The Conflicts of Registered Trademark Rights from the Perspective of Intertwined Civil and Administrative Procedures
Yujing Hou
Unitalen Attorneys at Law
Assuming that the procedure of trademark authorization is absolutely paramount and the registration certificate issued by the Trademark Office means that the registrant obtains an unchallengeable right and is supposed to use the registered trademark monopolistically and freely, there would never happen conflicts between registered trademarks in theory; however, the result of authorization may be changed by the following determination procedure, and the result of determination may be overturned in subsequent two-trialfor- final administrative litigation and retrial proceedings. This means that the status of “a registered trademark” in the trademark records is far from stable. If the posteriorregistered trademark is similar to the prior one and the designated goods or services are similar or of certain linkage or connection, which means within the scope of crosscategory protection for well-known trademarks, the prior-registered trademark owner is entitled to start a trademark determination proceeding to announce the posterior-registered trademark invalid. If the posteriorregistered trademark owner has put the registered trademark into use, the prior trademark owner should have the right to file a civil lawsuit to stop the use of the posterior-registered trademark and even claim monetary compensation.
The author has made a legal research about 12 civil lawsuits and related trademark invalidation procedures in which the plaintiffs charged that the defendants’ use of his own registered trademark constitutes trademark infringement.Except Lafarge case which involving the “misdistribution” of trademark certificate and “Land Rover” case which involving out-of-boundary usage, the defendants in the rest of cases all use their own registered trademarks within the designated scope of goods or services and the plaintiffs all start trademark invalidation procedures during the civil litigations. Civil litigations and administrative procedures of invalidation are intertwined, and are more complicated no matter in procedural or substantive trials. It raises many questions worthy of in-depth study and discussion. Firstly, are the regulatory uses of the self-owned registered trademarks chargeable? Secondly, are the legal effects of invalidation of the defendant’s own registered trademarks retroactive? Thirdly, after the defendants’ own registered trademarks have been declared invalid, the defendants should of course stop using it. But should the defendants be liabl e for compensation, if so, under what circumstances? The author will decompose these three problems one by one in order, to inspire others and trigger more discussions.
Suitability of registered trademark usages
In the eyes of a considerable number of people, having a registered trademark seems equivalent to having a “protective umbrella” and using of their own registered trademarks will certainly not end up with trademark infringement, but in fact it is not. If the trademark registrants use their registered trademarks beyond the scopes of the approved goods or services, change the distinctive features, for instance split or combine their trademarks, etc., it is equivalent to step out of the “protective umbrella”. In the cases of “out-of-boundary usages” and “deformed usages”, the defendants’ “registered” trademarks can certainly be deemed as common infringing marks without “protective umbrella”. For example, in the case1 of 
trademark infringement trialed by Beijing No.2 Intermediate Court, the defendant used the word “Aopu” prominently by separating the word from the graphic and wording combination and was found to be liable for trademark infringement. In addition, if the registered trademarks infringe the prior rights of others’ copyrights, design patent rights, trade name rights, etc., the prior right holders can also directly sue the registrants for infringing their corresponding rights. For example, the Supreme Court in the case2 of “Zhengye” found that the use of the posterior-registered trademark “ZHENGYE (both in Chinese and English)” infringed the prior trade name right. And in the case3 of “G Graphics” of Sichuan High Court, the use of the posterior-registered trademark “G and Graphics” was found to infringe the prior copyright of “Gigabyte Graphics” art works. In the two cases mentioned above, the face that whether the procedure of invalidation is initiated or the result of invalidation almost has no substantive impact on infringement litigations, nor is it the focus of this article.
What this article focuses on is the conflict of rights between registered trademarks in the two different procedures of trademark administrative litigation and trademark civil litigation and the interaction between the two procedures. To acquire exclusive rights upon a certain logo, the trademark invalidation is obviously the primary way to eradicate posterior-registered trademarks. However, the trademark invalidation and subsequent administrative litigations take a long time, ranging from 2-3 years to 3-5 years. For example, the trademark invalidation and following administrative litigations over the logo “
” handled by the author even lasted for 8 years. If the prior trademark owners cannot immediately stop the usage of posterior-registered trademarks but can only passively wait for the results of trademark invalidation, the coexistence of two identical or similar marks in the market will probably lead to damaged market interests and consumers’ interests. That way, the protection granted to the prior-right holders is clearly not exhaustive.
