Weekly China Trademark News Updates

April 19, 2023

1. Chivas successfully invalidated a copy registered on coffee, tea, and cookies

A Beijing company registered the “Zhihuashi CHIVAS” mark (“Disputed Mark”) in May 2015, which was partially rejected and published for opposition for Coffee; Tea; Sweetmeats [Candy]; Honey; Cookies; Noodles; Prawn cracker; Ice cream. An opposition was raised against the publication but the Disputed Mark was allowed. Chivas filed an invalidation against the Disputed Mark shortly after its registration.

The CNIPA found in the invalidation that the Disputed Mark’s approved use for coffee, cookies, and other goods constituted as a similar mark with the Cited Mark 1 and 2 “CHIVAS in Chinese” on identical or similar goods. However, the Disputed Mark’s other approved goods of sweetmeats [candy], ice cream, honey were not the same as those approved goods of the Cited Mark 1 and 2. Thus, the Disputed Mark was maintained for “sweetmeats [candy], ice cream, honey” but invalidated on “coffee, tea, cookies, noodles, prawn cracker”.

The owner of the Disputed Mark filed an appeal to the Beijing IP Court. The Beijing IP Court rejected the appeal. The owner of the Disputed Mark then appealed to the Beijing High Court to request to vacate the prior decisions and claimed that the Disputed Mark was a continuation of the mark with reg. no. 1768387. Thus, the Disputed Mark’s status shall still be valid.

During the process of the second instance appeal, the Disputed Mark was cancelled for all said goods due to three-year non-use and was published on January 13, 2023 on the Registered Trademark Cancellation Gazette.

The Beijing High Court found that: although all of the Disputed Mark’s goods had been cancelled and published, the nature and legal consequences of trademark cancellation and trademark invalidation are different. In addition, the Disputed Mark’s rights can have certain impact to the civil cases involved while it was still valid. Thus, even though the Disputed Mark had been cancelled and its status published, it was still necessary to determine whether the Disputed Mark violated Article 30 of the 2013 China Trademark Law.

In this case, the Disputed Mark’s approved goods for “coffee, tea, cookies, noodles, prawn crackers” fell into the same subclasses as “coffee, tea, sandwich, instant noodles, popcorn” approved for the Cited Mark 1 and 2. And the said goods’ function, use, manufacturing department, consuming public highly overlapped. These goods constituted identical or similar.

The Disputed Mark is a word mark consisting of “Zhi-hua-shi” on top and “CHIVAS” at the bottom. The Cited Mark 1 is a word mark consisting of simplified Chinese characters “Zhi-hua-shi.” The Cited Mark 2 is a word mark consisting of traditional Chinese characters “Zhi-hua-shi.” The Disputed Mark’s Chinese part “Zhi-hua-shi” shared the first two Chinese characters with the Cited Mark 1 and 2, and the ending characters “shi” shared identical pronunciation and similar fonts with the “Shi” characters in the Cited Marks 1 and 2. The Disputed Mark and the Cited Mark 1 and 2 are similar in word composition, pronunciation, meaning, overall appearance, and visual effect; if the marks are used simultaneously on identical or similar goods, the relevant public, when paying general attention and observing the marks individually, would likely to believe that the said marks’ goods came from the same source or the two entities were associated and thereby causing confusion. Thus, the Disputed Mark constituted as similar mark with identical or similar goods for “coffee, tea, cookies, prawn crackers, and noodles” with the Cited Mark 1 and 2, which violated Article 30 of the China Trademark law and shall be invalidated.

The owner of the Disputed Mark claimed that the Disputed Mark was a continued registration of its prior registered trademark No. 1768387. On this point, the court held that, the registrant enjoys separate trademark exclusive rights to each of the registered marks, and there was no definite continuation relationship between successively registered marks. The protective continuation registration of a new trademark on the basis of a registered trademark should not disrupt the established order of trademark registration, especially it should not constitute identical or similar trademark used on the same or similar goods with other’s previously registered trademarks.

Therefore, the relevant grounds of the appeal of the owner of the Disputed Mark cannot be found and the court would not support it.

2. A simple act of filing trademark applications does not infringe another’s trademark right or constitute unfair competition

Castrol is one of the world’s leading professional lubricating oil manufacturers. It owns the “Castrol in Chinese,” “CASTROL,” “CASTROL and Design,” “Jihu in Chinese,” “Cihu in Chinese,” “Jiahu in Chinese,” “Jinjiahu in Chinese,” and other trademarks in Class 4 on “industrial oils and greases; lubricants; greases; fuels,” etc. Among them, the “Castrol” trademark was first recognized as a well-known mark on lubricating oil products in China in 2008.

Castrol noticed that Annaichi Company (“Annaichi”), whose business scopes covered “lubricating oil (except brake fluid), grease, antifreeze, glass water, filter element processing and sales”, hired Century Dingli Agency to file applications for the “Castrol in Chinese,” “CASTROL & Design,” “Cihu in Chinese,” “Jihu in Chinese,” and “Jinjiahu in Chinese” marks in Class 39 for “goods delivery; goods delivery; commodity packaging; commodity packaging; transportation reservation; shipping goods; automobile transportation; cargo storage liquefied gas station; filling service,” etc.

