(By Albert Chen) The Beijing High People’s Court (the “Beijing High Court”) established the “merchandising right” in a 2011 judgment on an administrative dispute between the Trademark Adjudication and Review Board (the “Board”) and DANJAQ, LLC (the “DANJAQ”). That was the first judicial definition of the right, and the first time it was included as a protected “first right.” The decision can be considered a clarification of the “merchandising right” by the judicial organs as well as broadening the scope of first rights.
In today’s post, we would like to describe the facts in the case, and introduce to our readers the opinions of Beijing High Court and our comments on the matter.
Case Summary:
Xie, a Chinese citizen, went to the Trademark Office in order to complete registration of the trademark “邦德007，BOND” in Class 10. Yet, before that, DANJAQ, the publisher of the 007 series movies, registered the trademark “007 and image trademark” and the trademark “JAMES BOND” in Classes 28 and 41 in 2001. Therefore, DANJAQ filed an opposition to Xie’s application, but was subsequently denied by the Trademark Office, based on the grounds that the name concerned is just the title of the work instead of the work itself, and therefore shall not be protected by the Copyright Law. In addition, DANJAQ had not made any application in the relevant classes.
Dissatisfied with the decision, DANJAQ filed an appeal to review application with the Board. During the board’s review, DANJAQ stressed its copyright, trademark and merchandising right over the 007 and JAMES BOND marks. Also, they claimed, the 007 series movies command great influence in China, enjoying wide popularity with the general public. In addition, DANJAQ thought Xie’s application was “detrimental to socialist morals or customs, or having other unhealthy influences”, and moreover, that the trademark was applied for through “unfair means”.
In regard to DANJAQ’s claims with the review board, the Board decided: first, that the infringement against the trademark could not be established, that the opposed trademark is in a different class from that registered by DANJAQ, and also that the subject matter and content of the product or service is far from the same, which in sum brings them to the conclusion that they are not similar trademarks. Furthermore, DANJAQ’s trademark could not be determined to be a well-known trademark. Second, Xie’s application would not infringe DANJAQ’s copyright, and even if the marks concerned in the case could remind the public of the 007 movie series, it would not represent the entire work; moreover, the title itself could not be considered a “worl” in the law. Third, in terms of the infringement against the merchandising right and registration through unfair means, no adequate evidence was submitted to substantiate such claims. Based upon these findings, the Board refused DANJAQ’s application for review of the mark.
Dissatisfied with the review board’s decision, DANJAQ filed suit in the Beijing No.1 Intermediate People’s Court (the “Beijing Intermediate Court”). The Beijing Intermediate Court upheld the decision handed down by the Board, confirming that no infringement against the trademark or copyright could be decided in the case. The judge stressed that a mark is considered to be applied for using unfair means when the work it is applied to is clearly infringing; howevert, the current trademark dispute was only focused on the application for the mark and the subsequent adjudication with the trademark review board. Despite this, the Beijing Intermediate Court amended the Board’s decision that Xie’s application was in violation of the good faith principle and could present a negative influence; for this reason, the decision of the Board was far from fair and correct. Based on this, the court revoked the decision of the Board and ordered a remand to hear the issue again.
After the first instance, the Board and Xie, who was a third party in the lawsuit, filed an appeal with the higher court. After hearing the appeal, the Beijing Higher People’s Court overruled the first instance decision, and found that the so-called “negative influence” referred to the “passive and negative influence produced on the politics, economy, culture, religion, nationality and other social public interests as well as the public order,” and that it shall not “engage any private rights.”
The Beijing High Court held a different opinion on whether the “merchandising rights” could be included in the “first rights.” According to the understanding of the Beijing High Court: as the name of the figures in the 007 movies, “007” and “JAMES BOND” has gained a well known reputation as well as wide popularity among the general public. Seeing as this is the fruit of DANJAQ’ efforts, business value or business opportunity should also be acquired by DANJAQ, and be taken as the first rights for protection. Considering all these, Beijing Higher Court determined that the trademark application filed by Xie violated Article 31 of the Trademark Law, which stipulates that no first rights shall be damaged when filing a trademark application, and thereby the appeal was denied and the original decision sustained.
Lawyer’s Comments:
1. The most attractive point in the case is the establishment of the “merchandising right” in the Beijing Higher Court’s final judgment, which is also protected as a first right. In fact, the merchandising right is not a statutory right in China, and as contained in the opinions of the Beijing High Court, the merchandising right shall mean the exclusive right that brings its holder business value or business opportunity through wide popularity and long-term effort at building the mark.
As to whether the merchandising right could be determined to be a first right, the Beijing High Court gave us a positive answer by quoting Article 31 in the Trademark Law:
“An application for the registration of a trademark shall not create any prejudice to the prior right of another person, nor unfair means be used to pre-emptively register the trademark of some reputation another person has used.”
Based on these conclusions, the court denied the appeal of the Board.
But it shall be noted that the only available official document indicating the “first rights” is the “Trademark Adjudication Standard” (the “Standard”), which is stipulated by the Trademark Office. According to the Standard, the “first rights shall refer to the rights other than the trademark right acquired before the application day of the disputed trademark, including the trade name right, copyright, design patent right, name right, portrait right, etc.” In addition to the aforesaid general definition, the Standard also gives us detailed ways to determine infringement and standards. That is to say, the first rights in the Standards or according to the opinions of the Trademark Office shall only be the six rights, and yet now in this case that limitation has been broken by Beijing High Court’s decision.
2. Regarding the issue of the protection of the copyright as a first right, both courts hearing the dispute denied it being subject matter protected under the Copyright Law. As for that decision, the author bears no objection. However, in theory, once the length of the title is long enough, and is with originality, the mark could be protected as a work under the Copyright Law. That being said, it is not easy to make a unified and correct definition for originality demanded for “title,” and for this reason, the Copyright Office of China issued the “Reply on Whether the Work Title Could be Protected under the Copyright Law,” which regulates that “the title of the work is not suggested to be protected according to the Copyright Law but is advised to be protected under the Anti Unfair Competition Law.”
3. As for protection of the first registered trademarks, both courts in this case did not support DANJAQ’s claims regarding well-known trademarks, and this lack of support is actually depriving DANJAQ’s chance to protect its trademark based upon the confusion standard, or even based on a claim of trademark dilution. Dilution of a trademark essentially means that the link between the well-known trademark and the product or service it represents is damaged due to another’s use of a substantially similar mark; in other words, the distinctiveness of the original mark is diluted. In this particular case, the trademark would be diluted, because the well-known mark 007, and its film series would be damaged due to this association with contraceptive products. However, the current protection of well-known trademarks in China has diverged from that demanded in the Paris Convention, and the existing well known trademark system in China is more like an honor. Therefore, when deciding whether a trademark is well-known, the authorities demand a lot of evidence regarding the mark’s reputation in China. It goes without saying that reputation accumulated overseas would not be considered for the court’s decision. This has led to many brands that are well known outside China not being approved for well known status in China when are squatted by others.
Before closing, we checked the registration status of the trademark concerned in the dispute on April 18, 2013 on the China Trademark Office’s website, and the application for “邦德007，BOND” is now invalid.
Lawyer Contacts
You Yunting：86-21-52134918 youyunting@debund.com/yytbest@gmail.com
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