PRC’s Trademark Law wisely follows the ‘first to file’ principle

By Fabio Giacopello, HFG
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China belongs to the wide and wise group of countries that adopt the so-called “first to file” system. According to Article 4 of the Trademark Law, “any natural person, legal person, or other organisation that needs to acquire the exclusive right to the use of a trademark for the goods he produces, manufactures, processes, selects or markets shall file an application for registration of the trademark of the goods with the [China] Trademark Office”. It is not by using a trademark that you obtain exclusivity, but through filing and registering it.

The clarity and simplicity of the “first to file” rule has been somehow obscured by a few inglorious cases (iPad and Castle primarily), which has shown some weakness with a too-strict application of this principle. The “first to file” principle stands, despite some exceptions, and exclusions should be clarified.

China’s Trademark Law

In accordance with the World Trade Organisation, China agreed to integrate into its legal system Article 6bis of Paris Convention for the Protection of Industrial Property, under which any country shall not allow for the registration or use of a trademark constituting an imitation, a reproduction or translation of an unregistered mark well known in a certain country, providing such trademark can be utilised to create confusion on the market of that specific country. So if a well-known trademark is filed by someone who is not the generator of such a reputation, cancellation and prohibition of use are possible.

Fabio Giacopello Partner HFG
Fabio Giacopello
Partner
HFG

Article 13 of the Trademark Law reads: “Where the trademark of identical or similar kinds of goods is a reproduction, imitation or translation of another person’s well-known trademark not registered in China, and is liable to cause public confusion, no application for its registration may be granted and its use shall be prohibited. Where the trademark of different or dissimilar kinds of goods is a reproduction, imitation or translation of another person’s well-known trademark not registered in China, and it misleads the public so that the interests of the owner of the registered well-known trademark are likely to be impaired, no application for its registration may be granted and its use shall be prohibited.”

The relevance of such provision is limited to the case in which the unregistered trademark has obtained the well-known “status” before any other entity files for registration of an identical or similar trademark. To be precise, if an unregistered mark is well known already in China, any filing for the registration of that trademark will not be permissible by the Chinese authority.

Unregistered trademarks

The relevance of unregistered trademarks is not limited to this. Consider the decision issued by Guangdong Zhongshan Intermediate People’s Court in 2011, in the case of Guangzhou Clean Green Health Science Technology Development v Hainan Strong Biochemical Technology Development.

This decision offers an unusual interpretation of Article 31 of the Trademark Law, which states: “No applicant for trademark application may infringe upon another person’s existing prior rights, nor may he, by illegitimate means, rush to register a trademark that is already in use by another person and has certain influence.”

Article 31 is generally limited to existing prior rights, such as a design patent or copyright. So if a patented or copyrighted design has been used and is of certain influence earlier than the attempt of someone else to register an identical or similar design, then the attempt will not be granted.

Surprisingly, the Zhongshan judge in this case extended the scope of Article 31 to the extent of encompassing the use of a sign neither filed nor registered with the Trademark Office. In other words, the judge recognised the usage of unregistered trademark only qualified by achieving “certain influence”.

Hainan Strong started to produce and sell the commodities marked “Shrimp in Chinese” in December 2002. Clean Green filed the trademark “Shrimp in Chinese” in 2007 and registered it in 2010. The court found Hainan Strong was the first one to use the trademark “Shrimp in Chinese”. The mark had achieved a certain reputation with the public for distinguishing the merchandise. The court then recognised that the previous unregistered trademark should prevail based on Article 31. This decision, if confirmed by further case law, is interesting because it seems to lower the threshold from well-known trademarks to trademarks that enjoy “certain influence”.

Anti-unfair Competition Law

Another set of rules contained in the Anti-unfair Competition Law exert their influence especially in cases of unregistered trademarks that become “well known” after the filing of an application by someone else (but before the registration).

Article 5 of the law reads: “A business operator shall not harm his competitors in market transactions by resorting to any of the following unfair means … (2) using for a commodity without authorisation a unique name, package or decoration of another’s famous commodity, or using a name, package or decoration similar to that of another’s famous commodity, thereby confusing the commodity with that famous commodity and leading the purchasers to mistake the former for the latter”.

In order to consider such a provision, it is worth reporting the content of Article 1 of Interpretation of the Supreme People’s Court on Some Matters About The Application Of Law In The Trial Of Civil Cases Involving Unfair Competition, according to which “well known commodities as stipulated in Subparagraph (2) of Article 5 of the Anti-unfair Competition Law refer to those commodities that have certain market popularity within the territory of China, and are known by the public concerned. The people’s court shall take into account the time, region, volume and targets for selling such commodities, the duration, degree and scope for any promotion of such commodities, as well as the protection situation as well known commodities, and make comprehensive judgments when affirming well known commodities. The burden of proof for the market popularity of commodities shall be assumed by the plaintiff”.

Unlike Articles 13 and 31 of the Trademark Law, it is not required by Article 5 that the reputation must have been obtained before someone else filed a similar trademark. Article 1 of the Interpretation provides that “in case an identical or similar name, package or ornament with that typical to a well-known commodity is used within a different region, it will not constitute unfair competition as stipulated in subparagraph (2) of article 5 of the Anti-unfair Competition Law if the later user can prove its good faith in using it. Where the sources of commodities of the earlier user are confused due to the later business activities conducted within the same zone, the people’s court shall give support when the earlier user pleads the court to order the later to add other signs to make a distinction on the sources of its commodities”.

Fabio Giacopello is a partner at the Shanghai office of HFG

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