An Elementary Discussion on Determination of Malice in Trademark Confirmation Cases

Zhang Yuemei

Former Examiner of Trademark Review and Adjudication Board (TRAB)

In trademark opposition and confirmation cases in the People's Republic of China ("China"), among the various factors to consider in deciding whether to approve the registration of or invalidate a disputed one, it is very important to determine if the registrant of the disputed trademark contains a subjective malice when he applies for it. In other words, whether the registrant violates Article 7 of the Trademark Law, "a trademark should be applied for and used in compliance with the principles of good faith and trustworthiness." Although this Article 7 is just a clause of principles that not applied as a substantive clause is, the principles of good faith and trustworthiness are followed in most of trademark confirmation cases where other substantive clauses are applied in judicial practice.

A "malice" is a subjective intent of the original applicant of the disputed trademark to connect with another person's goodwill and the popularity of the trademark of such other person and to infringe upon any of the prior right of such other person. It can also be the subjective intent of the original applicant who registers a great many trademarks in order to seek improper gains rather than for his normal production and operation. All the substantive clauses of the Trademark Law that are mostly applied in trademark confirmation cases, though expressed in different ways, can be deemed as including the "malice" in their provisions. For example, "reproducing, imitating or translating (the well-known trademark of any other person)" in Article 13; "(an agent or representative) registers the principal's trademark in its own name" in the Paragraph 1, Article 15 and "(the trademark applicant) knows the existence of the trademark of the other person" in Paragraph 2 of the same article; "by any means improper" in Article 32; and "by deception or any other improper means" in Article 44. Although Article 30 does not seem to reflect any subjective intent of the trademark registrant, if the registrant of the disputed trademark obviously intends to connect with or lean on the prior reference trademark, then this Article will be applied by the court to rule that the two trademarks constitute similar trademarks that are used on the same or similar goods, because the disputed trademark and the prior reference trademark coexist and the coexistence increases the likelihood that the relevant public will be confused with the sources of the goods or services bearing these trademarks. In the application of the provision of Article 32 that "the trademark applicant shall not damage the prior right of any other person," it is also an important factor to consider whether the applicant of the disputed trademark knows or should have known the prior right of the other person concerned.

In the vast majority of cases, registrants will try various reasons to assert that they do not contain any malice when they apply to register their trademarks. As a result, the party who claims any malice of the registrant of the disputed trademark will have the burden of proof at the preliminary stage. As a subjective intent of the actor, the malice can be inferred in the discovery process on the basis of the objective behavior of the actor. In practice, the registrant of the disputed trademark can be deemed as containing a malice in any of the following situations.

The first situation is when the prior trademark is made up of any invented words or strongly creative elements of the prior right, such as copyrighted works, trade names, decorations, and characters in a work. The registrant of the disputed trademark, due to its competitor status or its relationship with the owner of the prior trademark, is reasonably expected to be aware of the existence of the prior right. Therefore, it can be inferred that the registrant is malicious in registering the disputed trademark. The second situation is when the prior trademark or right is highly popular. The disputed trademark is very similar to it without justification. Thus, it can be inferred that the registrant is malicious in the registration of the disputed trademark. The third situation is that when using the disputed trademark, the registrant tries to mislead the relevant public through marketing or induction, so that the relevant public mistakenly believe that the disputed trademark is associated with the prior trademark or right of any other person. Also the registrant may not actually use the disputed trademark, but claims a high amount of transfer fee, license fee or infringement damages or threatens a scaled action before the court against the other person. In this case, it can also be inferred that the registrant of the disputed trademark is malicious in the registration of the disputed trademark. The fourth situation is when the applicant of the disputed trademark has registered a large number of trademarks, which are obviously unnecessary for its normal production or operation. It disturbs the normal trademark registration and management process and thereby damages the public interests of society. It can be inferred that the registrant is malicious in the registration of the disputed trademark.

When it comes down to specific cases, these situations may exist separately or collectively. It should be specially noted that using a trademark, which usually occurs after its registration, often directly proves the applicant's subjectivity when he applies for the registration of the trademark. From my ten years of working in Trademark Review and Adjudication Board (TRAB), I think that the similarity between two trademarks is far less effective than their users' packaging and publicity efforts, in causing confusion among the relevant public. Even if the two trademarks are similar to each other, but if one of the users uses packaging and publicity efforts to keep emphasizing that "I am myself rather than him", then it is very unlikely that consumers will confuse between the two. On the other hand, even if the two trademarks are quite different from each other, but the registrant of one of the trademarks tries every means possible to convey the message that "I am just him", then it will be very easy to confuse the consumers. It is possible that some trademarks may be approved or registered primarily due to lack of evidence in the preliminary examination process to determine any subjective malice of the applicant. Once the malice of the applicant is inferred on the registrant's intentionally taking advantage of the commercial goodwill of any other person or misleading the consumers to mistaken purchases, the trademark of the registrant that breaches the principle of good faith and trustworthiness can be deregistered or invalidated in the objection or confirmation proceedings thereafter. This is essential to protect the normal order of trademark registration and use, as well as the interests of right holders and consumers.

