What BISHONEN’s nine-year journey to registration reveals about China’s Trademark Law

Summary

The sake of the ‘BISHONEN’ (Chinese characters ‘美少年’) brand was born in Japan and has been produced and sold in Kyushu, Japan, since the 1920s. The brand name was chosen by the president of Nanju Sake Brewery Co, Ltd (later renamed Bishounen Brewery Co, Ltd), at the time, and was taken from the verse “without restraint, Zongzhi is a gallant young guy” (original in Chinese ‘宗之潇洒美少年’) in the poem Songs of Eight Immortal Drinkers by the Chinese Tang dynasty poet Du Fu. After the approval of its trademark registration in Japan, owing to the change of business, the trademark and its sake manufacturing business were transferred to NLA Co, Ltd (NLA (later renamed Bishounen Co, Ltd)).

Since 2004, a Chinese individual, Feng, has repeatedly applied in China for the registration of a number of trademarks originating in Japan, including ‘ ’, ‘ ’, ‘玉乃光’, ‘高清水’, ‘高清水’ and ‘贺茂鹤’, and prominently used them in connection with sake and other products, claiming that the products were from Japan. Up to now, Feng has filed five ‘BISHONEN’ trademark applications, among which were the following.

Application/registration number	Class	Application date	Registration date	Mark
8848113	33	16 November 2010	14 January 2012
4067769	33	17 May 2004	7 June 2006

In 2014, NLA applied for international registration G1192609 under the Madrid Agreement and designated China (the NLA Application). After examination, the Chinese Trademark Office then rejected the application by citing the above trademarks No. 4067769 (Reference Mark 1) and No. 8848113 (Reference Mark 2). On 5 January 2015, NLA petitioned for re-examination of the rejection with the Trademark Review and Adjudication Board (TRAB) and sought to clear the way for its trademark application in China.

The non-use cancellation action against Reference Mark 2 and the appeal against the rejection of the NLA Application ran almost simultaneously, during which NLA exhausted the two-instance procedures in court to keep its application alive and, by a rehearing, it finally got its trademark successfully registered in China. It took nine years from the date of international registration of the NLA Application to the final approval of registration in China, the details of which can be seen from the timelines below.

Difficulties and reflections therein

Options against malicious applications

Articles 32 and 45 of the current Trademark Law stipulate that if an applicant preemptively registers by improper means a trademark that has been used by others and has a certain influence, the prior right holder or interested party may, within five years from the registration date of the trademark, petition to the TRAB to declare the registered trademark invalid; in the case of malicious registration, the owner of a well-known trademark shall not be subject to the five-year time limit.

However, it is difficult in practice for some foreign companies to prove that a registered trademark should be declared invalid, as it is difficult for them to collect evidence of their prior use and influence in China as well as evidence to show the other party’s bad faith; for example, when their marks first gained popularity before the application date of the registered trademark, their reputation in the market may have already been known to the relevant pubic and competitors in China, which may lead to trademark squatting, but at the time they did not enter the Chinese market on a large scale. Not to mention the five-year statute time limitation that requires the one who wants to overcome it to prove its mark to be well-known in China, which means a requirement of more evidence to prove its wide influence on the relevant public in the relevant Chinese market before the application date of the registered trademark.

Therefore, to fight against trademark squatting, we may need to look elsewhere to bypass the above difficulties. Article 49 of the Trademark Law provides a three-year non-use cancellation procedure. Based on this provision, requesting the cancellation of a registered trademark on the grounds of non-use for a continuous term of three years without justified reasons, and then getting one’s own trademark registered, may be a more convenient choice, especially against those who make a living by trademark squatting without intention to use, also known as ‘trademark trolls’. According to Article 66 of the Regulations for the Implementation of the Trademark Law, in cases where a registered trademark is challenged on the ground that it has not been used continuously for three years without justified reasons, it is the trademark owner who bears the burden of proof to submit evidence of use of the trademark three years before date of filing of the cancellation petition or provide justified reasons for the non-use. The petitioner, on the other hand, only needs to provide a brief petition with a lower burden of proof, which usually leads to lower costs as well.

