Posts by: Rhonda Tin | (4) posts

Recent Measures Introduced by CTMO

On March 24, 2016, the China Trademark Office (CTMO) announced the implementation of certain measures from that date.

  1. FAQ – An FAQ on trademark applications is put up on the CTMO’s website. The FAQ mainly deals with the practicalities involved in the filing procedures. While this may be a useful source for the basics, it does not provide anything new.
  2. Notarization – Notarization is not required for supporting documents for trademark applications for the portrait of a person or the name of a celebrity as a trademark, assignment applications, removals of registered mark, recordals of change of name or address in foreign language.
  3. Notices of Correction – Notices of Correction will provide, as appropriate to the case,more explanations or guidance to facilitate responses.
  4. Single set of evidence for multiple oppositions – For oppositions filed by the same opponent within one month, if all the evidence (not part of the evidence) is the same in all such oppositions and a complete set of the evidence is already filed in the first opposition at the time the opposition is filed, then the opponent is not required to file the evidence again in the remaining oppositions, provided that the opposition which has the complete set of evidence is clearly referred to in the remaining oppositions.
  5. Consolidation of oppositions – The CTMO may consolidate oppositions if the parties are the same, the opposed marks are the same, the same set of evidence is used or cross-oppositions are filed by the parties, or the CTMO considers that the other reasons as raised by a party satisfy the requirements for consolidation.
  6. Expedition of post-registration matters – The CTMO may expedite post-registration matters such as recordals of changes, assignment applications, renewal applications etc. if the applicant can explain with supporting documents the urgency and the reason for the expedition.
  7. Online database – The CTMO will improve the online trademark database by making timely updates, enhancing stability and improving the status check function etc. This is said to be most welcomed by practitioners and TRAB.

Rhonda Tin, Counsel

Trademark Protection in China – if everyone could be Disney…

In October 2015, the Chinese State Administration for Industry and Commerce (AIC) announced a special one-year nationwide campaign to protect the Disney trademarks. The campaign aims at attacking infringements of Disney trademarks, protecting the rights of consumers, creating a fair market and maintaining China’s international image of IPR protection. Routine monitoring (including online monitoring) will be strengthened. AICs and market supervisory bureau all over the country will strive to stop the infringements and training will be enhanced.

The commencement of the campaign was soon followed by the Shanghai AIC’s administrative action against a hotel chain called Vienna. Five hotels of this chain used the Chinese version of “Disney” in their names (such as using “Disney Store” after the name of the hotel) and the related signs were used on the signboards, the websites and the electronic notice board in the lobby etc. The hotel chain was found to have infringed Disney’s trademarks and was fined RMB100,000.

Following this fairly publicized action by Shanghai AIC, the other campaign efforts recently reported by SAIC include the following:

  • the Haidian branch of the Beijing AIC has implemented specific measures for the campaign, namely strengthening the inspection on the use of Disney’s registered marks and the inspection on traders dealing with clothing, electronic products, toys, bags and stationery etc. in physical markets, preventing and punishing infringements of Disney’s registered marks and making use of a specific report hotline for faster investigation and action.
  • after receiving a report from the public, the market supervisory bureau of Yuhang District of Hangzhou City seized a large batch of children’s clothing featuring classic Disney figures. The suspected culprit sold this kind of Disney clothing mainly via electronic trading platform.
  • an English education and training institute in ZhuZhou City has been found to have infringed Disney’s trademarks by using the marks at the premises and in the teaching materials. An AIC office in ZhuZhou City has ordered the institute to immediately stop the infringement and destroy all infringing products and trademarks.

The campaign commenced before the opening of the Shanghai Disneyland, which is said to take place in the spring of 2016. This campaign which targets at a specific brand is unprecedented. Some commented that the campaign is necessary because the Shanghai government has commercial interests in the business of the theme park, and people inevitably ask “how about the other brands?”. Whatever the motives behind the campaign, the efforts should be seen as positive signs. Hopefully, awareness of the importance of IPR protection will be enhanced, which is crucial for an even better IP environment for all foreign businesses in China.

Rhonda Tin, Counsel

OEM activities in China do not amount to trademark infringement

The PRC Supreme People’s Court has decided that OEM activities in China do not amount to trademark infringement (however, this does not seem to be the final word on the issue)

A foreign brand owner has registered its mark in a foreign country, but not in China. Another unrelated entity has registered the same or similar mark in China. Would a Chinese manufacturer be liable for trademark infringement in China if it manufactures in China solely for export purpose products bearing the foreign registered mark upon the authorization of the foreign brand owner?

Although in recent years, there have been more and more cases where the courts ruled that in the above original equipment manufacturer (OEM) scenario the Chinese manufacturer is not liable for trademark infringement, the position has not been clear. The law does not offer a definite answer and different courts have decided the issue differently. The Supreme People’s Court (SPC) had never ruled on this issue. In November 2015 its judgment in the “PRETUL” case was made. The judgment was long awaited as it was expected to offer some guidance on the issue.

TRUPER SA is a Mexican company and it has registered the marks “PRETUL” or “PRETUL & oval device” in Classes 6 and 8 etc. in different countries including Mexico. In China, an individual registered the mark “PRETUL & oval device” in Class 6 in 2003 and assigned this registered mark to Focker Security Products International Limited (Focker) in 2010.

