Protecting Trademark Rights under Coexistence
Trademark coexistence describes a situation where multiple enterprises use a similar trademark respectively for their products or services in good faith, usually within the same geographical area. It is a form of trademark use in special circumstances.
In some parts of the world, such as the United States, Germany, the United Kingdom, and Japan, trademark coexistence is allowed and can be used as one of the factors for a determination of likelihood of confusion. By signing a coexistence agreement, the enterprises that are using a similar trademark can continue using the trademark without interfering with each other’s businesses and proactively avoid trademark dispute or infringement.
However, in China such an issue is barely touched in the law. The provisions of relevance are considered to be Article 30 of the current Trademark Law (Article 28 of the second amendment of Trademark Law taken effective from December 2001 to April 2014): “Where a trademark, the registration of which has been applied for, is not in conformity with the relevant provisions of this Law, or it is identical with or similar to the trademark of another person that has, in respect of the same or similar goods, been registered or, after examination, preliminarily approved, the Trademark Office shall reject the application and shall not publish the said trademark” .
With respect to the same provision, the Chinese Trademark Office (CTO), the Trademark Review and Adjudication Board (TRAB) of the State Administration for Industry and Commerce (SAIC) of China and the courts seem having different understandings and adopt different operations. Here we use one of our recent cases as an example to explain the ideas.
In July 2011, our client filed to the CTO an application for extending the protection of its trademark in China through the Madrid Protocol. It is a word trademark of six letters on the goods of motor and engine cooling apparatus for land vehicles (Class 7) and heat exchange equipment (Class 11). The CTO rejected the application in January 2012 and cited five prior-registered trademarks as similar trademarks, all of which registered prior to our client filing its international trademark application. All the cited trademarks contain at least the first five letters of the word used in our client’s trademark. Some contain other elements also and some do not. These cited trademarks are registered designating various goods, including pumps, taps, thermal boxes, agricultural machines, machine tools, stoves, solar water heaters.
We then filed a review application with the TRAB arguing that the cited trademarks did not look like our client’s and did not designate similar goods, also that the client’s trademark, representing its trade name, has been used for years in the Chinese and global markets and already obtained recognition from consumers . The TRAB then, on one hand ruled that our client’s latter registration would not cause confusion to consumers when being compared with three of the cited trademarks for the reason that the designating goods of these trademarks and our client’s were different. But, on the other hand, the TRAB refused to accept these arguments with respect to the other two cited trademarks and determined that our client’s trademark was similar in terms of appearance and designating goods to the other two cited trademarks. Both cited trademarks only consist of the first five letters of our client's trademark’s word but in capital letters and different fonts. The designating goods of the two trademarks are machines, machine tools and parts (Class 7) and apparatus for lighting, electric lighting, stove, solar cooker and solar water heater (Class 11), respectively. Accordingly, the TRAB rejected our client's application for trademark registration in November 2013.
The decision of the TRAB did not satisfy our client and us, so we decided to file an administrative lawsuit against the TRAB with the First Intermediate People's Court of Beijing. While discussing the solution for this case, a coexistence agreement came out as a good option, particularly because such an agreement would support that the registrants of the related cited marks would also believe that the use of our client’s mark on the goods designated would not cause confusion to the public. So, we reached out to the agencies of the registrants of the cited marks and even contacted one registrant ourselves. Finally, we obtained the agreement with the registrant of the Class 7 cited trademark for the client and managed to submit the coexistence agreement before trail. The Intermediate Court agreed with the TRAB on the determination of similarity between our client’s mark and the cited marks. They held further that, even though the owner of Class 7 trademark agreed in writing to have both trademarks use in the Chinese market, if approved for registration, our client’s trademark was still likely to cause confusion to consumers and people would be misled on the source of the goods, in which case public interest would be put in the second place. Therefore, the coexistence agreement should not be used as the reason to allow the registration for extending trademark protection in China.
We then appealed to the Beijing High People’s Court in December 2014 with the opinions that the court at the first instance did not reason how, if approved, our client’s registration would harm common consumers’ interests. We also searched and provided previous cases as support of using a coexistence agreement to prove non-confusion and asked for the same standard to be applied to our case. The High Court issued the judgement in March 2015, ruling to revoke the judgement of the Intermediate Court and the refusal decision of the TRAB, and asked the TRAB to re-consider our client's application for trademark registration.
The written judgement read that the purpose of the provisions of the Trademark Law with respect to similar trademark was not to only prevent confusion and misunderstanding of the general public, but also to avoid the conflict of exclusive rights to actually use two registered trademarks in a real situation. It also gave three reasons explaining why a trademark coexistence agreement was powerful evidence to exclude the determination of “likelihood of confusion”. Firstly, trademark coexistence agreement was concluded by the parties having direct interests in the use of the trademarks – the owner of the prior trademark and the applicant of the latter trademark registration. Secondly, trademark rights are civil property rights; based on the principle of autonomy, the owner of a trademark has the rights to dispose his property at his will unless such a disposition involves significant public interest. The coexistence agreement was established based on the consultation between the prior trademark owner and the latter trademark applicant, and the prior trademark owner declared the intention to allow the coexistence of the trademarks on the same or similar goods, which reflected the prior trademark owner’s disposition of his property. Thirdly, the legislation intention of the Trademark Law is to safeguard rights and interests of consumers as well as legitimate rights and benefits of trademark owners. Only when there was sufficient evidence to prove the coexistence agreement gave rise to a violation of the rights of consumers should the prior trademark owner’s disposition be denied.
Therefore, considering the owner of the cited prior trademark has clearly acknowledged and accepted such a registration, there should be no obstacle for the latter trademark applicant to receive approval of his registration under Class 7.
