[China Intellectual Property Journal] Judgment of Infringement of Trademark Use after the Revocation of Latter Registered Trademark -- Comments on the Case of Jimin Company v. Yihua Company for Trademark Infringement

Sept. 12, 2018China Intellectual Property JournalEdition08

By: Ling Zongliang

[Case No.]

(2015) Xu Min San (Zhi) Chu Zi No. 1321

(2017) Hu 73 Min ZhongNo. 299

[Abbreviature of Adjudication]

The decision of the Trademark Office of the National Intellectual Property Office, PRC (hereinafter referred to as the Trademark Office) or the Trademark Review and Adjudication Board on granting trademark registration has certain credibility to the public, including the trademark owner. The use, license, transfer or protection of relevant trademarkswhich are conductedout of trust in the decision made by the trademark administrative departments shall be protected. Therefore, in the case where the rights of two registered trademarks conflict, the decision that the right of the latter registered trademark is revoked or invalid has no retroactive effect on the previous use behavior in principle, but if there is malice in the latter application for trademark registration, the former trademark owner may claim that the relevant use behavior constitutes infringement. There is a difference between the administrative cases on authorization and ownership and thecivil cases on infringement in the identification of the possibility of causing confusion. The former should consider all categories of products to which theaccused trademark is approved to apply. As long as there is the possibility of causing any confusion in any product, theaccused trademark shall not be allowed to register. The latter only considers the category of product to which the accused trademark actually applies.

[Case Review]

In 1998, the plaintiff Jimin Company registered and acquired the trademark of "Xineng" under the fifth category of chemical and pharmaceutical preparations, which would expire on September 27, 2018. In 2004, the defendant Yihua Company applied for registration of the "Xineng" trademark under the fifth category of pharmaceutical preparations, medicines for human use and injections. In 2010, the former Trademark Office of the State Administration for Industry and Commerce ruled,based on the plaintiff's objection,that the defendant's trademark shall not be registered. In 2011, the former Trademark Review and Adjudication Board of the State Administration for Industry and Commerce (hereinafter referred to as the Trademark Review and Adjudication Board) decided that the defendant's trademark shall be approved for registration. After that, the Beijing No.1 Intermediate People's Court and the Beijing Higher People's Court both decided that the decisions of the Trademark Review and Adjudication Board shall be upheld. In July 2015, the Supreme People's Court revoked the decision of the Trademark Review and Adjudication Board and ordered the Board to make a new decision. On October 28, 2015, the Trademark Review and Adjudication Board made the decision that the defendant's trademark shall not be approved for registration. From 2011 to 2016, the plaintiff purchased Cefprozil For Dry Suspension (Specification: 0.125 g *4 packs/box or 0.125 g *6 packs/box) marked with the trademark concernedin a number of drug stores in Shijiazhuang, Nanjing, Suzhou, Fuzhou and Taiyuan. The manufacturer is noted with the name of the defendant.

The plaintiff held thatsince 2005, the defendant had been applying, withoutapproval for the registration of trademark, the accusedtrademarkto the medicines involved produced by it, the huge amount of whichhad been sold all over the country. In particular, the malicious and repeated infringementof the defendant in a largescale had caused serious damage to the plaintiff. The defendant should compensate the plaintiff much more according to law. Therefore, the plaintiff initiated the lawsuit with the court and requested the court to order the defendant to stop infringement, eliminate the impact and compensate for its loss.

The defendant argued that the accused trademarkis a trademark which was applied for in accordance with law and approved by the Trademark Office for registration. Even if the court found that the trademark concerned is in real conflict with the accusedtrademark, it is a dispute over registered trademarks, which does not fall within the jurisdiction of the People's Court according to law. Based on the principles of publicity and credibility in the trademark registration system and the adjudication rule of non-retroactivity, after the Beijing Higher People's Court made the second-instance decision to maintain the decision of the Trademark Review and Adjudication Board to approve the registration of the accusedtrademark and before the Supreme People's Court made the decision after retrial, Yihua Company was using the accused trademark lawfully and properly on the premise that it enjoys the exclusive right to use the registered trademark. Therefore, the defendant requested all the plaintiff's claims should be rejected.

