Trademark Agency's Notes (12) Brief discussion on the practical status of domestic trademark coexistence

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"Trademark coexistence refers to the use of similar or identical trademarks by two different enterprises on goods or services, without necessarily interfering with each other's commercial activities. In trademark practice, in order to avoid the uncertainties caused by trademark coexistence and ensure the reasonableness, legality and compliance of trademark use, this paper analyzes the current situation of trademark coexistence in China. ”

Source: IPRdaily Chinese Network (iprdaily.cn)

Author: Wisp Cong

Guide

On June 14, 2023, the Diet of Japan passed the Partial Amendment Act to the Unfair Competition Prevention Act, etc., which is noteworthy in the Trademark Act by introducing a trademark coexistence consent system. On April 1, 2024, Japan's trademark coexistence consent system was officially implemented. Previously, Japan did not introduce a coexistence consent system, and even if the prior trademark owner agreed to issue a coexistence consent for a similar trademark applied for later on the same or similar goods, the coexistence consent was generally not recognized because the coexistence consent could not rule out the possibility of confusion or misidentification of the source of the goods or services by consumers. Even if the applicant and the owner of the cited trademark are affiliated companies, the official will not accept it.

The introduction of the coexistence consent system in Japan this time also has a certain inspiration and reference significance for the mainland, which is a neighboring country and also belongs to the East Asian cultural circle and civil law system. With regard to trademark coexistence, the World Intellectual Property Organization (WIPO) defines trademark coexistence as the use of similar or identical trademarks by two different enterprises on goods or services, without necessarily interfering with each other's business activities. The International Trademark Association (INTA) defines a trademark coexistence agreement as an agreement between two or more parties to allow the parties to set rules for the peaceful coexistence of trademarks by similar trademarks that avoid the likelihood of confusion. Some scholars in China define it as a trademark coexistence agreement, that is, an agreement reached by two or more independent business entities for the simultaneous existence of the same or similar trademarks on the same or similar goods or services.

In fact, the current Lanham Act in the United States (i.e., the Trademark Act of 1946, as amended) provides for trademark coexistence. Section 2(4) of the Lanham Act provides that "a trademark that closely resembles a trademark registered with the Patent and Trademark Office, or a trademark or trade name that has been used by another person in the United States but has not been abandoned, and is likely to cause confusion, misrepresentation, or deception when used." provided, however, that where a majority of persons use the same or similar trademarks, the Commissioner of Patents considers that the continued use of each trademark is not likely to cause confusion, misrepresentation or deception, subject to certain conditions or limitations, as to the manner in which the mark is used, the place in which the mark is used, or the goods in which the mark is used; Simultaneous registration may still be granted to them if, prior to the following specified times, they have been jointly and lawfully used commercially and thus become qualified users of each of the trademarks".

At present, the Trademark Law, the Regulations for the Implementation of the Trademark Law and the Guidelines for the Trial of Trademarks do not explicitly stipulate the administrative confirmation of the coexistence of trademarks. However, the Guidelines for the Trial of Administrative Cases Involving the Granting and Confirmation of Trademark Rights of the Beijing High People's Court provide guidelines for the adjudication of "coexistence agreements", which specifically include:

15.10 [Properties of the Coexistence Agreement]

To determine whether the disputed trademark and the cited trademark constitute similar trademarks, the coexistence agreement can be used as preliminary evidence to eliminate confusion.

15.11 [Formal Requirements for Coexistence Agreement]

The owner of the cited trademark shall agree in writing to the application for registration of the disputed trademark, clearly stating the specific information of the disputed trademark, but the conditional or time-limited coexistence agreement shall generally not be trusted.

Coexistence agreements shall be genuine, lawful, and valid, and shall not harm the national interest, the public interest, or the lawful rights and interests of third parties, otherwise they shall not be accepted.

15.12 Legal Effect of Coexistence Agreement

If the cited trademark is identical or substantially the same as the trademark symbol of the disputed trademark, and is used on the same or similar goods, the application for registration of the disputed trademark cannot be granted solely on the basis of a coexistence agreement.

If the cited trademark is similar to the trademark symbol of the disputed trademark and is used on the same or similar goods, and the owner of the cited trademark issues a coexistence agreement, it may be determined that the disputed trademark and the cited trademark do not constitute similar trademarks if there is no other evidence to prove that the coexistence of the disputed trademark and the cited trademark is sufficient to cause confusion among the relevant public as to the source of the goods.

If, after the owner of the cited trademark issues a coexistence agreement, it files an objection to non-registration or requests for invalidation on the ground that the disputed trademark and the cited trademark constitute similar trademarks, it shall not be supported, unless the agreement is invalid or revoked in accordance with law.

