AWA Asia likes Facebook’s victory in China

In Insights, Uncategorized

11 June, 2016

In a recent high profile case, Facebook secured a victory against a trademark squatter at the Beijing High People’s Court. This comes shortly after Apple Inc was defeated in its iPhone trademark battle.

In 2011 a Chinese individual, who is alleged to be associated with a local beverage company, applied to register the trademark FACE BOOK for various food and drink products in Classes 29, 30 and 32. Facebook opposed the applications in 2012. The oppositions and subsequent opposition reviews were unsuccessful. Facebook appealed to the Beijing Intermediate People’s Court and won. The Trademark Review and Adjudication Board were ordered to reissue the opposition review decisions. The applicant appealed to the Beijing High People’s Court, which affirmed the first instance court judgment.

The High People’s Court ruled that the suit mark FACE BOOK should not be registered. The court, relying on Article 41(1) of the then Trademark Law (Article 44(1) of the current Trademark Law), which allows for the invalidation of trademarks that are registered by deception or other improper means, endorsed the use of the provision in disallowing the registration of the applied-for trademarks.. In this case, the impropriety of the applicant was supported by the fact that he had applied for several FACE BOOK marks and had a couple of other marks such as the Chinese mark for the toothpaste brand ‘Darlie’. The court held that the applicant clearly intended to duplicate and copy other famous marks and such behaviour would disrupt the normal trademark registration management system, undermine fair competition and violate the principles of good public order and custom, which the above provision served to protect.

On the basis of what was said in the judgment, it appears that the court’s decision hinged upon the applicant’s applications for other famous trademarks. The judgment does not expressly state that FACEBOOK was famous, although Facebook alleged and seemed to produce considerable evidence to prove the same. The court also stated that activities where a person applies for a large number of famous trademarks belonging to others in order to squat on the trademarks and try to attain benefits by way of assigning the trademarks should be stopped. The judgment did not enumerate all the famous trademarks that the applicant squatted on and it did not set out the specific pieces of evidence the court relied on to reach its decision. The trademark database of the Chinese Trademark Office indicated that the applicant had no more than 20 trademarks and it is uncertain if all of those were famous trademarks belonging to others. It is unclear from the judgment whether there is a threshold in respect of the number of squatted trademarks and, if so, how many. It is also unclear whether evidence showing attempts made by the squatter to sell the marks is essential. Therefore, while it is not at variance with the law and practice to disallow a trademark application on the basis of Article 41(1), it might be premature to be too hopeful that more reliance will be put on the provision. Time will tell whether bad faith applications will in future be more stringently dealt with under Article 41(1) by the administrative authorities and the courts.

This judgment is in stark contrast to the blow dealt to Apple about a month before. Apple strived to achieve the same outcome as Facebook (i.e., to prevent the registration of a hijacked mark) but both companies were unable to convince the court that their marks were well-known in China at that time. However, unlike Facebook, Apple was unable to rely on Article 41(1) because it had not pleaded that ground in the previous procedures.

Ai-Leen Lim, CEO and Principal Counsel, AWA Asia

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