Criteria for determining validity of trademark coexistence agreements in China

At present in China, removing prior obstacles by choosing to sign a coexistence agreement/consent with the owner of a cited trademark has become one of the ways for more and more trademark applicants to obtain trademark rights. However, in judicial review practice in recent years, court attitudes towards co-existence agreements/consents have become increasingly strict, and not all co-existence agreements/consents have been accepted by the relevant court.

This article analyses the criteria for determining the validity of a trademark coexistence agreement/consent.

China’s laws and judicial interpretations do not set forth clear provisions on the validity of a trademark coexistence agreement/consent. The guidelines exist in paragraphs 15.10–15.12 of the Guidelines for the Trial of Trademark Licensing and Rights Confirmation Administrative Cases of the Beijing Municipal High People’s Court (April 24 2019), which are as follows.

To determine whether the disputed mark and the cited mark constitute similar trademarks, the coexistence agreement can be used as prima facie evidence to exclude confusion.

The owner of the cited trademark shall agree in writing to an application for registration of the disputed trademark, clearly stating the specific information regarding the disputed trademark, but a coexistence agreement with conditions or deadlines is generally not admissible.

The coexistence agreement should be true, legal, and valid, and should not be harmful to the interests of the country, the public interest, or the legitimate rights and interests of third parties, otherwise it should not be adopted.

Where the cited trademark and the disputed trademark have the same, or substantially the same, trademark symbol and are used on the same, or similar, goods, an application for registration of the disputed trademark cannot be granted on the basis of the coexistence agreement alone.

If the cited trademark and the disputed trademark have similar trademark symbols and are used on the same, or similar, goods and the owner of the cited trademark has issued a coexistence agreement, in the absence of other evidence proving that the coexistence of the disputed trademark and the cited trademark is sufficient to lead to confusion regarding the source of the goods among the relevant public, it can be concluded that the disputed trademark and the cited trademark do not constitute similar trademarks.

If the owner of the cited trademark issues a coexistence agreement and then files an objection to the non-registration of the disputed trademark or a request for invalidation on the ground that the disputed trademark and the cited trademark constitute similar trademarks, it shall not be supported, unless the agreement is invalidated or revoked in accordance with the law.

The first point to note is that a coexistence agreement/consent that does not violate laws and administrative regulations and does not harm the relevant public interest should be fully respected.

As courts have found in several recent judgments, the exclusive right to use a trademark is a civil property right with the attribute of a private right. According to the principle of autonomy of will, unless significant public interests are involved, the trademark owner may dispose of the right according to its own will.

A trademark coexistence agreement/consent embodies the cited trademark registrant’s transfer and disposition of part of the exclusive right to use the trademark, and the trademark registrant should be allowed to freely dispose of its exclusive right to use the trademark. Therefore, in the absence of evidence to show that the coexistence agreement/consent violates laws and administrative regulations, or is sufficient to harm the interests of the relevant public, the cited trademark disposition of the cited trademark right holder and recognition as the expression of the will of the disputed trademark registration should be fully respected.

The second point is that the applied-for trademark and the cited trademark can be distinguished and will not lead to confusion among the relevant public.

Generally, an application for registration of a trademark must meet the requirements of Article 30 of the Trademark Law of the People’s Republic of China (the Trademark Law); i.e., it must not be identical, or similar, to trademarks registered or preliminarily examined by others in respect of the same kind of goods or similar goods. In several recent cases, the courts found that there are differences between the applied-for and the cited trademark, and on the premise that the two are still distinguishable, the coexistence agreement/consent issued by the cited trademark owner was respected.

Even with a coexistence agreement/consent, it must also be based on the premise that it will not lead to confusion among the relevant public. The legislative purpose of the Trademark Law is to protect not only the interests of the trademark owner but also the interests of consumers, and the relinquishment or assignment of the trademark owner’s rights does not necessarily prevent confusion and misidentification by the relevant public.

Therefore, if the trademark applicant’s trademark is different from the cited trademark in overall appearance, word composition, and distinctive identification, and will not lead to confusion and misidentification among the relevant public, then the court will not find that the applied-for trademark and the cited trademark constitute the same, or similar, trademarks on the basis of the coexistence agreement/consent issued by the owner of the cited trademark.

Although courts’ current attitude towards coexistence agreements/consents tends to be conservative, it does not mean that the coexistence agreement/consent has completely lost its role. The coexistence agreement/consent is still one of the options available to the parties to exclude prior impediments in a trademark refusal retrial and subsequent administrative litigation procedures.

In light of recent court judgments, where there are differences in the trademarks, resulting in a low potential for consumer confusion, the parties can still try to obtain registration of the applied-for trademark by a coexistence agreement/consent.