Recently, the case over the QQ trademark in the auto industry between Tencent and Chery has caused quite a stir. Because the QQ trademark approved for goods such as autos has been canceled, Tencent brought the Trademark Review and Adjudication Board (the TRAB) to court and Chery was listed as a third person in the lawsuit. The case was heard before the Beijing No. 1 Intermediate People’s Court on July 16th 2013.

Tencent’s complaint

In its claims, Tencent requested the defendant to cancel ShangPingZi (2013) No. 04282 Decision on No. 4665825 QQ trademark and motioned the TRAB to render a new ruling.

The case goes originally back to 2009. Tencent, established in November 1998, is currently one of China’s largest Internet service providers. On February 10th 1999, Tencent launched “QQ99 beta build 0210 (Tencent QQ)” instant messaging service as well as the little penguin image into the market.

On August 31st 2001, Tencent Computer System Co., Ltd., affiliated to Tencent, applied for registration of the trademark in Class 38 for services such as information transmission and computer terminals.

On the same day, an affiliated company of the plaintiff applied for registration of the trademark in Class 12 for goods, such as vehicle tires, motorcycles, tricycles, trolleys, small vehicles, strollers and bicycles, and was approved on November 14th 2002 with the registration No. 1977837.

On May 19th 2005, the plaintiff applied for registration of the trademark in Class 12 for goods such as autos and obtained registration on March 7th 2008 with the registration No. 4665825, namely, the trademark at issue in the lawsuit. The trademark was registered with normal font as compared with the artistic font in No. 1977837 trademark.

On November 26th 2009, Chery filed before the TRAB to cancel the trademark at issue on the ground that registration of No. 4665825 trademark violated the Trademark Law, first paragraph of Article 13 (the trademark of an identical or similar kind of goods is a reproduction, imitation, or translation of another person’s well-known trademark), Article 28 (identical and similar trademarks for the same kind of goods or identical goods) and Article 31 (infringe upon another person’s existing prior rights). The TRAB ruled that registration of the trademark at issue has constituted preemptive registration of a trademark that is already in use by another person and has certain influence, as set forth in Article 31 of the Trademark Law. Therefore, the TRAB ruled to cancel the trademark at issue.

“Continuation of trademark registration is also an expansion of registration for Tencent’s existing well-known No. 1962825 trademark for services in Class 38. From the perspective of application and registration, no “inappropriateness” exists. Meanwhile, when Chery began to use the QQ trademark for goods in Class 12, the plaintiff had already obtained the exclusive right to use the registered trademark No. 1977837 for the same goods, and Tencent’s No. 1962825 trademark had been well-known for services in Class 38.

Chery’s defense

Chery responded to claims by Tencent. Chery held that the disputed trademark No. 4665825 QQ and the prior registered No. 1977837 trademark are two independent and dissimilar trademarks. Therefore, Chery held that Tencent’s application for registration of the disputed trademark is neither a continuation of registration on the basis of its original figurative trademark, nor an expansion of registration for the mouse-like trademark in Class 38. Moreover, Chery held that as a matter of fact it has the prior and legitimate right to use the QQ trademark.

In early 2003 Chery filed an application for registration of the trademark. In May 2003, more than 25,000 Chery QQ cars were sold, setting a record for the highest number of sales for a new car launched in a single year in China’s auto industry. In 2006, the word and design of Chery, and CHERY were declared as well-known Chinese trademarks. Based on the above, Chery held that Tencent filed an application for the disputed trademark in 2005 when the Chery QQ car had become a champion in sales among similar cars, and Tencent has not used the trademark for goods such as autos in Class 12. Moreover, Chery held that its trademark is neither identical with nor similar to Tencent’s trademark. Tencent’s mouse-like trademark is a combination of a circle and a mouse, and is classified as a design trademark by the search system of the China Trademark website, while Chery’s trademark QQ is simply made of simple letters, therefore, the two trademarks can be clearly distinguished.

In addition, China IP learned that Chery held that there was obvious inappropriateness in Tencent’s application for the disputed trademark. According to Chery, in November 2004, Tencent filed an opposition when Chery’s 3494779 trademark was preliminarily published. Therefore, Tencent was aware of Chery’s prior use and application of the QQ trademark when it applied for registration of No. 4665825 trademark in 2005. At this point, it was obviously inappropriate for Tencent to apply for the QQ trademark in Class 12.

The defendant TRAB

If we follow IP-related cases closely, it is not difficult to conclude that many cases get the TRAB involved. Records reveal that in the first six months of 2012, the TRAB heard and ruled on 29,189 cases of trademark review. The number of cases where parties were dissatisfied with TRAB rulings and filed administrative lawsuits before Beijing No. 1 Intermediate People’s Court totaled 1,335, accounting for 4.57% of all trademark review cases.

In the QQ trademark case, Tencent held that there was some insufficiency in the ruling. It is learned that Tencent held that the TRAB ruling was obviously erroneous and ran contrary to provisions of the Trademark Law, Trademark Review and Adjudication Rules and the spirit of the law as outlined in the Supreme People’s Court, according to the Article 9 of Opinion on Several Issues Concerning Serving of the Main Objective When Handling Intellectual Property Trials in View of the Current Economic Situation which was released by the Supreme People’s Court and protection provisions covering well-known trademarks in the Trademark Law.

China IP learned that Article 9 of the aforesaid Opinion provides that we shall strengthen the trial of cases about right confirmation of granted trademarks, and correctly handle the relationship between protection of trademark rights and maintenance of market order. We shall effectively curb improper squatting of others’ prior trademarks, strengthen protection of prior trademarks with certain popularity, and accurately apprehend the relativity attribute of trademarks, and shall not indiscreetly provide cross-class protection for registered trademarks which are not well-known trademarks.

