Has China taken another Bite out of the Apple?

In Insights, Uncategorized

30 June, 2016

After locking horns with a local Chinese company for six years over the IPHONE trademark, Apple took a drubbing after last month’s decision by the Beijing High People’s Court.

Apple applied for the “IPHONE” trademark for software and hardware (Class 9) in China in 2002. A Chinese company, called Xingtong Tiandi, which makes leather goods, is the owner of the suit mark “IPHONE’, which was filed in 2007, the same year Apple’s first Smartphone, the iPhone, was sold. The brouhaha began in 2010 when the US giant opposed Xingtong Tiandi’s trademark.  The appeal was dismissed by the Beijing Court on 31st March stating that Apple was unable to prove that its “IPHONE” mark was well known in China before 2007 when it first sold its smartphones.

After being dealt a series of unsuccessful outcomes; Apple was unlucky at the opposition, the opposition review, the appeal at the Beijing Intermediate People’s Court and finally the appeal at the Beijing High People’s Court. Apple has stated that it plans to vigorously protect its intellectual property rights by requesting a retrial by the Supreme Court.

The Beijing High People’s Court made specific reference to the fact that Apple’s iPhone was released in June 2007, and sold on the Mainland China in October 2009.  The evidence filed by Apple was predominantly after the application date of the suit mark, i.e. 29 September 2007. The Court found that Apple was unable to establish that its iPhone trademark was well known before that application date.

This is another case demonstrating the difficulty that brand owners face in the fight against trademark squatters, in the absence of registered trademark rights in China.  If the brand owners have to rely on the ‘well-known mark’ ground, the odds are stacked against them unless they have been on the ground in Mainland China for a significant period, before the relevant time.   So, the cardinal lesson/key takeaway for brand owners is to register the trademark for the goods that you need protection for in China at the earliest possible time.  It is expensive and time consuming to deal with a preemptive application, not to mention the negative publicity that inevitably arises out of a legal throw-down.

A degree of bewilderment seems to underlie some reports, especially the non-Chinese ones, on the decision that iPhone is not a well-known trademark in China.  The decision has made it clear that the relevant point of time in determining the well-known mark status is the application date of the suit mark. It is irrelevant as to how famous iPhone is nowadays or at the time of the hearing of the court of appeal.  Though without the benefit of knowing what the evidence consisted of, it is not difficult to imagine how onerous it would be to produce the required evidence of use and reputation in China before 29 September 2007.

Another point to note is that in the appeal to the Beijing Higher People’s Court, Apple claimed an additional ground, which provides for the invalidation of trademarks that are, for example, registered by deception or other improper means.   The Court did not consider this ground because it was never raised in the first instance appeal and the opposition review, and the Court did not comment on the applicability of the ground.  If Apple has some prospect of success by availing of this reasoning, it is curious as to why this was not pleaded in previous proceedings.

Apple was reported to plan to seek a retrial by the Supreme People’s Court and to continue to vigorously protect its trademark rights.  It will be interesting to see if the Supreme Court decides differently.

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

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