Trademark “Zhuomuniao”: Cancelled for Squatting Though It Has Been Put into Use

(By Luo Yanjie) Abstract: when applying for a trademark, the trademark office will judge the similarity of the submitted trademark based on the International Classification of the Trademark Registration for Product and Service (the “Classification”), but the court does not use this only standard. Even if the court finds that the later trademark application to be similar with the earlier applications, and the trademark office approves the later applied trademark’s application, the earlier trademark holder shall have no right to demand the later user for any damages.

Qihao Company (the “Company Q”) is the trademark holder in China of“Zhuomuniao”, a famous French clothing brand. Hangzhou Zhuomuniao Company (the “Company Z”) made use of the defect of the trademark holding of the plaintiff, and thus makes its own holding lawful. But that could not exempt it from being cancelled. Company Z applied the trademark “Zhuomuniao” on May 26th 2000 in the Class of 25 over the shoes product and then was approved.

On February 3rd 2004, Company Q filed the application to cancel the disputed trademark. According to Company Q, the company has applied the trademark in Class 25 and 18 (excludes the subclass covered by the application of Company Z), the specific one applied is “the image of a bird+ TUCANO” and the image only. After use, the brand it has become globally famous, and has been acknowledged as a well-known brand through judicial decision. The Trademark Adjudication and Review Board (the “Board”) decided after the examination that the product covered by the disputed trademark is different from those covered by the trademark applied by the plaintiff, therefore, it sustained the application of the trademark.

Dissatisfied with the decision, Company Q filed an administrative lawsuit : the court found that the disputed trademark was appointed on the product of shoes and boots, and the reference trademark had been approved for clothing products. Despite difference of the trademarks involving the materials and purpose, the targeted consumers for both company are identical. At the same time, the disputed trademark had only slight difference over the image of the bird as compared with the reference trademark. But the two are very similar. Based on the facts investigated, the reference trademark has gained a high reputation.

Furthermore, the court held that one can easily believe the two trademarks belong to the same company, or have some sort of relationship, thereby easily confusing the customers. In the end, the court ruled that the disputed trademark shall be revoked.

Lawyer Comments:  In the case, what is of Chinese company’s genius is that it captured the defect of the incomplete trademark strategy of the company and acquired the trademark right. However, the court finally cancelled the application for the following reasons:

1. The trademark classification is a reference but not the only one to determine similarity of products.

Despite Company Z’s trademark is not within the same sub class of that applied by Company Q, as provided in Article 12 of Interpretation on Several Issues concerning the Trial on Trademark Disputes: “For the court’s decision on whether the product or service trademarks are similar to each other with referring to Article 15 of the Trademark Law, it shall comprehensively judge basing on the common judgement of the public on the product or service; the classification could be taken as the reference for the judgement over the similar product or service”

In this case, despite the shoes are not of the same sub class with that of clothing, the court takes that in real practice, the sales method, consumer, and channel are almost the same for both, and therefore they would constitute similar products.

2. Even through usage, fake brand could still be cancelled, but no later than 5 years from its application

The purpose of the trademark legislature is to protect the market reputation accumulated through actual usage. In this case, although Company Z used the disputed trademark in practical business to exploit the fact that Company Q did not timely filed the application on its sub class of shoes. Yet, considering the principle of preventing free riding and confusion, and the malicious intention of Company Z in the application, the court ruled that the trademark shall be revoked.

3. Why didn’t the court rule a compensation for the infringement?

According to the Rules on Several Issues on the Trial of Civil Dispute of the Conflict between the Company name, Trademark and other First Rights (the “Rules”): “When the plaintiff files the lawsuit basing the claim that the disputed trademark has been approved but similar or identical to its first approved trademark, the court shall inform the plaintiff to settle the dispute in the authority approving the application basing on Paragraph 3 in Article 111 of the Civil Procedure Law. ” It could be concluded from the above regulation that, the first approved trademark holder could not filed the civil lawsuit to settle the dispute against the later applied same or similar trademark, but could only go through the administrative procedure, which has no regulation for compensation.

We posted this article several months ago which might be too long to read it on. Our intern Mr. Le Duc helped us to abstract it again. You may click here for the detailed post, if you prefer to know more on the case.

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