The court of first instance held that the judgment of retrial by the Supreme People's Court should be final. Given that the judgment clearly revokes the decision of the Trademark Review and Adjudication Board to approve the registration of the accusedtrademark, the accusedtrademark shall be deemed to have not been registered so far and the defendant has no exclusive right to use the registered trademark from the beginning. And given that Yihua Company has used the accusedtrademark on the medicines involved produced by it, which is enough to cause misunderstanding and confusion among the relevant public, its behavior has constituted an infringement on the exclusive right of trademark registration enjoyed by Jimin Company. Accordingly, the court ordered the defendant to stop the infringement, eliminate the impact and compensate for the economic loss of 5.5 million yuan, including reasonable expenses. The defendant refused to accept the first instance judgment and appealed. The court of second instance held that, if a registered trademark is revoked or declared invalid, there shall be no retroactive effect in principle on the use of the trademark registrant prior to such revocation or invalidation, but compensation shall be paid for the loss caused to others by the malicious intent of the trademark registrant. The defendant's use of a trademark similar to the plaintiff's trademarkon the same product is subjectively malicious and objectively prone to cause confusion, which constitutes an infringement on the plaintiff's trademark. The court therefore dismissed the appeal and upheld the original verdict.

[Comments by Judge]

This case is a typicallyadministrativeandcivil case over trademarks. The defendant applied for and used the trademarkcharged with infringement in 2004. The trademark, although being approved through administrative litigation for registration, was eventually revoked by the Supreme People's Court. The questions arising from it are whether the plaintiff can claim that the defendant's use of trademark before revocation constitutes infringement, and whether there is a difference between the civil cases over trademark infringement and the administrative cases over authorization and ownership in the judgment of causing confusion and misrecognition.

1. Is the case about the disputeovertwo registered trademarks?

First,the defendant did obtain the exclusive right to use the registered trademark on March 28, 2007. According to Clause 2, Article 36 of the Trademark Law of China, where a trademark is approved to be registered after examination and with no objection,the periodfor the applicant for trademark registration to enjoy the exclusive right to use the trademark shall be counted from the date after three months of the announcement of preliminary examination and approval. In this case, the plaintiff raised an objection after the announcement of the preliminary examination and approval of the accused trademark. After the Beijing Higher People's Court made the second-instance judgment, the decision of the Trademark Review and Adjudication Board on the approval of the registration of the accused trademark had already come into effect. Therefore, Yihua Company obtained the exclusive right to use the accused trademarkafter threemonths of the announcement of preliminary examination and approval, that is, March 28, 2007. Second, the defendant's exclusive right to use the accused trademark was revoked by the administrative judgment of the Supreme People's Court on July 1, 2015. On July 1, 2015, the Supreme People's Court, after retrial, revoked the administrative judgment on the approval of registration of the accused trademark and the ruling of the Trademark Review and Adjudication Board, and ordered the Trademark Review and Adjudication Board to make a new ruling. The Board re-ruled that the accused trademark shall not be approved for registration. As of the trial of this case, there is no evidence that the accused trademark had been registered. Therefore, the defendant no longer enjoys the exclusive right to use the accused trademark. The case is not about the dispute over registered trademarks. The court of first instance has the right to hear the case.