When it comes to trademark rights enforcement, the prior trademark owner has strong motives and needs to immediately stop the use of the posterior-registered trademark, thereby bringing a series of such civil actions, that is, the plaintiff uses the prior trademark as legal basis to claim the fact that the defendant normally uses their selfowned registered trademarks, which means the sued products are within the scope of the approved goods or services and bear the same logo as the registered one, constitute infringement. In such cases, it involves conflicts of rights between the two registered trademarks. The judicial interpretation of the “conflict of rights” of 20084 stipulated that “the case that the plaintiff sue others on the basis of the usage of registered trademark on approved goods by the defendant, in which the registered trademark is the same as or similar to the prior registered trademark” shall be settled through administrative procedures, which means that conflicts of rights between two common registered trademarks cannot be directly resorted to civil proceedings. However, the judicial interpretation5 of “wellknown trademark protection” and the opinion6 of “serving the overall situation” of 2009 gave special protection to well-known trademarks, that is, well-known trademarks owners can directly prohibit the usages of the posterior-registered trademarks in civil proceedings, without the prerequisite of the administrative procedures. In our practice, there are many cases especially the following five classical ones such as the case of “Yanghe” of Jiangsu High Court, the case of “John Deere” of Beijing High Court, the case of “Land Rover” of Guangdong High Court, the case of “Ariston” of Jiangsu High Court, and the case of “Esso” of Guangdong High Court showed that the courts do not "bypass" the regulatory usages of the registered trademarks through procedures such as refusal, dismissal, suspension of trials, etc., but prohibit the uses of the posterior-registered trademarks on the basis of well-known trademarks protection.
In addition, according to the author’s research, not all civil lawsuits in which the courts ruled that the uses of posterior-registered trademarks constitute infringement are necessarily based on the special protection clauses of well-known trademarks. If during the process of civil infringement litigations, the TRAB decision declaring the posterior-registered trademarks invalid has become effective, and the approved goods or services of both two trademarks are found to be similar, there is no need to invoke special protection of well-known trademarks. Instead, the courts can find the posterior-registered trademarks infringement directly based on similar trademarks on the similar goods, taking the five classical cases as examples, including the case of “Boss” of Zhejiang High Court, the case of “Miaomiao” of Shandong High Court, the case of “Huiyuan” of the Supreme Court, the case of “Three Five” of Changzhou Intermediate Court and the case of “Minhe” of Fujian High Court.
From the above-mentioned effective judgments, we can see that although the defendants used their self-owned registered trademarks within regulatory scope, those uses still constituted infringement according to special protection clause of well-known trademark provided that the plaintiffs’ trademarks have achieved wellknown status before filing date of the defendants’ trademarks. The courts do not have to wait for the trademark invalidation procedures, or even do not concern whether the registered trademarks can be declared void. In fact, among the 11 cases studied by the author involving the intertwined civil infringement litigations and trademark invalidation, the alleged registered trademarks in 10 cases were all invalidated and only the registered trademarks in Esso case were sustained in the invalidation procedures. That is to say, in most cases, Beijing IP Court and Beijing High Court, who take charge of trademark invalidation administrative litigations, and the Courts dealing with civil cases in other cities than Beijing, will keep consistent in the question of whether the alleged mark violated a prior trademark. However, it does not rule out the differences of understandings in individual cases.
If during civil cases the trademark invalidation decisions have come into effect, which means that the defendants’ registered trademarks are invalid from the beginning and the conflicts of rights no longer exist, the courts can tackle these cases as common ones; and the invalidation decisions on the issues of trademark similarity, goods or services similarity, likelihood of confusion or trademark dilution, and bad faith will drive the civil infringement cases in favor of the prior trademark owners. On the other hand, civil infringement cases will also have positive impacts on the procedures of invalidation. According to judicial interpretation o f t h e Supreme Court, “the specific circumstance of using the disputed trademark can be used as the basis of ruling to determine if the applicant’s registration is malicious7,” which means if the civil litigation judgment precedes, the bad faith scenario ascertained by the civil judgment can prove malicious intention of the defendant’s trademark filing, thus driving the TRAB decision and subsequent administrative litigations in favor of the prior trademark owner.
