Article 44.1, as an absolute ground clause, does not constitute a general and specific relationship with other absolute ground clauses (such as Articles 10 and 11), because the legislative wording of Article 44.1 is "other improper means." The "improper means" here does not have an inclusive relationship with the aforementioned Articles 10 and 11, which is different from the inclusive catch-all clause design in Article 11.1 of the Trademark Law. [14] Therefore, other absolute ground clauses do not have priority in application compared to Article 44.1.

　　Summary: Through combing and analyzing the application of Article 44.1 in judicial practice, we believe that there is no priority in the application of this clause and other substantive clauses. The judicial authorities should try all the claims raised by the parties. The provisions of Article 17.5 of the High Court Trial Guidelines and the practice of refusing simultaneous application in judicial practice are difficult to justify theoretically, not only will it cause contradictions in the subsequent application of the law, but it will also be detrimental to maintaining the already formed stable legal order, and thus damage the trust interests of the parties and the authority of judicial trials.

　　 II. On the issue of applying Article 13 to cases exceeding the 5-year time limit

　　In the process of analyzing and sorting out the 2018 losing judgments, we found that invalidation cases exceeding 5 years have received more support in judicial procedures, which is significantly inconsistent with the consistent trial practice of the review department, and it is necessary to further explore.

　　Article 45, paragraph 1 of the Trademark Law clearly stipulates that for invalidating a registered trademark that violates Article 13, paragraphs 2 and 3 of this Law, it should be filed within 5 years from the date of registration of the trademark. However, the article then stipulates an exception: for malicious registration, the owner of a well-known trademark is not subject to the 5-year time limit. In practice, the key to the disagreement between administrative organs and judicial organs lies in how to define "malicious registration" as referred to in Article 45.1. Administrative organs believe that the malicious registration here refers to other malicious situations besides "copying, imitating, and translating," while judicial organs basically equate "copying, imitating, and translating" with "malicious registration" in the exception.

　　In the "LOUIS CADENS and design" trademark invalidation case No. 7264299 [15] In this case, the disputed trademark was approved for registration on August 28, 2010, and the invalidation application was filed on May 30, 2016. The court's ruling did not support the invalidation applicant's claim because it exceeded 5 years and failed to prove fame and malicious registration. The first-instance court believed that given the cited trademark and its wide recognition among the relevant public, it should be presumed that the original registrant of the disputed trademark was aware of the existence of the cited trademark. However, it still used "LOUIS" as the main identifying part of the trademark, and the subjective intention of free-riding could not be ruled out. Therefore, this case is not subject to the 5-year time limit. In addition, given that the goods for which the trademarks of both parties were approved for use are the same, the first-instance judgment held that the plaintiff's (invalidity applicant's) claims based on Articles 28 and 13 of the 2001 Trademark Law were both valid, and accordingly revoked the ruling.

　　In Trademark Invalidity Case No. 1475893 [16] In this case, the first-instance judgment held that the cited trademark was a coined trademark and had reached the level of well-knownness before the application date of the disputed trademark. The applicant of the disputed trademark operated an advertising business and should have known the cited trademark, and there was no evidence to show that its choice of the "Aupu" trademark had a legitimate reason. In summary, it can be presumed that the disputed trademark constitutes the "malicious registration" situation referred to in Article 45.1.

　　In Trademark Invalidity Case No. 3709504 [17] In this case, the first-instance judgment held that the number of petals in the graphic of the disputed trademark was the same as that of the cited trademark, and the overall design style was similar, constituting copying and imitation. The plaintiff and the third party had signed an infringement settlement agreement (not targeting the disputed trademark in this case). Under the premise that the third party knew the fame of the cited trademark, it should have proactively avoided applying for and registering similar trademarks. However, it still applied for and registered the disputed trademark, which was malicious.

