Joint ownership of trademarks and judicial practice--- An analysis with comment on “BEIREN-TSK and image” case

By Duan Xiaomei, Chief of Cases Section, Trademark Review Board, State Administration for Industry and Commerce,[Trademark]

Case overview and parties’ arguments

Joint applicants: BEIREN Group Corporation (Applicant A), and Fuzhou Huangjing Printing Machinery Co., Ltd. (Applicant B).


Applicants A and B jointly filed an application with the Trademark Office to register “BEIREN-TSK and image” trademark (Requested Trademark) for printing plate making machines and others in Class 7 on April 23rd 2002. The application was rejected by the Trademark Office.


In the office action numbered ZC3156117BH1, the Trademark Office said that the Requested Trademark closely resembled the “TSK” trademark numbered 1414962 (Reference Trademark) that had already been registered for a similar class of goods by Fuzhou Huangjing Printing Machinery Co., Ltd. or Applicant B.


Disagreeing with the citation, the joint applicants requested the Trademark Review & Adjudication Board (TRAB) to review the rejection on July 15th 2003. During the review process, they argued that the Requested Trademark was applied for by them jointly, who were willing to combine their respective registered trademarks and formed a mark for a similar class of goods. It was improper that the Trademark Office deemed them as separate applicants and on that erroneous premise and rejected the application by referring to the previous trademark of Applicant B. The rejected interfered with the right of Applicants A and B to dispose of their own trademarks. Moreover, the term “another person” in Article 28 of Chinese Trademark Law should mean any person, but excluding the applicant. They requested that the TRAB recognize Applicants A and B as joint applicants and grant preliminary approval of the Requested Trademark.


TRAB process and decision

After the hearing, the TRB found the following. 1. Applicant A was allowed and registered the trademark “北人 BEIREN and image” numbered 1689741 for printing plate making machines and others in Class 7 on December 26th 2001. Applicant B was allowed and registered the trademark “TSK and image” numbered 1414962 for printing plate making machines and others in Class 7 on June 26th 2000. The trademark of Applicant B was the Reference Trademark in the case. 2. Applicants A and B entered into a mutual cooperative agreement on November 22nd 2001, which contained an Article 2 stating that regarding trademark-related matters, “both Parties will try to register a trademark that combines ‘北 人’ and ‘TSK’,” and “once the combination trademark is approved and registered, the Parties will shift to and jointly own the combination trademark.” 3. The Requested Trademark was filed for registration by Applicants A and B in the Trademark Office on April 23rd, 2002. In the action to accept the application, the Trademark Office confirmed that the applicant was “BEIREN Group Corporation and other joint applicant(s).”


From the above, after a panel discussion, the TRAB held that the Requested Trademark was a jointly owned trademark under Article 5 of the Trademark Law, which featured basically the applicants jointly owning and exercising the trademark privileges. The Requested Trademark combined the prior trademarks of, and the trademark privileges were jointly owned by, Applicants A and B. Despite resemblance between the Requested Trademark and the Reference Trademark, no conflict of rights existed between them in consideration of the feature of jointly owned trademarks and the mutual expression of their wills by Applicants A and B. Thus, the Requested Trademark might be preliminarily approved.


Comment

Article 5 of Chinese Trademark Law provides that “Two or more natural persons, legal persons, or other organizations may jointly file an application with the Trademark Office for the registration of one and the same trademark, and jointly enjoy and exercise the exclusive right to the use of the trademark.” The provision was added to the revised version of Chinese Trademark Law on October 27th 2001. The decision of the TRAB on October 20th 2004 was the first such decision made by the TRAB in reviewing a rejection ruling on jointly owned trademarks. Before the decision was reached, the TRAB convened two committee meetings and one experts’ consultation seminar, to conduct an in-depth study into special issues involving the new concept of “joint ownership of trademarks.”


I. Joint ownership of trademarks

1. The features of jointly owned trademarks.

A major feature is that jointly owned trademarks are single rights owned by two or more persons. The owners can be natural persons, legal persons or other organizations, or any combinations thereof.


2. Acquisition of jointly owned trademarks

Jointly owned trademarks are acquired on the basis of joint actions of two or more persons. From relevant legal provisions, literally the acquisition is based on the filing of applications by two or more applicants jointly. However, it is inappropriate to say that jointly owned trademarks can be acquired only originally through registration, as they can also be obtained derivatively through assignment, succession or inheritance.


Jointly owned trademarks may come from the separation of merger of companies, joint investments, property inheritance or individual partnerships. In the “BEIREN-TSK and image” case here, Applicant A was a Chinese company, and Applicant B a Japanese-funded company. In their agreement to enter into a strategic OEM alliance on November 22nd 2001, the two companies agreed that under the existing conditions, the trademark of Applicant A would be used on the products of Applicant B in accordance with the Trademark License Agreement between them. During the period of the agreement, they should actively work to apply for and register a combination trademark (i.e. the Requested Trademark) that combined the previous trademarks of both of them. Upon the allowance and registration of the combination trademark, they should terminate the Trademark License Agreement and begin to use the combination trademark. The combination trademark should be owned by Applicants A and B jointly. These provisions are explicit that the applicants would act jointly to apply for and were willing to be joint owners of the combination trademark.