According to the timeline of applications by both sides, Chery had already begun to apply and use the QQ trademark in 2003 and had acquired a certain reputation in 2005. At that time, regardless of its well-known status, the trademark of the plaintiff in Class 38 is not identical with or similar to the QQ trademark which has been actually used by the third party, to say nothing of association of goods. Therefore, will Tencent’s claim for the well-known status of the trademark and broader protection thereof be considered in line with provisions over well-known trademarks in the Trademark Law? There are different views in the community.

Main point of the dispute in the QQ trademark case

1. The latter part of Article 31 of the Trademark Law

The latter part of Article 31 of the Trademark Law provides that it is prohibited to, by illegitimate means, rush register a trademark that is already in use by another person. The relevant provision of this section has three main applicable elements: (a) “illegitimate means,” (b) “is already in use,” and (c) “has certain influence.”

The main point in debate in this case is whether it involves the use of “illegitimate means.” Wu Qiong, a partner at Kangxin Partners, P.C. said the “illegitimate means” has been expressly defined by Opinion on Several Issues Concerning Trial of Administrative Cases Involving Granting and Confirmation of Trademark Rights, released by the Supreme People’s Court. Namely, Article 18 provides that “in accordance with the Trademark Law, the applicant shall not preemptively register, through illegitimate means, a trademark which has been used by others and has acquired certain reputation. If the applicant knows or should have known a trademark that has been used by others and has acquired certain reputation, but the applicant preemptively registers the trademark, then illegitimate means may be deemed to have been used. A trademark which has been actually used in China and is known to the relevant public should be deemed as a trademark which has been used and has certain reputation. If there is evidence to prove that the prior trademark has certain periods of use in certain areas, sales volume and advertising, then it may be deemed to have certain influence. It is inadvisable for a trademark, which has been used and has certain reputation, to be granted protection for dissimilar goods.” Therefore, based on the judicial interpretation, Chery only need to prove that “Tencent has been aware of or should have been aware of the fact that Chery has used the QQ trademark for cars and has acquired certain reputation at the time of its application for the disputed trademark,” then it may be determined that “Tencent has used illegitimate means.” In determining whether Tencent “has been aware of or should have been aware of,” we may consider facts such as “Tencent had advertised QQ cars on its website prior to the application of the disputed trademark, i.e. on May 19th 2005.” Certainly, details of each piece of evidence should be analyzed carefully in terms of validity.

Chen Mingtao, a professor at the Law School of Beijing Jiaotong University, said of the issue that we should not blindly apply the entire Trademark Law or Article 31 of the Trademark Law. But in the current legal landscape, judges, lawyers and even scholars often blindly follow Trademark Law, for example in the iPad and Wanglaoji cases. We must attempt to ascertain all of the facts of the case in full, which are: 1) Chery itself is a well-known auto company in China; 2) Tencent has no intention to enter the auto industry; 3) Chery has been using the disputed mark extensively; 4) both parties have obtained certain reputation in their respective fields; and 5) if Tencent owns the trademark and enters the automotive industry, the existing market order will be undermined and market confusion will be caused.

2. Cross-class protection of well-known trademarks

In this case, Tencent stressed that the trademark in dispute owned by Tencent is a well-known trademark, which leads to the issue of cross-class protection of well-known trademarks. Wu Qiong said, first of all, declaration of well-known trademark adheres to the case-by-case principle. Although in one case the court has declared the No. 1962825 QQ trademark well-known for services in Class 38, it does not mean that Tencent has the trademark right to all goods and services and it should not be the absolute basis for Tencent’s registration of the disputed trademark for automobiles. The confirmation of rights over the disputed trademark should be based on an analysis of whether it has violated the provisions of the Trademark Law.

Wu Qiong said trademarks, in essence, carry corporate reputations. The protection of trademarks is the ultimate about the protection of corporate reputations. Corporate reputations mainly come from the goods or services that enterprises provide for their customers. Therefore, in dealing with the conflict between two high-profile trademarks, we should primarily take into account the service terrain of the goods actually used by the trademarks when determining the scope of protection of each trademark.

There are relatively clear viewpoints about cross-protection of well-known trademarks within the community. If a trademark is well-known in one area, it does not mean that its cross-class registrations will not be canceled. The purpose of protecting well-known trademarks is to avoid dilution, confusion and to maintain order in market competition. Chery has extensively used the QQ trademark in the auto sector and obtained certain reputation. If no customer confusion has been caused, it would make no sense to offer protection as a well-known trademark. That does not mean that Tencent has the right to prevent other companies from filing cross-class registrations. Chen Mingtao said that Tencent may be a well-known trademark, but in this case, the well-known status does not pull its weight, and that is the main reason behind the case-by-case declaration and passive declaration of well-known trademarks. Therefore, we should not blindly follow laws.

3. Whether it relates to illegitimate use

Does it constitute illegitimate use if Chery makes use of Tencent’s existing corporate reputation? Chery is a well-known Chinese automaker, and its use of the disputed trademark on autos has exploited the creativity and potentially the reputation of Tencent. Will permitting it to use the trademark be sufficient to cause market confusion and harm the market competition order? The answer should be negative. Because of the extensive publicity and use, Chery has not pushed the disputed trademark to the point where it will neither cause confusion with Tencent’s trademark nor cause customers to erroneously think that the two have some association. Moreover, the trademarks are in totally different classes and there is no possibility of undermining market competition order. As a matter of fact, the opinion of the Supreme People’s Court on trademark confirmation is also based on the same legal principle and purpose, namely, the existing clarity in market order and certain independent reputations. Consequently, we should not simply conclude that the disputed trademark constitutes confusion.

(Translated by Wang Hongjun)