The Owner of the trademark “Yitai ET and Picture” was canceled and the “ET and Picture” trademark was registered as wished 

Exotrophy Technology (Beijing) Co., Ltd (hereinafter refer to Exotrophy) would like to applied for the registration of “ET and Picture” trademark on type 9 products including computer software (already recorded), but was hindered by the prior trademark “Yitai ET and Picture” and received rejections upon its application for trademark registration from the Trademark Office of State Administration of Industry and Commerce (hereinafter referred to Trademark Office) and the Trademark Review and Adjudication Board, respectively. Exotrophy was dissatisfied with these decisions and thus filed litigation to the court. Recently, Beijing Higher People’s court made the [2016]Jing Xing Zhong No. 1682 Ruling and affirmed the first-instance ruling on the grounds that the owner of the trademark, having been canceled, should not have been the basis for whether or not the applied trademark could be approved. The Court also canceled the prosecuted decision of the Trademark Review and Adjudication Board and demanded the Board make new adjudication.

It is learnt that the applied trademark of this case, no. 13397364 “ET and Picture”, was applied for registration by Exotrophy in October 2013 and was designated to be used on type 9 products including disks, CDs, computers, recorded computer executable programs.

In October 2014, the Trademark Office decided to reject the application for registration of the trademark. In November 2014, Exotropy filed a rejection review application to the Trademark Review and Adjudication Board. In June 2015, the Board made the trademark rejection review decision and rejected the application for registration of the trademark, on the grounds that the applied trademark and the no. 7085701 “Yitai ET and Picture” trademark (hereinafter referred to as cited trademark) constituted similar trademarks applied on the same of similar products.

It is learnt that the cited trademark, no. 7085701 “Yitai ET and Picture” trademark, was applied for registration in December 2008 and was approved to be used to type 9 products, including computer memory, computer fittings, and computer peripherals. The owner of the trademark was Guangzhou Zhilin Market Development Co., Ltd. (hereinafter referred to Zhilin Company). 

Exotrophy was dissatisfied with the prosecuted decision of the Trademark Review and Adjudication Board and thus filed an administrative litigation to Beijing Intellectual Property Court. Its main reason was that the applied trademark did not constitute a similar trademark with the cited trademark. During the first-instance litigation, Exotropy submitted to the Court the industrial and commercial recordation documents of Zhilin Company provided by Guangzhou Haizhu District Administration of Industry & Commerce. The documents showed that Zhilin Company was approved for cancelation on August 18th 2010, which was the proof that the subject of the right to the cited trademark did no longer exist.

Beijing Intellectual Property Court holds that, according to the industrial and commercial recordation documents of the owner of the trademark, Zhilin Company, submitted by the plaintiff, the company was already approved for cancelation on August 18th 2010 by the administrative institution of industry & commerce and thus its qualification as a legal subject had disappeared. Although the current evidence suggested that the cited trademark was still effective, the exclusive right to use the trademark had lost its basis for right, since the registered subject did no longer exist. Also, since the cited trademark had not been used for a long period of time, it would not cause confusion with the disputed trademark in the market and should not pose any obstacles in the registration approval of the disputed trademark. Therefore, the Court gave the first-instance ruling that canceled the prosecuted decision of the Trademark Review and Adjudication Board. The Board was dissatisfied with the first-instance ruling and appealed but did not receive support.

Professional Commentary

Zhang Ji  Hunan Siboda Law Firm, Founding Partner: The currently effective Trademark Law of our country includes the element of “confusion” in determining trademark infringement. The Law does not clearly specify, however, if the element of confusion should be considered in the confirmation procedure of right to trademark, and there have been certain debates in actual applications. This case gave a clear answer to this question: confusion should indeed be considered in the confirmation procedure of right to trademark as well.

The introduction of the factor of confusion was actually a revelation of the nature of the trademark protection provided by the Trademark Law of our country. The protection, whether in trademark infringement procedures or trademark confirmation procedures, is not a protection on the symbol of the trademark but on the trademark’s function to distinguish the sources of products. Under objective circumstances, if a trademark cannot realize the function to distinguish the sources of products or services, it will neither be under the protection of the Trademark Law of our country nor pose obstacle to others’ applications of similar trademarks. In this case, the owner of the cited trademark had been canceled for many years and there was evidence indicating that the cited trademark did not undergo assignment or transfer procedures. Thus the trademark practically became a trademark with no owner. As the Chinese saying goes, “the fur is useless without the skin”. Under such circumstance, even if others apply for a trademark that is similar, the action will not cause confusion among the relevant public in the market. It was based on this reason that the People’s Court did not mechanically apply article 30 of the currently effective Trademark Law of our country but granted the registration for the applied trademark on the grounds that it would not cause confusion.

