Recently the Supreme People's Court delivered a ruling to revoke the first- and second-instance judgments, and the decision delivered by the Trademark Review and Adjudication Board of the State Administration for Industry and Commerce of China (TRAB) in respect to the administrative dispute over the trademark opposition review between Quanyou Furniture Co., Ltd. (Quanyou Furniture) and the TRAB as well as Chengdu Quanyou Electric Co., Ltd. (Quanyou Electric). The ruling held that the cited trademark, "Quanyou in Chinese characters and QUANYOU," had been a well-known trademark prior to the application date of the opposed trademark, and Article 13 (2) of China's Trademark Law should be applied, thus affirming all claims of Quanyou Furniture in the retrial. So far, the dust has finally settled for the administrative trademark case that lasted for eight years from administrative proceedings throughout to the judicial proceedings.
However, for the retrial applicant Quanyou Furniture (the plaintiff in the first instance and the appellant in the second instance), the whole process had been "thrilling." Its claims were all dismissed including the first opposition application before the China Trademark Office (CTMO), the opposition review by the TRAB, and the administrative lawsuits before the first-instance and secondinstance courts. It was a 180 degree turn for Quanyou Furniture as the ruling of the Supreme People’s Court guaranteed a final victory in its battle for the interests of the well-known trademark.
From trademark opposition application to trademark opposition review
According to reports, Quanyou Furniture, founded in 1986, is the largest panel furniture manufacturer in China. It engages in design, manufactur ing and marketing of panel furniture and is famous Final Victory in Retrial of “Quanyou” Trademark after Twists and Turns in the furniture industry. The application of the cited trademark, "Quanyou in Chinese characters and QUANYOU," No. 1993755, was filed on October 8th 2001 and the approved time limit for the exclusive right to use between January 14th 2003 and January 13th 2013 on goods of furniture and mattresses in Class 20. The initial applicant is the predecessor of Quanyou Furniture.
The application of the opposed trademark, "Quanyou in Chinese characters and QUANYOU," No. 4460324, was filed before the CTMO by the legal representative of Quanyou Electric, Yan Liang, a third party of this case, on January 12th 2005. The trademark was designated for goods in Class 11, such as general lighting, automobile lights, cooking equipment and installations, cool ing appliances and installations, ventilation (air conditioning) installations and equipment, water heaters www.chinaipmagazine.com 7-8/2014 China IP 41 (apparatus), water intake equipment, showers, sterilizers, and gas lighters. The opposed trademark was transferred to Quanyou Electric upon approval by the CTMO on January 10th 2011.
After the opposed trademark was preliminarily approved and published, Quanyou Furniture and Li Haiou, a person not involved in this case, applied to oppose the application before the CTMO within the statutory opposition period. On June 23rd 2010, the CTMO rendered the No. 12525 decision, holding that: (a) The goods or services designated for use by the opposed trademark are not similar to those of any previously registered trademarks including the cited trademark; (b) The trademark, “Quanyou in Chinese characters and QUANYOU,” No. 3745432, which Li Haiou applied for registration and cited, was opposed and failed to get approval from the CTMO, therefore, the trademark has lost rights of a previously filed trademark; and (c) There is insufficient evidence to support claims by Quanyou Furniture and Li Haiou that Quanyou Electric had reproduced, imitated or forestalled the cited trademark. Based on the above, the CTMO ruled to approve the registration of the opposed trademark.
Dissatisfied with the decision, Quanyou Furniture filed for an opposition review before the TRAB, claiming that prior to the application date of the opposed trademark, the cited trademark had been a well-known trademark, thus the registration of the opposed trademark has constituted a violation of Article 13 (2) of the Chinese Trademark Law; the registration would mislead the public and damage its interests, therefore, the registration of the opposed trademark should not be approved.
