What if a squatter registers your trade name as a TM?

By Dorris Hu and Shi Yakai, Sanyou Intellectual Property Agency
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To register the trade name of a well-known company as the trademark of one’s own to seek illegitimate interests is a typical act of the trademark squatter. The Trademark Law specifies in article 32 that, “An application for trademark registration shall not prejudice any pre-existing right of others”. The “prior rights” include a company’s right to its trade name.

Where the trademark registered is in infringement of the existing trade name, the owner of the prior trade name right may oppose or invalidate the trademark by virtue of its trade name right. The term “trade name” should be interpreted in broad terms.

The Supreme Court’s Rules on Several Issues on the Administrative Cases of Trademark Right Registration and Confirmation stipulates in article 21 that where a party claims prior right in its trade name on the grounds that the trade name has amassed such market awareness that others, in applying to register a trademark similar to or the same as the trade name without authorization, would confuse the public on the sources of the goods, the people’s court should favour the claim.

Dorris Hu Attorney-at-law, Trademark Attorney Sanyou Intellectual Property Agency
Dorris Hu
Attorney-at-law, Trademark Attorney
Sanyou Intellectual Property Agency

This rule also applies where a party’s claim is grounded on the abbreviation of the corporate name, which has amassed market awareness and has long been widely deemed to be associated with the company. The Trademark Examination and Review Standards requires that the following conditions be met to claim a prior trade name right.

First, the trade name has been registered or used by others before the registration of the disputed trademark is applied; second, the trade name enjoys a certain degree of awareness among the relevant public in China; and third, the registration and usage of the disputed trademark would confuse the relevant public, in prejudice of the rights and interests of the owner of the prior trade name right.

In an administrative dispute where the authors’ client, the Grandoe Corporation, sued the Trademark Review Board for the opposition of trademark No. 3734631 “GRANDOE”, the Beijing High People’s Court favoured the claim of Grandoe of the prior trade name right. The court took the view that Grandoe had been using the trade name “Grandoe” since 1959 and set up a fully owned subsidiary in Fuzhou in 1988 with the trade name.

From the evidence submitted, it could be established that Grandoe had been using the trade name “Grandoe” continuously and the trade name was known to the relevant public in certain regions before the day when the application of the disputed trademark was submitted.

Shi Yakai Attorney-at-law, Partner Sanyou Intellectual Property Agency
Shi Yakai
Attorney-at-law, Partner
Sanyou Intellectual Property Agency

The disputed trademark was the same as the trade name, and the gloves and caps sold by the Grandoe Corporation were similar goods to the clothes to be labelled with the trademark, thus, the relevant public would mistakenly associate the disputed trademark with the Grandoe Corporation and be confused on the source of the goods, which would damage the rights and interests of the Grandoe Corporation.

The court also took into account that both the applicant of the disputed trademark and the fully owned subsidiary of Grandoe resided in Fujian province, and the applicant showed no intention of use since the applicant sold the disputed trademark online, and therefore, the court decided that the applicant was an ill-intended trademark squatter. The court supported Grandoe’s claim of prior trade name right.

The Grandoe case demonstrates that the following conditions should be met if a company wants to block the registration of a trademark by claiming prior right to the trade name.

(1) The trade name has been registered, or is in use, prior to the application of the disputed trademark. First and foremost, the trade name must be registered or used beforehand, otherwise it cannot be used to block the registration and usage of the trademark by others, even though it enjoys high awareness. The rightful owner must also be actively using the trade name, or recognize the use of the trade name, or the abbreviation of the corporate name, otherwise the prior right would not be granted.

(2) The trade name enjoys a certain degree of awareness among the relevant public in China. In judicial practice, the company must be able to prove that the trade name enjoys a certain degree of awareness in the goods and service sector of the disputed trademark. In the Grandoe case, the plaintiff submitted a lot of contracts, invoices, brochures and other evidence to prove that the trade name had been widely used and amassed a certain amount of awareness prior to the application of disputed trademark. It is the same with the trade name of foreign companies that have been used and enjoy market awareness in China. Beijing High People’s Court’s Guidelines on the Trial of Trademark Registration and Right Confirmation Administrative Cases stipulates that the party may claim prior right to the corporate name, trade name or transliteration in conventional usage on the condition that the same have been used in China commercially and amassed a certain amount of awareness, and are known to the relevant public.

(3) The registration and usage of the disputed trademark would confuse the relevant public in prejudice of the rights and interests of the owner of the prior trade name right. The company not only needs to prove that the disputed trademark resembles the trade name, but also needs to prove that the goods and services to be labelled with the trademark are in the same industry as the goods sold by the rights owner, or both industries are closely related, so that the consumers would easily associate the disputed trademark with the trade name. Otherwise, the claim of prior trade name right does not hold. In the case where Starbucks sued the Trademark Review Board for the opposition of trademark No. 3785332 “STARBUCKS” (in class 3 – cosmetics), the High People’s Court decided that Starbucks is operating in coffee and coffee services, which are not in the same industry as cosmetics, so the relevant public would not be confused. The court did not support the claim of Starbucks of prior trade name right.

In practice, the court will consider the subjective intention of the applicant of the registration of the disputed trademark to extend the protection of the trade name and effectively crack down on the acts of trademark squatters. The company should protect its rights immediately once trademark squatters are spotted to prevent others from registering its own trade name as a trademark.

Dorris Hu is an attorney-at-law and trademark attorney, and Shi Yakai is an attorney-at-law and partner at Sanyou Intellectual Property Agency

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