Lessons to Be Learned from Apple Losing Their Apple Trademark for a Game Console in China

125px-Apple-logo.svg(By You Yunting) In the end of 2013, the Beijing Higher People’s Court rejected Apple Inc.’s trademark opposition towards “苹果” trademark (read “Pingguo” in Chinese and referring to “Apple” in English) under Class 28 for game console against Zhongshan Readboy Electronics Co., Ltd. Thereafter, Apple Inc. has gone through 4 procedures, including the Trademark Office’s opposition proceeding, TRAB’s review procedure and two administrative actions and ultimately lost the “苹果” trademark under Class 28 for game console. The following are abstracts from the judgment of the final trial and our comments.

Introduction to the Case:

Appellant: Apple Inc.

Respondent: Trademark Review and Adjudication Board (“TRAB”)

The third party: Zhongshan Readboy Electronics Co., Ltd (“Readboy”)

Court of first Instance: Beijing No.1 Intermediate People’s Court No. : (2012)一中知行初字第3322号

Court of second instance: Beijing Higher People’s Court No. : (2013) 高行终字第737号

In February 2002, Readboy filed an application of registering “苹果Apple” trademark (“disputed trademark”) under Class 28 for game console with the Chinese Trademark Office (“CTMO”). The CTMO approved the application after a preliminary examination and published the application. Apple Inc. filed an objection, alleging that the disputed trademark, similar with its prior trademarks (“reference trademark”), i.e., “Apple”, “苹果” and “apple”, infringed the prior right of its enterprise name. Under the circumstance that Readboy had known the famous reference trademark, which was owned by Apple Inc., Readboy’s application would have been considered plagiarized from Apple Inc.

The CTMO approved the objection filed by Apple Inc. and rejected the application of the disputed trademark. Readboy, who was dissatisfied with the decision, applied to the TRAB with the resulting ruling that the disputed trademark, in conformity with the relevant provisions of the Trademark Law, should be approved for registration.

Dissatisfied with the ruling, Apple Inc. brought the case to court. Two instance courts heard the case and held in the following:

1. The disputed trademark was approved under Class 28 for game console but the reference trademark was approved under Class 9 for computers. The two trademarks are different in such aspects as the function, purpose, sale channels and industry for use, between the different classes of commodities and therefore are unlikely to mislead the relevant public into thinking they are associated with each other and cause confusion. In other words, they are not similar trademarks in accordance with the Trademark Law.

2. Apple Inc. inadequately proved that the reference trademark already had high popularity and public awareness in China before the respondent filed an application for the disputed trademark. Therefore, the reference trademark is unlikely to deserve cross-class protection.

3. As for Apple Inc.’s claim that the disputed trademark infringed its prior right of enterprise name, Apple Inc. had not proven that “苹果” and “Apple”, acting as trademarks or enterprise names, were actually used on a commodity that is of a similar type to a game console or intelligent toy in mainland China. So, its claims are not supported by the facts and supporting evidence.

4. Upon Apple Inc.’s claim that the disputed trademark was plagiarized from its company, “苹果” and “APPLE”, an objective product of nature, has both a lack of sufficient distinctiveness as applied in determining trademark similarity, and insufficient facts and supporting evidence.

 For the above reasons, the courts rejected all claims of Apple Inc. and affirmed the ruling of the TRAB.

Lawyers’ Comment:

1. Strong subjective standards exist to judge whether the reference trademark could get cross-class protection.

Practically, Chinese courts’ judgment on whether two goods are similar may have three legal grounds. The first one is the Chinese Goods and Services Classification; the second, is whether the two goods are identical in such aspects as the function, purpose, industry, sales channel and consumers; the third one is whether the relevant publics would likely be misled into thinking that two goods are associated with each other with the result of creating confusion.

As for whether computers and game consoles are similar, it may be judged with strong subjectivity. In our opinion, the two goods are likely to constitute similar goods, at odds with the decision of the courts. In our previous posts, we have already introduced several successful cases regarding the circumstances where similar goods obtain protection. For example, in the litigation of Gap trademark, glasses and clothing are similarIn the dispute of “NEXT” trademark, hats and gloves are similar; In another dispute towards “JEEP” trademark, automobile and oil paints are similar. However, in this case, and to our surprise, the court decided that computers and game consoles that are different from such aspects as the function, purpose, sales channels and industry, do not constitute similar goods.

2. Apple Inc. should have made a complete registration under 45 classes for its important trademarks.

We think, the biggest problem in this case is Apple Inc’s trademark strategy. In a country implementing the “first to file” principle for trademark application, with insane levels of trademark squatting, owners of famous brands should ask for complete registration under 45 classes for important trademarks. On the one hand, this is good to prevent trademark squatting. However on the other, as there are no actual corresponding goods being sold under that trademark, pursuant to China’s Trademark Law, the CTMO could revoke a registered trademark in the circumstances where a  trademark has been out of use for three consecutive years.

BURBERRY encountered a similar problem when its “Haymarket Check” trademark was canceled, because BURBERRY had not used it for three consecutive years. This dispute is still ongoing. Regardless, when competing with trademark squatting, using your initiative to apply for registration will always be better. Besides, the provision stipulating revocation after no use for three consecutive years could technically be evaded.

Lawyer Contacts

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

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