Tuesday, July 24, 2007

With that, “I Pronounce You Famous and Well-known!”

Your trademark, is probably one of your most valuable assets. It rings more true if your mark has established remarkable secondary meaning in relevant market where you sell your product or service with that mark. In one of my past posts, I discussed Chinese law on trademark dilution, which is the exclusive method of protecting a famous trademark in China in terms of invoking legal actions.

This post primarily focuses on the legal standard for what constitutes a famous or well-known trademark in China. A trademark owner needs to go no further than China’s Trademark Law (2001), Implementing Regulations of Trademark Law (2002) (promulgated by the State Council) (“Implementing Regulations”), and the Interim Measures for the Recognition and Management of Well-Known Trademarks (1998) (promulgated by the State Administration of Industry and Commerce) (“Interim Measures”) [Chinese only].

According to the Interim Measures, the Trademark Office (part of the State Administration of Industry and Commerce) has the exclusive jurisdiction over the registration and management of well-known trademarks. See Article Three. To register a well-known trademark in China, an applicant must show evidence as follows:

1. the volume of product sales in connection with the registering trademark in China;
2. the main economic indicators associated with the products bearing the trademark (production volume, sales volume, profit, market shares)and comparative ranking of the products in the Chinese market;
3. the sales volume of products in connection with the trademark in foreign countries and regions;
4. the amount of advertising related to the mark;
5. the earliest date and length of continuous use of the trademark;
6. the registration status of the mark in China and elsewhere; and
7. other documentation establishing the famousness of the mark.

(The translation is mine.)

By requiring relevant market data of the mark in China, the Interim Measures set a relatively high bar in recognizing a well-known trademark prior to China’s assent to the WTO.

The amended Trademark Law (2001) and the subsequent Implementing Regulations mark a change in famous trademark law. Specifically, the Trademark Law does not stipulate that the Trademark Office has the exclusive jurisdiction over the registration and management of famous trademarks even though the Trademark office still has the exclusive administrative jurisdiction over the registration of trademarks in China. Of course, this leaves open the question of whether a foreign trademark owner can utilize the People’s court to ascertain whether a mark is famous in China (will be addressed later).

Pursuant to the Trademark Law, in order to get a “well-known” status for your trademark, a registrant must show the Trademark Office:

1. reputation of the mark to the relevant public;
2. time for continued use of the mark;
3. consecutive time, extent and geographical area of advertisement of the mark;
4. records of protection of the mark as a well-known mark; and
5. any other factors relevant to the reputation of the mark.

See Art. 14; Implementing Regulations, Art. 5.

In comparison, the amended Trademark Law covertly removes the requirements that the mark be famous inside China, with the exception of item one where the reputation of the mark is tied to the “relevant public.” This change, to a certain extent, reflects a general shift of attitude toward foreign famous trademarks. Of course, to register a famous mark in China, one still has to go through the normal procedures of hiring a local trademark agent, and present the requisite proof.

With that said, the next question, naturally, would be whether one has to register a mark with the Trademark Office in order to get the corresponding protection afforded to a famous mark. It is a fair question. In China, a trademark owner has two courses of action against infringement: through a local bureau of industry and commerce; or through a local People’s court.

Based on my observation, an owner can get a “famous” status for his mark. In Starbucks v. Shanghai Copycat, Starbucks Co. did exactly that, and the court was willing to hand out that label to it. In fact, a search on the well-known trademarks database in the China Trademark Office website revealed that Starbucks Co. has not registered its mark as a famous one. Absent errors in the database, Starbucks Co. is relying on the Shanghai court’s ruling as an official declaration of the well-known status for the “Starbucks” mark.

Should you do as Starbucks did? If you don’t mind paying high litigation cost, and if you have a stomach for unpredictability, copy what Starbucks did.

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