Author: Jin Lianyi, Partner at BEIJING MINGDUN LAW FIRM

When an enterprise prepares to explore the market in China but finds that its own trademark has been registered by others, if it cannot solve the problem of preemptive registration as soon as possible, it will directly lead to the loss of commercial interests in China. Recently, Mingdun Law Firm (hereinafter referred to as Mingdun) won an administrative lawsuit on the invalidation of preemptive trademark registration for a client who encountered such difficulties. It successfully cracked down on preemptive trademark registration and safeguarded the rights and interests of the client. The key to win this case lies in the use of prior copyright against the exclusive right of the trademark. This article will use this case to introduce the key points of cracking down on the preemptive registration of trademarks based on prior copyright.

1. Copyright of Artworks and Exclusive Rights to Use Trademarks

In the field of intellectual property, an enterprise, as the designer of a certain elaborate art graphic, has a right on it. Enterprises can use art designs as trademarks, submitting trademark registration applications to the Intellectual Property Office for protection. Also, they could treat their graphic designs as artworks and enjoy the copyrights. The difference is that to be protected by the Trademark Law, an artistic work must go through a trademark registration procedure, and the administrative authority shall grant the trademark registrant the trademark right. However, once a work of art is created, a copyright is automatically created in accordance with the law and is automatically enjoyed by the author. Due to the different legal benefits of the two kinds of protections, in practice, it is often seen that there is a conflict between the exclusive right of trademark and the copyright of enterprise logos and art graphics.

In the face of such conflicts, it can be referred to Article 13 of the Trademark Law of China. The article stipulates that an application for trademark registration shall not infringe upon the existing prior rights of others, nor may it preemptively register a trademark that has been used by others which has a certain degree of influence by improper means. Thereinto, the copyrights of prior works are included in the prior rights. The case below that will be shared in this article is a practice of using prior copyright against trademark rights.

2. Basic Facts

The plaintiff in this case is a Hungarian company. Founded in Hungary in 2006, the company is dedicated to the production and sale of energy drinks to customers worldwide and has dominated the Hungarian market since 2010. The Hungarian company produces 4.5 million cartons of beverages per day and is present in nearly 50 countries around the world. As the company's export activities continue to expand, it is now one of the world's largest producers of energy drinks. The artwork previously designed by the Hungarian company and registered as trademark is as follows:

On March 2, 2007, the Hungarian company registered its trademark in Hungary for the aforementioned design. In addition, the graphic design has also been approved for registration in other countries and regions, such as the European Union (May 3, 2021), South Africa (July 9, 2012), Brazil (January 27, 2015), etc.

On March 7, 2017, a Hangzhou company applied for and registered a trademark which was similar to the aforementioned design in Class 30, and the designated goods were: ready-to-drink chocolate drinks; sweets; bread; coffee drinks with cocoa; black tea drinks; fruit-flavored tea drinks; fresh pizza; sweet popcorn; coffee; Cocoa drinks. The exclusive period of use of the trademark is from March 7, 2018, to March 6, 2028. The picture of the trademark is as follows:

On April 8, 2020, the Hungarian company has been aware of the above trademark and filed an application for invalidation examination against it. Since the Hungarian company had not previously applied for registration of or used the mark in China mainland, it was difficult to prove that it had a prior trademark right on the above-mentioned design. On January 1, 2021, the China National Intellectual Property Office (hereinafter referred to as CNIPO) ruled the domestic trademark remain valid.

Dissatisfied with the ruling, the Hungarian company sued to Beijing Intellectual Property Court, requesting a judgment to revoke the ruling issued by the CNIPO which maintained the validity of the trademark and request it to make a new ruling.

After examination, the Beijing Intellectual Property Court held that the Hungarian company owned the prior copyright of the design, and then applied Article 32 of the Trademark Law and ordered the defendant CNIPO to make a new ruling.

3. Trial Opinions of Beijing Intellectual Property Court

In the present case, the Court held that:

The plaintiff was a Hungarian company, and the work involved in this case which it claimed copyright was a work of art completed abroad. Article 2.2 of Copyright Law of the People's Republic of China (Abbreviated as 'Copyright Law') provides that “The copyrights enjoyed by the works of foreigners or stateless persons in accordance with the agreements signed between the country to which the author belongs or the country of habitual residence and China or the international treaties to which they are both parties shall be protected by this Law.” Because Hungary and China were both members of the Berne Convention, according to the above provisions, Hungarian works could be protected by copyright law of China. The work involved in the case was a graphic design. Its form of expression and details were arranged and combined through special design, which reflected the designer's independent choice, trade-off, and conception. Thus, it had a certain originality and artistic beauty, and should be considered as a fine art in the sense of the Copyright Law.

In this case, the plaintiff submitted a notarial certificate to prove that it enjoyed the prior copyright of the above-mentioned work. In the notarized documents, screenshots from the official website of the Hungarian Intellectual Property Office showed that the plaintiff had applied for the registration of trademarks on March 2, 2007 and November 10, 2009 for the art works in question and the graphics containing the works of art, and the above-mentioned trademarks were approved for registration on January 3, 2008 and June 3, 2010 respectively. However, the registration certificate of artwork submitted by the defendant Hangzhou company stated that the registration time was February 16, 2013, which was later than the above-mentioned trademark registration date of the plaintiff. In the absence of other evidence to the contrary, it could be determined that the plaintiff is an interested party in the artwork involved in the case, and the copyright of the plaintiff was formed earlier than the filing date of the disputed trademark.

