Source:(2018) ZUIGAOFAMINZAI NO. 396|Author:pmoed5141|Publish time: 2019-12-10|25 Views
Bad-faith trademark registrations frequently take place with the rapid development of Chinese market economy. Although the word “bad-faith” or “malicious” is not clearly defined in the Trademark Law of China, the legislative intention to prevent bad-faith or malicious registration of trademarks is currently embodied in at least the following articles in the Trademark Law: Article 13 (intended to protect well-known trademarks), Article 15 (agents or representatives as trademark squatters), Article 32 (preemptive registration of a trademark that is already in use by another person and has certain influence), and Article 44 (registration obtained by fraudulent or other illegitimate means). The Supreme People’s court has, by various interpretations and particularly guiding cases, classified trademark hoarding without intending to use the registering the trademark into bad-faith registration under Article 44 (“registration obtained by other illegitimate means”), see (2017)zuigaofaxingshen No.4191. The SPC clearly showed its intention to curb the act of trademark hoarding in this case by additionally referring to the fundamental principle of “honesty and good-faith” in civil jurisdiction, and affirmed that the plaintiffs maliciously brought lawsuits against the defendant.
Case Background
Guangzhou Compass Exhibition Service Co., Ltd. (referred to as Compass Company) and Guangzhou Zhongwei Enterprise Management Consulting Service Co., Ltd. (referred to as Zhongwei) co-own Trademark No. 10619071 in class 25. UNIQLO Trading Co., Ltd. (referred to as UNIQLO) and Fast Retailing (China) Trading Co., Ltd. (referred to as Fast Retailing Company) jointly operate the “UNIQLO” brand and have franchised stores throughout China. On November 3, 2012, Fast Retail Co., Ltd. applied to the Trademark Office of China for the extension of the trademark application No. G113330, which was rejected by the Trademark Office on Apr. 15, 2014. UNIQLO used the logo on its premium down jackets. Compass Company and Zhongwei Company filed 42 trademark infringement lawsuits against UNIQLO or Fast Retailing Company and different stores in Beijing, Shanghai, Guangdong and Zhejiang. According to the facts ascertained by the court, Zhongwei Company and Compass Company hold more than 2,600 registered trademarks, some of which are highly similar to those of well-known trademarks. Compass Company and Zhongwei Company have publicly sold the trademarks in dispute online via an entity named “Huawei Trademark Transfer Online”, and offered to sell the trademarks to UNIQLO at a price of RMB 8 millions. During the first-instance trial, the Fast Retailing Company filed an invalidation application with the Trademark Review and Adjudication Board for the registered trademark in dispute on Mar, 31, 2014.
Upon examination, the first-instance court, Shanghai No. 2 Intermediate People’s Court, ruled that UNIQLO Company infringed the disputed trademark rights, and rejected the other claims raised by Compass and Zhongwei. Both parties were dissatisfied and filed an appeal. The second-instance court, Shanghai Higher People’s Court, dismissed the appeal and affirmed the first-instance judgment. UNIQLO was dissatisfied and applied to the Supreme People’s Court for retrial. During the retrial of the Supreme People’s Court, it was found that the trademark at issue was declared invalid upon the trademark invalidation procedure and administrative litigations of both instances. Upon retrial, the Supreme People’s Court vacated the judgements of both the first-instance court and the second-instance court, and rejected all of the claims filed by Compass and Zhongwei.
It is worthwhile to note Beijing IP court’s comments in the first-instance administrative litigation judgement upon Fast Retailing Company appealing the Board’s Decision to it (the Board maintained the trademark at issue valid). Beijing IP court said in the Judgement: Zhongwei Company filed 1931 trademark applications, and Compass Company filed 706. Some of the trademarks are highly similar to those of well-known trademarks. The compass company and Zhongwei Company have been publicly sold on the Huawei trademark transfer website, trying to earn RMB 8 millions from Fast Retailing Company. Compass and Zhongwei go far beyond their scope of business, and register and warehouse a great number of trademarks, which they are not intended to use and without reasonable or justified reasons. They tried to make profits by transferring these trademarks, and filing litigations, which seriously disrupts the order of trademark registration, damages the public interest, improperly occupies social public resources. The registration of Compass and Zhongwei constitutes “registration of a trademark has been acquired by fraud or any other unfair means” stipulated in the first paragraph of Article 41 of the Trademark Law. Therefore, Beijing IP Court vacated the Board’s Decision, and sentenced the Board to re-issue a new decision. Beijing Higher People Court held the same opinion upon Compass and Zhongwei appealing the case. Therefore, before the SPC rendered a final judgement, the trademark at issue was declared invalid on the grounds of bad-faith registration.
The SPC affirmed Beijing Higher People’s court judgement, and put forward the following opinions:
The Trademark Law of China (revised in 2013) clearly states in Article 7, “when applying for the registration of a trademark and using a trademark, the principle of good faith shall be followed”. Besides, the fundamental principle of “Honesty and Good-faith” in Civil Law could go back to the year of 1986. This principle should also apply to the trademark matters. To apply for registration and use of trademarks, we should follow the principle of honesty and good-faith.
The SPC pointed out that some of the current business entities violate the principle of good faith to warehouse a large number of registrations, some of which are similar to some well-known trademarks or trade names, and attempt to make profits by offering to sell these trademarks at high prices. Compass and Zhongwei are one of these business entities. What’s even worse is that after they failed to sell the trademarks at issue at high prices, they started to institute a series of lawsuits against UNIQLO or Fast Retailing Company, and asked the court to stop the selling and grant monetary damages. Their behavior clearly violates the principle of good faith, and they attempted to use judicial resources to obtain illegitimate interests in trademark rights.
The Supreme People’s Court has clearly expressed its view that the acts of maliciously obtaining and using trademark rights to obtain illegitimate interests are not protected by law. It is typical for building a healthy and orderly trademark order, purifying the market environment, and curbing the use of improperly obtained trademark rights for malicious litigation.