2. The retroactivity of the registered trademark on its use before revocation

According toClause 2, Article 47of the Trademark Law of China, if any decision or ruling declares that any registered trademark is invalid, there will be no retroactivity on the judgment, ruling and mediation letter of the trademark infringement case made and executed by the People's Court before the declaration of invalidation, and on the decision of the trademark infringement case made and executed by the administrative department for industry and commerce, as well as on the contracts for the transfer or license of the trademark which have already beenperformed. Trademark transfer or license contract does not have retrospective effect. However, compensation shall be made for the loss caused by the malicious intent of the trademark registrant. This provision does not explicitly indicate whether the decision or ruling declaring the invalidation of a registered trademark has any retrospective effect on the registrant's own use of the trademark before such declaration, that is, whether the prior registered trademark owner can accordingly claim that the use of the later registered trademark before invalidation constitutes infringement. The court held that the decision of the Trademark Office or the Trademark Review and Adjudication Board to grant trademark registration has certain credibility to the public, including the trademark owner. The use, license, transfer or protection of the relevant trademark conducted out of trust in the decision of the trademark registration authorities should be protected. The later revocation or invalidation of the trademark shall not turn the prior legitimate act into any infringement, otherwise the various market activities based on registered trademarks will beinstable and unpredictable, which does no good to the transaction safety of market participants. Yet Article 7 of the Trademark Lawalso stipulates that the trademarksshould be applied for registration and used in good faith. If the trademark registrant has malicious intent when applying for trademark registration or when using the registered trademark, that is, he knows that the trademark he applies for registration or use has infringed the prior rights of others, then the interests of the trademark registrant mentioned above which should be protected will no longer exist. No matter if the registered trademark has been revoked or declared invalid, the prior right holder may claim that the use of the later trademark constitutes infringement. The provision which states that "the dispute between two registered trademarks does not fall within the jurisdiction of the people's court" should be normally interpreted as the following: for any disputeover two lawfully and effectively registered trademarks, if there is malicious intent in the application or use of the later registered trademark, the people's court shall deal with it. Similarly, the retroactivity of any decision and ruling on the non-registration, revocation or invalidation of the trademark against the use of the registered trademark before revocation or invalidation should also depend on the fact that whether the registered trademark owner applies for or uses the trademark maliciously. To put it another way, if a registered trademark is revoked or declared invalid, there is no retroactive effect in principle on the use of the trademark registrant before such revocation or invalidation, but compensation shall be made for the loss caused to others by the malicious intent of the trademark registrant.

3. Distinction and judgment of confusion and misrecognition in civil and administrative cases

Whether the use of the accused trademark before it is revoked constitutes infringement depends on two judgments: one, whether the defendant is subjectively malicious; two, whether the defendant's use of the accused trademark is likely to cause confusion and misrecognition. For the former, there is no difference in judgment between the administrative cases on authorization and ownership and the civil cases on infringement. In this case, the defendant and the plaintiff are both located in Jiangsu Province, and both produce and sell antibiotics with similar efficacy. After the plaintiff had used the right trademark for many years, the defendant applied for the registration of and used a trademark similar to the right trademark on basically the same product, and could not give a reasonable explanation about the choice of "Xineng". Therefore, it can be found that the defendant is malicious subjectively. The problem here is the judgement of causing confusion and misrecognition. Some hold that in the administrative litigation on the trademark authorization and ownership, the court has made the judgment that the registration of the accused trademark is likely to cause confusion and misrecognition compared with the plaintiff's trademark, so the same determination should be made in the civil litigation. However, the court held that there is a difference between the administrative cases on authorization and ownership and the civil cases on infringement in the identification of the possibility of causing confusion. The former should consider all categories of products to which the objected trademark shall be applied. As long as there is a possibility of causing confusion for any product, the objected trademark should not be allowed to register. The latter only considers the category of products to which the accused trademark is actually applied. Therefore, the judgment of causing confusion and misrecognition in the administrative cases on authorization and ownership is stricter than that in the civil cases on infringement. In other words, there is a possibility that where it is found to cause confusion and misrecognition in administrative litigation, it is found otherwise in civil litigation on infringement. In this case, the productsto which the accused trademark is approved to apply include pharmaceutical preparations, medicines for human use, injections, tablets, water agents, etc., but the actual product it applies to is "CefprozilFor Dry Suspension". Therefore, it is not appropriate in this case to directly determine according to the retrial decision of the Supreme People's Court that the product to which the accused trademarkactually applies is likely to cause confusion and misrecognition among the relevant public. In civil litigation, it is necessary to judge according to the actual situation whether the defendant's use of the accused trademark is likely to cause confusion and misrecognition. Given that the products to which the accused trademark and the right trademark apply are both pharmaceutical preparations, the pronunciations of the accused mark and the right trademark are the same, the characters used for the trademarks are also in a similar style, and especially given that the products involved are drugs, which are closely related to people's life and health, stricter criteria should be adopted when determining whether the accused trademark is likely to cause confusion and misrecognition. When confusion is mistaken, strict standards should be applied. The court eventually found that the defendant's actual use of the accusedtrademarkis likely to cause confusion and misrecognition, so the defendant's behavior constitutes an infringement.