Fighting against COVID-19 related trademark applications: How China reversed the trend?

XU Liang,[Trademark]

 

In the past few months, trademark offices around the world have seen an inevitable flood of trademark applications refer to the pandemic. This trend is not surprising as there are always some applicants following the trending news and trying to register related terms as trademarks for potential business use. This article provides an overview of the COVID-19 related trademark applications in China and the US, investigates how China reversed the trend in a short period of time and possible results of the pending applications in the US. Hopefully, the article can provide some useful insights for professionals who are concerned about this issue.
 
China's Situation and Actions against Abnormal Trademark Applications
Since early February 2020, an increasing number of trademark applications related to the COVID-19 have been filed in China, designating various goods and services including medicine in Class 5, scientific equipment in Class 9, and medical device in Class 10. Among others, marks containing some “buzzwords” aroused widespread concern and heated discussion among the public. For example, some applications referred to "火神山" (Huo-Shen-Shan, literally, Vulcan Mountain) and "雷神山" (Lei-Shen-Shan, literally, Thor Mountain), which are associated with two frontline hospitals in Wuhan fighting the pandemic at the critical time. Some applicants even sought to register the names of two leading respiratory experts " 钟南山" (Zhong-Nan-Shan) and "李兰娟" (Li-Lan-Juan), and the doctor "李文亮" (Li-Wen-Liang), who tried to warn about the virus when it first emerged. This trend has quickly attracted considerable attention of Chinese authority and a series of harsh actions followed soon. The Trademark Office of China National Intellectual Property Administration ("CNIPA”) announced the Guideline for examining trademark related to pandemic prevention and control, and then issued several notices to open a fast-tracked examination channel. As of March 16, among the 1,580 virus-related applications, the Office has officially rejected 328 applications and approved 866 withdrawals filed by the applicants voluntarily. At the same time, local Administrations for Market Regulation ("AMR") successively interviewed trademark agencies and applicants involved within their jurisdictions to conduct further investigations. By July 31, local AMRs in Beijing, Shanghai, Guangdong Province, Hebei Province, Jiangsu Province, and Ningxia Hui Autonomous Region has administratively imposed separate fines up to CNY100,000(approx. USD14,125) against over ten trademark agencies and included them in the corporate credit file, and also issued CNY2,000 to CNY10,000 (approx. USD282 to USD1,412) fines against applicants. As of June 20, 2020, according to the database of the Trademark Office, the latest filing date for the aforementioned names was April 10, 2020, except for the term "新冠" (Xin-Guan, literally, New Crown) which has already existed before the pandemic. It is safe to say that the trend of abnormal trademark applications has been successfully reversed.
 
How China reversed the trend?
According to the Trademark Office, most abnormal applications violated the “principle of good faith" of Article 7 of Trademark Law. For rejecting applications involving "火神山" (Huo-ShenShan), "李文亮" (Li-Wen-Liang) and similar terms, the Trademark Office mainly applied the rule of "having other adverse effects" in Paragraph 1(8), Article 10 of Trademark Law. As for the term like "冠状克星" (Guan-Zhuang-KeXing, literally, Crown Buster) or "新冠消毒" (Xin-Guan-Xiao-Du, literally, New Crown Disinfection), the Office additionally applied Paragraph 1(7), Article 10 of Trademark Law, which prohibits registering deceptive marks. While there were other kinds of abnormal applications, like malicious application not for the purpose of use and application that prejudice the pre-existing right of others, such a flood of COVID-19 related trademark applications was dominated by the above applications for “buzzwords”.
 
