China presents some unique difficulties for foreign trade mark owners. The subtle differences between the IP systems applicable in many western countries and Chinese law have caused much consternation and frustration.
China practises a “first-to-file” trade mark system. This means that the person who first applies for registration of a trade mark in China will prevail over a person who is first to use the same trade mark in China regardless of the fame or reputation of that mark outside of China.
This “first-to-file” system has created, and continues to create, distress for those who are unaware of the Chinese system. This is especially the case for companies located in a country which practises a “first-to-use” trade mark system, where, as the name suggests, the first person who actually uses a trade mark would be the owner of the trade mark. For example, when a company has invested significant time and energy to arrange for the sale of a certain branded product in China, they may then discover that someone has already registered that brand as a trade mark in China. The “first-to-file” system means that instead of being the owner of that brand in China, the company may face a potential infringement issue.
The trade mark system in China does have a provision to prevent “famous” trade marks from being “grabbed” by unrelated parties, such as trade mark squatters. However, recent cases show that it is very difficult to establish sufficient “fame” to an examiner. It is a subjective assessment and the bar seems to be very high.
Three recent decisions involving Facebook, iPhone and Weixin illustrate these points and the challenges faced by trade mark owners in China:
- iPhone: A third party filed for “iphone” in relation to “leather goods”. This would cover accessories such as tablet covers. In this case, the court considered that iPhone was not well known in China before the filing date, thus the registration stands. In other words, Apple cannot use “iPhone” to sell leather goods in China.
- Weixin (“Wechat”): Weixin is an instant messaging service developed by Tencent (a major Chinese company) and enjoys active users of 650 million per month. A third party filed for “Weixin” in relation to “communication services” and Tencent opposed registration. At first court instance, the Court decided that public interest trumps the interest of the Applicant. On appeal, the High Court chose a different reason, ruled that “Weixin” was descriptive in that “Wei” means “small” or “little”, and “Xin” means “letter”, “message” or “communication”. Thus, the third party’s application was rejected. While not spelt out, it can be construed that Tencent now owns the mark through sufficiently wide use.
- Facebook: A third party filed for “face book” in relation to “fruit juice beverages”. While the use of Facebook is banned in China, the court considered that Facebook had sufficient prior reputation in China to be considered “famous”, thus the first filed “face book” in relation to “fruit juice beverages” by the third party was rejected.
It is not easy for us to reconcile these decisions. There does not appear to be a consistent application of legal principles that would lead to a predictable outcome. As said above, we must remember that China is not a common law country and thus earlier court decisions, while being able to assist one in understanding laws and regulations in China, would not set precedence that is always required to be followed by subsequent courts.
It is our strong recommendation to always file as soon as possible and to seek strategic legal advice for trade mark planning in China. Under a “first-to-file” system, it is necessary to get in early. If someone has already registered your mark, it is most important to discuss your options with a legal advisor to assess risk and consider available strategies.
Madderns has a specialised Chinese team to provide strategic legal advice to clients for trade mark planning in China. Most team members speak fluent Chinese and travel to China regularly to keep up with the latest developments.