Regarding the evidence in non-use cancellation actions

In the administrative lawsuit against the Reference Mark 2, the plaintiff, NLA, challenged the evidence of use provided by the third party, Feng, including because the photocopies provided were blurry, the evidence was self-made without any support of actual performance and no specific time was shown in the photos provided. In response to NLA’s challenge, the Beijing Intellectual Property Court specifically pointed out that the China National Intellectual Property Administration (CNIPA) should check the originals of the evidence submitted by the parties when hearing of such a cancellation. In practice, many commercial entities still lack awareness of using their trademarks registered in a regulated manner, which leads to little evidence of use of trademarks being retained in their commercial operations, and some trademark holders may even forge evidence to circumvent the provisions of non-use cancellation. Therefore, it is particularly important for the CNIPA to check the original pages or objects when examining evidence of trademark use. If a trademark holder is unable to submit the original copies of the evidence of use he or she submitted, making it difficult for the defendant and the court to determine or judge, based on the photocopies of the evidences alone, whether the disputed trademark has been used publicly, truthfully and legally within the specified time period, he or she shall bear the legal consequences of failing to provide evidence.

The discretion on suspension and the prevention of circulation of proceedings

Judges’ discretion on suspension

Under Article 51 of the Interpretation on Several Issues concerning the Implementation of the Administrative Procedure Law of the People’s Republic of China, which was in force during the period of the administrative lawsuits against Reference Mark 2, in the course of litigation, where the trial of a case must be based on the outcome of the trial of a relevant civil, criminal or other administrative case, and the relevant case has not been concluded yet, the litigation shall be suspended or stayed.

However, in practice, although one may petition the court to stay, the judge has his or her own discretion as to whether the previous case will have an impact on the current case and whether the proceeding should be stayed or not. When a court has a large number of pending cases with complex case schedules, the judge may, so as to improve efficiency and reduce the backlog of cases, not allow this suspension. In this case, the lawsuit against Reference Mark 2 and the lawsuit against the re-examination decision of the NLA Application proceeded almost simultaneously, and the result of the cancellation of Reference Mark 2 would have a substantial impact on the outcome of the lawsuit regarding the re-examination of the NLA Application, but the judge still did not rule to stay the hearing.

The choice of appeal and circulation of proceedings

Article 31 of the current Trademark Law stipulates that if two or more applicants for trademark registration apply for registration with identical or similar trademarks on the same or similar goods, the trademark applied for earlier shall be preliminarily examined and announced.

When facing an unfavourable first instance ruling on the re-examination decision of a trademark application, it is a difficult choice to decide whether to proceed with the appeal or not, as the appeal may not be successful. However, the obvious advantage of filing an appeal is that it can keep the trademark application alive, preserving its filing date and therefore having the effect of blocking others from applying for the same or similar mark in a later application. In other words, if the NLA Application remains alive, once the Reference Mark 2 is finally cancelled, it can then be approved for registration. Conversely, if the appeal is abandoned and thus the re-examination decision rejecting the request for the extended protection of NLA’s trademark takes effect, the NLA Application will lose its effect of blocking others. If, at this time, someone (sometimes it is the applicant of the trademark to be cancelled) files another application for registration of the same or similar trademark on the same or similar goods, even if later on Reference Mark 2 is finally cancelled and NLA immediately files a new application, this new application of NLA will face a new registration hurdle – the CNIPA will give priority to that earlier application filed during the time period between abandoning the appeal and the cancellation of Reference Mark 2.

Therefore, although there will be time and money costs, by continuing to appeal, keeping the original application alive, the applicant can at least reduce the risk of new obstacles to its trademark registration.

Cross-border cooperation of attorneys

The action of applying for a trademark in a foreign country and facing cancellation and administrative litigation procedures involves professional legal issues that require extraordinary research, team discussions, devotion of time and patience of experienced attorneys. The Chinese and Japanese attorneys in the NLA Application demonstrate these strengths, having worked closely with each other as a team for years, established good mutual trust with full and close communication channels and methods between them, highlighting the importance of effective teamwork in this and similar cases.