The disputed trademark was identical to the figure of the plaintiff's work, and was highly similar in terms of expression, design details, overall visual effects, etc., which had resulted in substantial similarity. Taking into account the originality of the works in question, the similarity of the trademark marks in dispute with the works in question, and the fact that the Hangzhou company in question was currently engaged in the import business of goods, the court held that there was a possibility that the defendant had contact with the plaintiff's works in question. Without permission, the third party applied for registration as a trademark with a figure that was highly similar to the work in question, which damaged the prior copyright enjoyed by the plaintiff in relation to the artwork. The aforesaid act had caused 'damage to the existing prior rights of others' under Article 22 of the 2013 Trademark Law.

In summary, the court held that the relevant determination of the ruling was wrong and should be corrected.

4. Analysis and Conclusion

When encountering an administrative dispute over trademark invalidation examination based on prior copyright, how should the law be applied? The core focus of the case is as follows:

Firstly, does the graphic involved in this case constitutes a work protected by copyright law?

The court firstly made a judgment on whether the work in question constituted a work within the meaning of China's Copyright Law. As mentioned before,the Article 2.2 of the Copyright Law provides a copyright protection for works of qualified foreign authors. The Hungarian company is incorporated under Hungarian law, and both Hungary and China are members of the Berne Convention. Thus, works created by the Hungarian company can also be protected by Chinese copyright law.

According to Article 3 of the Copyright Law of China, works refer to intellectual achievements that are original and can be expressed in a certain form in the fields of literature, art, and science. There are eight specific kinds of works listed, namely 1) written works; 2) oral works; 3) music, drama, opera, dance and acrobatic works; 4) fine arts and architectural works; 5) photographic works; audiovisual works; 6) engineering design drawings, product design drawings, maps, schematic diagrams and other graphic works and model works; 7) computer software; 8) as well as other intellectual achievements that correspond to the characteristics of the work. Returning to this case, the expression forms and details of the works involved have been arranged and combined through special design, reflecting the designer's independent choice, trade-off, and conception, and have a certain originality and artistic beauty. Therefore, the court held that the work constituted a work of art within the meaning of the Copyright Law and should be protected by the Copyright Law of China.

Secondly, is the plaintiff the true copyright owner of the work?

According to Article 19 of the Provisions of the Supreme People's Court on the Trial of Administrative Cases Involving the Authorization and Confirmation of Trademark Rights, where a trademark sign constitutes a work protected by the Copyright Law, the design draft, original copy, contract for obtaining rights, and copyright registration certificate before the application date of the disputed trademark provided by the parties concerned may be used as prima facie evidence to prove the ownership of copyright. In addition, trademark announcements, trademark registration certificates, etc. may be used as prima facie evidence to determine that the trademark applicant is an interested party entitled to claim the copyright of the trademark mark.

In order to prove to the court that the plaintiff is the true copyright owner of the work, during the litigation procedure, Mingdun suggested that the plaintiff could collect evidence outside the territory, considering that the plaintiff's goods did not enter the Chinese market on a large scale. Finally, together with the plaintiff, Mingdun collected and sorted out the evidence of publicity and reporting on the Internet about the artwork involved in the case and went through the notarization procedures for the evidence of Internet propaganda and reporting. The above evidence, together with the Hungarian trademark registration certificate submitted by the plaintiff at the stage of the application for invalidation, formed prima facie evidence that the plaintiff is the true copyright owner of the work. It could prove that the work in question was completed and published well before the filing date of the disputed trademark and enjoyed a certain degree of popularity and influence worldwide.

Third, what is the possibility of contact between the trademark registrant and the work?

Considering that the enterprise nature of the original registrant of the disputed trademark, namely the defendant, was an import and export trading company, Mingdun made a full statement to the court on this point. The Court also adopted this factor. Generally speaking, the registrant of the disputed trademark, as a company engaged in trade import and export and controlled by a Hong Kong company, should be aware of the plaintiff's popularity and trademark. In the end, taking into account the originality of the work involved in the case and the similarity of the trademark mark in dispute with the work, the court held that the registrant of the disputed trademark had a high possibility of contact with the plaintiff's work. Thereby, the court found that the defendant had preemptively registered the plaintiff's artwork as a trademark in bad faith.

Taking into account all the above factors, the court applied the situation of 'harming the existing prior rights of others' under Article 32 of the 2013 Trademark Law to correct the erroneous ruling sued.

Because of its feature of ' automatic acquisition after completion ', copyright is often a powerful weapon against preemptive registration. However, in order to make good use of this weapon, the right holder needs to properly preserve the evidence of rights at an early stage of the completion of the work, including retaining the documents of the creation process of the work and making reasonable and lawful use of the work. If the corporate logo is closely related to business operations, the enterprise should submit an application for trademark registration as soon as possible to avoid the risk of being preemptive registered.