As to the formal requirements of joint applications, although some experts or scholars believe that joint applicants should provide a joint ownership agreement when filing their applications, most experts are in the opinion that joint applicants may show their agreement by attaching their signatures or seals to the joint applications; they should not be required to provide any joint ownership agreement; and the trademark registration examination authority in general may only have a formal examination duty with respect to such signatures or seals.


The term “joint application” cannot be understood in a mechanical sense. Joint applications can be filed by applicants themselves or their representatives, by all the joint applicants or by any one or more of them as representatives of the other applicants. How such representatives are designated and how such representatives’ action works are regulated by or subject to restrictions in Article 16 of the Detailed Rules for the Implementation of the Trademark Law and Article 9 of the Rules for Trademark Review and Adjudication. In the case here, the Trademark Office sending the rejection action to Applicant A does not mean that it deemed Applicant A as the sole applicant, but rather as the first applicant appearing on the list of applicants. Applicant A was used as the representative of all the joint applicants to communicate with the Trademark Office, so that the rejection action given to Applicant A was deemed to be given to all the joint applicants.


3. The nature of joint ownership of trademarks

Joint ownership is a common form to share property right. In the trademark law, it is more focused on the ownership of trademark rights. The concept “joint ownership” comes from the property right law, and the term “jointly owned trademark” is created by borrowing this property-right-law concept.


In the property right law, joint ownership can be by shares or in common. The term “joint ownership by shares” means that the ownership is shared between two or more persons, with each person holding its respective share of the property. The General Principles of Civil Law COLUMN China Intellectual Property 58 China IP 3-4/2014 provides that “Each of the joint owners by shares shall enjoy the rights and assume the obligations respecting the joint property in proportion to his share.” The shares of joint owners can be equal or not equal. The term “joint ownership in common” means that the ownership is enjoyed by and undivided among two or more persons. The General Principles of Civil Law provides that “Each of the common owners shall enjoy the rights and assume the obligations respecting the joint property.”


In the legal implementation, is the joint ownership of trademarks by shares or in common? The general idea is that it should be in common. The owners of a jointly owned trademark enjoy the equal indivisible right in the trademark. The joint ownership of trademarks should be deemed in common unless the trademark is divided into parts. Moreover, this common nature can be seen from the legal restrictions to the acquisition or transfer of trademark rights. It is certain, however, that the parties may specially agree to jointly own a trademark by shares, as the trademark is a private right and any special agreement between the parties should be respected. Despite this, the joint ownership of trademarks by shares should be conditioned upon the divisibility of the jointly owned trademarks.


In the case here, the Requested Trademark combined the previous trademarks of Applicants A and B, and the Reference Trademark was owned by Applicant B. Therefore, whether there is any conflict between the Requested Trademark and the Reference Trademark bears on whether the Requested Trademark is jointly owned in common or by shares. For joint ownership by shares, the possibility of conflict cannot be excluded. The Requested Trademark should be jointly owned in common, which can be seen from the free expression of their wills by Applicants A and B. Therefore, the similarity of the Requested Trademark with a previous trademark of one joint owner will not damage the rights of that joint owner.


During the committee meeting at the TRAB, one opinion was that in addition to protecting the rights and interests of trademark proprietors, the trademark law has a mission to protect consumers. As jointly owned trademarks could cause general consumers to confuse with the origin of goods or mistake their quality, restrictions must be imposed on the use of such trademarks. The Paris Convention provides that the registration and protection of jointly owned trademarks is conditioned upon that their use will not mislead the public or be contrary to the public interest. As far as this case is concerned, goods bearing a jointly owned trademark can be from any one of the joint applicants of the jointly owned trademark, and goods bearing the prior trademark are from one joint applicant who owns that prior trademark. Therefore, although the jointly owned trademark is similar to one of the previous trademarks of the joint applicants, the marketing result that consumers believe that the goods are from any one of the joint applicants will hardly be harmful with respects to the origin of the goods, the marketing results of the prior trademark owners, the interest of the consumers, or the order of competition in the market.


4. Exercise and disposal of jointly owned trademark rights.

Joint owners of trademarks jointly enjoy and exercise the trademark privileges. The trademark privilege consists of the rights to possess, use, benefit from and dispose of trademarks. These rights should be exercised jointly by joint owners.


a. Joint use

The joint trademark right can be exercised by joint owners jointly or severally and any several use should not hinder the use of such right by any other joint owner or owners.


b. Joint disposal

Joint owners have the right to dispose of the joint trademark right, including assigning or giving up the right. A joint owner may only assign his rights with the unanimous consent of all the other joint owners. If a joint owner gives up his right, the right so given up will be enjoyed by the other joint owner or owners.


