Different Verdicts in Different MUJI related cases
—Comments on Location of Prior Use mentioned in the Article 31 of the Trademark Law of the PRC —

 

Article 31 of the Trademark Law: applying for trademarks shall neither infringe others’ prior use rights, nor constitute rush registration of others’ trademark which is already in use and are popular to some extent.

The main purpose of the Article in question is to protect unregistered trademarks. According to the current Trademark Law, trademark right cannot be achieved without registration. Thus, it will be surely more difficult to protect unregistered trademarks based on prior use principle.

The Article mentioned above contains three elements, i.e., “prior use”, ”popularity ”and “malicious motive”.

While there still exists intense debate on whether the rule of “prior use” is applicable in Hongkong, Macao and Taiwan.

According to Paris Convention, the territoriality principle of IP right protection is applicable for both registered trademark and unregistered trademark. In addition, Hongkong, Macao and Taiwan each has its independent legal system, which are different from that of mainland China. What’s more, neither of the legal systems of the two Special Administrative Regions includes civil and commercial legislation such as Trademark Law. Thus, the prior use of trademarks in Hongkong, Macao and Taiwan is not equivalent to that in the mainland China.

In the current judicial practice, the prominent viewpoint is that, the prior use of trademarks in Hongkong, Macao and Taiwan cannot be regarded as that in mainland China.

Case 1:
Ryohin Keikaku Co.,Ltd.’s trademark opposition review against the Trademark Review and Adjudication Board of SAIC & Beijing Cotton Field Textile Co., Ltd

The opposed word trademark “无印良品” No.1561046 on class 24 is applied by Nanhua Industry and Trade Co., Ltd. in April 6, 2000. And the trademark was transferred to Beijing Cotton Field Textile under the approval of AIC. In April 26, 2001, Ryohin Keikaku raised the opposition against the trademark. “無印良品”.

Ryohin Keikaku holds that: the trademark “無印良品” as well as its commodities which bear the given trademark are of high popularity in Hongkong. Located in Hainan, in the neighborhood of Hongkong, Nanhua must know the trademark “無印良品” well. So, Nanhua’s registration of the trademark “无印良品” actually constitutes an improper rush registration of  other’s trademark which is already in use and has popularity

Court’s decision in the first instance: Stipulated in the Article 31 of the Trademark Law of the PRC, the improper rush registration of others’ trademarks that have are already in use and have high popularity. In this case, all related evidences can only prove that the trademark “無印良品” registered on class 24 has been in use oversea and in Hongkong. But it cannot prove that it’s used in mainland China and has popularity. Therefore, there’s no legal and fact basis to regard the given case as the circumstance stipulated in the Article 31.  The reputation of “无印良品” in Hongkong cannot be considered as its popularity in mainland China.

In the second instance, Beijing Supreme People’s Court upheld that:
Ryohin Keikaku cannot prove that the trademark “无印良品” has been used on commodities of Class 24 and is popular to some extent in China. Therefore, its claiming that the opposed trademark violated regulations of the Article 31 lacks legal and fact basis. As a consequence, it is meaningless to analyze the motive of the trademark registration by Beijing Cotton Field Textile..

Beijing Higher People’s Court held that: we should firstly take into consideration whether the case does coincide the circumstances of the Article 31. If not, there’s no need to consider its motive.  So , does this mean that all the three elements of the Article 31 should be satisfied i.e., and that rules of the Article 31 is satisfied only when three elements are  satisfied?

In this regard there are different views within the Court. Rui Songyan, the presiding judge in the No.1 Beijing Intermediate People’s Court, discoursed in her published works” Comprehensive Analysis of the Trials of Administrative Trademark Cases” that: elements of ” prior use “, ”popularity ”and “malicious motive” of the Article 31 of the Trademark Law should be interrelated as an integral whole, rather than being separated for application, or being set with higher standards absolutely and isolated. Actually, regarding the territoriality issues of “prior use” in the Article 31, some breakthroughs have been gained in certain cases. we hereby take another administrative dispute case related to the trademark “无印良品” for example:

Case 2:
Hong Kong Sheng Neng Investment Co. vs. Trademark Review and Adjudication Board of the State Administration for Industry and Commerce  & Ryohin Keikaku Co., Ltd.

