“Well-known trademarks” are not necessarily well-known

2008/2/1By Harry Yang, China IP,[Trademark]

Daily, Chinese audiences view numerous commercials of "well-known" Chinese trademarks on TV.  However, not all are well known or recognized by the public although they are acknowledged by authorities as "well-known". It can even be said that it is only after many advertisements that some trademarks become really "well- known" to the public.

In 2007, the China Trademark Office (CTMO) under the State Administration for Industry and Commerce (SAIC) recognized 130 well-known trademarks in trademark administration cases and 16 in trademark opposition cases. In addition, the Trademark Review and Adjudication Board (TRAB) of SAIC acknowledged 51 well-known trademarks in trademark disputes. Apart from the well-known trademarks recognized through the administrative procedure by the CTMO and TRAB, in 2007 approximately 50 trademarks were familiar through judicial procedure by the courts throughout the country.

According to statistics, from 1996 to 2007, the CTMO and TRAB documented more than 1000 well-known trademarks through administrative procedure. From 2001 to 2007, the courts in the country recognized nearly 250 well-known trademarks by judicial procedure. Most of them were recognized between the years of 2004 through 2007. The reasons for the concentrated recognition can be attributed to two aspects. One is the gradual improvement of the laws and regulations regarding the protection of Chinese well-known trademarks. This protection began in China from its entry into the Paris Convention in 1985. At that time in China, there were no express provisions concerning the protection of well-known trademarks. However, in practice, China already started its protection of well-known trademarks. For example, in Aug. 17, 1987, the CTMO ruled that the opposition raised by Pizza Hut International Co. Ltd. was tenable and approved the registration of its trademark "PIZZA HUT".

Presently, the legal basis for the protection of well-known trademarks mainly includes the Chinese Trademark Law (2001), the Implementation Regulations of the Trademark Law (2002), the Regulations on Recognition and Protection of Well-known Trademarks (2003) as well as the three judicial interpretations of the Supreme People's Court, i.e., Interpretation on the Scope of Jurisdiction and Application of Law for Hearing Trademark Cases, Interpretation on the Application of Law for Halted Infringement upon the Exclusive Right to a Registered Trademark and Evidence Preservation Before Lawsuit, and Interpretation on Several Issues Concerning the Application of Law to the Trial of Civil Dispute Cases Involving Trademarks. The improvement of the legal system protecting well-known trademarks has added initiatives to many enterprises to safeguard their own rights in recent years. Some enterprises obtained timely and effective legal protection through recognition of well-known trademarks. This recognition has also played a role in the maintenance of the normal order of market competition.

The other reason for the concentrated recognition of well-known trademarks lies in the fact that the local governments at all levels in China actively formulated policies and called on local enterprises to create well-known and famous trademarks. For enterprises, the local governments' support in policy is embodied not only in the form of spiritual encouragement but also of material rewards. For example, in Dec. 20, 2007, Shenyang Municipal Government awarded RMB 5 million to "Huishan Diary" for the recognition of its trademark as well-known in China (According to the Shenyang Daily News); Fuzhou Municipal Government issued the Implementing Opinions of the Fuzhou Municipal People's Government on Further Promotion of the Brand Strategy Work of Fuzhou's Trademarks, stating that Fuzhou enterprises shall be awarded RMB 1 million if their trademarks are accredited as Chinese well-known trademarks. Besides the government at the prefectural or municipal level, the government at the provincial, county or even township level in some regions will also award enterprises whose trademarks are identified as well-known. Therefore, enterprises whose trademarks are identified as well-known can gain both fame and wealth. The improvement in law and the encouragement from governments have driven many enterprises to join the army of well-known trademarks. The number of trademarks recognized as well-known soared within a short time. Though local governments paid the bill for enterprises with well-known trademarks, they are not losers because the number of accredited well-known trademarks is an indicator for assessing government performance. Currently Zhejiang province tops the whole country with 145 Chinese well-known trademarks (According to Xinhua News).

Allured by the ample awards of local governments at all levels, some trademark firms and intermediary agencies in succession joined in the rush for well-known trademarks in hope of "digging out gold". Their emergence disarranged to some extent the well-known trademark recognition work. In an effort to attract clients, some firms even advertised "Near 100% Success Rate of Recognition of Trademarks as Well-Known". To this end, some even secured judicial recognition of well-known trademarks by filing false litigations. On June 5, 2007, Xuancheng Intermediate People's Court of Anhui province rendered a civil order on the retrial of a case involving "a false defendant and false case facts".  It revoked the effective judgment it made in the original trial of Aug. 4, 2006, wherein it recognized as well-known marks the three trademarks, "康王KANGWANG", "康王KANWAN" and "KANWAN", of Shantou Kangwang Fine Chemical Industrial Co., Ltd. In the retrial, the attorney for the plaintiff confessed that in the original trial, the Shantou Kangwang Company instructed him to register "中国康王" and the network domain name "www.kanwan.com.cn" by using the ID card of Li Chaofang, an Anhui resident, to create a false impression of infringement. Thereafter, Shantou Kangwang sued Li Chaofang for infringement in Xuancheng Intermediate People's Court. However, Li Chaofang said that he knew nothing about the registration and judicial matters, nor did he receive any notice to answer a complaint, to produce evidence or the judgment. Presently, the Xuancheng Intermediate People's Court has not delivered a retrial judgment. However, judged from the open trial, this case will very possibly set a precedent in China for repealing a judicially recognized well-known trademark.

