Author: Yang Xiuyun, Partner at BEIJING MINGDUN LAW FIRM

By the end of June 2022, there were 40.545 million valid registered trademarks in China. However, the growing number of trademark applications highlights the scarcity of limited trademark resources, making it highly possible for new trademark registration applications to conflict with prior registered trademarks. Gradually, trademark co-existence agreement has become a common method for applicants to overcome obstacles to registering a trademark earlier. However, for trademark authorizers, when dealing with trademark co-existence agreements, it is necessary to balance not only the conflict between the applicant and the prior rights holder, but also the conflict between the legitimate rights and interests of the applicant and the rights and interests of consumers, so as to maintain a good market order.

Therefore, the consideration and adoption of trademark co-existence agreements by trademark licensing authorities is of great practical significance to the majority of trademark applicants and trademark agencies.

This article discusses the Supreme People's Court's consideration and adoption of co-existence agreements with the following two trademark cases.

Case No.1: Synlait Milk Limited, No 245 Administrative judgment of trademark administration (trademark) retrial of CNIPA (2019)

In this case, the disputed trademark was filed by Synlait on February 5, 2016, and was refused in December 2016. The refusal was based on the similarity of the disputed trademark to the previously registered trademark of Bright Dairy Co., Ltd( The prior trademarks are hereinafter referred to as 'cited trademarks', and four cited trademarks were used in this case. Since the remaining two trademarks were not involved co-existence agreements, they are not repeated again). Details of Trademarks are as follows:

The Supreme Court held that:

Firstly, the goods designated by the trademark in dispute in this case constitute the same or similar goods as the goods approved by Cited Trademarks No.1 and 2.

Secondly, the disputed trademark is composed of 'NEW LAITE', and the cited trademarks 1 and 2 are composed of 'LAITE'. The disputed trademarks entirety includes the cited trademarks 1 and 2, which are similar signs. However, they are not identical. Which means there are still differences, and the relevant public has a certain ability to distinguish between similar signs.

Thirdly, the owner of the cited trademarks, Bright Dairy Co., Ltd, is the Controlling Shareholder of Synlait Milk Limited. Bright Dairy Co., Ltd submitted a trademark co-existence agreement, based on the consensus reached by the two parties that the co-existence of the disputed trademark and the cited trademark in their respective fields will not cause confusion and misidentification. Moreover, there is no evidence that the co-existence of disputed trademark and the cited trademarks is sufficient to cause confusion and misidentification of the source of the goods by the relevant public.

Finally, the court held that both Synlait Milk Limited and Bright Dairy Co., Ltd had a certain reputation in the industry. The disputed trademark 'LAITE' is also the trade name of Synlait, and there is no evidence to prove that Synlait's application or use of the disputed trademark has bad faith in climbing the goodwill or popularity of Bright Company and its cited trademarks. The registration and use of the disputed trademark will not harm the national interest, the public interest and the legitimate rights and interests of third parties.

Taking into account the above factors, the court held that the relevant public would not confuse and misidentify the disputed trademark and the cited trademark. The application for registration of the disputed trademark does not constitute a circumstance under Article 30 of the PRC Trademark Law.

Case No.2: ALDI Investment Co., Ltd. , No. 8163 Administrative judgment on trademark retrial examination and trial supervision of the CNIPA (2020)

In this case, the disputed trademark was filed by ALDI Investment Co., Ltd. on September 25, 2017, which was rejected in June 2018. The grounds for the refusal were similar to the earlier registered trademark of Ralph Lauren Corporation. Details are shown in the table:

The Supreme Court held that:

1. The disputed trademark and the cited trademark are composed of five English letters. The disputed trademark is 'ALMAT”, and the cited trademark is 'ALMAY'. The first four letters of the two trademarks are identical, only the last letter is different; The disputed trademark is similar to the cited trademark in sound; The two trademarks are both coined words and have no specific meaning. The use of the disputed trademark and the cited trademark on the same or similar goods may lead to confusion among the relevant public as to the source of the goods, or the relevant public may believe that there is a specific connection between the source of the goods of the two trademarks. Therefore, the courts of first and second instance found that the disputed trademark and the cited trademark constituted a similar trademark used on the same or similar goods.

2. Considering the similarity of the trademarks and the the goods, the possibility of confusion among the relevant public is high, so the co-existence agreement alone cannot automatically exclude possible market confusion. In a co-existence agreement, the parties may, based on their own commercial interests, express their intention to waive their rights in the registration of others' trademarks. However, this indication does not automatically prove that the subsequent trademark will not cause confusion in the sense of trademark law.

Conclusion

In the above two cases, although the applicants submitted trademark co-existence agreements, the court's examination results were completely different. The author believes that in addition to trademark co-existence agreements, CNIPA also considered more factors to determine whether the disputed trademark and the cited trademark objectively will cause confusion and misidentification among consumers. In Case No.1, the court also examined the commercial relationship between the applicant and the right holder of the cited trademark, as well as the actual circumstances of the applicant's use of the disputed trademark, and determined that the co-existence of the applied trademark and the cited trademarks would not lead to confusion and misidentification. In Case No.2, apart from the trademark co-existence agreement, the applicant did not submit other evidence to exclude the possibility of confusion caused by the co-existence in market of the disputed trademark and the cited trademark. On the basis of considering the similarity of the trademarks the goods, the court found that the possibility of confusion could not be ruled out. As a result, the disputed trademark was ultimately not approved to be registered.

Therefore, although trademark co-existence agreements are important evidence to overcome the obstacles to prior citation of trademarks, they are not sufficient evidence. In fact, although the co-existence agreement coordinates the conflict between the civil rights and interests of specific subjects in relation to trademark registration and the exercise of rights, the trademark system itself also has the function of safeguarding social public order and public interests. The co-existence agreement of trademarks is an important factor in the trademark apply examination, but it still does not relieve the applicant of the burden of proof to prove that the disputed trademark and the cited trademark will not cause confusion among consumers. As to whether or not to accept the co-existence agreement, the trademark authority should still find an optimal balance between respecting the private nature of the trademark and protecting the public interest, depending on the circumstances of specific case.