With authorities in India and China keen to assist companies in protecting their marques, recent changes to trademark law are worth studying. Here we compare the two jurisdictions
Business houses the world over spend unimaginable amounts of money on promoting and popularizing their brands. In addition to promotional efforts, a brand gains recognition and goodwill by observing excellent quality standards and effectiveness, which requires an enormous investment of resources including infrastructure, capital, labour and time.
With the passage of time, certain brands acquire such reputation and distinctiveness that they become household names and deserve protection of the highest order. Consequently, unlike other brands or trademarks that are entitled to protection from subsequent identical or similar marks being used only for identical or similar products or services, such brands merit protection across all categories of goods and services.
By virtue of many factors including duration, extent, promotional measures and geographical use of such brands, they carve a niche for themselves and come to be known as “well-known” trademarks.
The concept of well-known trademarks was introduced into Indian legislation as far back as 1999, in compliance with the provisions of treaties such as the Trade Related Aspects of Intellectual Properties (TRIPS) and the Paris Convention, to which India is a signatory. The Trade Marks Act, 1999, defines a “well-known trademark” to mean “in relation to any goods or services, a mark that has become so to the substantial segment of the public, which uses such goods or receives such services that the use of such mark in relation to other goods or services would be likely to be taken as indicating a connection in the course of trade or rendering of services between those goods or services and a person using the mark in relation to the first mentioned goods or services.”
Under the provisions of the Trade Marks Act, the registrar is obliged to protect a well-known mark from subsequent identical or similar marks. The registration of a trademark could be refused by the registrar, either on examination or upon receiving opposition from the registered proprietor of an earlier identical or similar well-known trademark, on the ground that the later mark is identical with or similar to the earlier mark, even if the later mark is to be registered for goods or services that are not similar to those for which the earlier trademark is registered, and to the extent that use of the later mark without due cause would take unfair advantage of, or be detrimental to, the distinctive character or repute of the earlier trademark.
The Trade Marks Act allows the registrar to take into account any fact that he considers relevant for determining whether a mark is a well-known trademark, including the following:
- The knowledge or recognition of that trademark in the relevant section of the public, including knowledge in India obtained as a result of promotion of the trademark;
- The duration, extent and geographical area of any use of that trademark;
- The duration, extent and geographical area of any promotion of the trademark, including advertising or publicity and presentation, at fairs or exhibitions of the goods or services to which the trademark applies;
- The duration and geographical area of any registration of, or any application for, registration of that trademark under this act to the extent they reflect the use or recognition of the trademark;
- The record of successful enforcement of the rights in that trademark, in particular the extent to which the trademark has been recognized as a well-known trademark by any court or registrar under that record.
However, the act provides that the registrar must not require any of the following as a condition for determining a well-known trademark:
- That the trademark has been used in India;
- That the trademark has been registered;
- That the application for registration of the trademark has been filed in India;
- That the trademark: (a) is well known in; or (b) has been registered in; or (c) in respect of which an application for registration has been filed in any jurisdiction other than India; or
- (That the trademark is well-known to the public at large in India.
In order to determine whether a trademark is known or recognized in a relevant section of the public, the registrar is required to take into account:
- The number of actual or potential consumers of goods or services;
- The number of persons involved in the channels of distribution of the goods or services;
- The business circles dealing with goods or services.
Until March 2017, a well-known mark could be declared as such by the Registrar of Trade Marks or the courts only during opposition or infringement and passing off proceedings. There was no statutory procedure available to register a trademark as a “well-known” trademark. Based on such pronouncements made by the registrar or the courts of law, the Trade Marks Registry has published a list of 81 well-known trademarks on their website.
In March 2017, the government of India brought into force the new Trade Mark Rules, 2017, with a provision introduced to enable proprietors to register their trademarks as well-known trademarks provided they fulfilled the statutory meaning of well-known trademarks. Guidelines for registration of well-known marks were published shortly thereafter, in May 2017.
