MLL344 Report on Chinese Commercial Law

MLL344 Report on Chinese Commercial Law

INFRINGMENT OF FOREIGN TRADEMARKS IN CHINA AND THE PROTECTION PROVIDED BY CHINESE COMMERCIAL LAW TO THE FOREIGNERS

Introduction

“The World Intellectual Property Organisation” has defined the intellectual property right as following: “the rights in relation to: literary, artistic and scientific works; the performance of performing artists, phonograms and broadcasts; inventions in all fields of human endeavour; scientific discoveries; industrial designs; trademarks; service marks and commercial names and designations; and all other rights resulting from intellectual activity in the industrial, scientific, literary and artistic fields”. So we see that intellectual property is a right which basically protects the labour of the mind or the intellect as this property is intangible in nature but this is a very important right which has been a very important right in the present times and the intellectual property has different forms and types and they hold they own importance but in the present times the most important and significant intellectual property rights have been patents rights and trademarks rights.

“The patent right is the right which is given to protect any new and innovative invention or process for a duration of twenty years.” “The trademark right on the other hand is given to protect any symbol of mark of a business which is distinctive in nature and which is not descriptive in nature and it can be a word, a sign, a symbol” [1]. In the present paper we will focus our research on the Trade mark rights and general and commercial law and our research country will be China and in this paper we will discuss the past present and future of trademark and commercial law in China and the relevant case laws and legislations related to Trademarks in China.

The history of trademark in China

  • China has a long an rich history which is more than 5,000 years old but China’s Modern system of law which also includes the intellectual property law and trademark law and is comparatively new[2]
  • China has been one of the most innovative countries which have invented papermaking, compass and gunpowder[3]. The first known trademark was recorded in the NORTHERN Zhou Dynasty (556-580), where the merchants had started to use dissimilar marks so that they can differentiate their craftsmanship and products from the other merchants.
  • We can see that even after having a history going so much back in time China made Trademarks laws only in the late 19th century and starting of the 20th The first Chinese trademark law was passed in 1904 but this law never came into use[4].
  • In 1923 the first office of trademark was opened by Northern Chinese War loads. Even though these developments were taking place in the field of trademark but still a significant part of trademark in China during the pre-1949 era was deceptive in nature and trademarks were often forged[5].

China’s modern trademark and commercial law

“CHINA started building a formal legal system after the Mao Zedong era which ended in 1980s and it had started to implement new regulations for intellectual property so that it could attract the foreign countries to do business in China. The legal system that we see in China at present was founded in the Chinese Constitution in 1982 and on 23 august 1982 the 5th National People’s Congress of China adopted a trademark and trademark registrations started in China” [6] The Trademark law was revised on 22nd February 1983 and the amendments extended the categories of action which constituted to infringements of trademarks[7]

External and internal pressure on China

There had been lot external and internal pressure on China to make its intellectual property laws stricter and effective and one of the most influential external pressure was from United States of America and it had also intimidated CHINA with trade wars, economic sanctions and non renewal of most favoured nation status and also threaten to oppose it entry into World Trade Organisation and China finally signed bilateral agreement with United States of America in 1992[8]. Another bilateral agreement was also signed in 1995 were China had promised that it would increase the protection of intellectual property within its borders [9]

The reasons that encourage Trademark Squatting in China

First to file instead of first to use:

  • In China the trademark system is based upon the first to file the trademark application where the applicant is not required to show any use of commerce before the trademark registration as is also provided under Article 29 of the China’s Trademark and commercial Law which defines the procedure to file an application which is as following:
  • “Where two or more applicants apply for the registration of identical or similar trademarks for the same or similar goods, the preliminary approval, after examination, and the publication shall be made for the trademark which was first filed. Where applications are filed on the same day, the preliminary approval, after examination, and the publication shall be made for the trademark which was the earliest used, and the applications of the others shall be refused and their trademarks shall not be published”[10]
  • On the other hand in USA, the applicant is required to show a proof of use of the trademark in commerce before it is registered as a trademark in USA but in China there is no such requirements [11]
  • So we see that in China there is no requirement of prior ownership or use which leaves the registration of popular foreign marks open for the third parties. So a foreign company may be using a mark which they developed but still their goods may get seized and they may not be allowed to use they trademark in China and they may also end up as defendant in as suit for infringement because a squatter might already exist that had registered the same trademark in China.

Single class filing and multi class filing

  • “In China there is a single class filing whereas in USA and other countries there is multiple class filing so for a person to completely protect his trademark he will be required to file forty five separate application for the forty five different trademark categories and if this is not done the a squatter can register the same trademark in any remaining category” also we can see the example of Apple that filed its application in the wrong subclass and had to face infringement suit against its own trademark.[12]

It is very difficult to be well known brand in China

  • In China the well known marks are given many rights and privileges under the Chinese law and the present law on trademark says that if a well known mark is being registered in China then the owner has the right to exclude other people from reproducing, registering or translating the mark among all the categories of trademark [13]

The barrier of language:

  • “This is another huge hurdle for the foreign countries when they want to register or protect their trademark in China. Also because of the language barrier each foreign brand would have three marks in China where one will be the original brand name, the second will be the “sound alike” mark and the third will be whatever the meaning is of the brand in Mandarin”[14]

Measures to deal with Trademark squatting:

  • On 16 December, 2011, the Supreme People’ Court gave an opinion where it discussed different aspect of intellectual protection [15]
  • “Also “Bad faith trademark registration” has also been introduced to be used as a defence in trademark infringement suits, so that if a trademark squatter bring a suit of infringement against the right and true owner of the trademark then the right owner can take the defence that the trademark was registered in bad faith” [16]

