Winning the judgment doesn’t necessarily end the dispute

Recently Soufun.com, a well-known real estate-related website, was renamed Fang.com, and this bold move caused intensive discussions. Soufun.com lost the case, however it is worth noting that the judgment anticipates a variety of risks for the future rights protection activities of the winning party.

Case introduction

On 4 September 2003 Beijing Soufang Real Estate Brokerage and Beijing Daojieshi Investment Consultancy Services jointly filed an application to the Trademark Office of the State Administration for Industry & Commerce (SAIC) to register the trademark No. 3702986 “sofan, or搜房” (the opposed trademark) on class 35, specified items including, without limitation, advertising communication, advertising, advertising agency, auction, and business relocation (information provision).

After a preliminary examination and approval for publication of the mark, Beijing Soufang Internet Information Services (the third party) filed a trademark opposition against trademark No. 3702986. After going through the review of the Trademark Review and Adjudication Board (TRAB) and the first instance of administrative litigation, Soufang Real Estate and Daojieshi finally appealed to Beijing Higher People’s Court.

After hearing the case, Beijing Higher People’s Court held that the evidence submitted by the third party was not sufficient to prove its affiliation with Beijing Soufang Information and Beijing Jiatianxia Advertising. And the third party failed to prove that the two appellants applied for the opposed trademark with malicious intent in order to damage the reputation of the prior used trademark of Soufang Information and Jiatianxia Advertising. Therefore, Beijing Higher People’s Court revoked the ruling made by TRAB and the judgment of first instance, and requested TRAB to make a new ruling.

Potential risks

The focus of dispute in this case involves article 31 of the Trademark Law: “… Nor shall an applicant rush to register in an unfair manner a mark that is already in use by another party, and that enjoys substantial influent”. To determine whether the above provision is applicable in a case, the following requirements must be met: first, the applicants apply for a trademark in an unfair manner, namely with malicious intent; second, the trademark has prior use and has a certain degree of influence. In this case, although the trial of second instance was fair to conclude that the existing evidence failed to prove the malicious intent of the appellants in applying the opposed trademark, the fact-finding has potential risks for the appellants in future rights protection.

The third party was established in December 2003, which is later than the filing date of the opposed trademark. Hence, it is impossible for the third party to provide any evidence in demonstrating the prior use of its trademarks soufang（搜房）and sofun. Under this circumstance, the third party submitted evidence to illustrate that the trademark had been used by two other companies beyond this case (Soufang Information and Jiatianxia Advertising). The second instance court did not affirm the affiliation between the third party and the two companies mentioned above. However, the court affirmed the brand’s public recognition, and recognised the evidence of prior use rights, and found that the appellants and the two other companies had co-existed in the market since 2000.

This will inevitably hinder the appellants from protecting their own rights against other parties in the future. In accordance with the third section of article 59 of the Trademark Law, the prior mark user could bring up the plea by applying the prior use of influential unregistered mark rights. Trademark law has provisions for defining the scope of continuously using the prior used unregistered trademark, whereas the internet is not geographically limitable. Obviously such a result of rights protection is not desirable to the appellants in this case.

Secondly, in terms of the services provided under the trademark at issue, Sofang.com, the real estate brokerage website, mainly publishes real estate related information on behalf of others and provides a platform for the public to post information. Although Sofang.com launches advertisements for large real estate companies occasionally, this kind of advertisement is in fact promotion activity for house sales and is merely an approach to perform its intermediary function as a real estate brokerage. To be precise, the service provided by Sofang.com is deemed to fall within class 36 as “real estate brokerage and agency services”. This kind of business is quite different from traditional advertising services provided by advertising communication companies, judging from either its connotation or function.

Nevertheless, the second instance believed that the trademark used by Soufang Information and Jiatianxia Advertising must be regarded as “used in advertising services”.

The appellants applied the trademark of sofang 搜房 on class 36, specified as “real estate agency and brokerage services” as early as 1999, and the trademark was approved by the Trademark Office. The affirmation of the second instance court will inevitably bring difficulties if the appellants attempt to protect their trademark rights in the future.

Finally, the basis for the TRAB re-adjudication is problematic. Since the trial of first instance did not admit the newly presented evidence, the trial of second instance held that the evidence presented during the trademark review and trial of second instance was insufficient to prove two key facts, i.e. the third party’s affiliation with the two companies outside of the case and the malicious intent of the appellants, and therefore required the TRAB to re-adjudicate by taking into account the evidence presented during the trial of first instance and other evidence. Thus, for the appellants, the variables in re-adjudication were greatly increased, for many issues were beyond their control, including what kind of evidence may be taken into effect, whether new evidence shall be presented, and of which party the newly presented evidence will be in favour.

An open ending

Despite the judgment apparently in favour of the appellants, certain risks remain. Very often a winning judgment doesn’t mean the end of disputes between the parties, but likely opens other issues. Therefore, the facts as found in a judgment require further professional analysis and examination. Based on that, one can decide whether or not to obey the judgment, and consequently form a strategy of future rights protection. Fortunately, in this case, Soufun.com changed its name, greatly reducing the possibility of a follow-up battle between the parties like that in the case of Wong Lo Kat v JDB.

Jiang Fengtao is the managing partner and Meng Aihua is a lawyer at Hengdu Law Offices