Upon examination on October 13th 2011, the TRAB rendered the ShangPingZi [2011] No. 24102 decision, finding that: (a) The opposed trademark and the cited trademark are similar in overall design, but the opposed trademark is used on goods in Class 11, while the cited trademark is used on goods in Class 20, and their goods are not similar because they differ significantly over functions, purposes, raw materials, production departments and sales outlets; the two trademarks don’t constitute similar trademarks used for identical or similar goods as set forth in Article 28 of the Chinese Trademark Law. (b) Quanyou Furniture, in its claim for rights under the second paragraph of Article 13 (2) of the Chinese Trademark Law, should produce appropriate evidence to demonstrate the duration, extent and geographical coverage of the use and publicity of the cited trademark prior to the application date of the opposed trademark in this case in accordance with different trademark cases, specific circumstances of individual cases and provisions of Article 14 of the Chinese Trademark Law. The vast majority of evidence submitted by Quanyou Furniture does not have a specified time, or the time specified is later than the application da t e o f t h e opposed trademark. The evidence that the trademark cited was declared as a wellknown trademark by the CTMO on March 5th 2008 is sufficient enough to prove that the cited trademark had been protected as a well-known trademark on furniture, but the date of such declaration is much later than the application date of the opposed trademark. Therefore, the evidence submitted by Quanyou Furniture is insufficient to prove that the cited trademark had been a well-known trademark prior to the application date of the opposed trademark. In addition, the two trademark opposition decisions rendered by the CTMO in 2009 are incapable of serving as convincing bases against the registration of the opposed trademark. Based on the above, the application for registration of the opposed trademark does not fall into the circumstances as set forth by Article 13 (2) of the Chinese Trademark Law. (c) The existing evidence submitted by Quanyou Furniture is insufficient to prove Quanyou Furni t u re has marketed goods or services which are identical with or similar to those of the opposed trademark prior to the application date of the opposed trademark. Therefore, it cannot be determined that the application for registration of the opposed trademark will likely harm the prior trade name rights of Quanyou Furniture. The application for registration of the opposed trademark does not fall into any circumstance set forth by Article 31 of the Chinese Trademark Law. In addition, Quanyou Furniture’s claims that the application for registration of the opposed trademark has gone against the good faith principle advocated by Article 4 of the General Principles of the Civil Law of China and provisions on regulating market competition in Article 2 of China’s Unfair Competition Law will not be upheld due to lack of facts. Based on the aforesaid, the TRAB ruled to approve the registration of the opposed trademark.
From First Instance to Second Instance
Dissatisfied with the ruling , Quanyou Furniture filed a lawsuit before Beijing First Intermediate People’s Court (First Instance Court) , requesting to revoke cover story China Intellectual Property 42 China IP 7-8/2014 the No. 24102 TRAB decision. In the first-instance proceeding, Quanyou Furniture said it would not expressly challenge the reasoning of the TRAB decision in respect of Articles 28 and 31 of the Chinese Trademark Law.
The First Instance Court held that the core issue of the case is whether the application for registration of the opposed trademark has violated Article 13 (2) of the Chinese Trademark Law, which provides that in the event of an application for registration of a trademark that is a reproduction, imitation, or translation of another’s well-known trademark registered in China on different or dissimilar goods, and consequentially is likely to create confusion and cause damage to the interests of the registrant for the well-known trademark, the application shall be rejected and the trademark shall be prohibited from use. One prerequisite for the application of this provision is that the cited trademark of Quanyou Furniture had been a well-known trademark prior to the application date of the opposed trademark. In this case, among the material evidence submitted by Quanyou Furniture to prove the well-known status of the cited trademark, the material used to prove the cited trademark had been declared as a well-known trademark by the CTMO later than the application date of the opposed trademark; some material evidence, such as the certification from China Quality Certification Center Sichuan Appraisal Center and some relevant trademark prosecution certificates don’t relate to the use of the cited trademark, and other materials, such as media agency contracts and certification from the Chamber of Commerce of Sichuan Furniture Industry, cannot prove the extent of awareness, duration and use in the relevant public of the cited trademark prior to the application date of the opposed trademark. Therefore, the evidence submitted by Quanyou Furniture cannot prove that the cited trademark had been a well-known trademark prior to the application date of the opposed trademark. Based on the above, the First Instance Court ruled to uphold the No. 24102 TRAB decision. Quanyou Furniture was dissatisfied with the firstinstance ruling and appealed to Beijing Higher People’s Court (Second Instance Court).
The Second Instance Court also held that the core issue is whether the application for registration of the opposed trademark has violated Article 13 (2) of the Chinese Trademark Law. The Second Instance Court held that the appeal claims of Quanyou Furniture are untenable and should not be upheld. Therefore, the Second Instance Court dismissed the appeal and upheld the original ruling.
Final ruling from the Supreme People's Court
Quanyou Furniture was dissatisfied with the second-instance ruling and appealed to the Supreme People’s Court for a retrial. On December 21st 2012, the Supreme People’s Court issued the (2012) ZhiXingZiDi No. 78 administrative decision to bring the case up for a retrial.
