Article on well-known trademarks raises questions about unregistered well-known and defensive marks

As part of its efforts to strengthen the country’s Trademark Law, the China National Intellectual Property Administration (CNIPA) has introduced a draft amendment that discusses the concept of dilution and freeriding on a well-known trademark’s reputation.

On 13 January 2023 the CNIPA published the draft fifth amendment to the Trademark Law on its official website. According to the administration, China’s Trademark Law has not yet met the market’s needs or matched the pace of its development. The main issues with the current law are that the system "emphasizes registration, but not use", the scope and strength of the fight against malicious trademark registration is still weak and protection for well-known trademarks is not strong enough. The draft amendment aims to address these issues, but also raises new questions and concerns.

Protection of well-known trademarks

The draft amendment includes a new paragraph in Article 18 about the concept of dilution and free-riding on a well-known trademark’s reputation. However, the draft keeps, without change, the existing paragraph that refers to "misleading the public and harming the interests of the right holders". The words "misleading the public" imply that there is a possibility of confusion (‘confuse’ and ‘mislead’ are almost synonymous). In 2009, the Supreme People's Court clarified these terms and defined the concept of dilution and free-riding, which are now included in the new paragraph of the draft law. Therefore, it  would be logical to simply delete the precedent paragraph containing the misleading word "mislead".

One question remains with regard to unregistered well-known trademarks. In the current law and in the draft, the remedy is simply an injunction prohibiting the registration and use of a trademark that is identical or similar to an unregistered well-known trademark. The law fails to provide for the possibility of obtaining damages. The reason is that, in the current law, reproducing or imitating a trademark is only defined as act of infringement if the trademark in question is registered, and fails to address situations concerning unregistered well-known trademarks. In a famous case surrounding the unregistered but well-known Xinhua dictionary (新华字典), the Beijing IP Court found a solution: it awarded damages by using the Tort Liability Law. The revision of the Trademark Law would be a good opportunity to clearly clarify that owners of unregistered well-known trademarks should also be able to obtain compensation in case of infringement.

It is worth noting that the draft revision extends the special protection of well-known trademarks.  They are protected, not only against conflicting trademarks used on non-similar goods, but also against those used on identical or similar goods.

However, when it comes to defining the level of reputation necessary to be recognised as ‘well known’,  the new paragraph in Article 18 specifies that a well-known mark must be well known among the "general public", which raises the bar very high and is not conducive to the protection of well-known marks. In addition, it diverges from the definition of well-known marks in Article 10(1) of the draft, which refers only to the "relevant public". The concept of ‘relevant public’ is more flexible. An example can be taken from the famous Intel case, in which the European Court of Justice pointed out that the concept of ‘relevant public’ depends on the circumstances. In dilution and tarnishing cases, the mark only needs to be well known among the relevant public of the plaintiff, whereas in free-riding cases, the mark should be well known to the relevant public of the defendant (C-252/07).

Defensive registration

Some reputed trademark owners want to obtain a large scope of protection offered by defensive registration without the duty to use. Their need is somewhat legitimate – they do not want others to benefit from their reputation or create a risk of dilution of their image. Such protection is normally provided by the system of well-known trademarks. Indeed, Article 14(2) of the draft stipulates that the scope and strength of protection shall be proportional to the distinctiveness and reputation of the mark. However, the need for defensive trademarks only arises when it is particularly difficult to obtain the recognition of the ‘well-known’ status. Defensive trademarks and well-known trademark recognition are, therefore, two sides of the same coin. If recognition of the well-known status works well on a case-by-case basis, there is no need for defensive trademarks. Vice versa, if it is too difficult to be recognised as well known, defensive trademarks are indeed necessary. The more well-known marks can play a role in combatting dilution and free-riding, the less the defensive marks are needed.