　　In these cases where support was granted after more than 5 years [18] the courts basically equated "knowing or should have known" with "malicious registration" as referred to in Article 45.1, thus determining that the claims of the invalidation applicant are not subject to the 5-year time limit. However, in reality, the malice here is merely "knowing". The legislative wording of "copying, imitation, translation" in Article 13 of the Trademark Law already implicitly contains the element of "knowing". If "knowing" is equated with "malicious registration", it means that no 5-year time limit should apply to invalidation declarations filed against all registered trademarks that violate Article 13. This interpretation will lead to internal contradictions and legal loopholes in Article 45.1, which is not a wise choice from either the interpretation path or the effect. The best interpretation method should use the literal interpretation of Article 13 as an anchor to conduct a purposive limitation of "malicious registration" in Article 45.1. The rationality of this interpretation method in theory and practice is reflected in:

　　First, from the perspective of legal interpretation rules, literal interpretation naturally has priority in order. Compared with "malicious registration", which is an uncertain legal concept, the meaning of the verbs "copying, imitation, translation" is simply impossible to interpret otherwise. At the same time, on the basis of confirming that Article 13 of the Trademark Law already includes the element of "knowing or should have known", conducting a purposive limitation of "malicious registration" in Article 45.1 is conducive to eliminating conflicts and contradictions in the legal provisions themselves. This interpretation also conforms to the requirements of legal hermeneutics.

　　Second, from a conceptual level, "malicious registration" is a unique term in trademark law. Compared with "malice", which only refers to the state of knowing or should have known, its connotation is richer. Admittedly, "malice" in the sense of knowing or should have known, as a commonly used legal term, may have affected our understanding of malicious registration in trademark law. However, in reality, only the element of "knowing or should have known" is not enough to constitute "malicious registration". From the English term for "malicious registration", bad faith filing, its essence should be non-good faith registration, specifically manifested as registration by the registrant in violation of the principle of good faith. In the subjective aspect, in addition to knowing or should have known, it also needs to meet the characteristics of improper purpose or abuse of rights. In other words, the subjective malice shown by malicious registration is more serious and is a more serious situation than "knowing or should have known". However, in cross-language communication, the Chinese trademark industry, based on its familiarity with the word "malice", only accepted the "knowing or should have known" element in bad faith filing, while ignoring other elements, thus leading to bad faith filing being translated into "malicious registration". Therefore, "malicious registration" should be understood as a synonym for "non-good faith registration", and it should not be simply equated with registration under the circumstances of "knowing or should have known".

　　Third, from the perspective of interest balancing, the Trademark Law has provided much greater protection for well-known trademarks than ordinary registered trademarks. Therefore, when setting the 5-year time limit for invalidation declarations, the legislature, in principle, treats Article 13 and other relative grounds clauses equally. Only when the situation of malicious registration is met, is more than 5 years of protection given to the right holder of a well-known trademark. If only because the registrant knows of another's prior well-known trademark can more than 5 years of protection be provided, the protection of well-known trademarks would be unbalanced.

　　Fourth, from the perspective of the legitimate exercise of rights, it is not only suspected of neglecting to exercise rights for the right holder of a well-known trademark to file an invalidation declaration against a registered trademark after more than 5 years without a legitimate reason, but it will also affect the stability of the registration order and may damage the legitimate interests of the registrant. In Trademark Invalidity Case No. 6338299 the first-instance judgment held that the applicant of the disputed trademark knew the fame of the "Langsha" trademark and still applied for registration of the disputed trademark on similar goods with the obvious intention of attaching itself to the plaintiff's market reputation. The applicant had applied for registration of "Langsha Xinxiao" and many trademarks containing "Langsha" in 2004, further proving its malice. Although the third party submitted evidence of use and certificates of honor, etc., under the circumstances where the application and registration of the disputed trademark infringed on the legitimate rights and interests of others, the aforementioned use situation cannot be a reason to maintain the registration [19] It is worth noting that the "knowing or should have known" situation of the registrant of the disputed trademark in this case occurred at the beginning of the registration. Langsha Company had the opportunity to quickly resolve the problem, but it allowed operators in the same or similar industries to use the disputed trademark similar to its well-known trademark for a long time and in large quantities until the disputed trademark gained a certain degree of fame [20] then belatedly filed an invalidation declaration. In the absence of a legitimate reason, its inaction in exercising its rights should not be encouraged, especially since this encouragement has resulted in the registrant of the disputed trademark permanently losing its exemption right simply because of "knowing or should have known". Moreover, its reliance interest after the 5-year exemption period has been completely ignored by the judges. If the consequences of the application of the law will lead to such an imbalance of interests, the judges need to re-examine the standards for the application of the law and make necessary adjustments.

