China trade mark: Examining non-trade mark rights protected by Chinese trade mark law

May 01 2018

In recent years, the protection system for trade mark rights has become more and more mature in China. Non-trade mark rights have also caught the attention of IP practitioners and even outsiders. After all, who can overlook the news that Disney has profited more from merchandise related to Frozen than publishing the movie and DVD? Even people who barely know anything about basketball or IP must have heard that the NBA superstar Michael Jordan has finally stopped a Chinese company from using his surname in Chinese as a trade mark in the Supreme Court. When posting pictures on WeChat's Moments has become a habit for thousands of Chinese people, it is astonishing to think that posting a picture of the night view of the Eiffel Tower could be an act of infringement.

These non-trade mark rights are also protected by Chinese Trademark Law. Article 32 of Chinese Trademark Law provides: "No trade mark application shall infringe upon another party's existing prior rights." As opposed to Articles 30 and 31, which intend to protect registered and pending trade marks, Article 32 is meant to protect non-trade mark rights so as to prevent the act of trading on others' goodwill, which cannot be classified as a trade mark right.

The most conventional cases applying Article 32 are usually based on prior copyright. In the cases of Quiksilver International Pty Ltd v Other parties and NXP B.V. v Other parties, Liu Shen successfully convinced the Chinese Trademark Office (CTMO) and the Trademark Review and Appeal Board to recognise prior copyrights of not only abstract logos but also stylised Latin letters. Unlike cases based on prior device trade marks, the designs in cases based on prior copyrights have to be substantially similar. In other words, the standard of similarity in prior copyright cases is much more rigid than the standard in prior trade mark cases. The designs must bear a very strong resemblance or even mirror each other, if the prior copyrighted work is not that complicated, as protection of copyright disregards similarity of goods and services.

The right of publicity has become a hot topic because of the Jordan case. The NBA superstar appeared to be satisfied with the protection of his surname in Chinese in the Supreme Court, going through long procedures, despite the fact that the corresponding Pinyin marks remain the asset of the Chinese company. Surprisingly, most Chinese people, NBA fans and non-NBA fans, put away nationalism for the moment and felt happy for him. Although it later turned out that procedures relating to the Jordan case will continue, the right of publicity is an unconverted prior right protected under Article 32. In the Elizabeth Taylor case, Liu Shen persuaded the CTMO to deny a Chinese company's application to register Ms Taylor's full name in Chinese as a trade mark on chinaware in the first phase. The reason why it was so difficult for Michael Jordan to protect his right of publicity is complicated. The marks registered by the other party were only the surname Jordan in Chinese characters and Pinyin, not his full name. The mark was registered and used on sports shoes, closely related to Jordan's career. Michael Jordan also licensed Nike to use his name on sports shoes, amplifying the conflict. To make the case even more difficult, the Chinese company registering these marks also adopted Jordan in Chinese as their trade name and become a well-known company in their home area after years of development. The authorities and courts had to protect prior right on the one hand and refrain from over protection on the other when the prior right was not very strong.

The most controversial prior right in recent years is the merchandising right, a right to market, sell and license physical articles related to fictitious characters and work titles. Supporters say recognition of the merchandising right has addressed an issue in the protection of intangible property and kept up with the needs of society. Those who criticise the right, on the contrary, express their worries that the protection granted to this right may be excessive. They also assert that the theoretical basis of the merchandising right is fragile. From the earlier cases of TEAM BEATLES (represented by Liu Shen), 007 BOND to the recent KUNGFU PANDA series cases, arguments have been raging, and the release of the Supreme Court's famous Rule 22 in Rules for Problems in Administrative Cases of Trademark Right Recognition and Grant did not end the debate, but rather created more discussion.

In Rule 22, the Supreme Court provided that if a fictitious character or work title has a relatively strong reputation and using it as a trade mark is likely to mislead the public to believe such a use is licensed by the copyright owner, or the trade mark user is associated with the copyright owner, the copyright owner's claim of prior right in the fictitious character or work title shall be supported by the courts. The Supreme Court has chosen not to define such a right as a merchandising right. It remains to be seen in future rulings, how famous the fictitious character or work title has to be in order for it to deserve protection and use on which goods and services is likely to mislead the related public.

With the rapid growth of the internet in China, more and more new IP-related matters keep arising, accompanied by differing opinions. The good news is that the Beijing Intellectual Property Court is building up an official database of IP-related precedents. Precedents in this database will be binding, which will make future IP cases more predictable.