(By Wang Ting and You Yunting) In enterprise name registration, if an enterprise changed its enterprise name at once, generally the new enterprise name is under protection. This means, the enterprise is no longer entitled to the rights and interests of its prior enterprise name. Such being the case, does another’s registration on the prior enterprise name cause its prior rights, or violate the Article 32 of the Trademark Law on the stipulation that the trademark application shall not infringe upon another party’s prior existing rights? Is the enterprise with a new enterprise name entitled to the prior right for its prior rights? In today’s post, with regard to those questions, the Trademark Office, the Trademark Review and Adjudication Board, Beijing No.1 Intermediate People’s Court and Beijing Higher Peoples Court were divided in their attitude.

Introduction to the Case:

Appellant (defendant at first instance): Trademark Review and Adjunction Board (the “TRAB”)

Appellant (the third party at first instance): Luxin Venture Capital Group Co., Ltd (the “LUXIN”)

Respondent (plaintiff at first instance): Qingdao SISA (GROUP) Abrasives Co., Ltd (THE “SISA”)

Court of first instance: Beijing No.1 Intermediate People’s Court No.: (2013)一中知行初字第1078号

Court of second instance: Beijing Higher People’s Court No.: (2013)高行终字第2354号

The SISA applied to register the “四砂SISHA” trademark (the “disputed trademark”) under Class 8 for abrading instruments (hand instruments) with the Trademark Office on October 8, 2008. In 2005, the LUXIN changed its name from SISHA Group Abrasives Co., Ltd, and always is using and promoting the disputed trademark as an enterprise name. In 2007, the disputed trademark gained access to the next step, i.e., publication. During the publication, the LUXIN opposed but rejected by the Trademark Office.

Dissatisfied with the rejection, the LUXIN applied with the TRAB for review. The TRAR made a ruling that:

1. Before the disputed trademark was registered, the LUXIN has always used the “四砂” mark as its brand and kept promotion, which made the “四砂” mark popularity and awareness among the relevant public.
2. Considering both SISA and LUXIN are located in Shandong Province, the SISA shall have known the “四砂” mark. Furthermore, the SISA also showed a clear recognition that they once cooperated with each other. Thus, it is hardly for the SISA to register the disputed trademark with goodwill/
3. The approved goods, i.e., abrading instruments (hand instruments), of the disputed trademark had a close relationship with that of the LUXIN in the function and purpose, which would create damage to that of the LUXIN for its registration and use, violating the Article 32 of the Trademark Law in the stipulation that the trademark application shall not infringe upon another party’s prior existing rights.

Based on the aforementioned analysis, the TRAB ruled out that the disputed trademark shall not be registered for the abrading instruments (hand instruments).

The SISA is not satisfied with the ruling and filed the case to the court. The first instance summed up the focus of controversy in this case whether the application of the disputed trademark caused damages to LUXIN’s prior existing rights of corporate name and violated the Article 32 of the Trademark Law.

1. Before the disputed trademark was registered, it is the prior existing corporate name that shall have already received a certain degree of awareness. And the application and use of the disputed trademark may create misunderstanding among relevant publics. Thus under the condition of the damage on the right holder of prior corporate name rights, the prior existing corporate name could block the application of the disputed trademark.
2. Paragraph 2, Article 17 of the Opinions of the Supreme People’s Court Concerning Trial of Administrative Cases in Respect of Trademark Right Granting and Confirmation stipulates “the people’s court’s reviewing and judging whether the disputed trademark has jeopardized the prior rights of others shall be subject to the application date of disputed trademark. Where prior rights no longer exist at the time when the disputed trademark is registered, the registration of the disputed trademark shall not be prejudiced.” In this case, when the disputed trademark was registered, the LUXIN has already changed its name from SISHA Group Abrasives Co., Ltd. This means, when the disputed trademark was registered, the prior rights of LUXIN’s corporate name was no long existing, which would not affect the application and registration of the disputed trademark.

Therefore, the first instance determined that the LUXIN’s prior rights of corporate name were no longer existing and then withdrew the ruling of the TRAB.

Both the TRAD and the LUXIN were dissatisfied with the determination and appealed. The second instance held the following upon hearing the case:

Where the prior corporate name of enterprise has obtained certain level of awareness and popularity by means of given time, history, culture and marketing after its prior registration and long-term use, leading relevant public into thinking that the corporate name and its goods and services could correspond with each other, if the enterprise changed its prior corporate name into a new enterprise name due to its enterprise restructuring, name change and other reasons but the relevant public still could make a corresponding relation between the new enterprise and the prior corporate name, the new enterprise could also take over its awareness and become the right holder of the prior corporate name. The said enterprise couldn’t, if gives up or fails to use or publicize the prior corporate name, claim for its rights and interests.

In consequence, the second instance decided that the disputed trademark shall not be registered and then repealed the determination of first instance.

Lawyer’s Comment:

Trademark is to distinguish the goods and services, but the enterprise name is to identify different enterprises. Despite of similar function in identification, actually trademark right often makes conflicts with the right of the enterprise name.

Article 32 of the Trademark Law stipulates that the trademark application shall not infringe upon another party’s prior existing rights, and shall also not be a means to register a mark that is already in use by another party and enjoys substantial influence. The prior right in the preceding refers to the right acquired at the time when the disputed trademark was registered, including the right of enterprise name, copyright and the right of personal name. In this case, however, a particular issue came out whether or not the prior enterprise name could be under legal protection.

Formally, the Provisions on Administration of Enterprise Name Registration regulates that an enterprise is permitted to use one name only and entitled to the exclusive right. In the event that the enterprise changes its enterprise name, laws protect only the new enterprise name. Even though another person cannot register the same enterprise name within one-year from the enterprise changed its enterprise name, the starting purpose is to prevent from market confusion. This means, the enterprise is not entitled to the rights and interests of its prior enterprise name, thus the enterprise cannot claim for its rights and interests in accordance with the Trademark Law. Therefore, we agree on the first instance determination that the prior corporate name right of LUXIN is no longer existing.

However, in this case, in consideration of that the registrant of the disputed trademark once cooperated with LUXIN, it is difficult to decide the registration with goodwill for the registrant. Seen from the whole time, considering that the registrant filed an application in 2004 at the time when LUXIN had not changed its enterprise name, viewed through this lens, the SISA is suspected of trademark squatting. However, on the grounds that LUXIN contributed a lot for the disputed trademark and another’s trademark registration is likely to create market confusion, the court decided that the enterprise is entitled to the rights and interests of its prior corporate name, so as to repeal the registration of the disputed trademark, in fully consideration of the interests of consumers and trade operators.

Therefore, we support that the court shall adopt a strict standard on the affirmation of trademark registration and take full consideration of the interests of consumers and trade operators, sufficient to prevent improper trademark squatting and reduce the possibility of trademark confusion.

Lawyer Contacts

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

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