Quanyou Furniture claimed in its retrial application that the evidence it submitted during the trademark examination proceeding is sufficient to prove that the cited trademark had been a well-known trademark prior to January 1st 2005, the application date of the opposed trademark. Quanyou Furniture provided further relevant evidence during the litigation proceedings. However, the TRAB, First Instance Court and Second Instance Court failed to take full account of the aforesaid evidence and imposed too harsh criteria on the declaration of a well-known trademark. The class of goods for the opposed trademark and that of the cited trademark are closely related.The initial applicant of the opposed trademark Yan Liang, also the legal representative of Quanyou Electric, has forestalled, out of bad faith, applications of many well-known trademarks, and the colors and fonts of the opposed trademark actually used by Quanyou Electric are all basically identical with the details of the cited trademark. Therefore, Yan has an obvious bad faith intention to exploit the good reputation of the cited trademark, which will suffice to mislead the public and damage the trademark rights of Quanyou Furniture. The CTMO and the people’s courts have declared in similar cases that the cited trademark had been a well-known trademark and given cross-class protection; therefore, the case should have the same ruling. Based on the above, Quanyou Furniture requested to revoke the TRAB decision and the first and second instance judgments, and ordered the TRAB to make a fresh decision.
The Supreme People’s Court held that the core issues of this case are as follows:
(1) Whether the cited mark had been a well-known trademark prior to the application date of the opposed trademark.
Quanyou Furniture claimed that the cited trademark had been a well-known trademark prior to the application date of the opposed trademark, therefore it should have the burden of proof in accordance with Article 14 of the Chinese Trademark Law. Quanyou Furniture has provided relevant evidence during the trademark examination, the first instance, the second instance and retrial proceedings, in a bid to demonstrate the reputation of the cited trademark prior to the application date of the opposed trademark. Among them, the material evidence submitted during the trademark examination proceeding, such as China Famous Brand Certificates and Sichuan Famous Brand Certificates, can directly prove the reputation of the cited trademark prior to the application date of the opposed trademark, and should be admissible.
As regards whether the evidence of use of the cited trademark after the application date of the opposed trademark should be admissible, the Supreme People’s Court held that a well-known trademark should be identified in accordance with the reputation of the trademark at a particular point in time, but the reputation always depends on the cumulative process of the entire status of the trademark, and this process usually keeps going on continuously. Therefore, in identifying the trademark reputation at a particular point in time, generally the relevant facts should not be examined in isolation and one-sidedly. If necessary, the facts will be placed in the cumulative process of the trademark reputation, and the evidence of use of the trademark before and after the particular point in time should be comprehensively analyzed in a bid to determine the accurate degree of the trademark reputation. Therefore, using the trademark capable of further proving the trademark reputation after a particular point in time should also be considered appropriately. In this case, though some material evidence submitted by Quanyou Furniture came into being after the application date of the opposed trademark, they come relatively close to the particular point in time and are capable of proving the reputation of the cited trademark at the time of application of the opposed trademark, therefore they should be considered appropriately. The TRAB, First Instance Court and Second Instance Court set the application date of the opposed trademark as a line in time and disregarded all material evidence submitted by Quanyou Furniture to prove the reputation of the cited trademark after the application date of the opposed trademark, which is inappropriate and should be corrected.
With regard to the issue of whether the material evidence which did not clearly mark the cited trademark, but clearly marked the business name or the abbreviated name of Quanyou Furniture should be admissible, the Supreme People’s Court held that both the name and trademark of an enterprise are part of its commercial identification system and jointly carry its reputation and fame. In particular, if the word mark and business name of the enterprise are the same, both will have a relatively strong correlation. In this regard, the use of the trademark and business or trade name, and their reputation will impact and compliment each other. Therefore, in recognizing the reputation of a word mark whose main content is the trade name of an enterprise, the use and reputation of the name and trade name of the enterprise should be taken into appropriate consideration, if necessary. In this case, the main part of the cited mark, “Quanyou in Chinese characters,” and the trade name of Quanyou Furniture are entirely the same, therefore, material evidence submitted by Quanyou Furniture, such as audit reports, tax certification, advertising contracts, and broadcast monitoring records, which didn’t clearly show the cited mark, but marked in different forms the full name and abbreviated name of Quanyou Furniture, should be taken into appropriate consideration. Therefore, the TRAB, First Instance Court and Second Instance Court have not sufficiently identified and considered such evidence, which should also be corrected.
A well-known trademark is one that enjoys a high degree of market reputation and is widely known to the relevant public. In this case, if we take the evidence submitted by Quanyou Furniture into full consideration, the evidence is capable of demonstrating the cited trademark had been well-known to the relevant public prior to the application date of the opposed trademark. If the circumstances of this case are concerned, it had been insufficient to remedy the trademark rights of Quanyou Furniture and maintain the fair competition market order. Accordingly, it should be declared that the cited trademark had been a well-known trademark prior to the application date of the opposed trademark.
