China Trademark Update for 2016-2017
China Trademark Update for 2016-2017
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2017/05/18 By ZY Partners

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Highlights

China’s Supreme People’s Court Released an Outline on the Judicial Protection of Intellectual Property Rights between 2016 and 2020 in April 2017 

The Supreme People’s Court on April 24, 2017 released the Outline of Chinese Judicial Protections for Intellectual Property Rights (2016-2020) (“Outline”). The Outline puts forward eight goals for judicial protection of IPRs, with fifteen core measures. 

The document, which is more like a political blueprint rather than a concrete regulation, outlines the main objectives and measures for the highest Chinese court in enforcing intellectual property rights in the coming years. Among the fifteen measures, the following five are worth special focus: 

(1) Hear IP cases of various types fairly and efficiently

The Outline states that cases should be classified according to their inherent difficulty and complexity so that simple cases can be handled promptly. while complicated cases can be heard more deliberately. 

(2) Continuously perfect the jurisdictional system for IP cases

The Outline clarifies that for those high-profile and complicated cases, the higher court may take over original jurisdiction to hear and determine the case at first instance. 

(3) Formulate rules of evidence for IP litigation in a timely manner

The Outline states that pre-suit and in-suit evidence preservation shall be improved to encourage the parties to actively collect and submit evidence. 

(4) Explore the establishment of appeal mechanism for IP cases

The Outline of China’s National IP Strategy (2008) raised exploring a proposal “to establish an IP appellate court”. The Outline believes the establishment of an IP appellate court at the state level should be considered. This would help achieve adjudicative consistency among different appellate court decisions and improve the credibility of the judiciary. 

(5) Actively promote case-guiding system for IP cases

The Outline sets out the needs to establish an IP precedent system, covering both binding cases and persuasive cases, and to achieve an interactive mechanism whereby new cases are strictly selected according to this standard, continuously compiled and updated to replace outdated ones. To this end, a national database for IP precedents shall be constructed for use by judges, lawyers, litigating parties and scholars. 

Supreme People’s Court’s Judicial Interpretation on Grant and Affirmation of Trademark Rights Effective as of March 1, 2017 

The Supreme People’s Court’s trademark judicial interpretation, the Provision of the Supreme People's Court on Several Issues Concerning the Adjudication of Administrative Cases on Granting and Affirming Trademark-related Rights (“SPC Provision”) has entered into force on March 1, 2017. 

The 2017 SPC Provision is the first judicial interpretation concerning grant and affirmation of trademarks rights inChina, and includes many clauses that particularly address recent controversial issues in judicial practice. 

The new SPC Provision addresses a wide range of substantive and procedural issues relating to trademark registration and protection, including examining  trademark distinctiveness, determining likelihood of confusion, protecting well-known trademarks, and prior rights, such as copyright, name rights, trade name rights, the rights related to the name of famous character in the work, the rights related to the title of famous works, among others. 

The highlights include:

(1) Article 5: an application to register the name, etc., of a public figure in the fields of politics, economics, culture, religion, an ethnic group, etc., falls within the scope of "other adverse effects" set out in Article 10(1)(8) of the Trademark Law. 

(2) Article 12 makes it clear that to evaluate the likelihood of confusion, the court shall comprehensively balance several factors, including (1) the similarity of the marks; (2) the similarity of the goods; (3) the distinctiveness and degree of fame of the trademark in which protection is sought; (4) the degree of attention paid by the relevant public; and (5) other relevant factors. The applicant's intent in using the trademark and evidence of actual confusion are also factors in determining likelihood of confusion. The SPC further indicated at the press conference that these factors are also applicable to the test for the likelihood of confusion under Article 30 of the Trademark Law (rejection of registration based on the similarity to another party’s prior cited trademark) and under Article 32 of the Trademark Law (rejection, opposition and invalidation of registration based on the similarity to another party’s prior trade name). 