Leading Trademark infringement cases in China

FACTS OF THE CASE:
  • “There was a company named Proview International holding which was based in Hong Kong and it has seven subsidiary which included Proview Shenzhen and Proview Electric that are located in Taiwan.
  • In the year 2000, Proview Taiwan applied for the registration of IPAD in some countries excluding China and in the same time Proview Shenzhen had filed two trademarks application in China and it got registered as IPAD in class 9 goods that included computers.
  • In the year 2009 IP Application Development Limited which was set up Apple in the UK met Proview’s UK subsidiary company and Proview Taiwan to buy the IPA trademarks and in December 2009 an agreement was made between Proview and IPADL for £35,000, and IPADL assumed that the person they had an agreement with was representing the Proview group.
  • Later on Apple’s registration request was rejected by China Trademark office as Proview Shenzhen had refused that t had any information about the Taiwan agreement and it was not party to it nor the person with whom the agreement was made had the authority to sell the trademarks in China and a suit was brought by Apple”[19].
  • “The court held that when a person wishes to obtain the trademark of another person for the commercial use then in that case the plaintiffs are required to have a higher duty of care and they should also go according to Chinese regulations and Law to enter into a contract to buy a trademark and the plaintiff claims were dismissed by the courts.
  • After this Proview Shenzhen brought action against Apple and finally the case was resolved through mediation where Apple paid Proview Shenzhen a sum of $60 million and Apple can import iPad products in China”[20]
  • [21]Aktieselskabet AF Nov. 21, 2001 v. eBay Network Info. Servs. (Shanghai) Co.,( 2005) [22]
  • “In this case the plapintiff had brought a suit for Trademark right infringment against eBay. The court noted in the case that online intermediaries cannot control counterfeiting online by the third parties and also the defendants had established an intellectuall property right reporting system to stop intellectual property infringements and so they had exercised their duty of care.
  • Also the defendant cannot be expected to check every merchandise sold on theh site. So in this case the court held that eBay was not liable for Trademark infringment”[23]

New trademark & commercial law in China

  • More than ten years have passed since the revision of the Chinese trademark & commercial law was done. After the reason done in 2001 there have been constant labours to pass THIRD amendment that would bring it in sync with the Singapore treaty that China signed in the year 2007[24]
  • The new law have been finally implemented from 1st May 2014[25]
  • The new amendment has brought in many new changes like firstly a very important change is the applicant for trademark registration is now required to submit one single application for multiple classes of trademark. This amendment has now simplified the registration process and this would help in preventing trademark squatters from doing the registration of famous trademarks in those classes here the original owner had not registered his trademark [26]
  • The article 7 of the amendment has introduced the principle of good faith in registration and use of the trademark and this amendment would help in guarding against the bad faith n trademark when there is no other ground to stop the bad faith [27]
  • The amendment under Article 34 says that where the trademark applicant had any contract, geographical relationship or business with the right holder of an trademark already in existence then the registration would be identified and would be refused as a form of malicious squatting[28]
  • The amendment has also made the trademark protection stronger where the proof of burden has been reduced for the owner of the trademark and the damages have been increased from RMB 500,000 to RMB 3,000,000 [29]

Conclusion

To conclude this paper we can say that even after all these shortcoming in the Chinese intellectual protection no country can deny the importance of China for trade and commerce and CHINA is also dependent on the western countries for its resources an business and to gain the confidence of the foreign countries china has made many amendments to the present Chinese commercial law but still we can say that China is moving towards a positive image and if the amendment are enacted properly then China would be able to gain the confidence of the western countries and would also be able to stop the squatting of the trademarks.

Although China has a long way to go but we hope that if the amendments are implemented strictly then we will not have to see a case like Proview Electronics Co. Limited, Et Al Vs Apple, Inc., Et Al, (2012)[30], where the right and true owner had to face a suit for infringment of his own trademark right in China. So in the present paper we have dicussed the different aspects and concepts and histroy related to the laws and its developement in China. We have tried to discuss the relevant case laws and the relavent legislation related to intellectual property laws in China, especially in relation to Trademarks laws.

References

  • CHANG, SUNNY, 'Combating Trademark Squatting In China: New Developments In Chinese Trademark Law And Suggestions For The Future' (2014) 34 Northwestern Journal of International Law & Business
  • GAO, XIANG, 'Apple V Proview: Lessons For Business In China.' (2012) 1 WORLD INTELLECTUAL PROPERTY REVIEW
  • GREEN, S, 'Protecting Trademark' (2014) 52 Law Society Journal
  • GREIG, JENNIFER, Research Guide To Chinese Trademark Law And Practice (Alert Publications, Inc., 2009)
  • HOOVER, DALILA, 'Coercion Will Not Protect Trademark Owners In China, But An Understanding Of China's Culture Will: A Lesson The United States Has To Learn.' (2011) 15 Marquette Intellectual Property Law Review
  • LONG, WEIQIU, 'Intellectual Property In China.' (1999) 63 MARY’S LAW JOURNAL.
  • YING, DU, 'Secondary Liability For Trademark Infringement Online: Legislation And Judicial Decisions In China' (2014) 37 J. L. & ARTS.
  • ZHOU, JESSICA J, 'Trademark Law & Enforcement In China: A Transnational Perspective' (2002) 20 WIS INT’L L.J.
  • Aktieselskabet AF Nov 21, 2001 v eBay Network Info Servs (Shanghai) Co [2005] [2006] NIAN HU YI ZHONG MIN WU (ZHI) CHU 371 (Shanghai No. 1 Interm. People’s Ct. Aug. 21, 2006).
  • Proview Electronics Co Limited, Et Al Vs Apple, Inc, Et Al [2012] 1-12-CV-219219.