Judicial opinion to clarify certain trademark issues

On 21st April 2010 the Supreme People’s Court issued the Opinion on Several Issues Regarding Administrative Adjudication of Trademark Grant and Confirmation. The opinion is based on the experience of the court in administrative actions brought against the Trademark Review and Adjudication Board in trademark application, opposition or invalidation cases.

The opinion lays down certain general guidelines. For example, widespread use of a trademark is a factor in favour of granting or maintaining its exclusive rights, and vice versa. This is because the value of a trademark relies on use thereof. Regarding trademark distinctiveness, the test is its overall distinctiveness, judged by relevant consumers based on their general knowledge. Thus, any descriptive element which does not affect its overall distinctiveness will not render a mark indistinctive; nor is a descriptive sign necessarily devoid of distinctive character if it is presented in an unusual manner such that it is distinguishable as to source. Accordingly, taking a foreign language mark as an example, the general understanding of its meaning by the Chinese consumer concerned is relevant.

A trademark may be refused registration on a number of absolute or relative grounds. The meaning of some of these grounds has been exemplified by the opinion, including the following:

• A mark will be refused registration if it is detrimental to socialist morals or has an “undesirable social impact”. According to the opinion, an “undesirable social impact” refers to a negative political, economic, cultural, religious or ethnic impact, or where public interests are adversely affected. It is an absolute, rather than a relative, ground of refusal for registration.
• A mark will be refused registration if its application is made by the agent or representative of the rights owner without the rights owner's authorisation. Acknowledging that this includes the trademark agent and sale agent of the rights owner, the opinion further confirms that this can have a broader meaning, covering the situation where the applicant was not yet the agent/representative of the rights owner at the time of the pre-emptive trademark application because they were only in business talks, and that this agent/representative relationship only came into being afterwards. This term should also include an applicant colluding with the agent/representative.
• A mark is refused registration if it concerns use of improper means to pre-emptively register the mark of a third party that has gained a certain level of influence in China. According to the opinion, this is satisfied if the mark of the third party has been consistently in use in respect of goods that are the same as or similar to those applied for by the applicant, and for a certain period of time, within a certain geographical scope involving a certain amount of sales or promotion, so that the mark is known to a certain range of the relevant consumer public, suggesting that the applicant actually knew or ought to have known that the trademark has been in use by the third party.
• A registered mark will be invalidated if its registration falls within any one of the absolute grounds for refusal, or has been acquired by means of fraud or by other improper means. The opinion explains that the “other improper means” provision is a catch-all provision for refusing registration of marks based on absolute grounds, which is applicable where registration may disrupt the stable trademark registration system, harm public interest, abuse public resources or give rise to unjust benefit.

Most of the views expressed in the opinion are not entirely new. The Trademark Examination Standards and the Trademark Adjudication Standards issued in 2005 by the Chinese Trademark Office and the Trademark Review and Adjudication Board contain similar guidelines. However, guidelines in the form of an opinion from the court, the final arbiter of trademark disputes, are most welcome.