The indication of this case, in relation to the actual practices of trademark confirmation, is probably a new approach for trademark applicant to deal with the Trademark Office’s trademark registration application rejection that is based on article 30 of the currently effective Trademark Law of our country, which is to determine the existence of the owner of the cited trademark. If the owner has already dissolved, the applicant can use the aforementioned case to save the right to trademark and fight for the registration. It should be noted that if the owner of the cited trademark is not canceled but revoked, it cannot be inferred that the owner has lost the ability to control the trademark. Revocation is a penalizing measure given by administrative institutions of industry and commerce in occasion of the company violating legal regulations. However, it does not represent the dissolution of the company, which could only be realized through the completion of cancellation procedure. Also, it can only be inferred that confusion in market will not be incurred after a certain amount of time since the cancelation of the owner of the cited trademark. In there is only a short period of time since the cancelation of the business, the distinguishing power of the trademark will still be left in the market and it cannot be excluded that the trademark will not cause confusion. I recommend refer to the regulation that “cessation of use for three consecutive years [the trademark] should be canceled” in the Trademark Law of our country, which means that cited trademark of its owner that has been canceled for three or more years can be inferred to lose its function of distinguishing the sources of products or products and not to be under protection. Still, certainly, all inferences must be made under the circumstances that the cited trademark has not been assigned or transferred. 

Xu Jin  Beijing Janlea Law Firm Partner: The main point of dispute in this case was that, whether or not, under the circumstance that the owner of the cited trademark had been canceled, the cited trademark could pose obstacle in the registration obtaining of the applied trademark.

Firstly, article 30 of the currently effective Trademark Law of our country states that, “If the trademark applied for registration is the same or similar to a trademark that is registered by others on the same or similar products, or is initially approved, the Trademark Office will reject the application.” It is not simply saying, however, that if the trademark applied for registration is the same or similar to a trademark that is registered on the same or similar products, or is initially approved, the Trademark Office will reject the application. Therefore, the application of this article not only requires the existence of a prior trademark, but also needs the trademark to be actually owned by others. The Trademark Law of our country protected manufacturers and operators and the rights they enjoy for the trademarks they own. Trademarks on their own as symbols do not have any rights that are protected by the laws.

Secondly, from a literal interpretation of article 30 of the currently effective Trademark Law of our country that “registered by others on the same or similar products, or is initially approved”, “others” here should be referring to appropriate trademark applicant or registrant. According to article of the currently effective Trademark Law of our country, natural persons, legal persons or other organization should apply for trademark registration to the Trademark Office, if they need to obtain the exclusive use of trademark for their products or services in manufacturing and operating activities. Therefore, appropriate trademark applicants or registrants should include natural persons, legal persons, or other organizations. According to article 36 paragraph 1 of the General Principles of the Civil Law of our country, a legal person shall be an organization that has capacity for civil rights and capacity for civil conduct, and independently enjoys civil rights and assumes civil obligations in accordance with the Law.

In this case, Zhilin Company was approved for cancelation on August 18th 2010. According to article 44 of the Regulation of the People's Republic of China on the Administration of Company Registration, “the company ceases to exist after the cancelation registration by the company registration authority, and to article 36 paragraph 2 of the General Principles of the Civil Law of our country, “a legal person's capacity for civil rights and capacity for civil conduct shall begin when the legal person is established and shall end when the legal person terminates”, Zhilin Company, after the cancelation, lost its capacity for civil rights and capacity for civil conduct, and was no longer an appropriate trademark applicant or registrant. Therefore, in this case, although the cited trademark had not been announced as ineffective, due to the cancelation of Zhilin Company, the cited trademark was no longer the trademark registered by others on the same or similar products or is initially approved mentioned in article 30 of the currently effective Trademark Law of our country. It no longer involved an operator’s right that is protected by the currently effective Trademark Law of our country and should not have, certainly, posed obstacle in the registration of an applied trademark.