In fact, trademark confirmation administrations and judicial authorities have a firm attitude towards malicious trademark registrations. In a few cases, they have determined the subjective malice of applicants and invalidated the maliciously registered trademarks. For example, in the trademark confirmation case No.16281699 involving the "银鹰" trademark, the TRAB held that in view of the fact that the "银鹰" part (in Chinese) of the complainant's trademark was strongly distinctive and extremely well known, the disputed trademark was identical with the complainant's trademark "银鹰" in textual structure and pronunciation. In addition, the respondent and the complainant were in the same area, and the behaviors and motivations of the two could hardly be anything but be a coincidence. Therefore, the disputed trademark constituted a reproduction or imitation of the wellknown trademark of the complainant.

In the trademark confirmation case No.14510167 involving the image trademark, the TRAB held that based on the evidence submitted by the complainant, it could be determined that "Logger Vick" was one of the main characters in the cartoon series, Bonnie Bears, produced by the complainant's company. Since it was first aired on CCTV in 2012, there had been several TV stations and websites that broadcast the cartoon series with Logger Vick as a main character. During the Spring Festival seasons, there also had been a few cartoon films produced and shot by the complainant, including Boonie Bears: Homeward Journey (2013) and Boonie Bears: Robo Rumble (2014). Some of the cartoons were exported to many other countries and regions. The Boonie Bears series had won quite a fame in the Mainland China, thanks to the publicity efforts and usage by the complainant. Considering that Logger Vick was a main character in the cartoon series, the disputed trademark was highly similar to it in respect of design method, expression technique, and overall visual effect. This could hardly be any coincidence. By registering the image of the cartoon character with high popularity as his trademark, the respondent had improperly taken an advantage of the popularity of Bonnie Bears among the public. It shortened the time for the public to accept the disputed trademark and increased the popularity the goods bearing it. As a result, the registrant of the disputed trademark received more trading opportunities and financial benefits. By so doing, he had damaged the legal prior rights of the complainant, in violation of the provision that "(a trademark registrant) shall not damage the rights of any other person" in Article 32 of the Trademark Law.

In the trademark confirmation case No. 8312897 involving the trademark "法恩莎/FAENSHA", the TRAB held that the legislative spirit of Paragraph 1, Article 41 of the Trademark Law (before revised most recently) is to protect the public order and follow the good practice of society, to maintain the normal order of trademark registration and management, and to create a good trademark market. This spirit is reflected throughout the proceedings of trademark application and review, approval and revocation. When he applies for trademark registration, the registrant should follow the principles of good faith and trustworthiness and abide by public business ethics. He must not seek unjust advantages by disrupting the trademark registration order or damaging the interests of the public. The complainant's trademark" 法恩 莎/FAENZA" had achieved certain popularity among bathtub brands and others. The disputed trademark "法恩莎/FAENSHA" was structured in the same way as the Chinese part of and thus similar to the prior trademark. According to the fact No. 4 as discovered by the court, the respondent applied for the registration of 270 trademarks. In addition to the disputed trademark in the current case, the respondent had successively applied for the registration of a number of trademarks that were the same with or similar to others prior well-known ones, such as "捷豹/JIE BAO", " 百岁山欧米伽III", "QQ情缘", "景山百岁山", "景田万岁山" and "井田百岁山" in Classes 5, 29, 30, 33, 39 and 44. The respondent neither provided evidence that it truly intended to use any of these trademark, nor did it prove any reasonable source of them. And most of them were the same or mostly the same as the other well-known brands. This was hardly a coincidence, and the behavior of the respondent could hardly be deemed justified. Therefore, the TRAB held that the above-mentioned actions of the respondent had obviously gone beyond the normal production and management needs. It obviously contained an intention to copy, plagiarize, and imitate the trademarks of other people. Its actions would mislead the related consumers in their misunderstanding of the source of goods bearing the disputed trademark, disturb the normal order of trademark registration and management, and damage the fair market order. Therefore, the registration of the disputed trademark constituted a "registration by any other improper means" under Paragraph 1, Article 41 of the Trademark Law (before revised recently).

In the trademark confirmation case No.11669952 involving the trademark "newbalunus," the TRAB held that the prior "New Balance" trademark had achieved high popularity for the continuous extensive marketing and usage. It had been well known among the relevant consumers. According to Article 14 of the Trademark Law, the trademark No. 175153, "New Balance" of the complainant, New Balance Sports Company, was a famous brand among shoe products. The disputed trademark, "newbalunus", was similar to the complainant's "New Balance" in letter combination. It was approved to be used on goods made of animal hides, which was similar to shoe goods approved for the "New Balance" trademark, in terms of targeted consumer groups. The respondent's registering the disputed trademark for animal hides would easily mislead consumers into thinking that the respondent was connected with the complainant. It would further caused them to mistakenly recognize the source of the goods bearing the disputed trademark, which would damage the complainant. Therefore, the registration of the disputed trademark violated Paragraph 3, Article 13 of the Trademark Law.