(3) Article 19: Where a party files a trademark opposition or invalidation claiming that a disputed trademark damages its prior copyright, trademark gazettes, trademark registration certificates, etc., can be used as prima facie evidence to show that a trademark applicant is an interested party with the right to claim copyright in a trademark representation. 

(4) Article 20.2: For works copyrighted works, if the name of a work, the name of a character within a work, etc., has obtained a rather high degree of fame, then use of the name as a trademark on related goods will easily cause the relevant public to mistakenly believe that the name has been licensed by the rights holder, or that it has a special relationship with the rights holder. If a party bases a prior rights claim on this, the People's Court shall support the claim. 

(5) Article 28: Where a People's Court is trying an administrative case concerning the authorization and affirmation of trademark rights, and where the TRAB has rejected a disputed trademark, or refused to approve its registration, or has invalidated the trademark based on reasons that no longer exist, the People's Court may revoke the relevant TRAB ruling in accordance with the new facts, and order the TRAB to issue a new ruling based on the changed facts. 

(6) Article 30: In cases where a judgment by a People's Court has entered into effect and such judgment includes a clear ruling with respect to the relevant facts and application of law, if a related or interested party files a lawsuit against a new ruling by the TRAB based on the effective judgment, People's Courts shall refuse to accept the said lawsuit according to law; If the lawsuit has already been accepted, the People’s Court should dismiss the lawsuit. 

China’s Recent Pilot IP Precedents System 

In April 2015, the Supreme People’s Court of China designated the Beijing IP Court as its IP Case Law Center to experiment on rules of stare decisis. The IP Case Law Center selects and publishes certain representative IP cases from all levels of court as precedent. Courts nationwide should “refer to” the IP precedents when handling cases with similar facts or legal issues. A precedent may be binding or persuasive, according to the hierarchy rules. Judges are required to comment on every precedent submitted by the parties, and to explain why they do or do not choose to follow precedent. Failure to discuss precedent in court opinions would prejudice a party’s due process rights and could be a ground for appeal. 

The citation of precedents has been gradually developing in the Beijing IP Court practice since the establishment of the IP Case Law Center in April 2015.  Statistics show that, from March 2015 to October 2016, the Beijing IP Court has cited precedents in 168 decisions, 128 of which were submitted by the parties and 47 of which the precedents were voluntarily invoked by judges. Among the 168 decisions, the Beijing   IP Court has followed precedent in 117 judgments, distinguished factual bases and not followed precedent in 51 decisions. In the next two years, the Beijing IP   Court aims to significantly expand the number of precedents and make them an indispensable part of judicial opinions. 

The establishment of the IP Precedents System is a great movement inChina. It calls for open and dynamic minds, transparency, professionalism, and pulls together the legal community. It is an indication of the SPC’s strong willingness to improve judges’ professional levels and the quality of judicial opinions, build a more impartial judiciary, and unify the standard of application of law. 

State-level Guideline on Protection of Property Rights Issued in November 2016 

On November 4, 2016,China's State Council issued the Opinions on Improving the Property Rights Protection System and Lawfully Protecting Property Rights (“Guideline”), the first state-level guideline on protecting Chinese private property rights. 

The Guideline includes a section devoted to intellectual property rights. In particular, the Guideline stresses increasing punishments for infringement of IPRs, raising the upper limits of statutory damages, and imposing punitive damages for willful infringement. Moreover, compensation for infringement should cover the reasonable expenses paid by the IPRs owner for enforcement. The Guideline suggests severely punishing those engaging in unfair competition in order to strengthen brand protection. The State Administration for Industry and Commerce is working on rules based on the Guideline. 

New Specialized IP Tribunals Established in Four Cities in January 2017 

After the launch in Beijing of the specialized IP Courts in late 2014, Shanghai and Guangzhou, four new specialized IP Tribunals were established in four cities: Nanjing, Suzhou, Chengdu and Wuhan in January and February, 2017. These four specialized IP Tribunals are attached to the intermediate courts of the four cities and have cross-regional jurisdiction over patent cases for the entire province or multiple cities within that province, which would further improve the quality, efficiency and consistency of IP adjudications. 