Retroactivity of trademark invalidation
When it comes to the retroactivity of the trademark invalidation, it naturally comes to mind that paragraph 2 of Article 47 of the Trademark Law stipulates that a decision or ruling to declare invalidation of a registered trademark is not retroactive to a trademark infringement case decision which is already made and enforced, and a trademark assignment contract or license contract which is already executed8. How to understand the meaning of “trademark infringement case” and “trademark assignment or license contract” here? It is argued that the “trademark infringement cases” stipulated in this paragraph includes cases where the prior trademark owner sues for infringement of the later registered trademark (that is the registered trademark which has been declared invalid), or that such cases can at least refer to this provision in order to prevent the prior trademark owner from “settling a score” and accusing the defendant of using the trademark before the invalidation is declared. The author cannot agree with this view. The “trademark infringement case” here refers to the case where the trademark registrant whose trademark has been declared invalid is the right holder to pursue the infringement liability of others. Accordingly, the sentence of “the trademark registrant shall compensate others for losses caused by its bad faith” means that a malicious trademark registrant takes a lawsuit or other measures to cause losses to others on the grounds that others infringe on the exclusive right to use the registered trademark. The provision of this paragraph does not apply to the case where the prior trademark owner sues the subsequent registrants for infr ingement. Similarly, the sentence of “the legal effect of invalid declaration is not retroactive to executed trademark assignment or license contracts” means that in general the assignee or licensee of a registered trademark cannot require the trademark registrant to return the assignment fees or trademark royalties after the registered trademark is declared invalid and this does not mean that the licensing contract between the two parties has binding effect against the prior trademark owner. The original intent of paragraph 2 of Article 47 of the Trademark Law to restrict the retroactivity of trademark invalidation is to maintain the stable order of protection, circulation and use of registered trademarks, not to refrain the prior trademark owner from challenging the usage of registered trademarks by later registrants.
However, how to understand and apply the above-mentioned clause of the limitation on the retroactivity of trademark invalidation in judicial practice has been controversial for a long time. One point of view is represented by the case of “Sumeida” of Fujian High Court and the case of “Lafarge” of Jiangsu High Court. It holds that the decision that the defendant’s trademark has been declared invalid does not have retroactive effect on the license contract previously signed by the defendant, so as to determine that the accused licensee has no subjective malice, and hence the infringement is not established or the defendant is not liable for compensation. Another point of view is represented by the case of “Boss” of Zhejiang High Court, the case of “Miaomiao” of Shandong High Court, the case of “Huiyuan” of the Supreme Court, the case of “Three Five” of Changzhou Intermediate Court and the case of “Minhe” of Fujian High Court. It holds that the trademark shall be deemed as invalid from the beginning after the trademark invalidation and its trademark exclusive right is legally considered to have never existed, and the existence or ever existence of the exclusive right to use the registered trademark is not legally recognized. The author agrees with the second view that the registered trademark is invalid from the beginning after it is declared invalid, and there is no legal basis for the use during the valid period. In tort determination, the fact that the defendant’s trademark was registered should be totally excluded after the trademark has been declared invalid, and the infringement should be determined directly on the basis of the evidence in the case; however, in the aspect of liability for compensation, the defendant’s subjective malice of the trademark application and usage of the registered trademark can be considered for weighing the compensation.
Accountability of the use of registered trademarks
It is argued that if the defendant uses its own registered trademark normatively, even if the registered trademark is later declared invalid, his act before the declaration of invalidity should not be pursued. The reason is that the registered trademark is authorized by the national trademark administration authority, and the registrant uses his own registered trademark basing on the trust in the trademark authorization procedure without subjective fault. The author thinks that the fallacy of this view lies in that the trademark registrant should be responsible for whether his application for registration and use infringe on other people’s rights. It is the duty of every trademark applicant and registrant to reasonably avoid conflict of other people's prior rights and not to free riding of other people’s reputation. Trademark applicants and registrants cannot rely solely on the limited examination function of the trademark administration authority to exclude possible use risks.
In the process of civil litigation, when the defendant’s registered trademark has been declared invalid and the trademark invalidation decision has taken legal effect, almost all the defendants defend that they should not bear any infringement liability due to the validity of their registered trademarks, trusted interests and no subjective malice. This defense was never supported in any other case except for the cases of “Sumeda” and “Lafarge”, in which the defendants were authorized licensees. In the case of “Three Five” of Changzhou Intermediate Court, the court further elaborated the reason of not supporting the defense, believing that subjective malice is not the consideration factor of whether or not the defendant should bear the liability for compensation, but the consideration factor of determining the amount of compensation, that is, subjective malice does not decide the question of “whether or not to compensate”, but only the question of “how much to compensate.” Even if there is no malicious intention, the defendant shall bear tort liability for the previous use of trademarks similar to the registered trademark of the owner on identical or similar commodities.