Although New Balance Sports Company raised multiple confirmation requests against such trademarks as the "纽巴伦/NIUBALUN and its image," the "Z image", and the "N", and although only Article 30 of the Trademark Law was applied by the TRAB to invalidate these disputed trademarks, the popularity of the prior reference trademarks, "New Balance" and "N," and the lack of justification in the registration of the disputed trademarks were always taken into account.

In the trademark confirmation case No. 1737521 involving the trademark "奥普/ao pu," Beijing Higher People's Court inferred that the registrant of the disputed trademark contained a malice on the basis of its actions after the registration. In this case, the Court held that in view of the actual use of the disputed trademark, Ryan Qicai Company did not manufacture or sell any metal construction material bearing the disputed trademark after it was registered. Instead, it transferred the disputed trademark to its legal representative, Tu Xiuping in 2004, and then deregistered it. Moreover, it changed its name and used "奥普" as its business name shortly after applying for the registration of the disputed trademark. These actions showed that Ryan Qicai never intended to use the disputed trademark on metal construction materials, when it applied for the registration of the disputed trademark. With the application for the registration of the disputed trademark and the change of its business name, its purpose was to add "奥普" to its stock of trademark resources.

In light of all these factors, it can be inferred that the registrant of the disputed trademark knew the popularity of the reference trademark among bath heaters and hot shower brands. It should have acted reasonably to avoid the reference trademark. However, it still applied for the registration of the disputed trademark which was highly similar to the reference trademark and used the disputed trademark on the same metal construction materials as approved for the reference trademark. In so doing, it intended to connect with the reputation of Hangzhou Opu's reference trademark. Modern New Energy and Yunnan Opu Company claimed that the registration of the disputed trademark was connected with the Olympic Games, as "奥普" meant to popularize the Olympic Games. Also, in the second-instance trial, these two appellants stated that Yunnan Opu registered the domain name, www.ap1998.com.cn, in order to commemorate the year that the disputed trademark was first used by Ryan Qicai. All these arguments could not be verified by each other in respect of time, and their explanations were inconsistent with the common sense. They were insufficient to prove that Ryan Qicai was justified in applying for the registration of the disputed trademark. Therefore, Ryan Qicai contained a malice in the application for the registration of the disputed trademark. Hangzhou Opu's request to invalidate the disputed trademark was in compliance with Paragraph 1, Article 45 of the Trademark Law (as amended in 2013).

In the trademark confirmation case No.1904474 involving the trademark "威仕达玉兰", the Supreme People's Court gave a clear explanation on Paragraph 1, Article 45 of the Trademark Law that "the owner of a well-known trademark shall not be restricted by the five year limit, if any similar trademark is registered by others maliciously." In this case, the trademark "威仕达玉兰" was registered on August 21, 2002. The complaint to invalidate it was filed by Procter & Gamble with the TRAB on August 4, 2010. After the TRAB's review and the first and second instance trials, the retrial decision was given by the Supreme People's Court on July 28, 2016, when the trademark "威仕达玉兰" had been registered for 14 years.

Regarding whether Wesheda, the owner of the disputed trademark, was malicious in its application for the registration of the disputed trademark "威仕达玉兰", the Supreme People's Court held that according to Paragraph 2, Article 41 of the Trademark Law (before revised most recently), "the owner of a well-known trademark shall not be restricted by the five year limit, if any similar trademark is registered maliciously by others." Whether the disputed trademark was malicious or not should not be decided solely on whether the reference trademark is well-known. It could not be taken for granted that the registrant was malicious as long as the disputed trademark was well-known. Moreover, the malice of the registrant should be determined in an overall way, considering the circumstances of the case and the subjective intention and the objective actions of the party concerned.

In this case, Wesheda and Procter & Gamble Co., Ltd. were both players in the cleaning chemical industry. Wesheda should have known that the reference trademark ("玉兰油") had earned high popularity before the registration date of the disputed trademark ("威仕达玉兰"). In addition, when it used the disputed trademark, it acted intentionally to connect its brand with the trademark or goodwill of Procter & Gamble. This proved its malice in the application for the registration of the disputed trademark.

The above cases, which were either heard by the TRAB or finally adjudicated by courts of final appeal in the last six months, show that trademark confirmation administrations and judicial authorities have been consistent in applying the principles good faith and trustworthiness throughout trademark registration and use stages. As long as a trademark applicant is proved to contain a malice against good faith and trustworthiness when registering a trademark, its trademark right can be deprived of in the corrective procedure thereafter. At the recent National People's Congress, in his state of government address, Premier Li Keqiang pointed out that "we must strengthen the protection of intellectual property rights and implement a punitive damages system." The author agrees that punitive damages should be awarded in the confirmation procedure, to increase the cost of malicious trademark application and registration, and effectively stop malicious registrations right from the source.

（Translated by Liu Lei)