(By Luo Yanjie) On June 27th 2002, Hua Yuan Company (hereinafter “Hua Yuan”) filed an application to revoke the disputed trademark “老人城LAORENCHENG” (hereinafter Lao Ren Cheng) pursuant to on Article 31 of the Trademark Law, with the claim that the trademark infringed upon Hua Yuan’s first rights in the mark. The disputed trademark was applied in Class 25 with registration number 1497462. During prosecution of the trademark, Hua Yuan submitted certificate of the No. 590673 trademark and No. 696935 trademark as evidence of its first rights in the mark. As indicated by the documents, the trademarks were registered before the trademark “Lao Ren Cheng.” Considering the opposition was mainly filed on the ground that Hua Yuan’s first rights had been infringed rather than due to similarity of the trademarks, the focus of this particular case depends on whether a trademark certificate may be treated as evidence of trademark ownership.
On March 23rd 2009, the Trademark Review and Adjudication Board (hereinafter the “Board”) issued its decision, numbered No. 6231, regarding Hua Yuan’s application for trademark revocation, which reads: the reference trademark filed by Hua Yuan was registered earlier than the disputed trademark, and the old man image incorporated within the mark constitutes an original creative work, protected pursuant to the Copyright Law in recognition of its originality, and could be regarded as fine art. Therefore, Hua Yuan shall have copyright over it. In terms of the disputed trademark, the image comprising the mark, namely that resembling an old man’s portrait is substantially similar to the work enjoyed by Hua Yuan in several aspects; especially in regard to the elements of the mark, its design, and its style. For this reason, Lao Ren Cheng’s unlicensed application for the trademark can constitute infringement against Hua Yuan’s first rights pursuant to Article 31 of the Trademark Law. Based on the above reasoning, the Board decided to revoke the application for the disputed trademark. Dissatisfied with the Board’s decision, Lao Ren Cheng Clothing Company filed an administrative lawsuit.
In the first instance, the Judge held that although Hua Yuan had not pointed out its claimed first rights as a copyright, to evaluate the mark involved in its claims is to focus on the first registered trademark, and to further consider the fact that the trademark is not included within the scope of “first rights” as written in Article 31 of Trademark Law. However, it could be concluded that the first right advocated by it is the copyright. The reference mark shared similar elements, such as the painting style and the similarity in drawing style to that of da Vinci’s self portrait, yet based on these similarities alone, the court did not thereby decide the two different works are one and the same.
The court determined that the two reference trademarks are examples of fine art containing the requisite originality, giving them both protections pursuant to the Copyright Law. In line with this reasoning, the court then stated that Hua Yuan is in fact the copyright holder of the reference trademark. The reference trademark, as a published work, is likely to be similar to the mark Lao Ren Cheng. Furthermore, the court held that when a disputed trademark shares little similarity with another mark, taking into account the mark as a whole and the mark in its individual parts, the disputed trademark shall not be deemed to be substantially similar to another trademark. However, taking into consideration the similarities of the old man portraits in both marks, the court determined that the disputed trademark had infringed Hua Yuan’s first rights in its mark. For these reasons, the court affirmed the No. 6231 decision made by the Board.
Dissatisfied with the first instance verdict, Lao Ren Cheng then appealed to a higher court. The judges hearing in the second instance stated that the Board was without legal grounds to confirm the first rights claimed by Hua Yuan are in copyright since there was never any clarification over whether Hua Yuan’s mark was in fact created by Hua Yuan. In addition, the judges stated that the allegedly “reasonable inference” made by the lower court that the first rights are in copyright was done without any factual support. Simply because Hua Yuan owned the mark, it cannot then be assumed it also has copyright over the same mark, and therefore the evidence filed by Hua Yuan could not demonstrate it had the copyright for the image in the mark. Based on these reasons, the second instance court reversed the holding made in the first instance.
Comments of the lawyer:
The opinion of the court in the second instance is that a trademark certificate alone cannot be taken as evidence of copyright ownership, and thereby reversed the holding of the first instance. Now, we will conduct the following analysis under the lawful regulations of evidence of copyright ownership and the facts of the case:
1. A trademark certificate is not lawful evidence of copyright ownership
Unlike trademarks or patents, copyright is established when the work is finished and can be immediately enjoyed by the creator. According to the law, the one who signs his/her name on the work shall be seen as the copyright holder, explained more clearly in the following article:
“The citizen, legal entity or other organization whose name is mentioned in connection with a work shall, in the absence of proof to the contrary, be deemed to be the author of the work.”
Moreover, to avoid any conflicts or arguments, in practice, some rights holders tend to register their works in copyright, and in the absence of the proof to the contrary, the name indicated on the copyright certificate shall be considered the rights holder. Therefore, it can be shown according to above regulations that there are no laws that state that a trademark certificate can be considered evidence of copyright ownership.
2. The trademark applicant does not naturally own the copyright of the trademark
In fact, ownership of a certain trademark cannot prove the trademark holder owns the copyright of the image used in the trademark. First, the trademark examination process does not cover copyright in images used in conjunction with or as part of a trademark, and on that account, we can see many counts of infringing trademarks in practice, because otherwise the trademark would not regulate the relief enjoyed by the copyright holder. Furthermore, a non-infringing trademark holder may have in fact been licensed by the copyright holder to use the image, and a license typically only permits use of the image in a trademark, whereby a trademark holder could only claim a use right rather than the right to combat any infringement against the image.
In conclusion, when the law has not provided a specific regulation in a given area, it is not reasonable to blame the second instance court for its verdict. However, one should take note that trademark squatting is rather common in China, and due to the unique features of copyright, it is difficult to demonstrate copyright ownership in practice. The trademark referred to by Hua Yuan was registered as early as the 1990s, and in that case it seems its lack of evidence showing rights ownership is feasible and forgivable. Although the case has already been heard and closed, the significance of the court’s decision demonstrates that both the administrative authorities and the courts hold a firm attitude toward claims requesting revocation of a trademark on the basis that it infringes against the complainants first rights in the mark. Finally, it is worthy of consideration whether such an outlook on this area of the law suits the nearly ubiquitous trademark squatting currently found in China.