Meituxiuxiu: Recognition of well-known trademark in Internet context

China’s Supreme People’s Court (SPC) recently rendered an administrative ruling in dismissing a retrial application that the natural person Bei Rongxiong had filed, seeking to overturn the invalidation decision of the Trademark Review and Adjudication Board (TRAB) against his pre-emptive registration of “美图秀秀MEITUXIUXIU” in Class 3. The SPC verdict puts an end to the invalidation proceeding Xiamen Meitu Technology (Meitu) had instituted, upholding the invalidation of the Disputed Trademark and the well-known recognition of Cited Trademark “美图秀秀” in Class 9.

On 24 July 2015, Meitu filed an invalidation request to the TRAB against Bei Rongxiong’s registered trademark “美图秀秀MEITUXIUXIU” (美图秀秀 in Chinese characters and Pinyin) (date of application: 19 April 2013; date of registration: 28 September 2014), citing its prior registered trademark “美图秀秀” in Class 9 (date of application: 8 December 2008; date of registration: 14 October 2010).

On 1 August 2016, the TRAB ruled in favour of Meitu, finding that: (1) the cited trademark “美图秀秀” had reached well-known status with regards to the designated goods in Class 9; and (2) the disputed trademark was a reproduction and imitation of the cited one, in violation of Article 13.3 of the Trademark Law. Therefore, the disputed trademark shall be invalidated.

On 24 January 2017, the Beijing Intellectual Property Court sided with the TRAB on its well-known trademark recognition of the cited trademark. The court also ascertained that: (1) through extensive use, the cited trademark had formed a corresponding relationship with its proprietor; (2) since the disputed and cited trademarks were identical in respect of the Chinese characters, even if their designated goods and services were different, the relevant public was still likely to believe that both were somewhat associated, which, in consequence, was prejudicial to the interests of the well-known trademark owner.

The Beijing High Court upheld the TRAB’s invalidation decision. The court of appeal affirmed on 25 September 2017 that, though Meitu earned a low net profit during the 2010-2013 period, such an indicator was merely one of the parameters in assessing the awareness and reputation of the cited trademark. The well-known recognition of the cited trademark shall be based on the distinctiveness and awareness of such a trademark on the designated goods, considering the fact that software development and marketing expenses may outweigh the short-term yields in the internet industry. The court of appeal was satisfied that existing evidence was enough to prove that the cited trademark, through extensive and continuous promotion and use, had become well-known prior to the application date of the disputed version.

The SPC also affirmed the well-known status of the cited trademark, reasoning that, as coined words, “美图秀秀” was intrinsically distinctive. If the two trademarks were to co-exist in the market, the consumers were likely to be misled into believing that the products to which the cited and disputed trademarks were attached or the sources thereof were associated. This would sever the innate relationship between the cited trademark and its proprietor to harm the legal interests of the well-known trademark owner. Therefore, it was not inappropriate that the court of appeal found that the registration of the disputed trademark breached Article 13(3) of the Trademark Law.

In this case, the registrant of the disputed trademark had exhausted all possible defences, in an attempt to challenge the well-known trademark status of the cited trademark, but to no avail. The TRAB and the courts unanimously ascertained the high distinctiveness and reputation of the cited trademark. The Beijing High Court, which particularly took into account the drastic difference between an internet company and the traditional industries in operation mode and revenue model, did not deny the reputation of the cited trademark, based on the short-term deficit of Meitu.

In the internet era, it is common business practice for related companies seeking to boost their traffic numbers and user groups to leverage hefty investments in market promotion. In this sense, it would be unprecedented for an internet trademark to be trending and be familiar to the relevant public, when compared with trademarks of traditional industries. The profit-and-loss account of an enterprise at a certain stage may only serve as a point of reference in recognition of a well-known trademark. It would always be advisable to consider the industry background, business model and causes for deficit when assessing the well-known status of a trademark. Any deficit stemming from heavy investments to gain market share in the internet industry does not equate to one resulting from outdated technology, insufficient productivity, or poor management in traditional industries.

Li Jie is a legal counsel, and Zhang Han is a senior associate at Wanhuida Peksung IP Group