Castrol filed a lawsuit before the Xicheng District Court in Beijing arguing that Annaichi’s act of applying for trademarks was a preparatory act for trademark infringement, and if the act did not constitute trademark infringement, it should constitute unfair competition. Castrol also argued that Annaichi’s trademark agency should know that these trademarks were improper, but still helped it to register these marks in bad faith. It was obvious that they have a common intention to infringe and cause damage, and they should bear joint and several liability for compensation.

The first instance court found that Annaichi’s applying for trademark applications were neither the act of trademark use regulated by the China Trademark Law, nor act of business production or operation regulated under the China Anti-Unfair Competition Law. Therefore, Annaichi’s application for registration of the disputed trademarks did not constitute trademark infringement or unfair competition against Castrol, and Castrol’s claims were dismissed.

Castrol appealed to the Beijing IP Court and, after holding an inquiry of both parties, the court affirmed the lower court’s decision.

The Beijing IP Court reasoned the following issues.

1. Whether Annaichi’s act of applying for trademark applications infringed upon Castrol’s trademark right

Article 1 of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Trademark Civil Dispute Cases (“Judicial Interpretation”) stipulates that the following acts are acts that cause other damages to others’ exclusive right to use registered trademarks: 1) prominently using words identical to or similar to others’ registered trademarks as the name of the enterprise on identical or similar goods, which may easily mislead the relevant public; 2)  copying, imitating, or translating a well-known trademark or its main part registered by others and using it as a trademark on different or dissimilar goods, misleading the public, and causing possible damage to the interests of the registrant of the well-known trademark; 3) registering identical or similar characters as others’ registered trademarks as domain names, and conducting e-commerce transactions of related commodities through this domain name, which may easily mislead the relevant public.

In this case, first, Annaichi’s act of trademark applications was mainly to apply for five marks of “Castrol in Chinese,” “CASTROL & Design,” “Cihu in Chinese,” “Jihu in Chinese,” and “Jinjiahu in Chinese” in Class 39 for “goods delivery; goods delivery; commodity packaging; commodity packaging; transportation reservation; shipping goods; automobile transportation; cargo storage liquefied gas station; filling service,” etc.  The acts of applying these trademarks were not the circumstances of causing other damages to others’ exclusive trademark rights as stipulated under Article 1 of the Judicial Interpretation. Second, Annaichi only applied for trademarks and did not put the five trademarks into business activities for use as defined in the China Trademark Law. These marks did not play the role of identifying the source of goods as trademarks and therefore did not constitute trademark infringement. Thus, Castrol’s claim that Annaichi’s act of applying for registration of trademark was trademark infringement lacked facts and legal basis, the court cannot support such claim.

2. Whether Annaichi’s alleged acts constitute unfair competition

Article 2 of the Anti-Unfair Competition Law stipulates that operators shall abide by the principles of voluntariness, equality, fairness, and good faith, and abide by laws and business ethics in production and business operations. The act of unfair competition referred to in this law refers to the conduct of business operators in violation of the provisions of this law, disrupting the order of market competition, and damaging the lawful rights and interests of other business operators or consumers in their production and business operations. The business operators mentioned in this law refer to natural persons, legal persons and unincorporated organizations engaged in the production and operation of commodities or the provision of services.

In this case, the accused behavior was that Annaichi’s applied for the registration of five marks “Castrol in Chinese,” “CASTROL & Design,” “Cihu in Chinese,” “Jihu in Chinese,” and “Jinjiahu in Chinese” in 2017 in Class 39 for “goods delivery, cargo shipment, shipping cargo, automobile transportation” and other services. The “Castrol in Chinese” and “Castrol” series trademarks of Castrol are fanciful words with high distinctiveness and high popularity. Judging by common sense, the possibility of creating a similar mark in coincidence without contact or knowledge at all was very unlikely. As a competitor in the same industry, Annaichi should know that the “Castrol in Chinese” and “Castrol” series trademarks are extremely well-known, but it still applied for the registration of the disputed marks that are identical or substantially similar to the “Castrol in Chinese” and “Castrol” series trademarks, and it did not provide evidence or fully explain the source of creativity of the five disputed marks. Their subjective intentions were hardly legitimate. Therefore, Annaichi’s act of applying for trademark registration of the disputed marks was an act of applying for trademark registration in bad faith.

However, it was not appropriate to apply Article 2 of the Anti-Unfair Competition Law to provide relief only for the act of applying for trademark registration. First, the act of applying for trademark registration itself can be given administrative relief through the relevant provisions of the China Trademark Law. For example, Article 13 of the China Trademark Law provides protection of well-known marks, Article 15 provides regulation of agents or representatives preemptively registering trademarks, Article 30 provides regulation of identical or similar trademarks for identical or similar goods, and Article 32 provides protection of prior rights or prior unregistered trademarks, and Article 44’s prohibition of “obtaining trademarks by other improper means” provides regulation of preemptive registration of trademarks. These articles provide administrative relief for trademark registration applications in bad faith. Second, the act of applying for trademark registration is an administrative act of applying to the CNIPA for trademark registration. In the absence of abuse of trademark rights after registration, it would be difficult to identify a simple act of trademark registration as a production and operation act, so it did not belong to the acts regulated under the Anti-Unfair Competition Law. Third, as far as the evidence on file is concerned, Annaichi’s accused act was only the act of applying for trademark registration, and the applications for the five disputed marks have been rejected or decided not to be registered. The legal rights of Castrol Company had been protected. Therefore, there was no legal basis for Castrol’s claim that Annaichi’s alleged conduct constituted an act of unfair competition, and this court does not support its claims.

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