Recognizing well-known trademarks in the same class on a needs basis—Deere Company et al. v. John Deere (Beijing) Agricultural Machinery Co., Ltd. et al. on trademark infringement and unfair competition

Recognizing well-known trademarks in the same class on a needs basis—Deere Company et al. v. John Deere (Beijing) Agricultural Machinery Co., Ltd. et al. on trademark infringement and unfair competition[1]

Introduction

The well-known trademark system is an important system of the Trademark Law of the People’s Republic of China (Trademark Law). Compared with ordinary trademarks, well- known trademarks enjoy stronger protection, specifically: protection can be carried out across classes of goods or services (as opposed to protection of ordinary trademark limited to the same or similar goods or services), protection can be extended (in trademark authorization and confirmation cases, when a malicious registration trademark infringes the rights of well- known trademarks, filing an application for invalidation of the disputed trademark is not subject to a five-year time limit), a large amount of compensation could be granted in case of infringement, etc. Accordingly, in judicial practice, the examination criteria for whether a trademark is well-known is also stricter, and higher standards are set in terms of producing evidence on trademark popularity, including the time and scope of promotion and publicity and market share concerning the trademark, the protection history and other evidence reflecting the popularityof trademarks, which are all different from those of ordinary trademarks. Under the Trademark Law, when a trademark is recognized as a well-known trademark, it is only a recognition of a factual state, not an honor or a title, nor can it be used for market promotion or publicity. However, as the fact has been confirmed through judicial or administrative procedures, it is sufficient to prove to a certain extent that the trademark has strong distinctiveness or high popularity, and it can enhance the reputation of an enterprise and improve its market competitive advantage. Therefore, in practice, quite a number of enterprises have intrinsic motivation and actual needs to claim their rights in well-known trademarks when their trademarks are subject to infringement disputes.

China’s well-known trademark protection system is legally based on the collection of normative documents, which is composed of a series of legal provisions, with Article 13 of the current Trademark Law as the core, as well as the judicial interpretation of the Supreme People’s Court and relevant provisions in the departmental rules of the administrative authority.

For a long time, numerous judgments involving well-known trademarks rendered by China’s courts in the trial of trademark civil disputes and trademark authorization and confirmation administrative cases are actually based on Paragraph 3 of Article 13 of the current Trademark Law, which provides that “[w]here a mark is a reproduction, imitation, or translation of a well-known trademark of another party which has been registered in China in respect of different or dissimilar goods, which may mislead the public, and cause damage to the interests of the registrant of the well-known trademark, no registration shall be granted and the use of the mark shall be prohibited.” This provision mainly reflects the principle of cross-class protection of well-known trademarks. The provisions of the law and numerous judicial precedents seem to convey the message that the recognition of a registered well-known trademark can only be applicable to different and dissimilar goods. Then, in trademark infringement cases and trademark authorization and confirmation cases, where the goods or services involved are same or similar, can the party claiming the trademark right obtain the court’s support when it requests to recognize that its trademarks are well-known?

In this regard, Paragraph 2 of Article 13 of China’s current Trademark Law only provides that “in the event of reproduction, imitation or translation of a well-known trademark not registered in China,” the owner of such well-known trademark may request the protection of such trademark from the people’s court or the trademark authorization and confirmation administrative authority pursuant to the provisions  of this paragraph, provided that the trademark for which the rights are claimed is    an unregistered trademark. There is a blank space between the second and third paragraphs of Article 13 of the Trademark Law, that is, whether the owner of a registered trademark can claim its trademark to be well-known on the same or similar goods? The Trademark Law itself does not specify. In the “John Deere” trademark infringement and unfair competition case and other trademark administrative litigation cases, the court gave a positive answer, that is, under certain circumstances, according to the request of the parties, the court or the trademark authorization and confirmation examination authority can recognize the trademark as a well-known trademark on the same or similar goods.

I.Basic facts of the case[2]

Parties:

Plaintiff of first instance (appellee of second instance):

1.Deere Company (hereinafter referred to as “Deere”);

2.John Deere (China) Investment Co., Ltd. (hereinafter referred to as “John Deere China”).

