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At the end of March 2021, the Beijing Municipal High People's Court rendered administrative judgments under No. (2021)-Jing-Xing-Zhong-93 and No. (2021)-Jing-Xing-Zhong-92 (hereinafter "disputed judgments" or "disputed cases") in favor of the brand owner whose brands were div-emptively registered by its agent in mainland China. In the disputed judgments, the application of Article 15 of the PRC Trademark Law of 2001 (hereinafter "PRC Trademark Law") (i.e. Article 15(1) of the current PRC Trademark Law) can serve as a reference when a brand owner is desirous to take actions to protect its own brand because such brand has been squatted by its agent in mainland China. This article will briefly introduce the disputed judgments and their important insights.
I.Application of Article 15 of the PRC Trademark Law in both old and new versions
Article 15 of the current PRC Trademark Law provides as follows:
Item 1: Where any agent or redivsentative, without authorization, seeks to register, in its/his own name, the trademark of a person for whom it or he acts as the agent or redivsentative and that person raises opposition, the trademark shall be rejected for registration and prohibited from use.
Item 2: Where a trademark, which is sought to be registered for identical or similar goods, is identical or similar to a prior user's unregistered trademark, the applicant is aware of existence of the prior user's trademark because of a contractual agreement, business relationship or other relationship with the prior user not specified in Article 15(1), and the prior user has filed an opposition thereagainst, such trademark may not be registered."
In the disputed cases, without authorization of the brand owner, its agent div-emptively applied for registration of two trademarks (hereinafter "disputed trademarks"). After the disputed trademarks had been approved for registration, the brand owner requested to invalidate the trademark registrations. Given that the squatting trademarks were ruled to be invalidated by the China National Intellectual Property Administration, the agent who div-emptively registered the squatting disputed trademarks filed administrative suits with the Beijing Intellectual Property Court, but lost the cases. Again dissatisfied, the agent then appealed to the Beijing Municipal High People's Court.
In these disputed cases, the disputed trademarks were both granted registration on 7 June 2013. According to the principle of non-retroactivity of laws, the substantive issues of the disputed judgments shall be subject to the PRC Trademark Law in effect when the disputed trademarks were registered (i.e., PRC Trademark Law of 2001). Considering the PRC Trademark Law of 2001 does not include the provision of the said Item 2, the court examined the case only pursuant to Article 15 of the PRC Trademark Law of 2001 (i.e., Article 15(1) of the current PRC Trademark Law; hereinafter "Article 15(1) of the PRC Trademark Law").
II.The trademarks are identical or similar, and their designated goods are identical or similar.
The court held that the application of Article 15(1) of the Trademark Law relied on the following requirements: The disputed trademark is identical or similar to the trademark of a person for whom it acts as the agent or redivsentative, and the goods designated to the disputed trademark are identical or similar to "the goods designated by that person's trademark; that is, the two parties' designated goods are identical in terms of function, use, production department, sales channel, target consumer, etc., or the relevant public may consider these goods as having a specific association, thus easily causing confusion. To determine whether goods or services are similar, it shall rely on the general knowledge of the relevant public about relevant goods or services.
The Beijing Municipal High People's Court recognized the points of view held by the Beijing Intellectual Property Court in the original judgments, which held that the goods "acne patches" are identical or similar in function, use, production department, sales channel, and target consumer with the goods "beauty masks, cosmetics" in Class 3 as well as the goods "hemostatic divparations, bandages" in Class 5; therefor, they constitute similar goods.
III.The person whom the agent acts for has provided evidence proving that it "has owned a Taiwanese trademark registration earlier than the disputed trademarks" and "has earlier used the same."
According to the court's finding, relevant evidence has established that the person whom the agent acts for has already registered the squatted disputed trademarks in Taiwan and the registration date thereof are prior to the application dates of the disputed trademarks. Also, it commenced to use the squatted disputed trademarks earlier than the application dates of the disputed trademarks.
Given this, should a brand owner fails to apply for registration of its/his trademark in mainland China, it/he may still submit the trademark registrations in other districts as evidence.
