Defining scope of ‘materially interested party’ in administrative trademark cases

By Jiang Fengtao and Wang Hua, Hengdu Law Offices
0
2438
LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link

The trademark registration system in China is a benefit-granting administrative act, with the approval of the registration of each trademark establishing a specific administrative act that is open to a legal action. Whether the registration of a trademark is approved or not has a decisive impact on the interests of the rights holder and the interests of persons not involved in the case.

江锋涛 Jiang Fengtao 恒都律师事务所 管理合伙人 Managing Partner Hengdu Law Offices
Jiang Fengtao
Managing Partner
Hengdu Law Offices

Accordingly, the Trademark Law brings in the concept of “materially interested party” as determined in the Administrative Permission Law and Administrative Procedure Law, specifying that a materially interested party may raise an objection, petition for cancellation or invalidation, or institute a legal action, giving such a party the same procedural and substantive rights as a trademark rights holder or prior rights holder, so as to comprehensively cover subjects of rights to the greatest extent possible and avoid improper permission granting acts.

In the Administrative Permission Law and Administrative Procedure Law, the term “materially interested party” normally indicates a non-specific unit or group, with the key lying in determining whether the specific administrative act has the consequence of directly causing damages to rights and interests. The Interpretations of the Supreme People’s Court of Several Issues Concerning the Application of the Law in the Trial of Civil Disputes Involving Trademark Rights specify that “materially interested party” includes licensees under registered trademark licence contracts and legitimate successors of the registered trademark property rights. However, the intent of the interpretations lies in resolving civil disputes involving trademark rights, and on the basis of registered trademark rights, the licensees and legitimate successors enumerated are materially interested parties with a direct relation to registered trademark rights.

王华 Wang Hua 恒都律师事务所 律师 Lawyer Hengdu Law Offices
Wang Hua
Lawyer
Hengdu Law Offices

However, in administrative trademark cases, prior trademark rights, whether as a result of filing or registration, are only one of the causes of disputes. There are a lot of cases in relation to objection, revocation and invalidation of prior trademark rights. The object of rights in such cases differs from the registered trademark rights specified in the interpretations, and consequently the interpretations should not be applied to determine the materially interested party. There are as yet no regulations specifying the criteria for defining “materially interested party” in administrative trademark cases, but the Trademark Law, implemented from 1 May 2014, specifies that subjects that have the right to raise objections or request invalidation in accordance with the relevant provisions are limited to “prior rights holders and materially interested parties”. Accordingly, the definition of the scope of “materially interested party” is a matter of urgency. Certain cases in judicial practice, two of which are discussed below, offer some references for the definition.

In 2008, Las Vegas Sands Corp instituted an action to revoke the trademark 威尼斯 (the characters for Venice) and device, one of the grounds being that The Venetian Group and The Venetian Macau, affiliates of Sands, made prior use of the trade name “威尼斯人” (the characters for The Venetian), which has certain popularity, meaning that the registration of the disputed trademark infringed upon its rights to its trade name.

Following its examination, the Trademark Review and Adjudication Board (TRAB) revoked the disputed trademark on the basis that it could damage the interests of Sands’ affiliates. After the case entered into administrative litigation procedure, the courts of first instance and appeal made two completely different judgments. Both courts held that the “materially interested party” specified in article 41 of the 2001 version of the Trademark Law should be understood as a party with direct material interests, and should exclude affiliates with an indirectly controlling relationship. Sands was not the holder of the trademark 威尼斯 and could not exercise rights on behalf of its affiliate. Accordingly, Sands was not the proper subject of rights to institute an action on the grounds of prior right of the trade name 威尼斯人.

Whereas, in the appeal of the 采埃孚 (the Chinese characters for “ZF” of ZF Friedrichshafen) trademark case concluded by the Supreme People’s Court in July 2014, the court held that current laws and regulations do not clearly define the scope of “materially interested party” as specified in article 41 of the Trademark Law. The Supreme Court held that although “materially interested party” usually appears in the form of licensees and legitimate successors in judicial practice, the scope of the term should not be restricted to this, and any subjects that have support evidence to demonstrate that they have material interests in cases may also submit revoke applications pursuant to article 31 of the Trademark Law. Furthermore, it held that ZF Lenksysteme of Germany had the right, based on the use of the trade name “采埃孚” by Shanghai and Liuzhou ZF, to have “采埃孚”, as a prior trade name right, protected as a legal interest.

It seems difficult to understand why two cases that share identical legal bases reached two completely different conclusions. However, when we take a second look and make a further analysis, it is not hard to understand. In the Venice case, Sands was not operating with the trade name of “威尼斯人”, i.e. The Venetian. Although it could demonstrate that Sands had the controlling power over its affiliates, the use of the trade name “威尼斯人” by the affiliates was clearly unconnected with Sands’ trade name.

By contrast, in the ZF case, Shanghai ZF, Liuzhou ZF and ZF Germany are all using the same trade name. The former two companies were invested in and established by ZF Germany, and the use of the trade name was obviously authorised by ZF Germany. Furthermore, the character combination “采埃孚” is highly original because it is inconsistent with China’s language conventions. It would cause huge damage to ZF Germany if it were permitted for other entities to register the trademark in the same industry. Under this circumstance, the “materially interested party” had substantial rights and interests in this case.

Judicial practice will eventually dispel the uncertainty about the definition of “materially interested party” and the definition will be written in law. Until then, we should follow the precedents that require us to adopt judicial practice based on results, and not be restricted to authorisation, licensees or other formal elements. Attention should be paid to demonstrate the existence of substantial damages of the party at issue, which will achieve equity and fairness of the law.

Hengdu_Logo

北京市东城区王府井东街8号澳门中心7层

邮编:100006

7th Floor, Macau Center

No.8 Wangfujing East Street

Dongcheng District, Beijing 100006,China

电话 Tel:+86 10 5760 0588

传真 Fax:+86 10 5760 0599

电子邮箱 E-mail:

hengdulaw@hengdulaw.com

www.hengdulaw.com

LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link