In practice, the rule of "having other adverse effects" mainly refers to two situations in China. One is the trademark sign, or its constituent elements may harm the public interest and public order of the society. The other is registering names of public figures as trademarks without prior authorization. Note the original and unique term "火神山" (Huo-Shen-Shan) or "雷神山" (LeiShen-Shan) itself has no adverse effects but instead contains a rich Chinese traditional culture. However, the related hospitals have been a meaningful sign to fight against the pandemic. Therefore, when someone other than the hospital-related parties registers or associates it with other particular products or services, the mark will inevitably offense the public sentiment. This being said, in addition to the mark itself, the mark should also be reviewed under the social background as well as the relevant market of the designated goods or services. It is also worth noting that the understanding of the "name of public figure" should be based on whether it will have an impact on the public interest of society, instead of some certain rights or interests. For example, in the cases of “乔丹”(QIAO-DAN, the Chinese name of Michael Jordon) related marks in 2016 and 2020, the Supreme People's Court affirmed the individual name rights of the legendary basketball player, but held that the disputed marks may not have a negative impact on China's public interests or public order.1 Here, as for the names "钟 南 山" (Zhong-Nan-Shan), "李兰娟 " (Li-Lan-Juan), and "李文亮" (LiWen-Liang), they have definitely surpassed the prior individual rights in present China, and therefore meet the rule of "having other adverse effects".
 
In addition to rejecting the abnormal applications, imposing administrative punishment on trademark agencies and even applicants also sent a tough message and acted as a strong deterrent. For trademark agencies, accepting the entrustment violated the "prohibition provisions" in Paragraph 3, Article 19 of the Trademark Law, since the applicants’ intents were obvious. For trademark applicants, they shall uphold the principle of good faith and not engage in any of the acts stated in Articles 3 of the "Several Provisions on Regulating Trademark Registration Applications".2 Note the later provision just came into effect on December 1, 2019.
 
The US's Situation and Possible Results
As of June 20, 2020, according to the online database of US Patent and Trademark Offices (USPTO), there are 303 trademark applications filed for marks that include the term “COVID”, 51 applications include “CORONA VIRUS”, and 105 applications include “PANDEMIC”. Other words related to the pandemic have also seen a massive wave of applications. Records show 98 and 50 applications are related to the terms “QUARANTINE” and “SOCIAL DISTANCING”, respectively. The vast majority of these applications are for clothing, especially shirts, and some are for diagnostic kits and protective masks. Surprisingly, there were even four applications for marks include “WUHAN” filed by the same company in as early as January 27, 2020, designating vaccine in Class 5, and one application includes “CHINA” filed on March 19 designating clothing. While these five applications have been withdrawn and are no longer active, six new applications for marks include “CHINA” were filed from April to June and are pending as of Aug.10, 2020.
 
Generally, a trademark application will be assigned to examining attorneys approximately three months after the filing date. On June 15, 2020, USPTO announces COVID-19 Prioritized Examination Program and will accept petitions to advance the initial examination of applications for marks used to identify qualifying COVID-19 medical products and services. While the above applications have met the minimum filing requirements, most are likely to be rejected under the Lanham Act for at least two main reasons. First, though many applicants expect to be the first who apply, they are unlikely to show they are using the marks in commerce or have a bona fide intent to use in commerce. Second, marks that are merely descriptive of the goods or services may not be registered absent a showing of acquired distinctiveness. It has only been several days that people now use "COVID-19" and "coronavirus" at a very high frequency. Therefore, these terms may not be able to function as trademarks that distinguish their goods and services with the notorious pandemic.
 
Note that Section 2(a) of the Lanham Act, which prohibits registration that consists of or comprises "immoral or scandalous" matter or "disparages" others, may not apply to reject the marks involving “CHINA” or “WUHAN”. In Matal v. Tam, the Supreme Court held that the Lanham Act's disparagement clause was unconstitutional because "speech may not be banned on the grounds that it expresses ideas that offend."3 In Iancu v. Brunetti, the Supreme Court held that the Lanham Act's prohibition on the registration of "immoral" or "scandalous" trademarks infringes the First Amendment. 4 However, the USPTO may reject the marks on the grounds of "primarily geographically deceptively misdescriptive" or "merely descriptive." The good news is five previous applications have been withdrawn. The World Health Organization has announced the official name for the virus responsible for COVID-19 and the disease it causes. We hope the applicants will withdraw the remaining new application in the future voluntarily.
 
