A closer look at the "IPHONE" & "face book" trademark cases in China

The "IPHONE" case

On 31 March 2016, the Beijing High Court issued a judgment dismissing Apple's appeal against the decision of Trademark Review and Adjudication Board (TRAB), in which the TRAB upheld the grant of the trademark registration "IPHONE" in Class 18 for leather goods to Xintong Tiandi Technologies (Beijing) Ltd. (Xintong).

Xintong's "IPHONE" mark (registration no. 6304198) was filed on 29 September 2007, just 3 months after Apple first launched its iPhone products. The application was published in 2010 and Apple filed opposition proceedings against the mark.

As Xintong's mark was filed before the 2014 Trademark Law amendments, the 2001 Trademark Law was applied. Apple mainly relied on two grounds to support its case:

1. Apple cited two of its registered trademarks No.4073735 "i-phone" (filed on 20 May 2004 for cell phone products listed in class 9) and No.3339849 "IPHONE"(filed on 18 Oct 2002 for computer hardware, software products listed in class 9) and claimed that Xintong's application was in violation of Article 13.2 of the 2001 Trademark Law, as Apple's trademark "IPHONE" was a well-known mark and protection should be extended to cover dissimilar goods;
2. Apple also asserted that Xintong's application was in violation of Article 10.1.8, i.e. it is detrimental to social morals or customs or having other unhealthy influences.

The Beijing High Court held:

1. There was insufficient evidence to show that Apple's cited trademark "IPHONE" had obtained well-known trademark status before the application date of Xintong's mark i.e. 29 September 2007. Most of the evidence adduced by Apple supported use after the filing date of Xintong's mark- Apple had first launched its iPhone products in June 2007 but did not start selling iPhones in China until October 2009.
2. In respect of Article 10.1.8 , there was no evidence to support that the registration of Xintong's mark would contravene this article.

Despite the popularity of Apple's iPhone products in China, they were unable to obtain well-known mark protection under the PRC Trademark Law. Whether a trademark is well-known or not is, of course, judged on a case-by-case basis. "Well-known mark" protection was first adopted in the 2001 Trademark Law. It has been well established that a party needs to show well-known status of its cited mark at the application date of the opposed mark if he claims well-known mark protection.

Consistently, this judging criteria is also applicable to determine well-known mark under the 2014 Trademark Law, and has been codified in Article 1 of the Beijing High Court Guidelines on Hearing Trademark Administrative Cases (January 2014) and Article 9 of the revised State Administration for Industry and Commerce Rules on Determination and Protection of Well-Known Trademark (SAIC Order No. 66 of 2014). Therefore, in the Apple case, if the filing date in dispute had been 2010, it is likely that Apple may have obtained well-known mark protection.

It is not surprising that Apple’s argument based on Article 10.1.8 was rejected by the Beijing High Court as “having unhealthy influence” has only been applied in limited circumstances. According to Article 3 of the Supreme People’s Court Judicial Interpretation on Hearing Trademark Administrative Case (SPC JI No. 12 of 2010), a mark would only be regarded as having other unhealthy influence when the mark or any of its element cause any negative impact on public interest and public order in terms of politics, economy, culture, religion and ethics etc.

Interestingly, at the Beijing High Court appeal stage, Apple raised an additional argument that Xintong’s application was in violation of Article 41.1 of the 2001 Trademark Law. Article 41.1 provides the legal basis to cancel a registered trademark. Rather than giving an opinion as to whether Article 41.1 could be relied upon for opposition proceedings, the Beijing High Court held that Apple's argument on Article 41.1 would not be considered as they had not raised this in the TRAB review proceedings. In contrast, the Beijing High Court did provide their opinion on Article 41.1 in the "face book" case.

The “face book” case

The "face book" case judgment was issued on 25 April 2016. The details of the case are as follows:

On 24 January 2011, an individual Liu Hongqun applied to register the “face book” mark for canned vegetables, potato chips in class 29, coffee, tea and candy in class 30, fruit juice and vegetable juice in class 32.

Facebook filed an opposition, but both China Trademark Office (CTMO) and TRAB ruled against Facebook. Facebook further appealed to the Beijing No. 1 Intermediate Court and received a favourable judgment. The Applicant Liu Hongqun then appealed the case to the Beijing High Court.

Similarly, Facebook's argument that their two cited trademarks No.5251161 "FACEBOOK" (filed on 30 March 2006 for providing service of on-line directory of business information service listed in class 35) and No. 5251162 "FACEBOOK"(filed on 30 March 2006 for providing service of on-line chatting room listed in class 38) are well known marks was rejected, as there was no sufficient evidence to show that these two cited marks were well known at the filing date of the opposed mark. Also, the opposed mark does not cause any negative impact on public interest and public order, thus there is no violation of Article 10.1.8 as asserted by Facebook. However, Facebook's argument based on Article 41.1 was supported by the courts. The Beijing High Court held that:

1. Article 41.1 of the 2001 Trademark Law provides that if the registration of a trademark is acquired by fraud or other improper means, any party can file a request to the CTMO to cancel the trademark registration. The legislative intent is to create an orderly trademark registration system and to promote a healthy trademark market environment. On a literal reading, Article 41.1 can only be applied for cancellation proceedings. However, if a trademark is filed by fraud or other improper means and such conduct can be shown at the examination or review proceedings stage, the CTMO and the TRAB should not be prevented from exercising the powers conferred under Article 41.1 merely because the mark has not yet been registered.
2. In this case, the applicant applied to register the "face book" mark in numerous classes; he also registered third party mark that enjoys relatively high reputation such as "黑人"("black man" in Chinese) and "壹加壹"("one plus one" in Chinese). Given the clear bad faith conduct of the applicant and his intention to profit from selling those trademarks, the court held that Liu Hongqun's trademark application should not be granted based on the legislative intent of Article 41.1.

It is worth mentioning that Article 31 of the 2001 Trademark Law also provides that an applicant shall not use improper means to preemptively register a third party's mark which is already in use and enjoys a certain degree of influence. Different from Article 41.1, Article 31 is commonly used in situation where a third party attempts to apply for a mark that has not been registered but already in used in China. In addition to the requirements to prove the use and the degree of influence of their mark in China, the application of Article 31 is also subject to the limitation in Article 18 of the SPC JI No.12 of 2010 - the protection of marks that have been used and enjoys certain degree of influence should not be extended to dissimilar goods.

It is worth pointing out that the 2 cases were assessed under the 2001 Trademark Law, but most of the provisions relied on have been adopted in the 2014 Trademark Law. One of the promising changes in the 2014 Trademark Law is the introduction of Article 7 which provides that all trademarks must be applied and used in good faith. In practice, it remains to be seen if this catch-all "good faith" provision would lead to any new change when applying it together with other remedies as provided under the Trademark Law.

The above two cases once again highlight the importance for brand owners to strategically plan and execute their trade mark filing programme early to avoid having to engage in lengthy administrative litigation for the recovery of their trademark further down the line.