To better understand these concerns, China IP has made special interviews with some lawyers and trademark agents from Unitalen Attorneys at Law. As the front line practitioners of trademark business, these experienced professionals interpret differently on some content of the new Trademark Law and provide corresponding solutions. By summarizing and analyzing several main issues in the new Law, the article tries to explain the major controversies of the trademark circle over the third revision.

Trademark opposition procedure as amended

By the legislative intent, the revision aims a t promoting economic development through system design and giving more protections to trademark right holders. But some provisions of the new Trademark Law are still worth considering.

According to Article 35(2), “Where the Trademark Office decides to allow registration of a trademark after reviewing an opposition, a registration certificate shall be issued and published. The opponent may, if dissatisfied with the decision of the Trademark Office, request the Trademark Review and Adjudication Board to cancel the registered trademark pursuant to the provisions of Articles 44 and 45 of this Law.” Meanwhile, Article 35(3) provides, “Where the party against whom the opposition is filed disagrees with the decision of the Trademark Office not to grant the registration, it may petition the Trademark Review and Adjudication Board for a reexamination within 15 days from the date of receiving the notification...”

Zhou Xinyan, an attorney at Unitalen, shows her strong disagreement with this new rule, by saying, “This is to set a one-shot-and-it’s final system for the trademark opposition procedure. According to this provision, the new trademark opposition procedure allows the opposing party only one opposition application chance. If the application is rejected by the Trademark Office, the trademark against which the opposition is raised will be granted registration. In this way, the Trademark Office decision about this opposition is final. Examples of such a ‘one-shot system’ of trademark opposition procedure can rarely be found in the whole world.”

Ms . Zhou emphasizes t h a t although the new law offered an invalidation procedure to cancel the registered trademark if the opposition application is denied, it wouldn’ t change the “one- Shot” nature of the opposition procedure determined by the new Trademark Law, because this invalidation procedure belongs to another legal procedure. The current Trademark Law is “registration-oriented.” Protection is only given to registered trademarks. Once a trademark is registered, the applicant is girded with iron-clad power over his trademark. Administrative organs will do everything to suit his convenience, and the goods under this trademark will find no hindrance at all in the market. And then, the most injured party will be the trademark right holders (the opponents), whose goodwill has been maliciously robbed by others. We can understand that maybe the “NONGFU SPRING” trademark holder would be thrilled if he had faced such a simplified opposition filing pattern when his trademark was maliciously opposed in 1999, because the malicious opposition would soon be rejected, and his trademark would soon be registered. But meanwhile, he would also see that before he had fully expressed his objections, numerous usages of the name “Nongfu Springs” will soon been spring up from other people for their products. Therefore, we can see that trademark opposition system is a double-edged sword. A slight error will cause it to cut the right holders’ ways.

Attorney Li Chunya holds a similar view. He thinks that the revision of the trademark opposition system will come with all sorts of problems. First, the new opposition system does not contain a cross-examination procedure, and opponents cannot fully enjoy their rights. Second, the burden of proof is greatly increased. Third, trademark opponents are exposed to higher risks of cybersquatting.

“The ultimate purpose of setting the trademark opposition system is to try to make the obtaining procedure of trademark right - through written review and administrative authorization - fair and just. To this end, this system had designed a notification process, where administrative organs shall announce the review results of a trademark application, so that conflicting parties will have the chance to prove to them the conflicts with their existing rights, and request for disproof of the exclusive use right of the trademark. In this way, the interests of real right holders will be safeguarded, the likelihood of wrong registration will be reduced, and the fairness, impartiality and authority of administrative organs will be ensured. Therefore, trademark opposition ought to be an important procedure in the trademark review and approval system. Its procedural model ought to guarantee ample opportunities for opponents to protect their own rights. Otherwise, administrative organ will have the final say on trademark registration, which is clearly against the development trend of China’s democracy and legality.” Ms. Zhou said.

She also suggested that we could draw on the practices of European and American developed countries and raise the threshold of opposition filing. We may set a more sophisticated opposition procedure, or introduce a voluntary withdrawal or compensation system in the procedure.