As per rule No. 124 of the Trade Mark Rules 2017 and the guidelines, an application for registration of a well-known trademark is required to be filed in the prescribed format along with the prescribed fees. The application has to be accompanied with documents including:
- A statement of case describing the applicant’s rights in a trademark and its claim that the trademark is a well-known mark;
- Evidence in support of the applicant’s rights and claim, such as the annual sales turnover, evidence regarding related publicity, advertisements and expenses, knowledge of the mark amongst the public in India and other countries of the world, etc.; and
- Details of successful enforcement of rights in the trademark where the mark was recognized as well-known by any court in India, or by the Registrar of Trade Marks.
Under the Trade Mark Rules, the Registrar of Trade Marks is entitled to invite objections from the general public before determining a trademark as well known, and objections are to be filed within 30 days from the date of invitation of such an objection. If the trademark is determined by the registrar to be well known, it will be published in the Trade Marks Journal and included in the list of well-known marks maintained by the Trade Marks Registry. In determining whether a trademark is well-known or not, the registrar will be guided by the factors laid down in the Trade Marks Act, 1999, described above.
The above-mentioned provision introduced in the new Trade Marks Rules, 2017, comes as a boon, particularly to several multinational corporations seeking declarations and blanket protection for their well-known trademarks in India.
A well-known mark having statutory registration will be cited as conflicting by the Trade Marks Registry against subsequent identical or similar marks applied for registration across the categories of goods and services. Obtaining statutory registration of a trademark as “well known” will also help its proprietor in infringement and passing-off actions in India by lowering the burden of proving knowledge and popularity of its trademark amongst members of the public.
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Intellectual protection must be one of the keywords of economic development in China in recent years. China is exploring ways to better protect trademarks and other intellectual property, and this process has been fruitful.
LEGISLATION, AUTHORITY UPDATE
President XI Jinping has reiterated the importance of intellectual property protection. Recently, in an opening speech at the BOAO Forum for Asia Annual Conference 2018, Xi emphasized that the protection of IP was crucial for the Chinese economy, and it was an actual need of both foreign and Chinese companies.
Similar opinions have been repeatedly addressed in public or at internal conferences by the central government in 2017, and even earlier.
The president’s speeches reveal China has been making great efforts to secure trademarks and other intellectual property. We have seen significant development in laws and regulations, which aimed to improve the protection of IP. In the trademark field, the changes in legislation below cannot be ignored:
· The judicial interpretation provisions of the Supreme People’s Court (SPC) on Several Issues concerning the Trial of Administrative Cases Involving Trademark Right Licensing and Confirmation was published in January 2017. The judicial interpretation addresses specific issues such as distinctiveness, well-known trademarks, the conflict between a trademark application and other’s prior rights, etc.
· The Anti-Unfair Competition Law has been amended. It was revised and came into force on 1 January 2018, stipulating that acts of confusion, such as using another’s influential product name or trade name, will constitute unfair competition. Such a revision is helpful to enterprises regarding anti-unfair competition and brand protection.
· China released its Opinions on Strengthening the Reform and Innovation in the Field of Intellectual Property Trials in 2017. Article 2 of the opinions emphasizes that the judiciary should focus on solving the problem of “low compensation” in IP infringement litigation. For serious infringement cases, the judiciary will impose harsher punishment measures and increase the amounts of compensation.
· The SPC released its Outline of the Juridical Protection of Intellectual Property in China (2016-2020). The outline has set the goal of judging IP cases in a more fair and efficient way, improving litigation evidence rules and establishing a better infringement compensation system, etc.
· The administrative department for IP issues will be reorganized. In 2018, China is in the process of reorganizing the State Intellectual Property Office (SIPO) to improve IP protection. The reformed SIPO will be responsible for the registration and administrative adjudication of trademarks, patents and geographical indications of origin.
· In addition to three IP Courts in Beijing, Shanghai, and Guangzhou, IP Tribunals were set up in 10 cities covering seven provinces across China in 2017.
DEVELOPMENTS IN LEGAL PRACTICE
Along with updated regulations and reformed IP authorities, the authors have also have witnessed changes in legal practice for trademark rights establishment and enforcement.
Bad faith in trademark matters. The most remarkable development is China has placed more attention on the regulation of bad-faith trademark registrations. After the amendment of the Trademark Law in 2013, bad faith infringements have become an important factor when determining trademark cases. In recent years, legal practice has fully revealed the application of such legislation.