Defendants of first instance (appellant of second instance):

• John Deere (Beijing) Agricultural Machinery Co., Ltd. (hereinafter referred to as “John Deere Beijing”);
• John Deere (Dandong) Petrochemical Co., Ltd. (hereinafter referred to as “John Deere Dandong”);
• Lanxi Jialian Deere Oil Chemical Co., Ltd. (hereinafter referred to as “Lanxi Jialian Deere”).

Cause of action:

Disputes over trademark infringement and unfair competition

Deere and John Deere China have the exclusive rights to use registered trademarks such as the No. G910051 graphic trademark (approved for use in Class 4 goods: industrial oil and grease, etc. Note: As there are many specific goods approved, only representative goods are listed here, the same below.), No.8380174 “HY-GARD”  trademark (approved for use in Class 4 goods: industrial oils, etc.), No.8380176 “PLUS- 50” trademark (approved for use in Class 4 goods: industrial oils, etc.), No.206346“JOHNDEERE” trademark (approved for use in Class 7 goods: agricultural machinery, etc.), No.7879578 “约翰·迪尔” trademark (approved for use in Class 7 goods: agricultural machinery and other industrial, manufacturing machinery and equipment, components, etc.), No.1253470 “JDL约翰·迪尔佳联” trademark (approved for use in Class 7 goods: agricultural machinery, etc.), and No.206347 “JOHNDEERE” trademark (approved for use in Class 12 goods: agricultural tractors, etc.). Deere and John Deere China have used the No. 206346 “JOHNDEERE” trademark, No. 7879578 “约翰·迪尔” trademark, and No. 206347 “JOHNDEERE” trademark for a long time. There is a large amount of evidence proving that these trademarks have high market popularity, including relevant advertising invoices, advertising service agreements, distributor agreements, sales invoices, financial statements, audit reports, photos of public welfare activities in China, exhibitions, forums, seminars and celebrations, meetings with officials, etc. Based on the aforesaid facts, Deere and John Deere China requested the court to recognize the three trademarks as well-known trademarks.

John Deere Beijing, John Deere Dandong and Lanxi Jialian Deere have used the trademarks same or similar to the No. G910051 graphic trademarks of Deere and John Deere China in their production, sales and promotion of supercharged engine pure oil and other goods, and used the trademarks same or similar to the “HY-GARD” and “PLUS-50” trademarks of Deere and John Deere China in their production, sales and promotion of industrial oil and other goods. John Deere Beijing, John Deere Dandong and Lanxi Jialian Deere used “JOHN DEERE, John Deere, John Deere Golden  Deer, John Deere Strong Deer, John Deere Silver Deer CF-4 SAE 15W-40, John Deere Silver Deer and other trademarks” in their production, sales and promotion of industrial oil and other goods. Lanxi Jialian Deere has also applied for the registration of No.11750705 trademark “Jialian Deere” in Class 4 industrial oil and other goods and obtained approval for the registration. John Deere Beijing, John Deere Dandong and Lanxi Jialian Deere have highlighted the use of the “Jialian Deere” trademark on the oil products they produce, sell and promote and on related websites.

Deere and John Deere China claimed that the acts of the three defendants infringed their exclusive right to use trademarks and constituted unfair competition, and requested the court of first instance to order John Deere Beijing, John Deere Dandong and Lanxi Jialian Deere to immediately stop trademark infringement; change the name of the enterprises; stop using domain names of johndeerexj.com and deersh.com; stop unfair competition acts such as making false representation and defaming the goodwill of the plaintiff; make a public statement in the relevant media to eliminate the impact, and compensate the plaintiffs for economic losses and reasonable expenses totaling RMB 5,360,000.

