Case shows traps involved in protecting unregistered marks

By Ming Xingnan and Lu Xue, Wan Hui Da
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If you wish to cite a prior but unregistered trademark to oppose or invalidate a junior trademark in China, you must resort to articles 13.1 and 31 of the 2001 Trademark Law (renumbered as articles 13.2 and 32 by the latest version of the law, but since the 2001 Trademark Law applies to substantial matters of the case this article will explore, all the citations are from the 2001 Trademark Law). Under article 31, it is not necessary to recognize the well-known status of the unregistered trademark, but under article 13.1, such recognition is necessary.

Ming Xingnan Senior Associate Wan Hui Da
Ming Xingnan
Senior Associate
Wan Hui Da

In practice, the China Trademark Office (CTMO), the Trademark Review and Adjudication Board (TRAB) and the courts tend to rely on article 31 to solve the problem, for convenience and for the lower threshold to invoke protection. In a recent trademark administrative case, Beijing High Court applied both articles to grant full protection over an unregistered trademark.

Guangzhou KuGou Networks is a leading supplier of digital music interactive services in China. KuGou Networks has been offering free music-streaming services to the public since 2004. In July 2009, Shantou Lifeng Electric Appliances applied for the trademarks “酷狗” and “KuGou” (KuGou in Chinese characters & pinyin) for “arrangement and organization of concerts, training; providing karaoke services; entertainment, etc.” in Class 41, which was approved by the CTMO in December 2011. In November 2014, KuGou Networks filed an invalidation application with the TRAB.

On 18 February 2016, the TRAB ruled in favour of KuGou Networks, revoking the disputed mark on all designated services. The board based its ruling on the finding that: (1) the “酷狗” (Chinese characters of KuGou) mark of KuGou Networks constituted an unregistered well-known trademark in “providing online music service (not for downloading)”; (2) the registration of the disputed mark in “entertainment, providing karaoke services, etc.” is in violation of article 13.1 of the law; and (3) the registration and use of disputed mark in “arrangement and organization of concerts, etc.” violates article 31 of the Law.

PROTECTION DIFFERENCE

Lifeng filed an administrative lawsuit with the Beijing Intellectual Property Court. The trial court found that the “酷狗” mark had already been used and had acquired certain influence in respect of the above-mentioned services before the application date of the disputed mark. The court cited article 31 to revoke the registration of the disputed mark in “arrangement and organization of concerts, programme production, providing karaoke services; night clubs and entertainment” based on the prior rights (the trademark and trade name) of KuGou Networks, but maintained the registration in dissimilar services: “fitness club, mobile library, training; book publishing; modelling for artists.” The court held that invoking article 31 to protect the “酷狗” mark exempts the necessity to determine its well-known status. Both KuGou Networks and Lifeng appealed.

KuGou Networks argued in the appeal that article 31 does not cover all the services for which the company seeks protection, so the recognition of its trademark’s well-known status was necessary. To avoid confusion, the scope of protection for unregistered well-known trademarks is more extensive when it comes to the similarity between the marks and the goods/services, because as required such trademarks always have higher levels of reputation. Article 13.1 intends to provide stronger and wider protection over unregistered well-known trademarks.

Lu Xue Associate Wan Hui Da
Lu Xue
Associate
Wan Hui Da

The Beijing High Court made a ruling on 13 March 2017, upholding the TRAB’s decision. The Court of Appeal opined that the difference between article 13.1 and article 31 lies in the extent of the reputation of the unregistered mark and the substance of the prior rights seeking protection. Article 31 intends to protect the prior trademark owner’s interests generated by its trademark use. Article 13.1, by contrast, focuses on preventing confusion in the market. The court echoed KuGou’s argument that article 13.1 should apply in assessing the registrability of a disputed mark in respect of services not covered by article 31.

The court found that evidence submitted by KuGou Networks − including certificates issued by industrial associations, the amount of tax paid, advertising and promotion materials, contracts and invoices, and media coverage − was sufficient to prove that the “酷狗” mark had reached well-known status before the application date of the disputed mark.

JUDICIAL INTERPRETATION

The Provisions of the Supreme People’s Court on Several Issues Concerning the Hearing of Administrative Cases Involving the Granting and Affirmation of Trademark Rights entered into force on 1 March 2017. The judgment, which does not directly cite the provisions, clearly adopts the same reasoning.

Article 12 of the provisions enumerates the factors to be considered by the courts for determining the likelihood of confusion. The provisions use the voluntary expression “the extent of similarity of the trademarks” instead of “trademark similarity”, which is in line with the principle that the higher the level of reputation of the prior mark, the lower extent of similarity between the goods/services is required to determine the likelihood of confusion.

SPECIAL FEATURES OF INTERNET

Article 14 of the law enumerates the factors to be considered, in principle, for determining well-known status. However, given the peculiarity of the internet, not all these criteria fit this case. Considering the preponderant public awareness of the “酷狗” mark, it would be inappropriate to indiscriminately apply all the factors. The internet grows public awareness quickly via its unique operation of promoting “free downloading and streaming services”. It differentiates from traditional industry in respect of its earning mode. Therefore, it would be advisable to assess the awareness of the relevant public for the determination of well-known status instead of following the same standards and requesting the proof of revenue, advertising costs and duration of trademark use.

Ming Xingnan is a senior associate and Lu Xue is an associate at Wan Hui Da

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