The specialized IP Tribunals are designed to try cases involving patents, technical secrets, computer software, new plant varieties, integrated circuit layout designs, and cases regarding recognition of well-known trademarks and antitrust issues. Unlike the IP Courts in Beijing and Shanghai — which only have jurisdiction over IP cases within their own cities — each of the four IP Tribunals has cross-regional jurisdiction over the entire province, or multiple cities within that province. For example, the Chengdu IP Tribunal and the Wuhan IP Tribunal hear first-instance civil cases relating to patent and similar cases in all Sichuan Province and Hubei Province respectively. The Suzhou IP Tribunal has jurisdiction over patent and similar cases from four cities of Jiangsu Province, while the province’s nine remaining cities fall into the jurisdiction of the Nanjing IP Tribunal 

Beijing High Court Releases a New Guideline for the Adjudication of Network-related IP Cases in April 2016 

On April 13, 2016, the Beijing High People’s Court released the Guideline for Adjudication of Network-related IP Cases (“Guideline”) in a bid to address various issues arising from adjudicating IP cases in connection with network.The second part of the Guideline is devoted to network-related trademark disputes. 

In the field of the judicial protection of network-related trademark rights, the Guideline makes clear that the principles of balanced interests and reasonable prevention shall be applied in the adjudication of cases. The Guideline specifically addresses following issues: 

(1) the platform service provider’s burden of proof in determining whether or not the act committed by the platform service provider constitutes direct infringement;

(2) the determination of an effective notice and the legal consequence of incorrect notice;

(3) the factors determining whether or not the platform service provider is aware of the infringing act; and

(4) the determination of whether goods or services provided by software are identical with or similar to goods or services designated by another’s trademark, etc. 

Furthermore, the Guideline affirms that it is the responsibility of the platform service provider to provide proof of the online seller’s detailed information. 

Article 26 provides a long list of 7 circumstances (plus additional “other factors”) that may be taken into consideration[a3]  when determining whether a platform service provider “knows” or “ought to know” that an online seller is infringing a trademark:

(1) the alleged infringing information is placed on the homepage of the website, the homepage of a column or other noticeable locations;

(2) the service provider provided some editing, selecting, sorting out, ranking, recommending, or revising of the alleged infringing information;

(3) the notification of the right holder is sufficient to enable the platform service provider to know that the alleged infringing information is disseminated, or the alleged infringing act is committed through the network service provided by the platform service provider; and

(4) well-known goods or services are sold or offered at an obviously unreasonable price, etc. 

New Trademark Examination and Review Standards issued by the TMO and TRAB in January 2017 

In January 2017, the China Trademark Office (TMO) and Trademark Review and Adjudication Board (TRAB) issued the amended Trademark Examination and Review Standards (“Standards”), to match the latest Trademark Law. 

The amended Standards improved the old version from the following aspects: 

(1) added the examination of a sound trademark;

(2) added the TMO’s issuing of the Examination Opinion during the examination;

(3) added the application of Article 19(4) of the Trademark Law (trademark agencies cannot apply for trademarks on services other than agency services);

(4) added the application of Article 15(2) of the Trademark Law (to prevent malicious trademark squatting by a party having a contractual, business or other relationship of the prior user); and

(5) amended the standard for examination under Article 10(1)(7) and Article 10(1)(8) of the Trademark Law. 

It is worth noting that the Standards provide two absolute rejection grounds to protect the prior naming right of others: 

(1) an application to register the name of another person without authorization with the purpose to mislead the public as to the origin of the goods or service can be rejected as a mark that is deceptive under Article 10(1)(7) of the Trademark Law; and

(2) an application to register the name of a public figure in the fields of politics, economics, culture, religion, or representing a particular ethnic group can be rejected as a mark that has “other adverse effects” under Article 10(1)(8) of the Trademark Law.


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