(By Albert Chen) The Beijing High People’s Court (the “Beijing High Court”) established the “merchandising right” in a 2011 judgment on an administrative dispute between the Trademark Adjudication and Review Board (the “Board”) and DANJAQ, LLC (the “DANJAQ”). That was the first judicial definition of the right, and the first time it was included as a protected “prior right.”

In today’s post, we would like to describe the facts in the case, and introduce to our readers the opinions of Beijing High Court and our comments on the matter.

Case Summary:

Xie, a Chinese citizen, applied a registration for the trademark “邦德007，BOND” in Class 10. DANJAQ, the publisher of the 007 series movies, owned the trademark “007 and image trademark” and the trademark “JAMES BOND” in Classes 28 and 41 since 2001 filed an opposition. DANJAQ’s opposition was denied by the Trademark Office, on the grounds that the name concerned is just the title of the workand shall not be protected by the Copyright Law.

Dissatisfied with the decision, DANJAQ filed an appeal to review application with the Board. During the board’s review, DANJAQ stressed its copyright, trademark and merchandising right over the 007 and JAMES BOND marks. In addition, DANJAQ thought Xie’s application was “detrimental to socialist morals or customs, or having other unhealthy influences”, and moreover, that the trademark was applied for through “unfair means”.The Board decided: first, that the infringement against the trademark could not be established, that the opposed trademark is in a different class from that registered by DANJAQ, and the board concluded that they are not similar trademarks. Furthermore, DANJAQ’s trademark could not be determined to be a well-known trademark. Second, Xie’s application would not infringe DANJAQ’s copyright, the title itself could not be considered a “work” in the law. Third, in terms of the infringement against the merchandising right and registration through unfair means, no adequate evidence was submitted. Based upon these findings, the Board refused DANJAQ’s application for review of the mark.DANJAQ filed suit in the Beijing No.1 Intermediate People’s Court (the “Beijing Intermediate Court”)which confirmed that no infringement against the trademark or copyright could be found. The judge stressed that a mark is considered to be applied for using unfair means when the work it is applied to is clearly infringing. Despite this, the Beijing Intermediate Court amended the Board’s decision that Xie’s application was in violation of the good faith principle and could present a negative influence. Based on this, the court revoked the decision of the Board and ordered a rehearing. The Board and Xie filed an appeal with the higher court. The Beijing High People’s Court overruled the first instance decision, and found that the so-called “negative influence” referred to the “passive and negative influence produced on the politics, economy, culture, religion, nationality and other social public interests as well as the public order,” and that it shall not “engage any private rights.”According to the understanding of the Beijing High Court: the name of the figures in the 007 movies, “007” and “JAMES BOND” has gained a well known reputation Seeing this as the fruit of DANJAQ’ efforts, business value or business opportunity which should also be acquired by DANJAQ, and be taken as a prior right for protection. Consequently, Beijing Higher Court determined that the trademark application filed by Xie violated Article 31 of the Trademark Law, which stipulates that no prior rights shall be damaged by a trademark application, and thereby the appeal was denied and the original decision sustained.

Lawyer’s Comments:

1. The most attractive point in the case is the establishment of the “merchandising right” in the Beijing Higher Court’s final judgement In fact, the merchandising right is not a statutory one in China, and as said by the Beijing High Court, the merchandising right shall mean the exclusive right that brings its holder business value or business opportunity through wide popularity and long-term effort at building the mark. The Beijing High Court affirmed merchandising right as a prior right by quoting Article 31 in the Trademark Law.

The only available official document indicating the “prior rights” is the “Trademark Adjudication Standard” (the “Standard”), which is stipulated by the Trademark Office. According to the Standard, the “prior rights shall refer to the rights other than the trademark right acquired before the application day of the disputed trademark.” The prior rights in the Standards shall only be six rights, and that limitation has been broken by Beijing High Court’s decision.

2. Regarding the issue of the protection of the copyright as a prior right,denied it being subject matter protected under the Copyright Law. However, in theory, once a title is long enough, and original, the mark could be protected as a work under the Copyright Law. That being said, it is not easy to make a unified and correct definition for originality for “title”. The Copyright Office of China issued in “Reply on Whether the Work Title Could be Protected under the Copyright Law” that a title should rather be protected by Anti Unfair Competition Law than by the Copyright Law.

3. As for protection of the first registered trademarks, both courts did not support DANJAQ’s claims regarding well-known trademarks, and the deprived it protection based upon the confusion standard, or on a claim of trademark dilution. Dilution of a trademark essentially means that the link between the well-known trademark and the product or service it represents is damaged due to another’s use of a substantially similar mark. In this particular case, the trademark would be diluted, because the well-known mark 007, and its film series would be damaged due to this association with contraceptive products but the current protection of well-known trademarks in China has diverged from that demanded in the Paris Convention. The authorities demand a lot of evidence regarding the mark’s reputation in China and overseas reputation is not taken into account. Many well known brands outside of China may not be approved for well known status in China when are squatted by others.

Before closing, we checked the registration status of the trademark concerned in the dispute on April 18, 2013 on the China Trademark Office’s website, and the application for “邦德007，BOND” is now invalid.

We posted this article several months ago which might be too long to read it on. Our intern Mr. Le Duc helped us to abstract it again. You may click here for the detailed post, if you prefer to know more on the case.

Lawyer Contacts

You Yunting：86-21-52134918 youyunting@debund.com/yytbest@gmail.com

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