Ryohin Keikaku is the first to register and use the trademarks”无印良品” and “无印良品MUJI” in England, Japan and Hongkong China. The trademark”无印良品MUJI”,NO. 1995B05368, on Class 25 was actually registered on June 30, 1995. However, Hong Kong Sheng Neng Investrade Market Co. also succeed in registering the trademark”无印良品” on Class 25. Thus, Ryohin Keikaku applied for trademark opposition against Hong Kong Sheng Neng Investrade Market Co.

Trademark Review and Adjudication Board held the view as follows: Firstly, the sentence “which is already in use and are popular to some extent” stipulated in the Article 31 of the Trademark Law is generally deemed to be “used in mainland China”. Thus, the applicant’s proposition that his trademark has high reputation in Hongkong cannot equate its popularity in mainland China. Secondly, the applicant has proved its prior use of the trademark”无印良品MUJI” and its registrations of the trademark in many countries. The applicant has been using and has registered the trademark over two years before the registration of the respondent.  Thirdly, the trademark “无印良品MUJI” itself has originality. While in practice, the opposed trademark is very similar to the applicant’s trademark. Meanwhile, the opposed party’s own sales staff also claimed their products as “Japanese brand” in sales. Accordingly, the Trademark Review and Adjudication Board claimed that the opposed has malicious motive when registering and using the opposed trademark. As a consequence, the opposed trademark”无印良品”NO.795636, class25 should be revoked.

According to Article 31 of the Trademark Law: Rush registration of trademarks that others have already used with popularity to some extent by improper means is prohibited. The so-called “improper means” mainly means that the applicant of the trademark has the malicious intention in misappropriation of another’s trademark with a reputation in the market for unfair competition. The purpose of this provision is to prohibit trademark rush registration, whether the unregistered trademark was used in mainland China do not constitute essential requirements. In this case, although Ryohin Keikaku’s prior-used trademark was not put into actual use in mainland China, it’s used in the same area as Hongkong Sheng Neng Co.’s trademark. Besides, both the two parties are engaged in garment business. The registered trademark “武林良品” NO.795636 should be revoked because of Sheng Neng Co.’s rush registration of Ryohin Keikaku’s prior-used and famous trademark.

The case has further supported the view that the three elements “prior use”, ”popularity ”and “malicious motive” in the Article 31 of the Trademark Law constitute an integral whole. In practice, all factors should be considered for judgment. The fact of actual usage in mainland China should not be essential if the malicious intention on rush registration can be proved. Actually, the rule of “prior use” doesn’t entail the same or close regions. Just as what was said by Rui Songyan, if the popularity of used trademark (with a certain influence in the market) has covered region where the applicant locates, it can be assumed that the applicant know the prior-used trademark well. Therefore, the malicious intention of the applicant can be confirmed.

Here’s another example related to the trademark “Duck King”, in which the Trademark Review and Adjudication Board held different viewpoints on the application of the Article 31 of the Trademark Law from the court. The divergence lied in whether Shanghai Quanjude Co. was aware of the popularity of ”Duck King”. TRAB claims that, although Beijing Duck King put the trademark” Duck King” into use and have gained a certain popularity in Beijing earlier than the trademark Shanghai Duck King, given that restaurant section has strong regional feature, the existing evidence cannot prove that the Shanghai Quanjude Co. had malicious intention in registering the opposed trademark. However, Beijing Higher People’s Court held that, Beijing and Shanghai are two major commercial centers of China with frequent communications with each other in regards with information and people. Furthermore, the newspaper advertisements of Beijing Duck King are not only issued in Beijing, so the influence of Beijing Duck King are not limited to Beijing. The two parties engage in the same business, should know the reputation of “Beijing Duck King”. As a consequence, the court believed that Shanghai    Quanjude Co. infringed the Article31 of the Trademark Law.

Therefore, the Article 31 can still be applied in similar cases when the trademarks are only used in Hong Kong, Macao or Taiwan by following the rules below: :
①     Whether the popularity and influence of the trademark have reached to the mainland China through various channels.
②    Whether there is enough proof in the applicant’s malicious intention. That’s to say, whether the applicant has the intention to cause confusion in propaganda or application, or whether the two trademarks are used in the same area or in the same industry.

It can be said that there are still some chances to win the cases by quoting the Article 31 as long as there is sufficient evidence to prove the abovementioned situation, particularly when authorities are currently paying attention to the malicious rush registration behavior.

 

 

Edited by: BOB IP Registration Division  Qian Min, Yao Xiaoqing

Jun 23th,2014