II.Case adjudication

After finding that the industrial oil and other goods in Class 4 approved for use with the registered trademark No.11750705 “佳联·迪尔” of Lanxi Jialian Deere were similar to the agricultural machinery and other goods in Class 7 and the tractors and other goods in Class 12 approved for use with Deere’s No.206346 “JOHNDEERE” trademark, No.7879578 “约翰·迪尔” trademark, and No.206347 “JOHNDEERE” trademark, the court of first instance held that the “JOHNDEERE” and “约翰·迪尔” trademarks of Deere and John Deere China had been widely promoted on agricultural machinery, tractors and other goods in large quantities and enjoyed a high market reputation. The documented evidence is sufficient to prove that the No.206346 “JOHNDEERE” trademark and No.7879578 “约翰·迪尔” trademark used in Class 7 agricultural machinery and other goods, and the No.206347 “JOHNDEERE” trademark used in Class 12 tractors and other goods had already become well-known before Lanxi Jialian Deere applied for registration of the No.11750705 “佳联迪尔” trademark on 12 November 2012. In recognizing “JOHNDEERE” and “约翰·迪尔” trademarks as well-known trademarks, the court of first instance held that the “迪尔” marked part of the “佳联迪尔” trademark constituted the translation and reproduction of the “迪尔” and “Deere” marked parts of the well-known trademarks. Considering the popularity and distinctiveness of the well-known trademarks, from the overall  composition of the trademarks,  “佳联迪尔” trademark  had already constituted the reproduction, imitation or translation of the well-known trademarks, “JOHN DEERE” and “约翰·迪尔.” Lanxi Jialian Deere used the words “佳联迪尔” as its business name on the same or similar goods by copying, imitating, translating the well-known trademarks of Deere and John Deere China, which was easily to mislead the relevant public and also constituted an infringement. Beijing Intellectual Property Court supported the requests of Deere and John Deere China for the protection of well-known trademarks on similar goods.

After the first-instance judgment was rendered, John Deere Beijing, John Deere Dandong and Lanxi Jialian Deere objected to the judgment, claiming that the first- instance court violated the laws in “recognizing well-known trademarks on the same class,” and appealed against it. Beijing Higher People’s Court affirmed the judgment of the first-instance court.

III.Key takeaways of the case

The typical significance of this case lies in the fact that the court demonstrated the legislative purpose and protection direction of the well-known trademark system through the examination of the relevant system in the Trademark Law. Through the legal interpretation principle of “analogizing the heavier situation if such case shall be decriminalized,” the court recognized “well-known trademarks on the same class” on the premise that the approved goods on which the claiming Party’s registered trademark used were similar to the goods on which the defendants’ trademarks actually used, which expanded the scope of protection of registered well-known trademarks and effectively safeguarded the legitimate rights and interests of the right holders. This case also served as a great reference and guidance.

China’s current Trademark Law and 2001 Trademark Law only provide the dichotomy principle of recognizing unregistered well-known trademarks on the same or similar goods and recognizing registered well-known trademarks on different or dissimilar goods[3]. There is no provision on recognition of registered well-known trademarks on the same class of goods, which leads to different understandings and continuous debates on this issue. In judicial practice, few parties have brought a lawsuit on the issue of recognizing well-known trademarks on the same class. Even if they do, most of the lawsuits have been rejected by judicial authorities on the grounds that it violates the principle of recognition on a needs basis.

Is there any legal basis for “recognizing well-known trademarks on the same class”? To answer this question accurately, it is necessary to carefully sort out the historical origin of the well-known trademark system and the judicial practice of trademarks in our country.

Known as “well-known mark” or “well-known trademark” in English, “驰名商标 ” (Chinese expression of “well-known mark”) is defined as a “trademark well known to the relevant public” in Article 13 of the current Trademark Law.

Well-known trademarks were first talked about in the Paris Convention for the Protection of Industrial Property (Paris Convention). In 1911, at the Washington Diplomatic Conference on Amending the Paris Convention, the French representative first proposed to give special protection to the well-known marks, suggesting that the owner of a trademark already registered in the original country had the rightto continue to use it if it was first used in other member states, even if it was later registered. However, France’s proposal was not approved due to opposition from two member states only advocating the protection of registered trademarks. At the Hague Diplomatic Conference in 1925, the Netherlands and the Joint International Bureau for the Protection of Industrial Property once again put forward a proposal for the protection of well-known trademarks. Article 6bis, which is designed to protect well-known trademarks, was added to the Convention, requiring member states to provide protection for well-known trademarks on the same or similar goods that are not registered in their countries. The well-known trademark system was formally established in the form of relevant provisions of international conventions and was quickly accepted by most countries in the world, including some non-members of Paris Convention. After constant adjustment, Article 6bis of the Paris Convention currently in force, was finally established. Its contents are as follows: (1) The countries of the Union undertake, ex officio if their legislation so permits, or at the request of an interested party, to refuse or to cancel the registration, and to prohibit the use, of  a trademark which constitutes a reproduction, an imitation, or a translation, liable   to create confusion, of a mark considered by the competent authority of the country of registration or use to be well known in that country as being already the mark of  a person entitled to the benefits of this Convention and used for identical or similar goods. These provisions shall also apply when the essential part of the mark constitutes a reproduction of any such well-known mark or an imitation liable to create confusion therewith. (2) A period of at least five years from the date of registration shall be allowed for requesting the cancellation of such a mark. The countries of the Union may provide for a period within which the prohibition of use must be requested. (3) No time limit shall be fixed for requesting the cancellation or the prohibition of the use of marks registered or used in bad faith.