Prior user right defense

Article 6 of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law to the Trial of Cases of Civil Disputes over the Protection of Famous Trademarks (effective as of May 1st 2009) provides that “For a civil lawsuit filed by the plaintiff on the ground that the use of the trademark involved therein infringes its exclusive right to use the registered trademark, if the defendant makes a defense or initiates a counterclaim on the ground that the plaintiff’s registered trademark is a reproduction, imitation or translation of its earlier unregistered famous trademark, it shall bear the burden of proof to support the popularity of the earlier un-registered trademark.”

The Trademark Law revision retains the content of Article 31 of the current Law in Article 32, porviding that “No trademark application shall infringe upon another party’s existing prior rights, nor shall an applicant register by unfair means a mark that is already in use by another party and has certain influence.” This article is mainly about the review and approval process of trademark registration, and shows protection over the first to use right.

The new Trademark Law adds an article about “right of defense on first to use.” Article 53(3) defines that “If a trademark identical with or similar to the registered trademark in respect of the same or similar goods is already in use by another person and enjoys substantial influence before the trademark applicant files a registration application, the holder of exclusive rights in registered trademark shall have no right to prohibit such person’s continued use of the trademark within the original scope of use, but may require him to append an appropriate distinguishing mark.”

Such specific description of the right of defense on first to use in the new Trademark Law is believed to have great significance.

According to attorney Gui Qingkai, the “prior user right defense” is defined under Chapter VII “Protection of the Right to Exclusive Use of Registered Trademarks,” in order to clearly stipulate infringement defense by prior use. It is not only the embodiment of the essence of judicial interpretation of the Supreme People’s Court, but also extends such defense to all trademarks besides the un-registered famous ones.

Mr. Gui also thinks that the right of defense when first used may face initial disputes in practice. Firstly, is the defense right of the first to use limited to the prior user? Will the prior user right defense be available to successors, assignees or licensees? In cases of restructuring, split or merge of enterprises, new subjects may inherit the original subject’s right to defense due to prior use. But the licensing case is not in the picture. Secondly, can the first to use right be obtained by other holders of the first use right through ratification, so as to oppose trademark registrant’s infringement claims? Such protection of the actual prior use by first users is an exception under the basic registration system for obtaining a trademark right. If such prior user right could be transferred to, licensed to or ratified by other persons, it will subvert the entire trademark registration system. Thirdly, the blurred boundary of “original scope of use” may lead to problems in the application of the law. For example, if an enterprise advertises its products bearing un-registered trademark in print media, or publicizes them through the Internet or TV, or sells them in physical stores in most provinces and cities of China, will this kind of nationwide first to use signify the continual use on a national scale, with no need to worry about any later trademark rights? If so, the nationwide market will have two identical or similar trademarks for the same or similar goods. How can the public identify them? Fourthly, with the mass of evidences provided, it’s difficult to distinguish the true from the false, which will certainly increase the difficulty of trial. In future, the Trademark Office, the Trademark Review and Adjudication Board, and especially courts and attorney agents will possibly have to do such distinguishing work in trademark infringement cases. Fifth, the registered trademark right obtained by right holders through “first-to-file” should be an absolute right without being undermined by the “relativity” as prescribed by law. The prior user right defense is unfair for them and will impact the trademark registration system. Sixth, in the new Trademark Law, there is no mention of good faith or bona fide claim in the elements for the prior user right defense. Counting out subjective factors will bring new problems in future practice. Seventh, Article 59 of the new Trademark Law hasn’t defined whether continuity is an essential condition for the prior user right. If a trademark is granted first to use right of defense simply because it is used earlier, while ignoring the fact of its uninterrupted years of non-use, such un-registered trademark is then granted more protection than registered ones, which is a breakdown of the current trademark registration system of China.

In conclusion, there still exist many practical problems with the prior user right defense. We can only count on the court’s legal precedents or final judicial interpretation to explicitly express them after the new Trademark Law comes into force.

(Translated by Hu Xiaoying)