(By Luo Yanjie) China trademark application procedure follows the principle of “first application,” but when two trademarks are substantially similar, a subsequent trademark could be considered as distinctive as the previously registered one through a sound reputation among consumers; taking this into account, and the possibility that such reputation may well differentiate a subsequent trademark substantially similar to a previously registered one causes one to consider whether such reputation would be worthy of the granting of trademark rights and protection.
Despite more and more Chinese companies focusing on IPR protection , a shockingly high number of companies in the country utilize an incomplete trademark strategy. In the case introduced in this post, the company involved failed to apply for its trademark when it initially began use of the mark, and the consequence was that the trademark was not approved for registration, despite a history of long-term use. The details of the case are as follows:
On July 12 2001, the Shenzhen-based Jin Wei Beer Company (“Company J”) filed an application for the trademark in its “K” image (“opposed trademark”), which was subsequently opposed by the East Zhejiang-based Ying Bo Beer Company (“Company Y”) during the prosecution of the mark. Company Y’s main reason for its opposition is that the opposed trademark was substantially similar to its applied for “K” trademark (“reference trademark”). In 2003, Company J filed another trademark application for a mark containing the previous “K” logo in the opposed mark, along with a new image, appearing as “金威啤酒Kingway.” The trademark office for approved this mark for registration. After that, the Kingway mark became well known among the relevant consumers through several years of marketing and use, and was ultimately awarded the title of being a “well known trademark.”
In 2006, The Trademark Office determined that the opposed trademark would not be approved for registration. Dissatisfied with this decision, Company J applied for a review of the Trademark Office’s decision, its main reason being that the opposed trademark had become a well-known mark. The Trademark Adjudication and Review Board (“Board”) noted that although the opposed trademark and the reference trademarks were all marks featuring a “K” image and logo, both companies have made use of their marks, and both marks have maintained sound a reputation among consumers. Taking these facts into consideration, the Board felt that the public would be less likely to be confused by the similarity of the marks. Based on these findings, the Board supported the approval of the opposed mark’s registration. Following the Board’s decision, Company Y initiated an administrative lawsuit, where the court upheld the Board’s decision; in response, it appealed to a higher court.
The second instance court decided that the reference trademark as well as the opposed trademark were all comprised of the “K” logo in various artistic fonts and formats, and similarity between the marks could be found both in the composition of individual elements of the mark as well as pronunciation of the mark. Therefore, the court found that both trademarks were indeed substantially similar. However, the opposed trademark became well known after a preliminary examination of the opposed trademark and the approval of the reference trademark. Moreover, the opposed trademark could be easily differentiated from the reference trademark, and therefore use of the reference trademark could not demonstrate the public had linked the trademarks, and that the marks would not cause confusion among the relevant consumers. Therefore, the second instance court revoked the decision made by the Board and the first instance court.
The focus of the dispute in the case is: for an administrative dispute involving review of trademark opposition decisions, in judging whether an opposed trademark is substantially similar to a reference trademark, one shall consider the well-known elements of the trademark subsequently filed by the opposing party. For this issue we hereby analyze as follows:
- In regard to similarity, a subsequently applied for trademark’s reputation could help to distinguish it from those previously applied for ones due to stronger distinctiveness.
According to Article 28 of the Trademark Law, a later applied trademark shall not be similar or identical to a first applied trademark, as dictated by the “first to file” principle. The main reason for such a principle is to prevent a situation where a later applied trademark would lead to confusion among consumers, and thus damage the interests of the first applied ones. Based on such a premise, if the later applied trademark is only seen to be similar to a first applied mark, but becomes well known through long-term use, the consumer is more likely to be able to distinguish the two. Although they may be similar in appearance, it is possible to distinguish the two in the mind of the consumer. In such a case, a later applied trademark could be granted exclusive rights in the mark (and elements constituting the mark). In this case, the opposed trademark applicant argued based on opinions, despite the court in the second instance rejecting those opinions. The main reason the court rejected such statements was primarily due to defects in evidence presented to prove reputation of the mark, but there was no legal finding that this could be established.
For sure, the opinions mentioned above can only really be applied when similar trademarks can be found; if the trademarks involved are nearly identical, even in situations where the later applied mark may be considered more “well known” than a previously applied mark, objectively the marks provide no room for the consumer to make a judgment as to the differences in the marks, and this would inevitably lead to confusion..
2. In combination trademarks, can part of the mark be individually distinctive or well known?
Many trademark holders misunderstand this aspect of trademarks, and incorrectly believe that once the marks have been registered, that they can use them in variant formats, including literally changing the composition and style of the mark. In fact, the law prohibits this type of trademark alteration. As seen in the case discussed above, the opposed trademark applicant otherwise filed an application for a combination trademark, which was subsequently recognized as a well-known trademark. Interestingly, the court did not thereby determine what part of the mark made it adequately “well-known.” Is it possible such a method of determination would be considered too mechanical? Although we will not delve into this question in this particular post, if a trademark holder could independently use well-known parts and elements of a mark, the consequences of such use of trademarks could be disastrous. Here, we would like to remind trademark holders not to change or modify their marks once they have been registered with the Trademark Office. Registered trademarks should only be used in the same combination as they were when registered. This will ensure that any future trademark disputes in this particular area of the law will likely be avoided.