what we think

Businesses around the world have been receiving phone calls, faxes, and emails from Chinese domain name registration companies, with news that a third party is trying to register a domain name with the same name as their own name/trademark. These businesses are advised that to protect their rights, they should act quickly to register their domain name.

This is of course just another way to market the registration of domain names and should be ignored if the business has already registered relevant domain names and websites. However, should a business choose to not register a relevant domain name and a third party registers it instead, this will lead to a conflict between two kinds of intellectual property (IP) rights: trademarks and domain names.

IP rights that potentially conflict also include similar or overlapping (design) patents and trademarks, trademarks and copyrights, and trademarks and enterprise name rights. To improve the mechanism for handling such conflicts, the Chinese Supreme People's Court on 1 March 2008 promulgated its judicial opinion in the Provisions on Issues Concerning the Trial of Cases of Civil Disputes over the Conflict between Registered Trademark, Enterprise name with Prior Right (hereinafter "the Provisions").

Background of the promulgation of the Provisions

Conflicts of rights primarily originate from a lack of codification in the legal systems of the different forms of IP, which each rely on a different set of rules and recognition principles. For example, a copyright is derived automatically upon completion of the work, while the rights to a trademark, patent, or the rights to an enterprise name are gained through registration with different administrative organizations. These organizations are managed and regulated by different governmental departments with conflicting interests. And to complicate matters even further, IP often overlaps and intersects; the creation of one product can lead to different forms of IP, which may be owned by different owners. When conflicts arise, rights owners have two options.

First, the relevant administrative departments may be requested to resolve the conflict through cancellation and nullification procedures. Second, IP rights owners may directly initiate litigation with the court to enforce a transfer or cancellation. In practice however, courts have been reluctant to involve themselves where IP rights owners have already been granted exclusive rights by a competent administrative department. Should administrative measures be considered mandatory before judicial claims can be made, in order to confirm the legal basis of such claims? As cases of IP rights conflicts continue to increase, it has become necessary to better define the jurisdiction of courts and determine guidelines on how to conduct hearings.

Explanation of the Judicial Interpretation

• Lawsuits may be filed directly with the court for any conflict between a registered trademark and a pre-existing IP right such as a copyright, a design patent, a right to enterprise name, etc.

According to Article 1 (1) of the Provisions, for a lawsuit filed on the ground that the character or graphic used in the registered trademark of another party infringes upon the plaintiff’s copyright, patent right for a design, right to enterprise name or other prior right, if the lawsuit conforms to the provision of Article 108 of the Civil Procedure Law, the people’s court shall accept it. The Provisions clarifies the basis for a court to handle IP conflicts by determining that the priority of judicial procedures is to solve the conflict between registered trademarks and other prior rights. But the Provisions do not disallow administrative remedial procedures for such issues either. Therefore in conflicts between a registered trademark and a copyright, design patent, or right to enterprise name, the complainant may file a lawsuit in court, and may also choose to apply to the Trademark Review and Adjudication Board (TRAB) for cancellation of the registered trademark as per Article 41 of the Trademark Law.

• Conflicts of rights between registered trademarks should be ruled on by the State Trademark Office (STO) or the TRAB. People's courts should not directly accept such cases.

As per Article 1 (2) of the Provisions, for a lawsuit filed on the ground that the registered trademark used by another party on approved commodities is identical or similar to the plaintiff's trademark in prior registration, the People's court shall inform the plaintiff to apply to the competent administrative organizations for settlement according to Article 111 (3) of the Civil Procedure Law. Primary reasons to give sole jurisdiction for such conflicts to administrative authorities are:

1. The Trademark Law includes legal remedies for such conflicts. Where a party is dissatisfied with the ruling of the TRAB, he may initiate a corresponding administrative litigation against such a ruling.
2. This recourse reinforces the key principle of China's trademark system; that of a unified and centralized registration and authorization system for trademarks,
   for the whole country.

Civil disputes following the illegal use of a trademark, by the owner of the rights to that trademark, may be accepted by the court directly. In accordance with Article 1 (2) of the Provisions, the people's court shall accept a lawsuit filed on the ground that another party uses a registered trademark on commodities beyond the approved extent, or uses a registered trademark by means of changing conspicuous characteristics, splitting, composing, etc. if this registered trademark is identical or similar to the plaintiff's registered trademark. The specific illegal circumstances in which an owner of an exclusive right to a registered trademark maybe be filed against include:

1. using the trademark on commodities or services beyond
   the approved extent;
2. conspicuously changing the characteristics of the
   trademark, resulting in a change of its overall
   appearance;
3. Overlapping or composing multiple registered
   trademarks inappropriately on one commodity,
   weakening some parts while emphasizing others, and
   thereby confusing it with another trademark.

The above three circumstances make substantial changes that go beyond the extent of the scope of the rights of the trademark, and therefore such changes could be deemed as an entirely new trademark that has not been registered. Courts shall accept civil disputes related to such matters.

• If the name of an enterprise is identical or similar to the name of another enterprise, and the similarity is sufficient to confuse the relevant public, a lawsuit may be initiated as per the Law Against Unfair Competition.

As per Article 2 of the Provisions, a lawsuit filed on the ground that another enterprise's name is sufficiently identical or similar to the plaintiff's name in prior to confuse the commodity's source to the public concerned and thereby violates Article 5 (3) of the Law Against Unfair Competition, shall be accept by the people's court if the lawsuit conforms to the provision of Article 108 of the Civil Procedure Law.

Article 5 (3) of the Law Against Unfair Competition stipulates that "using the name of another enterprise or person without authorization, thereby leading people to confuse products from the two" is an act of unfair competition. The Provisions clarify that using the name and brand of another enterprise without authorization is an act of unfair competition. The court may accept cases directly without involvement of administrative procedures, and shall not suspend the lawsuit because of the enactment of any administrative procedures.

In addition, enterprise names acquired abroad that are used in China, even if meeting relevant laws and regulations that apply to registrations abroad, must not conflict with enterprise names and brands already in use and with a certain reputation in China. This may still be regarded as unfair competition or trademark tort according to the principle of the regional relevance and independence of IP.

• An enterprise whose name infringes upon another party's exclusive right to a trademark or whose conduct constitutes unfair competition, shall bear civil liabilities such as ceasing to use the trademark, conforming with regulations, etc.

Article 4 of the Provisions stipulates that where the defendant's enterprise name infringes upon the exclusive right to trademark or constitutes an unfair competition, the people's courts may order the defendant to bear civil liabilities such as ceasing to use, using in conformity with regulations, etc. as per the Plaintiff's claims and specific circumstance of the case.

When hearing cases in regards to an IP conflict case, the court may order the rectification or the changing of the infringer's enterprise name or brand, with the infringer bearing all civil liabilities in regards to "the ceasing of it’s use, and correct use in accordance with regulations". In the example of the infringement of a registered trademark, the court may order the infringer to use the trademark in a reduced context. Rulings may also consider economic compensation.

Conclusion

The promulgation of the Provisions further clarifies the double-protection structure of administrative procedures and judicial claims in China's IP legal system. These interpretations should solve many issues involving rights confirmations and tort. More importantly, the Provisions give IP rights owners further assurances to protect their IP rights in many different situations.