TRUPER SA entrusted Zhejiang Pujiang Yahuan Locks Co, Ltd (Yahuan) to supply and produce goods bearing the marks “PRETUAL” and “PRETUL & oval device” and the goods were only for export to Mexico. Focker sued Yahuan for trademark infringement.

Both the Ningbo Intermediate People’s Court at the first instance and the Zhejiang Higher People’s Court at the second instance ruled against Yahuan. Both courts ruled that Yahuan’s use of the marks was trademark use and the marks and the goods are similar to those of Focker’s registered mark in China.

Yahuan requested the SPC to retry the case. The SPC overturned the previous judgments and found that there was no trademark infringement. The SPC considered that trademark use as referred to in the Trademark Law means use of the trademark for identifying the trade origin. The SPC ruled that the products were only for export to Mexico and were not sold in China and therefore the signs used on the products would not cause confusion in China and would not perform the identifying function within China. The affixation of the signs on the products cannot be regarded as trademark use. The SPC stated that if a trademark does not perform the identifying function and its use is not trademark use, it would not be meaningful to determine if the marks and goods involved are identical/similar.

One issue which the SPC did not deal with is the allegation that the Chinese registration by the individual was made in bad faith because that individual was a shareholder and officer of a supplier of TRUPER SA.

There is no case law (stare decisis) in China, so the courts are not bound to follow the SPC’s judgment, although it is expected that the courts would tend to follow the SPC judgment. This judgment may therefore help foreign brand owners who do not manage to register their marks in China, but want to have their products manufactured in China.

Further, how the courts decide on the issue would depend on the facts of the case and the courts may depart from the judgment of the SPC, if distinguishing facts are found. The Jiangsu High People’s Court, for example, has recently decided differently from the SPC. In that case, the Jiangsu High People’s Court, though recognizing that the activity involved is OEM manufacturing, ruled that there is infringement because the OEM manufacturer should know that the Chinese registered trademark is a well-known mark and the foreign brand owner may have hijacked the Chinese trademark and registered the same in the relevant foreign country (though the relevant authority in the foreign country has decided that the registration is valid). Based on this judgment, the OEM manufacturer has the burden to ensure that the company entrusting it with the manufacturing has the rights to do so.

Commentators have taken the view that the “PRETUL” case still needs to be explored regarding the legal questions surrounding OEM activities and the “PRETUL” case does not represent the final complete opinion of the SPC on OEM. It would be interesting to see how the jurisprudence evolves with further OEM decisions from the courts. It would also be interesting to see whether and how administrative trademark enforcement authorities such as AIC and Customs would be affected by the SPC judgment.  A simplistic pro-OEM approach can be a double-edge sword as this may not be favourable to foreign brand owners who have trademark registrations in China, but would like to stop the manufacture in China of counterfeits by foreign counterfeiters who have registered the marks in the exported countries.

Rhonda Tin, Counsel

Moncler secured victory with a substantial Damages Award

Italian brand Moncler secured victory against Chinese infringer with a substantial Damages Award

In a so-called “landmark” decision by the Beijing IP Court, luxury down jacket maker Moncler secured a victory against Beijing clothing company Nuoyakate Gourmet Co.
Nuoyakate was marketing jackets bearing marks similar to those of Moncler’s registered marks, and it registered numerous trademarks similar to those of Moncler’s marks and they also registered and used the domain name “mockner.com”.  Moncler took out a trademark infringement and unfair competition action with the Beijing IP Court, which accepted the case in December 2014 and rendered the judgment in April 2015.
Moncler was awarded a sum of 3 million yuan (US$470,100) as damages and reasonable expenses. 

For years, the amount of damages awarded by Chinese courts in intellectual property infringement cases had, for various reasons, been on the comparatively low side. The Moncler case has frequently been commented on as being a breakthrough where even though there is no evidence of Moncler’s loss of profit or Nuoyakate’s gain, the Beijing IP Court was willing to take into account all evidence of the case and allowed the full sum claimed by Moncler.
The maximum statutory damages of 3 million yuan was newly introduced by the current Trademark Law in May 2014.  While this approach of the Beijing IP Court in determining the amount of damages may be regarded as a sign of progress and reform in the right direction, it is noteworthy that the high amount in the Moncler case is determined by a number of factors including, for example, the reputation of Moncler’s marks, the seriousness of the infringement, the blatant bad faith of the infringer and the high selling prices of the infringing products.  Furthermore, this case was one of the cases being highlighted to demonstrate how China has been strengthening the protection of intellectual property rights by way of awarding higher amounts of damages.
However, this approach might backfire on foreign brand owners.  In the New Balance case in April 2015, we note that the US New Balance did not have a PRC (People’s Republic of Chinatrademark registration for the Chinese name it had been using in China while a Chinese company had secured trademark registrations and has allegedly used the same Chinese name on shoes.  The Chinese company sued.  The US New Balance’s defences of fair use and earlier use failed.  It was ordered by the Guangzhou Intermediate People’s Court to pay a record high of RMB98 million as damages for trademark infringement.

It is reported that the US New Balance has filed an appeal, and we will continue to watch out for further progress on this case.

Rhonda Tin, Counsel