China's Courts Revisit Bad Faith Trademark Applications


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Over the years, the large number of trademark squatters and counterfeiters, have led to foreign and local trademark owners complaining that China needed to police bad faith trademark applications more rigorously. In the recent Doosan case, discussed herein, it is seen that the Chinese Trademark Office and courts, are willing to extend the application of provisions of the law to stop bad faith filers in certain cases.

Beijing Jiahe Xingchan Lubricant Co., Ltd. Vs. Trademark Review and Adjudication Board and Doosan Co., Ltd., Doosan Infineon Co., Ltd.

Case Title: Beijing Jiahe Xingchan Lubricant Co., Ltd. (Jiahe) Vs. Trademark Review and Adjudication Board (TRAB) and Doosan Co., Ltd., Doosan Infineon Co., Ltd. (collectively, “Doosan”)

Court: Supreme Court

Date of Decision: 30 March
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2016

Area of Law: Trademark law

Significance of Decision: This case shows an increased willingness of the CTO and courts to apply Item 8 of Paragraph 1 of Article 1 of the Trademark Law in relation to bad faith filings. It is hoped that this practice obtains popularity in China.
Appealed: No.

Case History

Beijing Nissan Jiahe Lubricant Co., Ltd. (Nissan Jiahe, which name was changed to Jiahe Xingchan, “Jiahe”) filed an application for registration of the trademark “斗山” (DOOSAN in Chinese characters) with the Chinese Trademark Office (CTO) on 25 July 2005, in relation to “lubricating oil, lubricating grease, technical white oil, motor oil, cutting fluids, industrial oil, industrial grease, heat-conducting oil, and gear oil” in class 4, under Trademark Application No.479739.

Doosan filed an opposition in relation to this application, after it was preliminarily approved by the CTO, based on its trademark registrations for “斗山 DOOSAN” under Trademark Registration No.’s 1910283 and 1910286 registered from 4 July 2001, in relation to “aeroplane engines, boat engines, drilling bits [parts of machines], road rollers, feed mixing machines, milking machines, mixing machines for industrial purpose, winders, washing machines, printing machines, bulldozers, tarring machines, excavators, and road making machines” in class 7.

The CTO made a decision in relation to this opposition matter on 13 July 2011. It concluded that the opposed trademark application was similar to the prior registrations owned by Doosan, and that the registration of the trademark would mislead the public and lead to negative social influence, when it was used for lubricating oil.

Jiahe appealed to the TRAB on 6 September 2011 on the grounds that 1) there was not any evidence showing the good reputation of the “斗山 DOOSAN” in Trademark Registration No.1910283 that was already obtained before filing of the trademark application at issue, 2) the goods covered by the trademark application at issue and Doosan’s trademark registrations were not similar, in terms of function and usage, and co-existence of the two trademarks would not cause consumer confusion, and 3) the opposed trademark application did not violate Item 8 of Paragraph 1 of Article 10 of the Trademark Law 2001, which states that The following words or devices shall not be used as trademarks: “ … (8) those detrimental to socialist morals or customs, or having other unhealthy influences.” The same provision is stipulated in Item 8 of Paragraph 1 of Article 10 of the Trademark Law 2013 which is currently effective.

The TRAB made a decision on 9 October 2013, considering 1) although the goods covered by the opposed trademark application, such as lubricating oil, were not similar to those covered by Doosan’s trademark registrations, such as excavators and bulldozers, but “斗山 DOOSAN” was a trademark registered by Doosan in relation to excavators and bulldozers, and before filing of the opposed trademark application, Doosan carried out an acquisition and established Doosan Engineering Machinery (China) Co., Ltd. in China, which was widely reported by the media. Doosan also promoted its “斗山 DOOSAN” brand before filing of the opposed trademark; 2) The opposed trademark “斗山” was similar to “斗山 DOOSAN” that was registered by Doosan earlier; 3) Jiahe filed the applications to register other well-known car brands, such as “Honda”, “Toyota”, “Dongfeng Citroen”, “Mondeo”, “Elysee”, “Regal”, “Camry”, “Skoda” (all is in Chinese characters), in addition to the opposed trademark application, which was not a coincidence but showed Jiahe’s intentional copying and imitation of other’s trademarks having great reputation; 4) Jiahe’s filing of the opposed trademark would not only cause relevant public’s confusion as to the sources of the goods, but also disturb the normal trademark registration and management order, undermine fair competition, violate the principles of good faith, and lead to negative social influences, which constituted the situation referred to in Item 8, Paragraph 1, Article 10 of the Trademark Law 2001. The TRAB accordingly determined that the opposed trademark application should not be registered.