On the basis of the Paris Convention, the Agreement on Trade-Related Aspects of Intellectual Property Rights (Trips Agreement) has made some new progress in the protection of well-known trademarks, specifically: Paragraph 2 of Article 16 of the Trips Agreement specifies that the provisions of Article 6bis of the Paris Convention shall apply to service trademarks; Paragraph 3 of Article 16 of the Agreement also extends the protection of well-known trademarks to different and dissimilar goods and services for the first time, provided that the claimed well-known trademarks are limited to registered trademarks.

China officially joined the Paris Convention in 1985. Since then, China had started the exploration[4] of well-known trademark recognition in accordance with the provisions of the Convention. However, the well-known trademark system had not yet been established in China’s Trademark Law at that time. In 2001, in order to meet the needs of joining the World Trade Organization, China revised the Trademark Law and for the first time established the well-known trademark system in 2001 Trademark Law.

After the well-known trademark system was established in the law, quite a number of enterprises and even local governments showed fanaticism and irrationality in pursuing well-known trademarks, which led to the deviation from the purposes of well-known trademark system. In order to rectify the deviation, the judicial authorities, on the basis of summarizing the judicial practice of well-known trademarks, finally established the basic principles of passive recognition, case-based recognition and recognition on a needs basis in the judicial protection of well-known trademarks.

1.Passive recognition. The Supreme People’s Court once pointed out in connection with the recognition of well-known trademarks: “[t]he principle of passive recognition and case-based recognition should be followed. The recognition of a well-known trademark must be based on the fact that the plaintiff has already made a clear factual claim on the matter and used related facts as the basis for accusing the defendant of infringement. The court shall not recognize the well-known trademark ex officio and its determination is only valid for the handling of this case.”[5] Therefore, in the trial practice, the people’s courts recognize the well-known trademark at the request of the parties, that is, the court will only consider recognizing the well-known trademark when the parties clearly make the factual claim for such recognition.

2.Case-based recognition. The recognition of well-known trademarks in judicial practice should be a fact identification, which must be conducted case by case instead of making a general recognition.

It is worth noting  that  although  the  recognition  of  well-known  trademarks is a kind of fact finding, it is still different from the fact finding confirmed by the legally effective judgment of the people’s court in civil proceedings. Subparagraph4, Paragraph 1 of Article 9 of the Supreme People’s Court’s Several Provisions on Evidence in Civil Proceedings provides that as for the “facts that have been confirmed by legally effective judgments of the people’s court,” the court may directly affirm such facts without requiring the claimant to produce evidence. However, in the fact finding involving well-known trademarks, Paragraph 3 of Article 22 of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Laws in Trials of Trademark Civil Disputes[6]  provides that if a party requests protection  for a well-known trademark that has been recognized by an administrative authority or a people’s court, and the counterparty has not object to the well-known trademark involved, the people’s court will no longer make examination on such trademark; if any objection is raised, the people’s court shall conduct examination in accordance with Article 14 of the Trademark Law. Obviously, in terms of evidence validity, the fact findings involving the well-known trademark confirmed by the judicial judgment is inferior to those of other matters confirmed by the judicial judgment.