As we all know, all trademarks in mainland China are examined and registered by the Trademark Office of the State Intellectual Property Office. The judicial guidelines promulgated by the Beijing High Court, as the competent court of the Trademark Office, will indirectly have an impact on the registration and confirmation of trademark rights across the country, which is equivalent to supplementing the gaps in legislation and departmental rules, and in fact allowing the existence of the Trademark Coexistence Agreement. In the case of Shuailong Company and Haoxiangyou Company concerning the trademark "I Really Always Miss You"[1], the Beijing Higher People's Court held in the reasoning part that trademark rights are essentially private rights and property rights. In the practice of trademark grant and confirmation examination, although it is necessary to prevent confusion and misunderstanding by the relevant public, it is more necessary to respect the private nature of trademark rights, especially the will of the prior trademark owner. The interests of consumers do not necessarily constitute public interests, and there is no necessarily sufficient reason for the protection of consumer interests to take precedence over the protection of the interests of trademark owners in the Trademark Law, and the essential nature of private rights of intellectual property rights, including trademark rights, determines that the Trademark Law should give priority to respecting the will of the trademark owner and protecting the interests of the trademark owner. When there is a conflict between preventing confusion and misidentification by consumers and respecting the will of the prior trademark owner, respect for the will of the prior trademark owner should generally be given priority over the prevention of confusion and misidentification by consumers.

In practice, however, the Trademark Coexistence Agreement is not a panacea. In the case of GF Securities Co., Ltd. v. the State Intellectual Property Office concerning the trademark "GF Private Placement Trustee"[2], the Beijing Intellectual Property Court held that the disputed trademark and the cited trademarks constituted similar trademarks used on the same or similar services. The agreement submitted by GF Securities Co., Ltd. to agree to the nature of trademark coexistence and registration with each cited trademark is in essence a license contract for GF Securities to allow each cited trademark owner to use its registered trademark "GF GUANGFA", and is not a coexistence agreement between the disputed trademark and each cited trademark. The Disputed Trademark is a continuation of the trademark "GF GUANGFA" already registered by GF Securities, and cannot be the natural basis for the Disputed Trademark to be approved for registration.

It is not difficult to see from past examination and adjudication cases that both the administrative and judicial authorities have maintained a cautious attitude towards the Trademark Coexistence Agreement. In the process of market-oriented operation of enterprises, disputes arising from objective "trademark coexistence" are not uncommon. Such as the "Du Kang" trademark dispute, the "Nanxiang" trademark dispute, the north and south "Daoxiang Village" dispute, and so on. In addition, Article 59 of the Trademark Law stipulates that "if a trademark registrant has used a trademark that is identical or similar to the registered trademark and has a certain influence before the trademark registrant on the same or similar goods before the trademark registrant applies for trademark registration, the owner of the exclusive right to use the registered trademark shall not have the right to prohibit the user from continuing to use the trademark within the original scope of use, but may require it to attach an appropriate distinguishing mark". The purpose of this provision is to balance the interests of trademark registrants and prior users of trademarks, and to safeguard the rights and interests of prior users of trademarks that have already had a certain influence in the market but have not registered trademarks on the basis of not prejudice to the system of obtaining trademark registration. The CNIPA held that[3] for the application of this paragraph, the prior user must meet the following five conditions at the same time: first, the trademark has been used before the trademark registrant applies for trademark registration; second, it is used before the trademark registrant; (3) the use of the trademark registrant before applying for trademark registration has reached the level of "having a certain influence"; Fourth, it shall not exceed the original scope of use such as the original business goods or services and the original business area; Fifth, if the trademark registrant requires it to attach an appropriate distinguishing mark, the prior user shall attach a distinguishing mark.

Even if the registration of a coexisting trademark is approved, it does not mean that everything is fine. First of all, the Trademark Coexistence Agreement often restricts or restricts the rights of the contracting parties to a certain extent, for example, the trademark may not be transferred or authorized to be used without the consent of the parties to the agreement, which is equivalent to the loss of part of the right to dispose of it. secondly, it is not possible to oppose or invalidate the trademark of the party to the agreement, which is equivalent to giving up part of the means of rights protection; In addition, they are not allowed to enter the industry or region in which the other party operates, which is equivalent to permanently losing part of the commercial market in some regions or subdivisions. Originally, it was a registered trademark of its own, but in the process of actual use, it had to "dance in shackles", and I didn't dare to take a step beyond Lei Chi, which made people feel very helpless.

