Well-known Trademark Certification: Practical Thinking of “Dual-track System”

By Wang Jun,Partner at Deheng Law Firm,[Trademark]

  In recent years, certification of well-known trademarks by judicial and administrative means has caused widespread concern among different sectors of society and enterprises, but there is also misunderstanding of the level of effectiveness between judicial certification and administrative certification. Meanwhile, problems arising from judicial certification have brought about frequent occurrences of phony lawsuits, thereby triggering a series of responses from the Supreme People’s Court in an effort to curb the abused “judicial certification of well-know trademarks.”

  Since 2001, when the judicial interpretations empowering the people’s courts to determine the well-known status of a registered trademark in trial of domain name disputes were promulgated, the intermediate people’s courts in different regions across China have become important instruments in “judicial certification of well-known trademarks” which has also been an important means by enterprises in litigations Subsequently, a number of judicially certified well-known trademarks have hit newspapers, media and products, stealing the limelight for a time. However some doubts have also arisen.
  In June 2007, a consumer in Henan Province sued a Qingdao-based stationery company for improper publicity of its well-known trademark on the grounds that the “well-known Chinese trademark” was affixed to the packaging of the company’s XXX correction fluid; in the same year, three graduate students from Shanghai University majoring in IP filed a lawsuit in a Shanghai court against false advertising of the”康王well-known trademark in Guangdong. Coincidentally, both marks at issue were judicially certified as “well-known trademarks.” For a time, misunderstandings have distorted the real meaning of well-known trademarks, for example, some said judicial certified well-known trademarks were “certified in individual cases”, while administrative certification was not “individual certification”; others have said that administratively certified well-known trademarks were higher in effectiveness than judicially certified well-known trademarks and could be promoted, while judicially certified well-known trademarks could not be promoted.
  Recently with increasing abuses of judicial certifications of well-known trademarks, problems have gradually surfaced in the judicial certification of well-known trademarks. On June 5, 2007, the case of Shantou 康王which obtained “judicially certified well-known trademarks” in 2006, was suspected of fraud - “a phony case, fake allegations, bogus entrustment and false agents” - and dragged into the retrial proceedings. As conclusive evidential materials were all made public, three judicially certified well-known trademarks were cancelled, making it China’s first typical significant case of cancellation of judicially certified well-known trademarks. The reason behind frequent occurrences of such fraudulent cases by means of “judicial certification” is that an enterprise is able to obtain certification of well-known trademarks through courts to illegally get high prizes from the governments. For quite a long time, professional levels of judges in adjudicating judicial certification of well-known trademarks differed greatly, and the period of time for judicial certification was shorter than that of administrative certification. Besides, it was more convenient to submit materials; therefore, judicial certification has been regarded as a shortcut to obtain well-known trademark status, thereby giving birth to the black chain of interests.
  Origin of “Dual-track System”
  “Well-known trademarks,” or “well-known marks”, are literally trademarks with high degrees of fame; however, it is difficult to find a standard definition of “well-known trademarks.” At the international level, Article 6b of the Paris Convention for the Protection of Industrial Property (the Paris Convention), the earliest provision on well-known trademarks, did not give a definition of well-known trademarks; and no countries have made a definition of well-known trademarks in their trademark legislations. Either in international treaties or domestic legislation, people often find factors to be considered by “competent authorities” in their certification of well-known trademarks. Currently, there has not been a clear answer yet as to the fundamental question of “what is a well-known trademark.”
  On September 20, 1991, with the approval by the State Administration for Industry and Commerce (SAIC), the Legal Daily, China Central Television, China Consumer News jointly organized activities to poll the first batch of “China’s Well-known Trademarks.” Ten “China’s Well-known Trademarks” were selected in the poll, namely, Maotai, Phoenix, Qingdao Beer, Haier, Chunghwa cigarettes, Polaris watches, Forever, SOFEA, Wuliangye and Luzhou liquor. However, the polling method was identical with that of “China’s Famous Brands”. With the help of subsequent advertising hype by winning enterprises and media frenzy, people tended to cherish the illusion that well-known trademarks were an honor of some kind and benefits granted by the public authorities.
  On August 14, 1996, SAIC promulgated and implemented Provisional Measures on Certification and Administrative Control of Well-known Trademarks, thereby putting China’s certification and management of well-known trademarks into the track of legalization and standardization. The measures initially established the mode of “active certification and batch publication”, and provided that “China Trademark Office (CTMO)” was the sole authority in the certification.
  On April 17, 2003, SAIC promulgated and implemented Provisions on Certification and Protection of Well-known Trademarks, which provides in Article 5 that “where a dispute arises in the procedures of trademark registration or trademark review and adjudication, and the party concerned believes that its trademark constitutes a well-known trademark, it may request the CTMO or the Trademark Review and Adjudication Board (TRAB) to determine whether its trademark constitutes a well-known trademark or not.” There are two certifying authorities, namely, the CTMO and the TRAB, without excluding other authorities in charge of such certification; certification of well-known trademarks has shifted from the “active certification and batch certification” mode to the international practice of “passive certification and individual protection” and played down management of well-known trademarks, further improving China’s protection system of well-known trademarks.
