Weekly China Trademark News Updates

August 10, 2023

1. Consent letter from an associated company was not accepted by court in a trademark rejection appeal case

GFM GMBH TRADEMARKS (“GFM”) applied for the registration of the “” mark in November 2020, designated for use on “Footwear; Boots; Shoes; Sandals; Boot uppers; Insole; Soles for footwear; Fittings of metal for footwear” products. The CNIPA cited 9 prior marks of “,” “,” “,” “,” “,” “,” “,” etc. co-owned by “DR.MARTENS” INTERNATIONAL TRADING GMBH and “DR.MAERTENS” MARKETING GMBH (“DR. MARTENS”) in refusing the Disputed Mark from registration. GFM appealed. During the refusal review, the CNIPA found that the Disputed Mark and the Cited Marks 1 to 9 constituted similar marks used on identical or similar goods. Although GFM provided a signed consent letter with DR. MARTENS, the Disputed Mark was relatively similar to the Cited Marks, and the likelihood of confusion and misidentification by the relevant public cannot be ruled out, so this evidence was not accepted.

GFM appealed to the Beijing Intellectual Property Court and submitted its shareholder list which showed that each of the DR. MARTENS is 25% shareholder.

The first instance court held that since the distinctive part of the Disputed Mark “MARTENS” appeared in the distinctive parts of Cited Marks, the Disputed Mark and each of the Cited Marks share relatively high degree of similarity. Regarding the proof of affiliation of the Cited Marks’ owners submitted by GFM, considering that they each hold 25% of GFM’s shares and 50% in total, they are not the controlling shareholder. Their correlation was not strong enough. For the Disputed Mark and the Cited Marks with such a high degree of similarity, the relevant public was likely to confuse them, so it should be determined that the Disputed Mark and the Cited Marks constituted similar trademarks.

GFM appealed to the Beijing High Court where the court handed down the final judgment.

In its decision, the second instance court stated that consent letter shall be genuine, legitimate, and valid, and shall not damage national interests, social public interests, or the legitimate rights and interests of third parties. According to the legislative intent of the trademark law, it should not only protect the interests of the trademark owner, but also protect the interests of consumers. Therefore, in administrative cases of trademark right authorization and confirmation, if the mark sign of the Cited Mark and the Disputed Mark are identical or basically identical, and when used in identical or similar services, a consent letter cannot exclude the application of Article 30 of the Trademark Law.

Although GFM submitted a consent letter, the signs of the Disputed Mark and the Cited Marks shared a relatively high degree of similarity and were basically identical. Therefore, the consent letter cannot be used as a means of excluding possible confusion of the source of goods between the Disputed Mark and the Cited Marks. Although the applicant for the Disputed Mark and the registrants of the Cited Marks are affiliated companies, they are still different entities. This was not a factor to be considered in Articles 30 and 31 of the Trademark Law. Therefore, GFM’s grounds for appeal could be established, and this court did not support it.

2. The Beijing High Court: Abandoning parts of designated services in a litigation does not affect the scope of judicial review

Tencent Technology (Shenzhen) Co., Ltd. (“Tencent”) applied for the registration of the “” mark (“Disputed Mark”) in Class 42, and was first approved in “Research and Development of New Products for others; Dress designing; Graphic arts design,” and refused in “Styling [industrial design]; Design of interior decor; Computer software design; Design and development of computer game software; Software as a service [SaaS]; platform as a service [PaaS].” Among them, the Cited Mark 1 “QUANTUM” blocked the service “Styling [industrial design],” and the rest of the services were blocked by the Cited Mark 2 “QUANTUM in Chinese.” After review, the CNIPA still decided to refuse the Disputed Mark on those rejected services.

Tencent appealed. The first instance court determined that the Disputed Mark and the Cited Marks 1 and 2 constituted similar trademarks used in identical or similar services. Although Tencent submitted evidence in an attempt to prove that the Disputed Mark was relatively famous, the court deemed that as the two Cited Marks’ owners did not participate in the case, Tencent’s evidence was all unilateral evidence, which was not enough to prove that the Disputed Mark can be distinguished from the two Cited marks via use. Therefore, the court dismissed Tencent’s claim.

Tencent further appealed to the Beijing High Court; in its appeal, Tencent claimed that it shall waive the Disputed Mark on “Styling [industrial design]” services, so the Cited Mark 1 should no longer constitute an obstacle.

The second instance court held that, in view of Tencent’s abandonment of the “Styling [industrial design]” service in the second instance lawsuit, the other services on review did not constitute similar to those services under the Cited Mark 1, and the Cited Mark 1 could no longer block the Disputed Mark from registration.