Likewise, in the course of administrative recognition of well-known trademarks, instances also exist that applicants cooked up facts and evidence, conspired maliciously, and fabricated false charges. In May 2006, "蜘蛛王" (meaning "Spider King") owned by the Spider King Group was determined to be a well-known trademark by SAIC. Mr. Zhang Xiaobao, a Wenzhou citizen, claimed that the Bureau of State Taxation and the Bureau of Local Taxation of Yongjia County provided false tax materials of RMB 700 million to promote the recognition of the trademark "蜘蛛王" as well-known, and thus the TRAB wrongly rendered the recognition of "蜘蛛王" as a well-known trademark. For this wrong recognition, all the trademarks of "蜘蛛星" (meaning "Spider Star") owned by him were revoked by the TRAB. Mr. Zhang, on the above ground, sued the above two bureaus to the Yongjia County People's Court. (According to the Legal Daily news)

Actually, many enterprises may have other reasons for creating well-known trademarks. It is not entirely for the protection of their trademark rights that they have their trademarks recognized as well-known through administrative or judicial procedure. The advertising effect has tremendous value. Upon recognition of their trademarks as well-known, these enterprises began to publicize their "well-known" trademarks on a large scale and advertisement through the media including newspapers, TV and the Internet. As a result, well-known trademarks spring up like mushrooms inundating the public. However, not all these quick emerging "well-known" trademarks live up to their reputation. Some of these trademarks are not well known to the public, or necessarily known within their own industry. The title of well-known trademark has, in such a circumstance, become a billboard or misplaced honor.

According to a survey by the Social Survey Institute of China (SSIC) in Shanghai, Beijing, Zhejiang and Jiangsu, 98% of the respondents say they become familiar with well-known trademarks through advertisements on TV and in newspapers; 45% think that a well-known trademark is a "sign" of good product quality; 58% say that they will consider purchasing a product if it bears a well-known trademark; 76% believe that a well-known trademark is an honor for a product and is in recognition by the relevant authorities of the country; only 13% recognize well-known trademark as a means of legal protection. In the mind of the public, almost no distinction exists between well-known trademarks and the quality and food safety inspection. It seems that well-known trademarks have become a criterion for measuring product quality.

This public confusion can be attributed to many factors. Under China's guidance in the recognition of well-known trademarks, there arises a succession of similar systems for evaluating famous and well-known trademarks at the provincial, municipal, as well as prefecutral (municipal) level. Also, the China Promotion Committee for Top Brand Strategy authorized by the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), after a uniform appraisal of the products recommended by enterprises, will confer an honorary title of "China's Top Brand Product" on those that meet its standards. These famous and top brand products are elected in a collective way which is different from the recognition of well-known trademarks based on "case-by-case recognition and case-by-case application". At the same time, the CTMO annually issues its recognition of many well-known trademarks on a case-by-case basis. The coexistence of two recognitions has deepened the public's misunderstanding of well-known trademarks. It is natural that laypersons view "well-known trademark", like "China top brand product", as an honor granted by the national administrative agencies and an honorary title of a product. This misunderstanding has led the recognition of China well-known trademarks to deviate from its normal track and Chinese enterprises to participate in an ever fiercer pursuit of well-known trademarks.
According to SAIC's Regulations on Recognition and Protection of Well-known Trademarks implemented as of June 1, 2003, a well-known trademark is defined as "a mark that is widely known to the relevant sectors of the public and enjoys a relatively high reputation in China. Relevant sectors of the public shall include consumers of the type of goods and/or services to which the mark applies, operators who manufacture the said goods or provide the said services, and sellers and other persons involved in the channels of distribution of the type of goods and/or services to which the mark applies." It should be said that there is no ambiguity as to the legal definition.

Well-known trademarks do exist, but they are not well-known for the recognition of relevant authorities. The recognition of well-known trademarks is a protective means when trademark right infringement arises, rather than a necessary means for commercial publicity. In China, many famous brands, including some international ones such as Coco Cola, IBM, Nike, Microsoft and Sony, never go through the well-known trademark recognition procedure, but who can deny their popularity? By contrast, some trademarks are certified as well-known in China, but who knows how many of them can become truly famous brands?

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