　　In summary: The legislative language of Article 13 of the Trademark Law has already indicated the requirement of "knowing or should have known." To prevent legal loopholes, "malicious registration" in Article 45.1 should be interpreted restrictively, that is, in addition to "knowing or should have known," it must also meet the requirements of improper purpose or abuse of rights. The improper purpose or abuse of rights here may manifest as: demanding high transfer fees, coercing cooperation, misleading consumers in actual use, improperly obstructing the normal operation of the true right holder (such as not using it themselves and not allowing the true right holder to use it), other manifestations can be judged according to the specific case. As long as the objective behavior of the litigated trademark registrant can prove that their subjective intention exceeds the "knowing or should have known" malice, it can be deemed to constitute "malicious registration" as referred to in Article 45.1.

(Author: Sun Mingjuan)

　　 [1] First instance case number 2016京73行初5429号.

　　 [2] First instance case number 2019京73行初2148号.

　　 [3] First instance case number 2017京73行初9077号.

　　 [4] First instance case number 2017京73行初8742号.

　　 [5] First instance case number 2016京73行初2485号.

　　 [6] First instance case number 2017京73行初6967号.

　　 [7] First instance case number 2017京73行初4039号.

　　 [8] First instance case number 2019京73行初6554号.

　　 [9] First instance case number 2017京73行初3621号.

　　 [10] First instance case number 2017京73行初435号, the second instance judgment has been issued, upholding the first instance judgment, case number 2019京行终3652号.

　　 [11] First instance case number 2018京73行初481号.

　　 [12] See Li Chen's "On the Interpretation Conflicts of the General Clause of Trademark Prohibition Registration Reasons", published in the Knowledge Property magazine, 2015, No.8.

　　 [13] Due to the legislator's consideration of interest balance, some private interests have not been given the representation of rights, and it is difficult to constitute legal interests, thus unable to be protected by law. For example, a trademark that has been snatched may only have local or overseas reputation, but has not reached the level of well-known in China, and the true right holder has not registered or used it on the same or similar goods. In this case, it is difficult to obtain legal support for the claim of damage to prior rights or interests.

　　 [14] In Article 11.1.3, "other lack of distinctive features", "lack of distinctive features" clearly has an inclusive relationship with the previous two items, therefore constituting a general and special clause in terms of distinctiveness. When applying, the principle of special over general should be followed.

　　 [15] First instance case number 2017京73行初3723号.

　　 [16] See 2016京73行初3939号/2019京行终3972号. The second instance judgment did not make a clear comment on "malicious registration".

　　 [17] See 2016京73行初4885号.

　　 [18] There are many similar cases, and due to space limitations, they cannot be elaborated one by one. The author lists the case numbers of some collected cases for readers to check themselves. 2016京73行初4886号 Sakura graphic case, 2018京73行初10652号 "CITIC TN and graphic" case, 2017京73行初3153号 "Nine Mu Wang and graphic" case, 2017京73行初6316号 "Dilimeng" case, 2018京73行初6308号 "Hankook" case, 2016京73行初6802号 "Heaven and Earth Work" case, 2018京73行初7514号 "Hengshi" case, 2018京73行初3689号 "FSCHRB and graphic" case, etc.

　　 [19] See 2016京73行初6166号/2019京行终3673号.

　　 [20] The litigated trademark product was awarded "Hebei Province Small and Medium-sized Enterprise Brand Product" in 2013, and the litigated trademark was recognized as a famous trademark of Hebei Province in 2016.