What We Can Learn from China's Experience?
For many years, China has taken the global lead in the number of trademark applications. It is now also leading the way of dealing with the COVID-19 related trademark applications. While the attitude towards such trademark applications varies from country to country, one thing is almost for sure. Many applied applications might end up in failure at the end for either the ground of "contrary to principles of morality" or "lack of distinctiveness," similar to the application of the rule of "having other adverse effects" and other principles in China. Therefore, efforts of filing such a trademark application may be in vain after a long wait.
 
China's quick actions are a response to the newly amended law. In 2019, China implemented the new Trademark Law and the Several Provisions on Regulating Trademark Registration Applications, with a focus on the regulation of malicious trademark registration and the hoarding of trademarks. The new law and regulation enhance the applicant's obligations of trademark use, saying malicious trademark application "not for use" shall be refused, and also increase the obligations and legal responsibilities of trademark agencies. By the time the U.S.-China "Phase One" Deal was reached in January 2020, China had already started to enforce the new provisions. Section H of the deal sets a general rule on bad-faith trademark registrations, which requires adequate protection and enforcement of trademark rights, particularly measures against bad-faith trademarks. In view of the substantial differences between two trademark regimes, reaching a detailed agreement in a short time seems infeasible. China, while still following the "first-to-file" systems, via amendment of Trademark Law, has shown clear progress to move towards a higher level of IP protection.
 
Furthermore, China's unique IP protection system makes it possible to deal with COVID-19 related trademark applications effectively. Unlike most countries, China has established an IP system with Chinese characteristics where both judicial and administrative protection play critical roles. Taking advantage of administrative enforcement, authorities get involved in not only the maintenance and enforcement of IP rights, but also the acquisition of IP rights at the very beginning. In recent years, improvements have also been made to the rules and regulations governing administrative IP enforcement. While dealing with the abnormal or malicious trademark applications, CNIPA and the Trademark Office opened a fast-tracked examination channel, and coordinated AMR of varied levels to conduct further investigation and impose a penalty if applicable. Note that a lot of applicants withdrew the applications voluntarily after seeing the authorities' actions. According to the TRIPS Agreement, members are able to independently choose to use the IP administrative protection system. Traditionally, in view of the private right nature of IP rights, most countries rely mainly on judicial protection. By comparison, administrative protection has its advantages in practice to crack down on infringement or other illegal activities in a timely and efficient manner. While countries like the US, South Korea, and Japan have also launched administrative departments to enforce IP rights, China's response to the COVID-19 related trademark applications at such an early stage should set a positive example for other countries.
 
 
 
 
(This article is a research result funded by the Overseas Visiting Program of Doctoral Students of East China University of Political Science and Law)
 
 
Reference:
 
1 See (2016) Supreme People's Court No. 27 Administrative Judgment and (2018) Supreme People's Court No. 32 Administrative Judgment.
 
2 Article 3 of the "Several Provisions on Regulating Trademark Registration Applications" stipulates that “An applicant for trademark registration shall uphold the principle of good faith, and shall not engage in any of the following acts:(1) Where the applicant falls under the circumstance prescribed by Article 4 of the Trademark Law, and maliciously applies for trademark registration not for the purpose of use; …; (4) Where the applicant falls under the circumstance prescribed by Article 32 of the Trademark Law, and infringes upon the existing prior rights of others or uses improper means to preemptively register a trademark that has been used by others and has acquired certain influence; (5) Where the applicant applies for trademark registration by deceptive or other improper means; or (6) Where the applicant otherwise violates the principle of good faith or public order, or causes any other egregious impact.
 
3 See Matal v. Tam, 137 S. Ct. 1744 (2017).
 
4 See Iancu v. Brunetti, 139 S. Ct. 2294 (2019).

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