As can be seen from the case, the High Court adopted a more open attitude towards trademark coexistence. Its judgement and interpretation is more based on and ties in with legislative cause and purpose.
Actually, the juridical system has been making an effort to introduce and apply the concept of trademark coexistence for several years. In December 2010, the Supreme People’s Court pronounced the judgement to the first trademark dispute case regarding coexistence in China - LACOSTE v. CARTELO. The judgement of this case was considered as the first step, according to which, the juridical system took to place implementation towards trademark coexistence. It received many headline attentions at the time and was selected as one of the Top 10 Exemplary Cases of 2010 regarding Intellectual Property Rightsand announced to the court system and the general public.
This case has exerted great influence by giving guidance on how to judge this kind of case at people’s court of all levels. Approximately fifty cases of the topic have been judged in different courts, most of which are administrative cases against the TRAB.
In parallel, the TRAB has also paid close attention to the examination with respect to coexistence agreement during the past few years. In 2007, the 24th TRAB committee meeting brought the issue to discussion and suggested a standard for dealing with the scenario where the CTO rejects a trademark registration on the ground of similarity and the registrant files a review for this rejection to the TRAB.
The TRAB thought it was not reasonable to completely ignore the coexistence agreement. However, in the TRAB’s opinion, protecting consumers’ interest should take priority as it was the purpose of the provisions of Article 28 (currently Article 30) of the Trademark Law and of the entire Trademark Law. Overall, the TRAB thought the discriminability of the trademarks on the whole and the likelihood of confusion needed to be taken into account when determining whether coexistence should be allowed. The specific factors to be considered should be:
The comparability of the designating goods of the two trademarks, and the likeness of the trademarks. In the event that the designating goods of the trademarks are under similar groups according to Chinese Goods/Services Classification but the similarity degree is relatively low, and the words, patterns or other elements of the cited and the latter trademarks have similarities, the trademarks will be determined as similar trademarks according to the general examination rules. However, if consumers are able to distinguish the trademarks from one another on the whole appearance, coexistence should be allowed and the latter trademark should be approved for registration. On the contrary, if both trademarks are used on identical goods or goods of close relevance, and the words, patterns or other elements of both trademarks are very similar, consumers will not be able to distinguish, accordingly coexistence should not be allowed and the trademark should be rejected for registration.
The brand awareness of the trademarks. Where the cited trademark has good brand awareness, the approval for registration and use of the latter trademark will cause confusion to consumers, the registration should be rejected. Where the latter trademark has already obtained certain fame through actual use, in spite of the latter trademark and the cited trademark having similarities, and consumers can still distinguish the two; the latter trademark should be allowed for registration.
Although the aforesaid standard was set in November 2007 and disclosed to the public in 2009, it was observed to be applied only passively to real cases over the next few years. The TRAB took a conservative approach and mostly held the opinion that the coexistence agreement was merely supporting evidence but not the decisive factor and should not necessarily be considered. But from the recent practice, particularly since the beginning of 2014, we have seen several trademarks getting approved for registration with the occurrence of a coexistence agreement. In addition, the new Trademark Review and Adjudication Rules (taking effect as of June 2014) has added provisions in Rule 8 as “during review and adjudication, the party shall have the rights to make disposition of, pursuant to law, his trademark rights and the rights relating to trademark review and adjudication. Provided that public interests and a third party’s rights will not result in prejudice, and the concerned parties may reach an amicable settlement agreement in writing by themselves or by mediation.” These are positive signs that the TRAB may start joining in applying the trademark coexistence system in China.
Finally, as to the practice at the CTO, examination of application for registration is conducted in a simple and direct manner. The existence of a coexistence agreement does not change the factors contributing to the determination of similarity under the Trademark Law. Examiners may consider the supplementary document but this is not mandatory; more likely, they may not consider it. Therefore, the examiners of CTO usually reject the application for registration based on a prior trademark that is similar to the latter trademark application. Generally in practice, a coexistence agreement will not be submitted with the application documents for registration, but to be used after rejection in the review application with the TRAB or in the subsequent administrative lawsuit with the court.
To sum up, when facing similarity rejections by CTO, if the trademark looks highly-similar to a prior trademark and the applicant of the latter trademark registration really wants to protect his trademark in China, the applicant may try to conclude a coexistence agreement with the owner of the prior trademark. With the coexistence agreement, the applicant is suggested to resort to trademark review with the TRAB and further administrative lawsuit at the competent court to fight for the opportunity to obtain the trademark registration. Generally, the TRAB will consider the coexistence agreement in the event that a prior and a latter trademark have low similarities on the whole, and the court system usually tends to be more open and will give consideration even in the event of both trademarks being highly-similar in terms of words, pattern, elements and designating goods.
 The third amendment of Trademark Law (in Chinese) http://www.sipo.gov.cn/zcfg/flfg/sb/fljxzfg/201309/t20130903_816432.html
The second amendment of Trademark Law (in Chinese) http://www.sipo.gov.cn/zcfg/flfg/sb/fljxzfg/200804/t20080403_369302.html
 Top 10 Exemplary Cases of 2010 regarding Intellectual Property Rights (in Chinese) http://www.court.gov.cn/upload/file/2011/04/24/08/P020110424289821250146.doc
 Legal Communication of the 24th TRAB Committee Meeting (in Chinese) http://www.saic.gov.cn/spw/cwtx/200904/t20090409_35830.html
 Trademark Review and Adjudication Rules (in Chinese) http://www.saic.gov.cn/zwgk/zyfb/zjl/fgs/201405/t20140529_145637.html