Jiahe appealed to the Beijing No.1 Intermediate People’s Court and it found that 1) The old Trademark Law 2001 which was effective when the TRAB reviewed the appeal and issued the decision should be applied to this case; 2) the evidence filed by Doosan with the TRAB, especially including annual reports, sales contracts, invoices, industry association certification, designing report, relevant media reports could show that its trademark registrations had obtained great reputation, in relation to excavators and bulldozers, before filing of the opposed trademark; 3) the Chinese characters included in the opposed trademark and Doosan’s trademark registrations were completely the same, and considering that Jiahe registered a number of famous car brands in relation to lubricating oil in class 4, its acts above were not coincidental but had seriously disrupted the order of trademark registration and accordingly led to unhealthy influences of social and public interests. Therefore, the TRAB’s decision stating that the registration of opposed trademark constituted the circumstances referred to in Item 8 of Paragraph 1 of Article 10 of Trademark Law 2001, was proper and was supported by the Intermediate Court.

Jiahe appealed to Beijing Municipal Higher People’s Court on the grounds that 1) whether Item 8 of Paragraph 1 of Article 10 of Trademark Law 2001 should be applied was not related to the reputation of Doosan’s trademark registrations; 2) there was no causal relationship between its filing of car brands and the application of Item 8 of Paragraph 1 of Article 10 of Trademark Law 2001; 3) Doosan’s rights and interests are specific civil rights, rather than the public interest, and the Chinese characters “斗山” itself did not have unhealthy influence, so the Intermediate Court’s decision on disruption of trademark registration order and production of unhealthy influences lacked factual and legal basis. However, on 20 July 2015, the Higher Court issued its decision, maintaining most of the original decision issued by the Intermediate Court and rejecting all of Jiahe’s claims.

Jiahe filed an application for retrial of this case with the Supreme People’s Court on the grounds listed above. It claimed that its filing of car brands only damaged specific civil rights and interests but should not be identified as a situation involving unhealthy influence. It requested the Supreme Court to overturn the decision issued by the Higher Court.

In the decision issued by the Supreme Court on 30 March 2016, it summarized the key point of the dispute as whether the opposed trademark application contained a trademark that has unhealthy influence and should not be used as a trademark, and it confirmed the following: 1) Doosan’s trademark registrations had obtained great reputation, before filing of the opposed trademark; 2) the Chinese characters of the two trademarks were completely the same; and 3) Jiahe filed a number of famous car brands for registration in relation to lubricating oil in class. Based on these facts, the Supreme Court confirmed that the decision issued by the Higher Court applied the correct law so it was supported, and Jiahe’s claim regarding the opposed trademark application did not violate the provision of Item 8 of Paragraph 1 of Article 1 of the Trademark Law could not be established and was not supported.

Implications

In this case, Jiahe’s bad faith filing of famous car brands was identified by the various courts (and originally, the CTO) as violating the principle of good faith and disturbance of trademark registration order, which would cause unhealthy influence. They all went on to then find that Item 8 of Paragraph 1 of Article 1 of the Trademark Law was properly applied to this case. This case clearly demonstrates a progressive step taken by Chinese courts in relation to their willingness to identify bad faith filings and apply Item 8 of Paragraph 1 of Article 1 of the Trademark Law (and presumably, the 2013 amended law equivalent) to such cases. We are looking forward to seeing whether this example is followed in future cases by the CTO and the courts, especially involving foreign trademark owners.

ABOUT THE AUTHOR: Yu Du
Yu Du is a Partner in the MMLC Group.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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