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A Brief Review on the Protection of Well-known Trademarks in China
Linda Liu & Partners
Intellectual property protection has been a hot issue in recent years. Many local governments in China have been calling for their local enterprises to establish an intellectual property strategy and place intellectual property issues on their agendas. The core of this strategy is making brands - building well-known companies and well-known trademarks. Consequently, the recognition of a trademark as being well-known has become one of the parameters concerning the implementation of an intellectual property strategy by which a local government can be judged. A local government is likely to be considered good if a certain number of its local enterprises obtain well-known trademarks. Such enterprises may be considered to improve the image and prestige of the local government and they may be favored by the government when it is making policy, or even be directly rewarded by the government. Similarly, the number of well-known trademarks in an administrative area has become a showcase of political achievements for local leaders. Many enterprises are working hard to get their trademarks recognized as being well-known regardless of expense. Some even go so far as to manufacture evidence in order to start a bogus infringement lawsuit with the intention of getting a Court decision that the trademark is well-known.
What is meant by a “well-known trademark”? What is the nature of a well-known trademark? What should our point of view be with regard to the recognition of well-known trademark?
Article 13 of the current Trademark Law stipulates the protection available for well-known trademarks, but lacks a detailed definition of constitutes a well-known trademark. Recently, the questions of what are well-known trademarks and whether there is necessarily a connection between a well-known trademark and the quality of the goods protected by it, have been the topics of hot discussions between some experts and scholars. The term “well-known trademark” originates from the Paris Convention. The literal meaning is a trademark that is known to everyone. The presence of a well-known trademark does not necessarily mean that the designated goods are of good quality. In this sense, there is no connection between well-known trademarks and the quality of the goods using the trademarks. A well-known trademark only means that the mark is known to a large number of people in a wide area during a long period of time during which the mark has been used and the mark enjoys a high awareness among the relevant public. The quality of the designated goods is not a consideration when determining if a trademark should be recognized as being well-known.
However, in practice, the designated goods of well-known trademarks usually enjoy a consistent and reliable quality, which, we think, reflects that the survival-of-the-fittest theory applies in the trademark sphere. Ordinary consumers in China often consider that goods bearing well-known trademarks have good quality and they equate the well-known trademarks with good quality goods or service. Once a trademark is recognized as being well-known, not only the brand value but also the reputation and sales of the goods and service are increased immediately, which is an important reason why numerous Chinese enterprises are keen to have their trademarks recognized as being well-known.
According to the current Trademark Law and trademark practice, the competent Chinese authorities handling trademarks have adopted the “passive recognition and active protection” principle in the recognition and protection of well-known trademarks. Therefore, a mark has to be involved in a trademark infringement case or ownership dispute in order to start the action of being recognized as being a well-known trademark. The competent authorities for determining if a trademark is well-known are the Trademark Office, the Trademark Review and Adjudication Board and the People’s Court.
During the registration phase for trademark applications, the competent Chinese authority for trademarks only considers whether the later mark is in conflict with any earlier marks according to the Article 28 of Trademark Law, whether the mark itself is distinctive and whether it violates the prohibitory provisions. It does not actively consider whether the later applicant is acting in bad faith and plagiarizing or imitating a third party’s earlier trademark right. The rightful owner of an earlier trademark has to file an opposition or take an invalidation action to block or cancel the registration of a later infringing trademark, which is a heavy burden to be borne by the owner of the earlier right. However, once an earlier trademark has recognized as being well-known, then in the examination phase the authority may actively refuse the later-filed trademark application in accordance with Article 13 of Trademark Law. This is so-called “active protection”. Additionally, the owner of the well-known trademark has an easier time when asking for an injunction against, and punishment of, the infringement of its well-known trademark before the Chinese local administrative Authority of Commerce and Industry. This is not only another important reason why Chinese enterprises are desperate for recognition of their trademarks as being well-known, but also an important reason why many famous foreign enterprises need to consider obtaining well-known trademark status in China.
We think that it is necessary to offer appropriate protection to well-known trademarks in China, as this is consistent with the requirements of international conventions. Many foreign enterprises are facing the problem that when they enter the Chinese market their trademarks are being imitated or have been preemptively registered in bad faith. The recognition of a trademark as being well-known has become an important means and powerful weapon for them to fight against those dishonest acts. At the same time, when we consider protection afforded to well-known trademarks, we should bear in mind the characteristics of the well-known trademarks themselves and the scope of their designated goods. We must avoid exaggerating the function of well-known trademark recognition, which would be contrary to the nature of well-known trademarks and the basic intention of the competent authority that recognizes well-known trademarks.
We think that trademarks with a strong distinctiveness should be given the broadest protection as such trademarks embody the creative thinking and hard work of their creators. It takes a lot of labor, material resources and time to create a trademark and develop it from being weak to being strong and from being unknown to being well-known. It is highly unlikely that someone can design and adopt a mark that is confusingly similar to, or identical with, a well-known trademark by sheer chance. Therefore, we think that the protection given to such well-known trademarks should extends to all classes of goods and services, i.e. such well-known trademarks should be able to block the registration and use of identical or similar marks on any goods or services; while being subject to stricter criteria for determining whether the marks are similar or not, in order to avoid any possibility of confusion which might damage the reputation of the owner.
We think that trademarks with comparatively weak creativeness or distinctiveness should be treated in different ways. If the mark actually enjoys a high popularity over a long time period and through wide use, then it should be given the broadest protection - similar to that given above to the highly creative and distinctive well-known trademarks. Owing to their good reputation such trademarks are also very likely to be imitated out of bad faith. Additionally, as they are known to a large proportion of society, if identical or similar marks are used on dissimilar goods, it is still easily for ordinary consumers to mistake the origin of the goods, and as a result the interests of the owner of the well-known trademark and consumers in general can be harmed. If the reputation or popularity of a trademark is build up over a comparatively short period of time and just in a certain group of people rather than the whole of society, we think that a comparatively looser criteria should be used in considering the similarity between the marks, especially if the later mark does not appear to a deliberate imitation. The protection should be limited to the scope that is appropriate for the designated goods of those well-known trademarks in order to avoid unnecessary waste of limited trademark resources.
Owing to the huge increase in trademark registration application in recent years in China, it is not easy to design a mark and smoothly obtain its registration as it is very likely to be in conflict with earlier registered marks. It is quite hard to design a good mark and build up its reputation in order to receive significant economic benefits. Currently, the Chinese government encourages domestic enterprises to use their own brands and develop their own well-known trademarks and products. At the same time it is also taking an active attitude towards protecting well-known trademarks owned by foreign enterprises. But some local governments can be quite different in their attitudes towards protecting the well-known or famous trademarks owned by foreign enterprises. Local protectionism shows up now and then. We are expecting the protection of intellectual property in China to grow, with people becoming more conscious of the need to respect other peoples’ intellectual property rights as well as to protect one’s own, thereby leaving no room for faked and infringing products.