  In 2009, CTMO and TRAB certified 390 well-known trademarks. Among them, 277 were certified by the CTMO in trademark management cases, 22 by the CTMO in trademark opposition cases and the remaining 91 were certified by the TRAB in trademark dispute cases.
  In June 2001, the Supreme People’s Court passed the Interpretation of the Supreme People’s Court on Application to Laws in the Trial of Civil Disputes Involving Domain Names of Computer Network which provides that people’s courts, in adjudicating domain name disputes, may determine whether a registered trademark is well-known or not. Interpretation of the Supreme People’s Court Concerning the Application of Laws to the Trial of Cases of Civil Disputes Arising from Trademarks [Fashi(2002) No. 32] further provides that the people’s courts, in adjudicating cases of trademark disputes, may determine whether a registered trademark related thereto is well-known or not.
  The courts, from July 2001 onwards, have been empowered to judicially certify well-known trademarks, putting an end to the single-track mode of administrative certification. In the meanwhile, the principle of “passive certification and individual effectiveness” has been established. So far, China has put in place a dual-track system of both judicial and administrative certification of well-known trademarks.
  Parallel “Dual Tracks”?
  As certification of well-known trademarks is termed as a “dual-track system,” the dual tracks must have many differences.
  1. Courts and administrative authorities
  Article 5 of Implementing Regulations of Trademark Law of the People’s Republic of China provides that where a dispute arises in the procedures of trademark registration or trademark review and adjudication, and the party concerned believes that its trademark constitutes a well-known trademark, it may request that the CTMO or TRAB determine whether its trademark constitutes a well-known trademark or not. There are two authorities certifying well-known trademarks, namely, the CTMO and TRAB.
  Interpretation of the Supreme People’s Court on the Relevant Issues concerning the Scope of Jurisdiction and of the Scope of Application of Laws for Hearing Trademark Cases [Fashi (2002) No. 1] provides that “the people’s courts, in adjudicating cases of trademark disputes, may determine whether a registered trademark related thereto is well-known or not. The first-instance trademark cases are under the jurisdiction of the intermediate people’s court or a court above. With the approval of the Supreme People’s Court, the high people’s courts may designate, according to the practical situation in the region under their respective jurisdiction, one or two grass-root people’s courts of relatively large cities to hear civil cases of trademark disputes for first instance.”
  On January 5, 2009, the Supreme People’s Court released the Notice of the Supreme People’s Court on the Jurisdiction over Cases of Civil Disputes involving Certification of Well-known Trademarks, delegating jurisdiction over cases of civil disputes involving certification of well-known trademarks to intermediate people’s courts located in capital cities of provinces or autonomous regions, designated cities in the State plan or municipalities directly under the Central Government. “Jurisdiction of other intermediate people’s courts over such civil cases must be subject to the approval of the Supreme People’s Court. Intermediate people’s courts shall not accept such cases without approval.” The notice has tightened the power of jurisdiction and dealt a heavy blow to previous approaches frequently taken to get judicial certification of well-known trademarks by courts or judges professionally weak in adjudicating IP cases.
  2. Conflict of effectiveness of certification
  From the perspective of final effectiveness of certification of well-known trademarks, judicial certification is higher in effectiveness than administrative certification. Although both judicial and administrative certifications are individual certifications afterwards, the effectiveness of certification has a direct effect in individual cases. In 2005, Administrative Adjudication [(2005) Gaoxingzhongzi No. 122] rendered by Beijing Municipal High People’s Court cancelled a decision by TRAB with respect to the certification of “21金维他(21 Super Vita)” as a well-known trademark, becoming China’s first case of cancellation by the court of a judicially certified trademark.
  Article 12 of the Provisions on Certification and Protection of Well-known Trademarks provides that where a party concerned requests, in accordance with Article 13 of Trademark Law of the People’s Republic of China (Trademark Law of China), protection of a well-known trademark, the party may submit the records showing that the trademark has previously been protected as a well-known trademark by the relevant Chinese authorities. Where the scope of protection for an accepted case and that for a case where a trademark has been granted protection as a well-known trademark are basically the same, and the other party has no opposition to such trademark’s well-known status or otherwise fails to provide any evidential materials to demonstrate that the trademark is not well known, the administrative department for industry and commerce that has accepted the case may make a decision or resolution based on the conclusion of the record of protection. It is not difficult to see that, in a case where a judicially certified well-known trademark requests administrative protection, the other party who raises any opposition to the well-known trademark is obliged to “provide evidential materials to demonstrate that the trademark is not well known”. While in Fashi (2002) No. 32, “where a party concerned requests protection of a well-known trademark that has been certified by an administrative authority or people’s court, and the other party concerned has no opposition as to the well-known status of the trademark involved, the relevant people’s court shall not conduct any further examination. Where an opposition is filed, the relevant people’s court shall conduct an examination in accordance with Article 14 of China Trademark Law.” The article does not require the other party to “provide evidential materials to demonstrate that the trademark is not well known”, if an opposition is filed, the court shall conduct an examination in accordance with Article 14 of China Trademark Law.
