GAP Defeated a Trademark Squatting in China After 20 Years

GAP(By You Yunting) It is well known that GAP is a famous brand in clothing. However, in China, someone attempted to register “GAP” under Class 9 for eyewear products as a trademark. GAP has been defeating similar trademark squatting for over 20 years.

Introduction to the Case:

Applicant of a retrial (Plaintiff in the first instance and Appellant the in second instance): GAP (ITM) INC.

Respondent (Defendant in the first instance and Appellee in the second instance): Trademark Review and Adjudication Board (the “TRAB”)

Court of first instance: Beijing No.1 Intermediate People’s Court   No.: (2011)一中知行初字第1134号

Court of second instance: Beijing Higher People’s Court   No.: (2010)高行终字第1446号

Court of a Retrial: the Supreme People’s Court   No.: (2012)行提字第10号

In July 1992, GAP (ITM) INC. was approved to apply for the “GAP” trademark (hereinafter the “reference trademark”) separately under Class 25 for shirts and T-shirts and Class 18 for bags from China Trademark Office (the “CTMO”). On April 19, 1999, XinHengLi Company applied for “GAP” trademark (hereafter the “disputed trademark”) that was an identical trademark to the reference trademark owned by the GAP (ITM) INC. under Class 9 for eyewear and glasses. After GAP (ITM) INC. noticed this registration, the company brought an opposition to the TRAB. The TRAB heard the case, and ruled that the disputed trademark was to be approved for registration. It decided that the disputed trademark did not constitute a similar trademark with the reference trademark, on the grounds that the approved products of the disputed trademark, i.e., eyewear and glasses, were different from the function, purpose, industry, sales channel and consumers of the approved products for the disputed trademark.

Dissatisfied with the ruling, GAP (ITM) INC. filed an administrative lawsuit and failed in two courts. Thereafter, GAP (ITM) INC. applied for a retrial to the Supreme People’s Court on the following grounds of appeal. First, the disputed trademark was identical to the reference trademark; second, the approved products, i.e., eyewear and glasses, of the disputed trademark, are associated with that of the reference products and identical in some of the consumers and sales channels of the reference products that are likely to lead relevant public into false thinking and confusion.

The Supreme People’s Court heard the case and held in the following:

  1. GAP (ITM) INC did not adequately prove that its reference trademark was becoming a famous trademark in China before the date of the registration of the disputed trademark. However, it was sufficient to demonstrate its reference trademark to have attained a certain level of popularity in China.
  2. XinHengLi Company claimed that it was from the United States and touted itself as having identical clothing characteristics to GAP (ITM) INC.’s. It actually used the disputed trademark in a similar design with the deliberate stretched trademark on a dark background of the reference trademark. For those facts, XinHengLi Company should be aware of the popularity and brand awareness of the reference trademark and thus obviously intend on riding on the brand awareness and popularity of the reference trademark.
  3. Where the approved products, i.e., eyewear and glasses, of the disputed trademark were classified into a different classification of Chinese Goods and Services Classification than with that of the reference, the two afore-mentioned products are highly similar in many respects including: the function, sales channel and consumers. Particularly, for fashion brands, it is a common phenomenon that a company would sell clothing and accessories such as eyewear and glasses in a same brand.

In conclusion, considering the popularity and awareness of the reference trademark as well as the subjective intention of XinHengli Company, the disputed trademark and the reference trademark are identical to each other for the glasses and clothing, thus being likely to objectively lead consumers into thinking that the two aforementioned products are provided by the same company or at least associated with each other. As such, the Supreme People’s Court judged that the disputed trademark was similar to the reference trademark and should not be approved to register.

Lawyers’ Comment:

It is not a complicated question to judge whether glasses and clothing are similar products. However, GAP (ITM) INC. had been puzzled by this question since 1992. The root cause was that the courts and TRAB mechanically applied laws.. It hurts the interests of the actual right holder of intellectual property, but ironically, protects the registrants of trademark squatting.

Luckily Chinese courts recognized such mistake and published 3 typical cases such as Apple Inc. vs Proview Technology (Shenzhen) over “Pad” trademark ownership dispute, BESTSELLER vs Cui Huansuo over “Jack & Jones” trademark infringement and this case. For this case, the comments contained by the Supreme People’s Court are for the following:

“This case was a typical dispute concerning deliberate trademark squatting. The TRAB, first instance court and second instance court decided the disputed trademark to be approved registration on the basis that two approved products of two trademarks are not similar. The Supreme People’s Court finally judged the disputed trademark would not be approved for registration on the grounds of that the registrant of the disputed trademark knew the popularity of the reference trademark and still applied the disputed trademark with deliberate intention of exploiting brand confusion and popularity, and also that clothing and glasses are associated with each other to some extent. Such judgment indicates the judicial guidance and attitude of the Chinese courts in prevent from trademark squatting.”

Still, this case shows China has strengthened its protection towards intellectual property. Even though intellectual property protection in China may not yet compare favorably with developed countries, foreign investors shall have confidence in China’s intellectual property protection.

As such I implore you, when encountering trademark squatting or other intellectual property infringement in China, please be active in protecting your legal rights and interests.

 Lawyer Contacts

You Yunting86-21-52134918

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