The TRAB, First Instance Court and Second Instance Court had set requirements too high for evidence to support the reputation of the cited trademark, failed to fully consider the consistency of the main part of the cited mark and the trade name of the holder of the cited mark, failed to appropriately consider the cumulative continuity of the use and reputation of the cited trademark before and after the application date of the opposed trademark, and failed to recognize the fact that the cited trademark had been a well-known trademark prior to the application date of the opposed trademark, which is inappropriate and should be corrected.
(2) The issue of whether the opposed trademark has constituted a reproduction, imitation or translation of the cited trademark, cover story China Intellectual Property 44 China IP 7-8/2014 would mislead the public and likely damage the interests of Quanyou Furniture.
The scope of cross-class protection of a well-known trademark should correspond to its significance and reputation. The more significant a wellknown trademark is and the higher reputation the well-known trademark has, the greater scope of protection will be given. Specific circumstances of each case should be considered to reasonably determine the scope of cross-class protection of the wellknown trademark in line with the criteria that, “whether confusion will ensue and damage will be done to the interests of the registrant for the wellknown trademark.”
In this case, the opposed trademark and the cited trademark are the same word mark, “Quanyou in Chinese characters and QUANYOU,” both have basically the same font, proportion and design with minimal difference, therefore, they should be recognized as the same trademark. Upon application of the opposed trademark, the cited trademark had been widely known to the relevant public, particularly because it enjoys high reputation in Sichuan Province. Yan Liang, the applicant of the opposed trademark and also the legal representative of Quanyou Electric, should have been aware of the reputation of the cited trademark at the time of application for registration of the opposed trademark. In consideration of the consistence of the factual use of the opposed trademark and that of the cited trademark, it can be determined that Yan had the apparent intention of bad faith to exploit the cited trademark by filing for registration of the opposed trademark. The designated goods of the cited trademark and those of the opposed trademark belong to daily commodities, and both overlap partly in the public and sales outlets, relating to each other to a certain degree. Based on the aforesaid, the application of the opposed trademark is sufficient to mislead the relevant public and harm the interests of Quanyou Furniture, and violate Article 13 (2) of the Chinese Trademark Law; therefore, its application should not be approved. The rulings for the approval and registration of the opposed trademark by the TRAB, First Instance Court and Second Instance Court do not comply with the spirit of the trademark law to encourage honest business operations and curb bad faith exploitation, and go against the legislative intent to enhance protection of well-known trademarks, therefore, the rulings should be corrected.
In summary, the Supreme People’s Court rendered the final judgment to revoke the administrative rulings of the First Instance Court and Second Instance Court and TRAB decision, and ordered the TRAB to render a new ruling.
The significance of Quanyou case
It is preliminarily reported that the Supreme People’s Court has, for the first time, found for a well-known trademark in an individual case on its own initiative in this case, therefore, this case had been recognized as a benchmark in significance.
It is worth mentioning that the result of this case has played a decisive role in that of the subsequent lawsuit filed by Quanyou Furniture against Foshan Quanyou Sanitary Ware Co., Ltd. (Quanyou Sanitary) in respect to trademark infringement and unfair competition. In the lawsuit, Quanyou Furniture won the firstinstance proceeding and was awarded 14 million yuan in compensation; claims of Quanyou Sanitary lost strong support due to the declaration and crossprotection of the cited trademark as a well-known trademark by the Supreme People’s Court which has revoked the rulings of the TRAB, First Instance Court and Second Instance Court for the approval and registration of the opposed trademark (which was licensed for use to Foshan Quanyou by Quanyou Electric).
Zhang Yazhou, an attorney at law with Unitalen Attorneys at Law representing Quanyou Furniture in this case, said the bad faith registration of Quanyou Electric has caused huge losses to the business reputation of Quanyou Furniture, but also tremendously misled the relevant public. However, the final victory has effectively protected the publicity of the trademark of Quanyou Furniture and safeguarded its legal interests.
Building a well-known brand and creating its own IP rights had been the only way for the sustainable development of China’s economy. A number of local brands like Quanyou start from scratch and grow from a small business to a large one, their development processes are also doubly difficult, so we need to cherish them more. Providing protection for them represents the respect for the fruits of honest labor.
Zhang said, in the current social and economic life, bad faith exploitation and imitation of well-known brands had been running rampant. Some speculators cling to the idea of, “finding shelter from a big tree with spreading canopies,” do everything possible through this seemingly legitimate applications for registration of trademarks, indiscriminately encroach on the reputation of well-known brands, deceive the relevant consumers and snatch large and illegal profits.“Obviously, the Supreme People’s Court aims to strongly convey, through the hearing of this case, the judicial spirit of containing bad faith filings and strengthening protection of well-known trademarks, which will also become a landmark case in the judicial protection of well-known trademarks,” said Zhang.
(Translated by Wang Hongjun)