A chief judge of Guangdong High Court pointed out in the article “How to Regulate Malicious Registration of Trademarks in Civil Proceedings for Trademark Infringement (Part II)”: “The retroactivity of infringement liability after trademark invalidation should be limited to malicious intentions. If the goodwill trademark registration is revoked and its use should be liable for infringement, it will cause the circulation of trademark rights itself be unsafe. Therefore, in order to balance the interests of the public and the owners, and protect the transaction security and the health of the development of the trademark licensing system, we should limit liabilities to malicious intentions.” The author deeply agrees with this. As for how to determine malicious intentions, the judges of “Minhe” case have written an article9 giving very constructive opinion. It said that malicious intentions can be determined respectively according to trademark filing stage and commercial use stage. The malice in trademark filing stage can be manifested by distinctiveness of prior trademark, popularity, same industry, same zone, specific relationship, etc. which factors are considered in trademark prosecution litigations. The malice in commercial use stage can be manifested by various freeriding activities. It can be determined malicious as long as there’s malicious intent found in either trademark filing stage or commercial use stage. In addition, once the procedure of trademark invalidation is brought up (note: it doesn’t mean that the trademark invalidation decision takes effect here), the latter user must have known the existence of the prior trademark right. At this time, the latter user has the duty of being prudent and capacity of foreseeing the possible risks of continuing commercial use. Therefore, if the latter user continues to use the trademark improperly after the commencement of the trademark invalidation, he can be found to have subjective fault.
Conclusion
In the process of resolving the conflict of rights among registered trademarks, civil lawsuits and trademark invalidation & followup administrative l i t igations are usually intertwined, which makes it more complicated both in procedural and substantive trial and bringing up new rulethinking and judicial practice. The article summarizes as follows: first, normatively using the selfowned registered trademarks are chargeable. Such civil lawsuits are either based on prior well-known trademarks or the fact that the defendants’ registered trademarks are declared invalid during the civil proceedings. Second, after the defendant’s own registered trademark is declared invalid, it is invalid since its inception thus the defendant’s defense of legitimate use and proper use are difficult to be supported. Third, after the defendant’s registered trademark is declared invalid, he shall be liable for compensation if the defendant has been found bad faith at either trademark filing stage or commercial use stage.
1 See civil judgment of “(2011) ER ZHONG MIN CHU ZI No.18727” of Beijing No.2 Intermediate Court.
2 See civil judgment of “(2008) MIN TI ZI No.36” of the Supreme Court.
3 See civil judgment of “(2017) CHUAN MIN ZHONG No.786” of Sichuan High Court.
4 It means “Provisions of the Supreme Court on Issues Concerned in the Trial of Cases of Civil Disputes over the Conflict between Registered Trademark or Enterprise Name with Prior Right.”
5 Article 11 of “Interpretation of the Supreme Court on Several Issues Concerning the Application of Law to the Trial of Cases of Civil Disputes over the Protection of Well-known Trademarks”: If the registered
trademark used by the defendant is a copy, imitation or translation of the plaintiff's well-known trademark and if the trademark infringement is constituted as a result of violation of Article 13 of the Trademark
Law, the people's court shall, upon motion of the plaintiff, make a ruling on enjoining the defendant from using the said trademark.
6 Article 10 of “Notice of the Supreme Court on Issuing the Opinions on Several Issues concerning Intellectual Property Trials Serving the Overall Objective under the Current Economic Situation”: If the alleged
infringing trademark is a registered trademark, but the alleged infringement is the replication, imitation or translation of a prior well-known trademark, the people's court shall accept the case according to law.
7 Article 25 of “Provisions of the Supreme Court on Several Issues concerning the Trial of Administrative Cases involving Trademark Authorization and Confirmation”:When judging whether a disputed trademark
applicant has “maliciously registered” a well-known trademark of another party, the people's court shall give comprehensive considerations to the popularity of the cited trademark, the grounds of the disputed
trademark applicant for applying for the disputed trademark, and the specific circumstance of using the disputed trademark, to determine its subjective intent. Where a cited trademark has high popularity and a
disputed trademark applicant has no justified reason, the people's court may presume that its registration constitutes “malicious registration” as specified in paragraph 1, Article 45 of the Trademark Law.
8 Article 47 of the Trademark Law: The Trademark Office shall publish registered trademarks declared to be invalid under Article 44 or 45 of this Law, and the right to exclusively use such a registered trademark
shall be deemed void at the inception. A decision or ruling to declare invalidation of a registered trademark is not retrospective to a judgment, ruling, or consent judgment made and enforced by a people's court,
a trademark infringement case decision made and enforced by an administrative department for industry and commerce, or a trademark assignment contract or license contract executed before the trademark is
declared to be invalid. However, the trademark registrant shall compensate others for losses caused by its bad faith. Trademark infringement damages, trademark assignment fees, and trademark royalties which
are not returned under the preceding paragraph shall be all or partially returned if the principle of fairness is evidently violated otherwise.
9 Cai Wuei, ChenYing, How To Define The Trademark Usage Before It Is Declared Invalid, PEOPLE’S COURT DAILY, Feb 1, 2018.