An outstanding development regarding bad-faith issues is the opinion of the SPC. In a trademark infringement case that was based on squatting on the plaintiff’s trademark registration, the SPC judged the plaintiff’s claim would not be sustained since its trademark was registered in bad faith, regardless of whether its trademark registration was valid or not. This case has been published by the SPC as a guiding precedent. Even though in theory the precedents have no binding force for similar cases afterwards in China, the opinions reveal in the precedents what may be a major influence on local courts.
The China Trademark Office (CTMO) is also vigorously attempting to stifle bad-faith trademark registrations. In 2017, the CTMO rejected a number of squatted trademark applications, since trademarks were the same or very similar to other famous brands, the names of famous persons, etc.
Take a Chinese company in Weihai city as an example. This company filed more than 300 trademark applications, all of which were the same or very similar to other famous brands. After noticing this, the CTMO rejected all of its applications.
The CTMO has gone further than its efforts in trademark examination, and plans to establish a database of bad-faith registration suspects. This database will be used to alert IP owners if bad-faith suspects files applications in future.
DAMAGES IN TM DISPUTES
Monetary compensation has been significantly increased in particular trademark infringement lawsuits. Years ago, courts in China were over-cautious in determining a high amount of monetary compensation in their judgments, but this is changing. Several judgments have shown the courts ruled with a monetary compensation over the statutory threshold (RMB3 million, or US$476,190), which was very rare in the past.
The New Balance case is part of such a breakthrough. In a trademark infringement lawsuit in Jiangsu province, New Balance obtained a judgment awarding RMB10 million. In order to better protect New Balance’s interests, the court also issued an injunction against the infringer’s manufacturing and selling activities.
In recent years, the CTMO has taken a series of actions to facilitate trademark registration procedures. This campaign started from mid-2016, but still continues apace. In 2016, China issued the Opinions of the State Administration for Industry and Commerce on Vigorously Promoting the Reform of Facilitating Trademark Registration, which mapped a reform plan for improving the efficiency of trademark registration. Nowadays, we have seen achievements for the goals step by step.
One achievement is that trademark prosecution procedures have been sped up. At the end of 2017, the period for trademark examination has been shortened from nine months to eight months. This improvement is in process, and the period will be further shortened to six months by the end of 2018, and to four months by 2020.
Another reform is simplified filing documents. In April 2018, the CTMO released an instruction for the requirement of filing documents. Before that, if the trademark owner wanted to file multiple trademark applications for registration, or changes in the applicant’s address, for example, the trademark agent had to prepare multiple power of attorney (POA) and good standing certificates for each application, which consumed considerable time.
According to the new instruction, the CTMO only requires one set of POA and good standing certificate for multiple applications for the same matter. Such a reform will benefit the trademark owner and its agent, and improve the efficiency of the CTMO.
As per the above, China is in the process of reformation from various perspectives to protect trademarks. However, the authors believe trademark infringement in China is becoming more sophisticated. Therefore, establishing a customized comprehensive trademark protection strategy is crucial.
By taking a comprehensive trademark protection strategy, the trademark owner should combine prosecution, administrative action, litigation and other approaches as a whole, and decide how to conduct the correct action at the appropriate time. Such a strategy means the actions can support each other in order to offer better protection.
In complicated cases, administrative action and/or litigation against infringement may be required, and in the meanwhile cancelling or invalidating the preemptive registration of the infringer’s trademark registration may be tried.
One can also take advantage of the right owners’ patent (especially design), copyright and other rights, which are also supportive for brand protection. In making such strategy, business interests should be taken into consideration. According to the authors’ experience, such a strategy can result in a “1+1>2” effect in IP protection actions.
Specific trademark infringements are different case by case, and therefore a strategy for one case may not be applied to others, at least it may not be the most efficient strategy. Chinese infringers are familiar with common actions and so their infringements have become more complicated. Therefore, forming the specific strategy on a case-by-case basis instead of applying a certain strategy to all matters will be more practical against infringement.
China has exerted great efforts to secure trademark and other IP in recent years. Trademark owners will definitely benefit from an improved and updated IP protection environment.
The authors have noted many foreign companies used to be reluctant to take action to protect trademarks in China because of the lack of confidence in the regulatory regime. We believe now is the time to change the stereotype. If trademark owners can establish an appropriate strategy, effective protection is entirely possible.
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