Abstract: With the increasingly close international trade relationship, more and more agent or representative registers are committing scramble for registering foreign trademarks.  Special legal provisions ——Article 15 of Trademark Law of the PRC——have been set up to address this problem. However, in practical enforcement of the Trademark Law, many kinds of problems cannot be interpreted just according to legal provisions literally. Our company has encountered a problem regarding law application. The focus of the problem lies in whether should the trademark being scrambled meet the premise “prior used or prior owned by agent or representative registers”. That is exactly what we are going to discuss in this article according to our latest cases.

Ⅰ The Current Laws and Regulations

Article 15 of Trademark Law of the PRC:
Where any agent or representative registers, in its or his own name, the trademark of a person for whom it or he acts as the agent or representative without authorization therefrom, and the latter raises opposition, the trademark shall be rejected for registration and prohibited from usage.
The trademark registration application should not be approved if the trademark is the same or similar with other’s unregistered trademark not only in trademark itself but also in its commodities, and at the same time, the applicant has knowledge of the unregistered trademark through contractual relationship, business contact or other communication other than those specified in the preceding paragraph, and opposition against the trademark registration was filed by the owner of the unregistered trademark.

According to the Criteria for Trademark Review, Examination and Adjudication, trademarks of consigners include:
a.Entrustedtrademarks specified in contracts or entrustment letter.
b.In the case of no specification, trademarks that have already been used on the entrusted commodities or services when the agency relationship is confirmed would be regarded as entrusted trademarks.
c.In the case of no specification, trademarks that have been regarded as the unique symbol of the commodities or services of consigners in consequence of the agents’ advertising or other application behaviors would also be deemed to be trademarks of consigners.

Trademarks of persons that are represented include:

a.Trademarks that have already been used by persons that are represented.
b.Trademarks that legally belong to persons that are represented.

As mentioned above, the trademarks of the consigners or persons that are represented referred to in the article 15 of the Trademark Law of the PRC shall be trademarks that have been used or owned by consigners or persons that are represented who are the legal rights holder of these trademarks. In practice, most trademark related cases that are applicable to this article are the rush registration of trademarks by agents or representatives.

However, is the case applicable to this article if the agents or representatives own or apply for the trademarks first which have actually been used by consigners or persons that are represented? There’s no standard that we can reply on. We hereby are going to talk over this issue by introducing a rush registration case entrusted by one’s of the clients of BOB.

Ⅱ Case Presentation

The trademark TANDY has been used by a famous Japanese chemicals company (hereafter called Company A) on paint and coatings, etc (class 2) for many years. In 2003, Company A set up a wholly owned enterprise in China and hired Mr. Yu as the vice manager to manage the business in China. In 2006, Mr. Yu applied for the trademark “恬迪” to the Trademark Office in his own name on class 2. In 2008, Mr. Yu advised the Japanese headquarter to use “恬迪” as the Chinese trademark on their products as the supplement of the trademark TANDY, which was accepted. So since 2008, the company have been using the trademark “TANDY 恬迪” on its products and for propaganda. In 2009, Company A discovered that Mr. Yu was suspicious of economic crimes in the financial operation and found that Mr. Yu had already applied for the trademark of恬迪 on his own name when the company planned to register this trademark. After that, Company A was forced to sue to the PSB and made announcements on paper. At the same time, the company posed opposition against the registered trademark恬迪.

At first, the Trademark Office rejected the opposition application of Company A considering that the opposed trademark恬迪 did not constitute similarity to the quoted trademark TANDY. Company A again posed opposition review application to the Trademark Review and Adjudication Board.

The Trademark Review and Adjudication Board cited that Mr. Yu was engaged in Company A and its affiliated company before the registration of the trademark in question and shall had knowledge about the trademark TANDY. Due to the homologous application of trademarks TANDY and恬迪, it’s confusable to consumers if they coexist in the market. Therefore, the board decided that TANDY and恬迪constitute similar trademarks on class 2. The registration of 恬迪 was regarded as the situation of “registration of trademarks by agents or representatives in their own names without authorization of consigners or persons that are represented” mentioned in Article 15 of the Trademark Law of the PRC.

