Korean Game Company Defeated China Local Agent for Cancelleation of Rush-registered Trademark

ESTsoft(By Luo Yanjie) Today we will introduce an example of a trademark squatting case where a Chinese online game operator rush-registered a trademark. In this case that trademark was canceled by Trademark Review and Adjudication Board.

Introduction to the Case:

Applicant: EST Software Corporation (the “ESTsoft”)

Respondent: Shanghai Moliyo Digital Entertainment Co., Ltd (the “Moliyo Co., Ltd”)

The disputed trademark: No. 5766142 “惊天动地” Trademark

The Korean game developer ESTsoft operated the game “Cabal Online”, with the corresponding Chinese name “惊天动地”, and authorized Moliyo Co., Ltd, as the operator for the game in Mainland China through the completion of a license contract, under which Moliyo Co., Ltd enjoyed and undertook all rights and obligations for the game “Cabal Online”.

Subsequently, ESTsoft found that Moliyo Co., Ltd had applied for the name “惊天动地” as a trademark in its own name without authorization. As such, ESTsoft filed an arbitration of trademark dispute to the Trademark Review and Adjudication Board (the “TRAB”), claiming that the acts of Moliyo Co., Ltd violated Article 15 of the Trademark Law, which prohibits the situation where an agent seeks to register their client’s trademark in the agent’s own name without the authorization of said client.

The TRAB decided the following after consideration:

  1. The Applicant had provided evidence that it had entered into a license contract in 2006 to authorize the respondent to act as a game-operator in mainland China, Taiwan and Hong Kong for the game “Cabal Online”. This consequently eschewed that the respondent was an agent of the applicant to operate the “Cabal Online” in mainland China. Thus, before the date of registration of the disputed trademark in December 5, 2006, there existed an agent-client relationship between the applicant and the respondent.
  2. The respondent attempted, acting as an agent of the applicant, to apply for the Chinese game name “惊天动地” in its own name as a trademark for toys and game consoles, without authorization from the applicant. Consequently, this is likely to lead the relevant public into thinking that the two companies or goods are associated, creating confusion and violating the principle of good faith.

In conclusion, the TRAB made a ruling cancelling the disputed trademark pursuant to Article 15 of the Trademark Law.

Lawyer’s Comment:

The understanding of an “Agent” as regulated in Article 15 of the Trademark Law.

Article 15 of the Trademark Law regulates that, in the event that an agent or representative seeks to register the client’s trademark in their own name without the authorization of the client and subsequently faces an objection from the client, such a trademark shall not be registered and will be prohibited from use. The “agent” is defined as a trademark agent or a representative that dealt with matters concerning the trademark in early legal matters. However, such a definition would likely be interpreted too narrowly to be conducive to an effective crack down on trademark squatting behavior.

Afterward the definition was formed in legal matters, the Opinions of the Supreme People’s Court Concerning Trial of Administrative Cases in Respect of Trademark Right Granting and Confirmation became effective, as of April 2010. Article 12 of the Opinions regulates that, if the trademark of the principal or of the one represented, without authorization, is registered in the name of trademark agents, representatives or other agents and representatives based on a sales and agency relationship, such as distribution and agency, the People’s Court shall deem it to be the preemptive registration of trademark of the principal or of the one represented by the agents or representatives. Thus, the respondent acts, playing the role as the game operator in mainland China, as the “agent” as regulated in Article 12 of the Opinion. (Similar issues were addressed in detail in our previous post Whether Sales Agents Are Included in the Trademark Agent Squatting Articles of China Trademark Law.)

The protection scope of the “goods” in Article 15 of the Trademark Law.

Regarding the scope of “goods” in Article 15 of the Trademark Law, the Trademark Review and Adjudication has interpreted that the protection scope of the trademark of the principal and represented not only covers products or services which are the same as those represented by the trademark, but also products or services similar to those represented by the trademark.

Currently the Chinese Goods and Services Classification is the benchmark to determine whether two goods are identical or similar. However, when facing a complicated and fast-moving market, there is likely to be a lag between what happens in the market and what the Chinese Goods and Services Classification stipulates. Another theoretical issue is that many well-known trademarks, if rush-registration occurs for identical or similar goods which are not classified in the identical or similar category within the Chinese Goods and Services Classification, cannot protect their rights. Taking the agent’s rush-registration for example, as the behavior of the agent’s rush registration subjectively constitutes bad faith, if the “identical or similar” goods test is mechanically applied, the result is inequitable.

Therefore, in practice, both the TRAB and courts apply loose standards to define whether the goods of the rush-registered trademark are identical with or similar to that of the reference trademark. As long as there is some implication of subjective bad faith present in the rush-registration, the determination of an illicit rush-registration by an agent would be held by the TRAB and courts. In this case, even though the trademark was applied under Class 28 for toys and game consoles (different from online games under Class 9 and Class 41), the TRAB still canceled the rush-registered trademark.

Lawyer Contacts

You Yunting86-21-52134918  youyunting@debund.com/yytbest@gmail.com

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