Well-known trademarks protection returns to original legislative intent

By Wang Yadong and Lu Lei, Run Ming Law Office
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The third revised version of the Trademark Law, approved on 30 August, expressly specifies that it is prohibited for a producer or business operator to use the words “well-known trademark” on goods or the packaging or containers for such goods, or in advertising, publicity, exhibitions or other commercial activities.

According to the new Trademark Law, business operators will no longer be able to use “well-known trademark” in their advertising and publicity. It is the author’s opinion that this provision will be beneficial in returning to the original legislative intent behind well-known trademarks, and will be beneficial in the development of the PRC’s well-known trademark system.

Original legislative intent

The term “well-known trademark” first appeared in the 1925 Hague version of the Paris Convention. The well-known trademark protection system was gradually established with the development of the market economy, and capital concentration gave rise in the market to a number of marks with a relatively high degree of recognition.

王亚东 Wang Yadong 润明律师事务所 执行合伙人 Executive Partner Run Ming Law Office
王亚东
Wang Yadong
润明律师事务所
执行合伙人
Executive Partner
Run Ming Law Office

Based on the traditional theory of trademark protection, where a trademark is identical or similar to a trademark designated for use on a certain product or service, and the use of such trademark on goods or services that are not identical or similar will not lead to confusion, the law does not accord protection.

However, in nurturing such trademarks, rights holders invest great amounts of time and money, and if protection is not accorded, it is clearly unfair to these rights holders. It was at this juncture that the well-known trademark protection system saw the light of day, with its core being the according to such trademarks protection over and above that accorded to ordinary trademarks.

In China, up until 2001 the protection of well-known trademarks was stuck at the stage where administrative rules and regulations served as the legal basis, and the recognition of such trademarks was done by the administrative authorities. It was not until 2001 that China amended the Trademark Law for the second time in light of the Paris Convention and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Given the previous administrative basis, and that the term “China well-known trademark” itself was somewhat misleading, the system easily led to the linking by the population with the “honours” and “awards” bestowed by the administrative authorities. Some enterprises requested well-known trademark recognition solely for the purpose of using such recognition on their products, product packaging, or in their advertising and publicity to enhance the competitive advantage of their brands in the market; and certain local governments, perceiving the number of recognitions of well-known trademarks of local enterprises as a mark of government performance, actively encouraged enterprises to apply for well-known trademarks, even going so far as to award large sums as rewards to enterprises with well-known trademarks.

The administrative authorities and courts held divergent and incorrect understandings of the concept of well-known trademark, and their criteria for recognition also differed. In certain infringement cases involving the use of an identical or similar trademarks on identical or similar goods, courts would recognise well-known trademarks where they shouldn’t, or where it wasn’t called for.

Certain enterprises even went so far as to fabricate cases in order to achieve the objective of having their trademarks recognised as well-known trademarks. It is the author’s opinion that the origin of treating the concept of well-known trademark as an honour, an award and a mark of government performance lies in an understanding of the concept of well-known trademark that deviates from the legislative objective of the well-known trademark legal system of treating “protection” as the core.

Overcorrection

On 22 April 2009, the Supreme People’s Court issued the Interpretations of Several Issues Concerning the Application of the Law in the Trial of Civil Disputes Involving the Protection of Well-Known Trademarks, which have been relatively effective in reining in the above-mentioned phenomenon. However, in recent years some courts have, in the interests of prudence, even excluded trademarks that essentially satisfy the criteria for recognition as being well-known.

The author is of the opinion that this kind of “overcorrection” is similarly not in keeping with the original legislative intent of the well-known trademark legal system. Proceeding from “protection”, prudence is essential in the recognition of well-known trademarks, but the erection of too many barriers for those trademarks that require the protection of the well-known trademark system is equally uncalled for. Currently, instances of “malicious pirate registration” have been cropping up with great frequency, and this reflects the excessively high standards for recognition of well-known trademarks. In cases of the pirate registration of another’s trademark in a different class, the relevant authorities have been strictly adhering to the classification in determining the relationship between the goods for which the pirate trademark is applied and the goods for which the pirated trademark have been approved, usually reaching a conclusion of “not similar”.

陆蕾 Lu Lei 润明律师事务所 律师 Associate Run Ming Law Office
陆蕾
Lu Lei
润明律师事务所
律师
Associate
Run Ming Law Office

If a determination of not similar is rendered, the concerned party cannot secure the protection accorded to ordinary registered trademarks by the Trademark Law, and cannot exclude others from using, without a licence, an identical or similar trademark on identical or similar goods. In such a situation, the party can theoretically secure “cross-class” protection through the well-known trademark protection system.

However, if the relevant authority has set overly high standards in respect of well-known trademarks, the result is a legal loophole that leaves a sufficiently wide space for malicious pirate registration, and as long as there is a buck to be made, there will be a steady flood of incidences. Fortunately, the Supreme People’s Court is aware of the issue and is working to resolve it.

The author is of the opinion that the study and understanding of the protection of well-known trademarks are growing deeper with the Chinese public, and the calls for the well-known trademark protection system to return to its original legislative intent are becoming louder. The intent behind the relevant provisions in the latest Trademark Law prohibiting the use of “well-known trademark” for publicity purposes is to cause the various sectors of the public, through the prohibitions, to have a rational understanding of what a well-known trademark is, and to recover for well-known trademarks their true aspect. Only in this way can the system achieve its maximum effect.

Wang Yadong is the executive partner and Lu Lei is an associate at Run Ming Law Office

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