Ⅲ Analysis and Summary

One of the breakthroughs of the case lies in the liberal interpretation of agents or representatives, which is in line with the regulation on the agency and representing relationships in Criteria for Trademark Review, Examination and Adjudication, i.e., the “agent” mentioned in the article include the agents defined in the General Principles of the Civil Law of the PRC and the Contract Law of the PRC as well as the distributors that have full knowledge of the trademark due to the business relationship with the consigners. Representatives refer to individuals that have full knowledge of the trademark due to the representing relationship with the persons that are represented, such as legal representatives, directors, supervisors, managers and partnership executors.

Another point in the case lies in the attribution of the trademark involved in the case due to the fact that the representative Mr. Yu recommended the company to use the trademark which was registered by himself earlier.

The board made a absolute decision that the opposed trademark “恬迪” shall belong to Company A citing that TANDY and恬迪 had been used together leading to confusion of consumers.

So, can this special trademark agency relationship be called reverse proxy of trademark?

In the above-mentioned case, although the representative Mr. Yu firstly applied the opposed trademark‘恬迪’, it was Company A that publicizes and puts the captioned trademark into use. And the trademark has finally formed a unique correspondent relationship with Company A in the market. The representative Mr. Yu took advantage of his position, fame of the Company and the usage of the opposed trademark to expand its reputation. No doubt, Mr. Yu does not make any direct contribution to the visibility of the opposed trademark, in addition, his behavior has damaged the business ethics and trampled on the principle of good faith.

Trademark ownership recognitionshould return tothe nature of the trademark, that is, the function of trademarkis to represent the source and origin of commodities and goods. And if the basic function is directed at a particular subject, it means the trademark belongs to the subject. In the captioned case, it makes sense that the ownership of opposed trademark is adjudicated to be of Company A.

Of course, this case has some particularity. Foreign counterparts of the opposed trademark ‘恬迪’ has accumulated a certain reputation after years of use, with knowing the prior reputation of the cited trademark, Mr. Yu registered the opposed trademark which was similar to the cited trademark in pronunciation. From the view of the Trademark Review and Adjudication Board, and considering that the coexistence of the opposed trademark and cited trademark in the market could confuse related consumers, Mr. Yu’s behavior is a violation of Article 15 of Trademark Law of People’s Republic of China.In other words, if the agent or representative just simply registers a certain trademark beforehand, and draw upon the authorization and dealership to utilize the trademark, how to define the ownership of the trademark based upon our prior registration principle?

Although the revised new trademark law has supplemented the interpretation to the agent relationship, but it fails to provide any clear solutions to the situation of reverse proxy of trademarks.

In our opinion, as long as the principal could quote definite evidences that prove the authorization relationship, and the evidences also could substantiate that the principal’s promotion and actual use of the trademark forms the unique correspondence between the trademark and the principal, then it shall be applicable to the definition on the authorization relationship in Article 15 in Trademark Law of People’s Republic of China.

As for trademark rights holders, especially for overseas trademark rights holders, usually, they often set up specialized agent or dealers in China while doing business here. It is necessary for them to prevent the agents and representatives from rush registration of the prior IP rights. And it is better to try the IP rights registered and protected before kicking off the business. For those non-registered IP rights, overseas right holders shall keep written evidences, for example, the contract agreement signed with the agents or dealers. In order to safeguard the rights and interests, overseas right holders should explicitly stipulate the provisions regarding IP rights in the contract agreement as much as possible.

Note: Trademark and company information in the article is processed afterwards.

 

 

Author：BOB IP Registration Division Jimmy Qian;Tanne Yao

Jul 29th,2014