  In addition, after some companies obtained judicial certification of well-known trademarks, people usually said that well-known trademarks certified by authorities for industry and commerce were more valuable and authoritative than judicially certified ones. Well-known trademarks certified through litigation in courts were different from those certified by authorities for industry and commerce and their well-known status was temporary, therefore, even if these brands were certified as well-known trademarks in the case, they were different from those certified by authorities for industry and commerce. As a matter of fact, certification of well-known trademarks does not have any difference between temporariness and permanence. China’s certification of well-known trademarks, either judicial or administrative, adheres to the principle of “passive protection and individual effectiveness.”
  Direction of “Dual Tracks”
  1. Equal certification and equal protection
  In 1985, China acceded to the Paris Convention and began to actively explore and practice certification and protection of well-known trademarks, having already put in place relatively complete systems for certification and legal protection of well-known trademarks, and thus tremendous achievements have been made in legislation and practice.
  In practice, the certifying authority in administrative certification is single, highly specialized, and regulated in operations, and has been authoritative after years of operations; while judicial certification is more efficient and final in judicial remedial proceedings, but many certifying judicial bodies, and judges vary in professionalism at different levels of courts and are more influenced by local appointments and remuneration mechanisms than by laws, as a result, occurrences of “local well-known trademarks” are inevitable, affecting public views on authority of judicial certification. Personally I think that, based on the current circumstances of China, it is premature to have intermediate people’s courts take the job of judicial certification of well-known trademarks from the perspectives of experience, economic benefits and judicial authority. The Supreme People’s Court has been aware of the loopholes in the judicial certification of well-known trademarks and promulgated the Notice of the Supreme People’s Court on Building up the System of Archival Filing of Judicial Recognition of Well-Known Trademarks in November 2006, unifying standards of certification and strengthening protection efforts. Both administrative and judicial certifications agree on the same legal implications for “well-known trademarks”. As for the effective certification of well-known trademarks, China’s legal system has provided unified protection.
  With regard to phony infringement disputes initiated in the process of judicial certification to obtain judicially certified well-known trademarks, Interpretation of the Supreme People’s Court on Certain Issues Concerning the Application of Law to the Trial of Civil Dispute Cases Involving Protection of Well-Known Trademarks, which entered into force on May 1, 2009, explicitly excludes circumstances in some cases from examining well-known trademarks. Because application and registration of domain names is relatively easy, if certification of well-known trademarks has been set as a precondition against registration and use of such domain names, it will be easy for the parties involved to register domain names “voluntarily” and file a lawsuit to demand certification of the well-known trademarks for the purposes of obtaining certification of well-known trademarks by deliberately “setting a trap”. In the interim, the interpretation has imposed strict restrictions on circumstances capable of obtaining judicial certification of well-known trademarks in order to prevent the parties from “colluding” in making phony disputes. The interpretation also stipulates that “unless otherwise provided in this interpretation, the rules on self-admission of evidence for civil actions shall not apply to the certification by the people’s court of the fact of a trademark’s well-known status.” These provisions will, to a large extent, curb proliferation of judicial certification of well-known trademarks.
  2. Foreign practices
  In general, it is an international practice to have the court as the core authority in certification of well-known trademarks and to uphold the principle of “individual certification and passive protection”. However, in practice, different countries will not have any interference from the international provisions when they delegate power of certification to other authorities including the authority in charge of trademark registration.
  According to Article 6b of the Paris Convention as revised in 1967, “The countries of the Union undertake, ex officio if their legislation so permits, or at the request of an interested party, to refuse or to cancel the registration, and to prohibit the use of a trademark which constitutes a reproduction, an imitation, or a translation, liable to create confusion, of a mark considered by the competent authority of the country of registration or use to be well known in that country as being already the mark of a person entitled to the benefits of this Convention and used for identical or similar goods.” The “competent authority” referred to in this article should be the administrative, judicial or quasi-judicial authorities in charge of determining whether or not a trademark is well-known or enforcing protection of well-known trademarks and should not be confined to administrative authorities. Meanwhile, Paragraph 4 of Article 41 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement in short), provides that parties to a proceeding shall have an opportunity for review by a judicial authority of final administrative decisions and, subject to jurisdictional provisions in a Member’s law concerning the importance of a case, of at least the legal aspects of initial judicial decisions on the merits of a case. The provision, as a matter of fact, has impliedly empowered courts to serve as the final authorities in determining well-known trademarks.
  Certainly, there are modes of active certifications in some countries at the same time, where, in the absence of circumstances involving actual rights disputes, the relevant authorities, in administrative management, will determine whether a trademark is well-known or not for prevention or other administrative management purposes. For example, trademark registration authorities in South Korea and Thailand have a list of well-known trademarks certified on their initiative (but publicly inaccessible) as a reference for future reviews.
  In conclusion, in either administrative or judicial certification, the practice of “passive certification and case-by-case certification” is highly target-oriented and also applicable to administrative authorities or other authorities. Meanwhile, the practice also helps enterprises and units to protect their legitimate rights and interests; therefore, it is adopted by the majority of countries in the West and is also an internationally accepted practice.

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