As of the end of the second instance trial, the Cited Mark 2 is still a valid prior registered trademark, and the Disputed Mark and the Cited Mark 2’s distinctive identification part “QUANTUM in Chinese” are similar in terms of text composition, call, meaning, etc., and their coexistence may easily lead to confusion among the relevant public. Therefore, the Cited Mark 2 constituted a prior right obstacle against the Disputed Mark for all the services under appeal except “Styling [industrial design].”

This case is an administrative lawsuit to review the legality of the sued CNIPA decision, and the situation of the Cited Mark 2, which is pending in other proceeding, does not fall into the situation where the lawsuit must be suspended according to the Administrative Procedural Law and relevant judicial interpretations. The court did not grant Tencent’s request to suspend the trial. Therefore, the court made a judgment in May 2022 to reject Tencent’s appeal.

Tencent later petitioned for a re-trial and submitted the trademark gazette published on September 13, 2022, proving that the the Cited Mark 2 had been de-registered, and requested the court to revoke the sued decision and the first and second instance judgments based on these changes in circumstances.

The retrial court held that, regarding the Cited Mark 2, according to the facts found by this court, after the second instance judgment was made, the CNIPA has issued a publication of cancellation of the Cited Mark 2, and it no longer constituted an obstacle to the Disputed Mark’s registration.

However, regarding the determination of the Cited Marks in this case, Tencent claimed that it had explicitly abandoned the “Styling [industrial design]” service, so the Cited Mark 2 was the only cited mark in this case. In this regard, this court found that the Trademark Law did not clearly regulate regarding a trademark applicant’s “abandonment” of certain goods or services during an examination of a trademark application. The “abandonment” of the application for certain goods or service items is essentially where the applicant deletes the designated goods or services. According to the relevant provisions of the Trademark Law and the Regulations for the Implementation of the Trademark Law, if an applicant deletes certain designated goods or services, it shall follow the statutory procedures for amendment. Therefore, if a trademark applicant fails to perform such procedure, the so-called “waiver” statement has no legal effect and cannot change the scope of examination by the competent trademark registration authority. The range of goods or service items designated for use at the time of application shall be reviewed, and a review decision shall be made in accordance with the law. The trial scope of an administrative litigation for a trademark refusal is limited by the scope of the administrative action and should not exceed the scope of the administrative action being sued. On the premise that the administrative authority fails to take corresponding administrative actions on the application for deletion of designated goods or service items, no matter whether the application is filed in the name of abandoning the application for registration of the disputed mark on some designated goods or service items, or in other names, these actions are not subject to the trial scope of the people’s court because they have not been handled by administrative actions. The court should not directly accept the applicant’s application, in any form, for goods/service deletion during a court proceeding, and should not exclude, on such basis, theexamination of whether the Disputed Mark falls under the circumstances specified in Article 30 of the Trademark Law relative to all or some of the Cited Marks.

In the second instance of this case, Tencent stated that it had waived the application for the registration of the Disputed Mark on the reviewed service of “Styling [industrial design],” and claimed that the Cited Mark 1 no longer constituted an obstacle to the Disputed Mark, leaving Cited Mark 2 being the only obstacle. This claim lacks legal basis and should not be supported according to law.

On this point, the second instance judgment made an error in the application of the law, which was corrected in the retrial.

Since the CNIPA should make a re-examination decision, the retrial court cannot predict in this case what the status of the Cited mark 1 would be at the re-examination and whether it still constitutes a prior right obstacle to the registration of the Disputed Mark. Therefore, on the question of whether the Disputed Mark should be preliminarily approved and published, this court will not comment at this time. If Tencent was not satisfied with the re-issued decision made by the CNIPA, it can file a lawsuit in another case according to the law.

3. Overview of IPR crimes in the first half of 2023

The Supreme People’s Procuratorate recently released data showing that in the first half of 2023, procuratorial organs across China accepted, examined, and prosecuted 11,675 people for intellectual property infringement crimes, a year-on-year increase of 36.1%.

Among them, 10,384 people committed trademark infringement crimes, accounting for 88.9% of the intellectual property infringement crimes. Cases concerning cigarettes, liquor, food and health care products, daily chemical products, clothing, luggage, and other traditional areas of people’s livelihood that are closely related to daily life are still relatively frequent. In some cases, trademark infringement is intertwined with the crime of producing and selling counterfeit and inferior products, and with the crime of endangering food and drug safety. In addition, crimes of infringement of trademark rights are gradually spreading to emerging industries, and criminal activities such as selling refurbished electronic products as new products and manufacturing and selling counterfeit auto parts have increased. Some criminals take advantage of the characteristics of “immediacy” and “wide audience” of live broadcasts to sell fakes through “live streaming” and “mixing authentic and fake products.”

In addition, in digital environment, the dissemination of literary works, audio-visual works, musical works, computer software and other works is easier and rapid, accordingly the number of copyright infringement-related cases has increased, and the criminal methods have become more technical.

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