Judicial practice seeking a breakthrough
With the social and economic development over the recent years, the market practice has witnessed various issues relating to infringement upon the merchandising rights and an increasing number of domestic disputes relating thereto. However, due to a lack of support from the substantive law, the plaintiff’s cause of action is often varied, and it is difficult to get a satisfactory verdict.
The law will never be able to keep up with the pace of the times, as Cardozo, former Justice of the US Supreme Court has put it, “Hardly is the ink dry on our formula before the call of an unsuspected equity — the urge of a new group of facts, a new combination of events — bids us blur and blot and qualify and even, it may be, erase.”
The legislative process is relatively long, but the judicial practice will not pause for a moment and can only head forward in a positive and problem-saving direction.
It is noteworthy that in recent judicial practice, Chinese judges with courts at different levels have begun to address the issue of the merchandising rights of images and uphold more adequate protection. For example, in the “Ultraman Tiga” copyright dispute case, the court ultimately based its verdict on current Chinese laws and protected the character as a work of art, and at the same time held theoretical discussions over direction of the merchandising rights for virtual images.
In 2012, Shanghai courts concluded two cases related to disputes over establishment of copyright for works of art by Shanghai Animation Film Studio which were created before the implementation of the copyright law. In one case, the court held that at the time of the creation of the Monkey King animated image, the creator thereof was not an employee of the plaintiff Shanghai Animation Film Studio, and the creator had already previously published works of art incorporating images similar to the Monkey King. Therefore, the court found that the property right of the Monkey King animated image was jointly owned by the studio and the creator. In another case, the plaintiff was an employee of the studio, claiming ownership of copyright of “Calabash Boys” animated images.
Article 31 of China’s Trademark Law provides that “An application for trademark registration shall not prejudice any prior right of others.” There are different understandings over the content of “prior rights” both in practice and theory. Professor Zhang Ping of Peking University held that the current trademark law divides prior rights into three types: the first is other prior IP rights, including prior copyright, design patent, trade name right, packaging and decoration rights peculiar to well-known goods; the second is other prior civil rights, including the right to a corporate name, a portrait and a name; the third is other new rights, such as domain names and the merchandising rights.
Kong Xiangjun, chief judge of the IP Tribunal of the Supreme People’s Court, pointed out in his article Application of Creativity and Initiative of Trademark Law that “prior rights” set forth in Article 31 of the Trademark Law has been narrowly understood to include trade name right, copyright and few other rights, excluding prior right to a registered trademark and legal interests specifically set forth by law. In practice, the interests similar to the merchandising rights like virtual characters are not protected on the ground of lack of legal bases, or protected, to a certain extent, without justifiable citations. Lack of protection of such interests is obviously unjustified, and the evasive protection leads to “sometimes hot, sometimes cold and fickle behavior.”
Judging from the current judicial practice, the courts mostly adopt expanded interpretations for existing provisions in the trademark law to protect the interests relating to the merchandising rights in the absence of clear legal bases. Especially as regards the prominent phenomenon of trademark squatting, the courts have made full and flexible use of the relevant principles to effectively curb the phenomenon in the existing legal framework.
As regards protection of “prior rights” in Article 31 of the Trademark Law, Beijing courts proceeded from the legislative intent of the law and expanded application of the article.
For rights and interests which have not been expressly protected by laws, regulations and judicial interpretations, as long as the parties have legitimate rights and interests thereof, then the article can be cited to protect prior rights in order to prohibit acts of trademark squatting.
For example, in the trademark administrative case over “Bond in Chinese pinyin 007 BOND,” Beijing Higher People’s Court ruled that both the well-known film characters “007” and “JAMES BOND,” should be protected as prior rights. It is understood that this is the first time the merchandising rights of characters have been found to be a “prior right” as set forth in Article 31 of the Trademark Law.
In the Guo Jing v. Trademark Review and Adjudication Board (TRAB) case, the court did not apply Article 30 of the Trademark Law, but cited item (8) of Paragraph One of Article 10, which states signs which are “detrimental to socialist morality and custom or having other adverse effects” shall not be used as trademarks, because use of names of well-known characters as a registered trademark would mislead the public and lead to adverse effects.
In 2006, Guo Jing filed for the trademark “Guo Jingjing” in Chinese characters for goods in Class 25 before the China Trademark Office and was later rejected. Guo then applied for a review before the TRAB and was also rejected. The TRAB ruled that the trademark designated for use in clothing, swimwear, swimming cap and other goods would be easy to make the relevant public mistakenly believe that the trademark application has been authorized by the wellknown Chinese diver Guo Jingjing or there is some association therewith, thus having adverse effects of misleading the public. Therefore, the applying trademark is a sign having adverse effects as set forth in item (8) of Paragraph One of Article 10 of the Trademark Law, and Guo cannot obtain registration of the trademark. Dissatisfied with the ruling, Guo filed an administrative lawsuit before the court. Both the first and second instance courts upheld the TRAB ruling and did not support Guo’s claims.
In the case, the courts held that because of the high profile of public figures in the relevant public, if their names have once been registered and used as trademarks by others, the relevant public might believe that goods using the trademarks may have some association with the public figures, thereby causing confusion and misunderstanding. Therefore, registration of names of public figures by others will fall into the circumstance of “having adverse effects” as described by item (8) of Paragraph One of Article 10 of the trademark law, and thus cannot obtain registration for use.
In the case the TRAB held that the actual use of the applying trademark could easily cause harm to the lawful rights and interests of the vast number of consumers and famous athlete Guo Jingjing, but “lawful rights and interests” had not been described in detail. The courts held that whether the diver Guo Jingjing has used her own name for commercial activities will not affect the consequence of misleading the public by the applying trademark.
Some held that the grounds for the rulings of the TRAB’s and Beijing First Intermediate People’s Court’s are contrary to the views expressed by the Supreme People’s Court in 2008 in the “Chuanglian” in Chinese characters case. The Supreme People’s Court expressly stated in the case that violation of Article 10 of the Trademark Law is the absolute ground for cancellation of trademark registration, damaging public order or interests, or hindering trademark registration order. If the public misunderstand that the trademark has been authorized by a celebrity or has some association identified to has adverse effects as set forth in item (8) of Paragraph One of Article 10 of the Trademark Law, the trademark will be rejected or canceled on the absolute grounds, then trademarks which conflict with business names, copyright and other prior rights may also cause such misunderstanding. Therefore, it is debatable as to whether it is justifiable to use the possibility of public misunderstanding as the absolute grounds over authorization of the trademark from a celebrity.
Others held that traces of the merchandising rights can be found in the case, and we will have to wait and see if the judicial authorities will make some breakthrough in the merchandising rights on the basis of such cases.
(Translated by Wang Hongjun)