Therefore, in trademark practice, in order to avoid the uncertainties caused by the coexistence of trademarks, and at the same time ensure the reasonableness, legality and compliance of trademark use, the agency usually recommends that the applicant adopt the following methods within the framework of the current laws and regulations:

1. Handle the trademark transfer, and transfer the unique trademark to both or more parties

According to Article 5 of the Trademark Law, "two or more natural persons, legal persons or other organizations may jointly apply to the Trademark Office for registration of the same trademark, and jointly enjoy and exercise the exclusive right to use the trademark." "On the premise that multiple parties have reached an agreement on the coexistence of trademarks, this is already a solution that can be more in line with the procedures handled by the Trademark Office and close to the true expression of the right holder's intentions. It can not only realize the joint use of the same trademark by multiple right holders, but also play a role in mutual checks and balances. After all, if there are multiple registrants, the signatures of all registrants are required when handling subsequent business such as trademark transfer, licensing, and change at the Trademark Office, so as to avoid unilateral and private operations by individual right holders. However, this plan requires close cooperation between multiple parties to jointly safeguard the exercise of trademark rights. Generally speaking, from the perspective of the agency, it is mainly reflected in the ability to provide a power of attorney or corresponding materials with the official seal in a timely manner. Some large-scale companies often have a complete approval process for the use of seals, and having multiple registrants for trademarks means that the seal process for each company needs to be carried out once, which is very inconvenient. In addition, a co-owned trademark is also prone to disputes during the asset appraisal or property division during the audit, and if a right holder undergoes major changes such as bankruptcy liquidation or merger and reorganization, it will also affect other rights holders. Therefore, this scheme is usually suitable for small and medium-sized companies that continue to operate.

2. Handle the filing of trademark licenses, and the right holder authorizes others to use them exclusively

Article 43 of the Trademark Law stipulates that "a trademark registrant may license others to use its registered trademark by signing a trademark license contract." The licensor shall supervise the quality of the goods in which the licensee uses its registered trademark. The licensee shall guarantee the quality of the goods using the registered trademark. If the registered trademark of another person is used with permission, the name of the licensee and the place of origin of the goods must be indicated on the goods using the registered trademark. If the licensor licenses others to use its registered trademark, the licensor shall report the trademark license to the Trademark Office for the record, which shall make a public announcement. The trademark license shall not be used against a bona fide third party without filing. "The exclusive license of the trademark can meet the needs of two enterprise entities at the same time. According to Article 4 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Trademark Dispute Cases, "in the event of infringement of the exclusive right to use a registered trademark, the licensee of the exclusive use license contract may jointly sue with the trademark registrant, or may file a lawsuit on its own if the trademark registrant does not file a lawsuit." This, in turn, gives the exclusive licensee the right to initiate a lawsuit to enforce its rights. In addition, the process of filing trademark authorization and license is also simple, the cost is lower, and the rights relationship is clear. However, in comparison, the trademark owner, i.e., the licensor, will have a greater initiative, while the licensee will be on the weaker side. In a trademark licensing partnership, the licensor often has the brand or core technology, while the licensee generally needs to provide funds and develop sales channels. In the unlikely event that the partnership breaks down, the licensee may encounter the same dilemma as JDB back then. If you change the brand, you will face new market challenges and spend a lot of money on publicity. The "business" of "trademark" represents commerce, so on the basis of complying with the trademark law, it is also necessary to consider more commercial risks, balance and protect the common interests of all rights holders, so that the trademark can play a greater role.

3. Establish a special intellectual property or brand management company

As mentioned above, in the trademark coexistence case of "GF Securities" and "Guangfa Bank", in fact, most of the enterprises that raised the demand for trademark coexistence were themselves affiliated companies, but different commercial entities were set up for business needs. However, in legal terms, an independent legal person that has obtained a business license is regarded as a separate entity, even if there is an inextricable connection between the two. As a result, some groups choose to set up a special intellectual property or brand management company to manage all the trademarks under the group's name in a unified manner, and then authorize the subsidiaries to use them through trademark licensing. For example, China Resources established China Resources Intellectual Property Management Co., Ltd. in 2018. In this way, you can not only avoid the embarrassing phenomenon of being rejected because of the similarity of your own trademark, but also actively protect your rights externally. Although this model is good, it is costly and is mainly suitable for large-scale companies with a large number of trademark registrations.

Specific situation, specific analysis, choose the most suitable plan, and effectively protect the legitimate rights and interests of the enterprise.

Exegesis:

[1] See the Administrative Judgment of the Beijing Higher People's Court (2014) Gao Xing (Zhi) Zhong Zi No. 3024

[2] See the Administrative Judgment of the Beijing Higher People's Court (2020) Jing Xing Zhong No. 7048

[3] See Guozhifa Bao Han Zi [2021] No. 77 Reply of the State Intellectual Property Office on the Application of Law in Paragraph 3 of Article 59 of the Trademark Law

(Original title: Trademark Agency's Notes (12) On the Practical Status of Domestic Trademark Coexistence)

Source: IPRdaily Chinese Network (iprdaily.cn)

Author: Wisp Cong

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