During the discussion at the committee meeting at the TRB, an opinion was that the existing Trademark Law only provided the concept of joint trademark, but failed to specify related rights and obligations. If an allowed and registered joint trademark is assigned, divided, licensed or pledged thereafter, it is likely to affect the interests of the joint applicants or consumers. However, as stated, jointly owned trademarks mean that the trademarks are applied for, enjoyed, used and disposed of by joint owners jointly. In the Opinions on Issues in the Implementation of the General Principles of Civil Law, the Supreme People’s Court provides that “joint owners in common shall enjoy the same rights and assume the same obligations respecting the jointly owned property. During the existence of the joint ownership, any disposal of the joint property by any joint owner without due authorization of the other joint owner or owners shall generally be deemed as invalid;” any disposal of the joint trademark right by any joint proprietor without the consent of the other joint proprietor or proprietors shall be invalid. Therefore, although it is likely that the joint trademark may be assigned to a third party and lead to new conflict with the Reference Trademark, it is almost impossible in reality that the assignment will be agreed by the proprietor of the Reference Trademark, as one of the owners of the joint trademark (unless by means of any trademark coexistence agreement).


II. Joint ownership and coexistence of trademarks

1. Joint ownership and coexistence.

The joint ownership of trademarks provides a solution to the issue that two or more companies use trademarks that are identical or similar with each other. However, there is also another solution ---- trademark coexistence. The so-called “trademark coexistence” means that when two or more companies own justifiable interest in identical or similar trademarks, the trademark registration authority may, on the basis of the actual usage, marketing effect or historical reasons underlying the trademarks, according to law or by accepting any trademark coexistence agreement between the parties, allow the separate registration of these trademarks by adding certain restrictions with respect to the scope, territory or way of use. Trademark coexistence agreements are acceptable in the U.S. and Hong Kong.


Joint ownership of trademarks and coexistence of trademarks have one thing in common ---- under either of them, identical or similar trademarks can be used by two or more companies legally at the same time. They are different in the following aspects. First, under joint ownership, there is only one and the same trademark right which is jointly owned by two or more persons. Under trademark coexistence, there are two or more trademark rights that are separately enjoyed by two or more persons and coexist with each other. Second, under joint ownership, owners jointly enjoy and exercise the trademark right. Under trademark coexistence, owners each enjoy and exercise their respective trademark rights. Third, under joint ownership, as no additional restrictions are imposed on the scope or territory of the goods or services bearing jointly owned trademarks, the joint owners may appear at the same time in whatever circumstances where the jointly owned trademarks are used. Under trademark coexistence, due to often imposed or actual limitations on the scope or territory or usage of the goods or services bearing coexisting trademarks, generally the owners cannot possibly or are not allowed to appear at the same place.


For the case here, an opinion was that to deal with the conflict between the Requested Trademark and the Reference Trademark, the Trademark Office might require that Applicant B enter into a trademark coexistence agreement with the joint applicant created by combining both Applicants A and B. As stated above, joint ownership of trademarks is different from coexistence of trademarks, and the trademark registration authority should respect the joint application and declaring its will that Applicants A and B be joint owners, as well as relevant legal provisions and other justifiable claims. Moreover, even if the case is handled in the way of trademark coexistence, that Applicant B, as a joint applicant, brought up the review process was sufficient to prove that Applicant B, also as the owner of the prior Reference Trademark, accepted that the Requested Trademark might coexist with the Reference Trademark.


2. The conditioned acceptance of the trademark coexistence agreement by the TRAB.

Regarding the trademark coexistence agreement in the rejection review, the TRB accepted that the agreement was valid in principle after deliberation at the 24th committee meeting in 2007. It held that on one side, as the conflict between the Requested Trademark and the prior Reference Trademark was private rights in nature, as long as the applicant of the Requested Trademark and the owner of the Reference Trademark reached a trademark coexistence agreement, the conflict of rights between them might be deemed eliminated. It was somewhat unreasonable if no consideration was given to the trademark coexistence agreement. On the other side, as to protect the interests of consumers is one of the objectives of Article 26 of the Trademark Law, and one of the purposes of the Trademark Law, the allowance or not of trademark coexistence should take into account the distinguishability of coexisting trademarks to and the likelihood of confusion among consumers.


Therefore, the following elements on two sides should be considered. Firstly, the degree of similarity between the coexisting trademarks and related goods of the parties. The trademark coexistence may be allowed if the goods are less similar, though in the same group, according to the Differentiation Table of Similar Goods and Services and if as a whole, the coexisting trademarks are distinguishable to consumers. Secondly, the publicity of coexisting trademarks. In the case that the reference trademark enjoys high publicity, the requested trademark should be rejected if its registration and use will easily lead to confusion among consumers. In the case that the requested trademark has been used with certain publicity, it may be allowed for registration if despite the similarity, the requested trademark is distinguishable to consumers.


Final Comment

The joint ownership of trademarks is a system where two or more persons jointly own the exclusive right to the same registered trademark. In handling cases involving jointly owned trademarks, the trademark review authority should respect the will of joint applicants to “enjoy the same rights and assume the same obligations” and their voluntary and justifiable claims, the private nature of trademark rights, and the “joint application, enjoyment, use and disposal” of jointly owned trademarks by joint owners.


(Translated by Ren Qingtao)

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