Judicial interpretations tougher on pirate registrations

By Han Yufeng and Lu Lei, Rui Bai Law Firm
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The trademark system in China has adopted the “first to file” principle, common in the great majority of countries, but the peculiarities of the social environment in mainland China, such as bad faith pirate registrations, have had a pernicious effect on this principle.

Han Yufeng-cutout 2
Han Yufeng
Associate
Rui Bai Law Firm

Bad faith pirate (or preemptive) registrations usually mean preemptively applying to register another’s prior trademark, trade name, image and title of a work, celebrity name, etc., that has already cumulated significant goodwill or a significant influence as a trademark before the rights holder has submitted an application to register the same, and then seeking improper gains through transfer, licensing or infringement legal action, or using the pirated trademark for one’s products or services, and so misleading the public into believing that the products or services in question are sourced from, or have a specific connection with, the victim of the pirating.

This bad practice has been a headache for rights holders for many years. Relevant authorities are constantly exploring effective measures to put a stop to this, e.g., the amendment of the Trademark Law in 2013. The Provisions on Several Issues Concerning the Trial of Administrative Trademark Right Granting and Confirmation Cases issued by the Supreme People’s Court on 1 January 2017 (the new judicial interpretations) provide guidelines for the specific application of relevant provisions of the Trademark Law.

Various circumstances under which administrative authorities for trademark granting and confirmation can directly handle instances of the pirate registration of celebrities’ names as trademarks. With huge returns from fans, the pirating of celebrities’ names has increasingly intensified. The cases involving Michael Jordan, the pianist Li Yundi and the opera singer Warren Mok Wah-yeun fall into this category. Sometimes the Trademark Office proactively rejects such applications on the grounds of infringement of the public interest and at other times has handled them by reliance on the natural person claimant on the grounds that the right to one’s name involves the civil rights only of a specific subject.

The new judicial interpretations place the application for trademark registration of the names of public persons in such fields as politics, economy, culture, religion, etc., firmly into the category of things the
registration of which as a trademark is absolutely prohibited, and bestow upon administrative trademark granting and confirmation authorities the right to take such measures against the same as rejection at their own discretion without relying on a claim by the rights holder. Of course, those rights holders that fall through the net may still assert their rights through other available means.

Clarification of the elements considered in the protection of “merchandising rights”. The merchandising of the titles of novels, television dramas, comics and games, and the names of characters in them have become favourite targets of pirating. In recent years, the administrative and judicial authorities have moved from a stance of not according protection to a position of exploring the protection of rights holders in such individual cases as James Bond 007, Harry Potter, Kung Fu Panda, etc.

However, the handling of individual cases cannot be applied universally. The new judicial interpretations specify that, for works still covered by copyright, if the title of the work, the name of the characters therein, etc., are relatively well known and their use for relevant goods is likely to mislead the relevant public into believing that the same has been licensed by or connected with the rights holder, and a concerned party claims on this basis that prior rights and interests are constituted, the court is to reject such a claim. This provision characterizes titles of works and names of characters as “civil rights and interests”, and also sets out the elements to be considered when protecting “merchandising rights”, while also limiting the term of protection to the copyright protection term, providing clear legal foundations for merchandising rights.

Grace Lu-cutout 2
Lu Lei
Associate
Rui Bai Law Firm

Requirement that the bad faith registrant that proposes to legitimize his or her trademark registration through use bear the burden of proof. In the 2010 Opinions of the Supreme People’s Court on Several Issues Concerning the Trial of Administrative Cases Involving the Granting and Confirmation of Trademark Rights, there is a provision to the effect that, “with respect to a disputed trademark that has been used for a relatively long period of time, has established a fairly good market reputation and gained a relevant public, the court must … fully respect the market reality of the relevant public having objectively differentiated the relevant commercial marks and place emphasis on safeguarding the market order that has arisen and stabilized”. This provision gives the impression to outsiders that as long as a pirated trademark has been used to a great extent, it can ultimately be legitimized.

However, the foregoing provision has been removed from the new judicial interpretations, and they stress that if the applicant/registrant of a trademark that was registered in violation of the principle of good faith, and that has undergone certain use wishes to claim that his or her trademark will not cause confusion with the reference mark and that they can co-exist, the applicant/registrant must provide such “new facts” as evidence, failing which the court can no longer rely on its own subjective understanding to determine the potential for confusion.

In the real world, as a bad faith pirate’s motive is to free ride on the goodwill of the victim of the pirating, having him or her produce evidence is virtually impossible, and given that the pirate is unable to produce the evidence, he or she will be required to bear the legal consequence of having registration of the trademark denied or invalidated.

Where an applicant with a specific identity relationship with the representative registers a trademark, it is assumed that the pirating act is authored by the representative. The Trademark Law prohibits representatives from preemptively registering the trademarks of the persons whom they are representing. In practice, a representative will usually avoid carrying out the pirate registration under his or her own name, but under the name of an immediate relative or the enterprise for whom he or she serves as legal representative.

The new judicial interpretations specify that if there exists a family relationship or other such specific identity relationship between the trademark applicant and the representative, it can be assumed that his or her trademark registration act is collusion in bad faith with the agent/representative, and the court, when trying such a case, is to deny registration of the pirated trademark and prohibit its use.

Han Yufeng and Lu Lei are associates at Rui Bai Law Firm

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