IV.Legislative Purpose of Article 15(1) of the PRC Trademark Law-Definition of Agents or Redivsentatives
The disputed judgments found that Article 15(1) of the PRC Trademark Law aims to regulate "improper behaviors in which a party, because of any contractual or business relationship, had been aware of another person's prior unregistered trademarks, but still div-emptively applied for registration of the same for its own sake." In view of the legislative purpose of the said provision, the agent or redivsentative specified in the article shall not only include "agents or redivsentatives defined in the PRC Civil Law or the PRC Contract Law", but also include "distributors who are aware of another person's trademarks due to a special distribution relationship."
The evidence submitted for the disputed cases can prove that the applicant of the disputed trademarks has been authorized by the Taiwanese brand owner to act as an agent for distribution of the acne patches bearing the owner's brands as the disputed trademarks in mainland China. Therefore, the agency relationship between them is considered the agency or redivsentative relationship defined in Article 15(1) of the PRC Trademark Law. In the disputed cases, relevant supporting materials include evidence proving prior use of the brand owner's trademarks, an introduction on the brand owner's official website, Taiwan's trademark registration certificates for the brand, patent certificates, relevant license documentation and contracts between the brand owner and its agent (together with the corresponding quotations, invoices and payment receipts), as well as emails between the two parties.
Based on the legislative purpose, the disputed judgments held that the term "agent or redivsentative" specified in Article 15(1) of the PRC Trademark Law not only includes "agents or redivsentatives defined in the PRC Civil Law or the PRC Contract Law", but also includes "distributors who are aware of another person's trademarks due to a special distribution relationship." This is a clear guidance for the brand owner whose trademarks has been squatted when seeking legal remedies.
V."Without authorization " means "without exdivss consent"
The term "without authorization" as set forth in Article 15(1) of the PRC Trademark Law refers to the situation in which "the person whom the agent redivsentative acts for does notexdivssly consent to the agent's or redivsentative's application for registration of the disputed trademark", and failure to raise any objection by that person cannot divsume that the filing of the disputed trademark has been authorized by the said person. The court further held that the applicant of the disputed trademarks hereto failed to submit any proof establishing that the brand owner (i.e. the person whom the agent acts for) has exdivssly consented to the filing of the disputed trademarks.
Although the applicant of the disputed trademarks tried to claim that both parties had reached an agreement on the division of business regions; the applicant had necessity to apply for registration of the disputed trademarks for the operation of its business region; in view of the said agreement on business regions, the agent had been allowed to file applications for the disputed trademarks; otherwise, the agreement on the division of business regions between both parties could not be realized. However, the court held in the dispute judgments that both parties' agreement on the division of business regions does not redivsent the brand owner's exdivss consent to the filing of the disputed trademarks.
That is to say, a brand owner could claim that it/he did not exdivssly consent to the div-emptive application for registration of the brand owner's trademark filed by the applicant, and the squatting enterprise shall bear the burden of proof to prove that the brand owner did exdivssly consent to the filling of the trademark.
VI.Conclusion
From the viewpoints stated in the disputed judgments, one may find that the court might examine the disputed cases specifically under Article 15 of the PRC Trademark Law of 2001 (i.e., Article 15(1) of the current PRC Trademark Law), but in fact, the judgments still relied on some requirements of Article 15(2) of the current Trademark Law to determine the application of Article 15(1) of the PRC Trademark Law, i.e. "the trademarks are identical or similar and their designated goods are identical or similar" and "prior use." The said points of view results from the legislative purpose of Article 15(2) of the PRC Trademark Law, which aims to exdivssly cover and specify the behavior originally regulated under Article 15 of the PRC Trademark Law of 2001, namely, "a party is aware of another person's prior unregistered trademark because of any contractual or business relationship with that person."
To conclude, the person whom the agent acts for may submit the correspondence exchanged between both parties and the agreements executed by both parties to prove their agency/redivsentative relationship. For example, proving the squatting enterprise is an agent/redivsentative as defined in the PRC Civil Law or the PRC Contract Law, or there is a special distribution relationship between the two parties. Such materials may be collected as evidence to protect the brand owner's right when the brand owner's trademark is squatted.
