Article 44 of trademark law: old rule, new application

By Han Yufeng and Lu Lei, Run Ming Law Office
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Instances of large-scale pirating in bad faith where an entity simultaneously preemptively registers several dozen or several hundred trademarks are no longer news in China. Recently, as a result of the final-instance judgments in the administrative cases about Apple’s trademark “IPHONE” and Facebook’s trademark “FACEBOOK”, and retrial decision by the Supreme People’s Court (SPC) of the administrative trademark case relating to the name Michael Jordan, the issue of large-scale preemptive registration in bad faith has once again drawn attention.

HAN YUFENG IP Counsel Run Ming Law Office
HAN YUFENG
IP Counsel
Run Ming Law Office

The Trademark Law as amended in 2013 (the new TML) incorporates the principle of good faith, presenting an opportunity to effectively squelch pirate registrations, including “large-scale preemptive registration in bad faith”. Against this background, the new application of an old provision also reflects the direction of halting preemptive registration in bad faith. Article 44 of the new TML specifies that, “where fraud or other illegitimate means are used to secure registration, the Trademark Office shall declare the registered trademark in question invalid”. Although this provision itself is identical to article 41 of the 2001 version of the Trademark Law, its new application has recently played a prominent role in the handling of a number of cases of large-scale preemptive registration in bad faith.

In past cases of preemptive registration in bad faith, the commonly used legal basis included provisions of the Trademark Law on the following matters: pirating by agents and representatives; not harming the priority rights of others; and reproduction, copying and translation of the well-known trademarks of others. The Trademark Law does not contain any special provisions on “large-scale preemptive registration in bad faith”.

However, in many cases, particularly in cases of the large-scale preemptive registration in bad faith of others’ trademarks for non-identical and non-similar goods, use by relevant rights holders of provisions on well-known trademarks presents significant difficulties. For example, in both the Facebook and Apple cases, the concerned parties cited the provisions on well-known trademarks. However, because they were unable to satisfy evidentiary requirements and other such reasons, their claims were rejected by the Trademark Review and Adjudication Board (TRAB) and the courts.

However, if legal denial is not accorded in cases of large-scale preemptive registration, halting the trend of pirate registrations becomes impossible and results in the act of trademark registration returning to the core requirement of “using one’s own goodwill”. In numerous precedents, the TRAB or the courts have cited as a legal basis a provision of article 10 of the Trademark Law, namely “those that harm socialist morality or practices, or that have other adverse effects” may not be used as trademarks.

However, from the perspective of the Trademark Law legislative regime, article 10 falls into the category of provisions of absolute prohibition: if this provision is relied on, no one’s trademarks, including those of the victims of pirate registrations, should be granted registration. Clearly, application of this provision to halt “large-scale preemptive registration in bad faith” presents obstacles in legal theory.

In 2014, the SPC issued the Provisions on Several Issues Concerning the Trial of Administrative Trademark Right Grant and Confirmation Cases (Draft for Comment), which specifies that, “where a trademark registrant clearly lacks the intent of genuine use and applies to register a large number of trademarks that are identical or similar to another’s trademarks that have a significant degree of fame, or place names that have a certain degree of fame, or applies for a large number of trademarks without any legitimate reason, and the TRAB refuses registration thereof or declares the same invalid by applying the provisions on ‘the principle of good faith’ and ‘illegitimate means’, the People’s Court shall uphold the same”. This provision provides an approach and the basis for applying article 44 of the new Trademark Law (corresponding to article 41 of the old law) in handling large-scale preemptive registration in bad faith.

Lu Lei Partner Run Ming Law Office
Lu Lei
Partner
Run Ming Law Office

Notwithstanding the fact that the draft has not yet entered into effect, it is a summarization of judicial practice by the SPC, and courts and the TRAB have adopted it in the course of their handling of actual cases. In the final judgment in the Facebook case, the court ascertained that the opposed trademark registrant had registered “黑人” (Chinese characters for the trademark “Darlie”) and other trademarks that have a significant degree of fame, in addition to three “facebook” trademarks, and accordingly held that the concerned individual clearly had the intent in these registrations to reproduce or copy others’ trademarks that have a high degree of fame, whereupon it cited the provision “where fraud or other illegitimate means are used to secure registration” to ultimately cause the TRAB to render a ruling to not approve the disputed trademarks.

Recently, the Beijing Municipal Higher People’s Court in its final judgment in the Michael Jordan case stated that the phrase “where fraud or other illegitimate means are used to secure registration” mainly refers to the means used to secure the registration, not the purpose of the registration, being illegitimate. When trying an administrative case involving the cancellation of a registered trademark, to determine whether illegitimate means were used to secure registration of the disputed trademark, consideration needs to be given to whether they are means that fall outside the category of fraud, such as ones that disrupt the order of trademark registration, harm the public interest, illegitimately appropriate public resources, or otherwise seek to obtain improper gains.

In a circumstance where only a specific civil right or interest is harmed, the review needs to be conducted by applying other provisions of the Trademark Law. Accordingly, the court ultimately did not render a finding as to whether registration of the disputed trademark was secured using fraud or other illegitimate means.

The SPC has rejected Michael Jordan’s request for a retrial. The court’s interpretation in its ruling of “where fraud or other illegitimate means are used to secure registration” also have significant guiding significance on handling cases of large-scale preemptive registration in bad faith and the criteria for determining bad faith.

Han Yufeng is an IP counsel and Lu Lei is a partner with Run Ming Law Office

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