China trade marks: Analysing the key aspects of Article 15 of Trademark Law

Article 15 of Trademark Law of the People's Republic of China (PRC) states:

1) When any agent or representative registers, in its own name, the trade mark of a person for whom it acts as the agent or representative without authorisation from the owner, and the owner raises opposition, the trade mark shall be rejected for registration and prohibited from use. The so-called agent in this article includes dealers and distributors who know about the trade mark in dispute due to business activities.

2) Where an applied trade mark used on identical or similar goods is identical or similar to an unregistered trade mark used by a third party prior to the filing date of the applied mark, and the applicant is fully aware of the trade mark previously used by the said third party due to a contractual agreement or business relationship or other relationship other than those prescribed in the previous clause, the applied trade mark should not be registered when the third party raises opposition.

In the 2013 revision of PRC Trademark Law, paragraph 2 is added into Article 15. In drafting the grounds of opposition, invalidation or complaint, it is advisable to quote a specific clause depending on the relationship between the two parties.

Paragraph 1 regulates the agent or representative and the principal. Usually, the agent refers to the distributor of the principal. Paragraph 1 does not require the prior use of the trade mark, or the reputation of the trade mark. The only requirement is the special business relationship between the parties, namely, distributor and principal. Since Article 15 is usually considered the clause that protects unregistered trade marks in China, if one expands the scope of relationship to any kind of business relationship, such as buyer and seller, advertising agency and OEM manufacturer, the protection of an unregistered trade mark under Article 15 will be more attractive to owners of unregistered trade marks than Article 13 and Article 32.

We think that paragraph 2 should apply where the business relationship is other than distributor and principal. To apply paragraph 2, the opponent should provide evidence to prove prior use of the trade mark, which is not a requirement in paragraph 1.

Continuous purchase orders in successive years, annual purchase plans for a continuous period of time, email communications during the negotiation procedure, sales documents to reflect the real transactions and authorisation letters to satisfy the requirement of Chinese authorities can all count as sound evidence to prove the relationship.

Article 15 can be used in these scenarios. If Article 15 cannot apply before the contract of distribution is settled, it will encourage negotiation out of bad faith, in particular, aimed at obtaining information regarding the principal's trade mark and other business information using the excuse of distribution but without the true intention to fulfil the contract. If the agent applies for the principal's unregistered trade mark after the termination of the distribution contract, in most cases, so long as the agent can still earn unjustified benefit from the former business relationship with the principal, Article 15 can still apply.

In a different way from other clauses such as Article 13 and Article 32, territory is not a requirement in Article 15, especially when paragraph 1 applies. To prove ownership, the opponent can produce trade mark registration certificates in any jurisdiction, usually other than in mainland China. If the principal's trade mark is registered in China, then Article 30 or Article 31 applies rather than Article 15. If the mark in dispute is not a registered mark in any jurisdiction, evidence of prior use of the mark can be used to prove ownership.

In current practice, the China Trademark Office and the courts tend to observe the criteria that the goods covered by the trade mark in dispute should be the same or similar to those provided by the opponent. The issue of how to judge whether the goods or services are similar can be irritating for opponents in China because of the sub-class system. The opponent should prove the similarity in function or close relationship between the goods and hence the likelihood of confusion among the relevant public, if the opposed goods are not considered similar to the goods provided by the opponent as per the sub-class system in China.

Authorisation from the principal to register the trade mark in the name of the agent should be explicit and definite. In cases where the principal only authorises the agent to register its trade mark, but does not state in whose name the trade mark should be filed, the authorisation is not explicit and cannot be taken as granting an entitlement to the agent to register the mark in its own name.

In Miji Electronic Appliances (Shanghai) Co Ltd v TRAB (third person Josef Schulte-Ufer), Miji argued that the third person (the principal) knew the fact that the trade mark in dispute was filed under the name of Miji (the distributor), stating that the principal did not raise opposition in due time but allowed the trade mark to mature into registration. Miji argued that such behaviour from the principal should be taken as an authorisation. However, the court took a different view. Silent acquiescence should be explicitly prescribed in legislation. The act of omission from the principal should not be taken as authorising the distributor to register the trade mark in its own name.

Article 15 can be a very useful ground for opposition and invalidation when the conditions mentioned above are met. Hopefully, it gives trade mark owners a useful tool against trade mark pirating. To make the tool work, trade mark owners should make an effort to preserve evidence when dealing with distributors and other parties falling within the framework of Article 15 as representatives.

Lily Lei	Miao Tian

Liu Shen & Associates10th Floor, Hanhai Plaza (1+1 Plaza)10, Caihefang Road, Haidian DistrictChinaTel: +86-1068681616Email: mai@liu-shen.com