3.Recognition on a needs basis. Recognition on a needs basis has two meanings: first, the recognition of a well-known trademark by the people’s court shall not exceed the scope of certain types of cases. Article 1 of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in Hearing Civil Dispute Cases Involving the Protection of Well-known Trademarks, issued by the Supreme People’s Court in 2009, provides: “[w]ith regard to any of the following cases of civil disputes, in which a party concerned believes that its trademark is well-known and takes this as the factual basis, the people’s court shall determine whether the trademark involved therein is well-known or not in light of the concrete circumstances if it deems it really necessary: (1) a trademark infringement lawsuit initiated on the ground of violation of Article 13 of the Trademark Law; (2) a lawsuit for trademark infringement or unfair competition initiated by a party on the ground that an enterprise name is identical or similar to its well-known trademark; or (3) a counterargument or counterclaim made in accordance with Article 6 of this Interpretation.” It can be seen that the people’s court will not recognize well-known trademarks beyond the scope of the above-mentioned cases even though the concerned parties made corresponding factual claims. Second, the people’s court can determine whether a trademark is well- known or not according to the claims of the concerned parties only if the relevant trademark cannot be protected as an ordinary trademark. Article 3 of the aforesaid judicial interpretation specifically provides: “[i]n either of the following cases of civildisputes, the people’s court will not examine whether the trademark involved therein is well-known or not: (1) Whether the trademark involved therein is well-known shall not be the factual basis for the establishment of the alleged trademark infringement or unfair competition; or (2) The alleged trademark infringement or unfair competition is not established due to the absence of other elements as prescribed in law. From  the above provisions and analysis, we can know that only when it is necessary to recognize the well-known trademarks for trial of the cases will the court make such recognition. If the parties could be granted adequate relief according to the standards for ordinary trademarks on identical or similar goods, the cross-class protection for well-known trademarks will not be applied.”

The three principles of well-known trademark recognition summarized by the court in judicial practice, especially the principle of recognition on a needs basis, serve as the guiding principles in the trial practice of well-known trademark recognition in recent years. Under the guidance of the principle of recognition on a needs basis, judges, in face of “recognizing well-known trademarks on the same class,” tend  to believe that a trademark can be fully protected by resorting to the protection procedures for ordinary trademarks without starting the recognition of well-known trademarks. Although it cannot be said that the principle of recognition on a needs basis has played an overkill role in the judicial practice of the recognition of well- known trademarks, we can be sure that, in the process of applying the law, the judge, due to paying too much attention to the principle of recognition on a needs basis, has neglected to a certain extent that the most basic function of the registered well-known trademarks is to prohibit the use of such trademarks on the same or similar goods. Ignoring such basic function will somehow make it illogical in the recognition of well-known trademarks.

Looking back on the whole development process of well-known trademarks and their incorporation into the law, it can be seen that the well-known trademark system came into being with the original intention to provide the protection for unregistered well-known trademarks in other jurisdictions. In the Paris Convention, the scope of protection mainly covered the same or similar goods. Trips Agreement, echoing the Paris Convention, extended the protection scope of registered well-known trademarks to different and dissimilar goods. Both of them acknowledged that, whether it is a registered or an unregistered well-known trademark, it basically focuses on the protection of trademarks on same or similar goods. Cross-class protection is designed to prevent confusion or misunderstanding of well-known trademarks when the market popularity, influence and goodwill of such trademarks are extended to other classes of goods.

With deeper understanding of the well-known trademark system in recent years, the court has become more rational and open in “recognizing well-known trademarks on the same class” and is more adept at applying the principle of recognition on a needs basis. For example, in the administrative dispute over the request for invalidation   of trademark rights between Nike Innovation LLP. and the Trademark Review and Adjudication Board and the third party, Quanzhou Luojiang Chaosheng Shoes Co., Ltd., which was heard by the Beijing Intellectual Property Court,[7] the court held that the disputed trademark and the cited trademark were pure graphic trademarks, and they were very similar in composition, overall appearance and visual effects except the directions of the drawings. In view of the high popularity of the cited trademark on “clothing, shoes and hats” goods, and the facts that the cited trademark has already become well-known prior to the application for registration of the disputed trademark, the relevant public of the goods approved for use with the disputed trademark should know the existence of Nike’s logo trademark. In this case, if the disputed trademark was allowed to be registered, the relevant consumers would definitely misunderstand the source of the goods. Moreover, the Third Party Luojiang Chaosheng Shoe Company’s application for registration of the disputed trademark had subjective malice. In such case, Nike shall not be subject to a five-year time limit in requesting the Trademark Review and Adjudication Board to declare the invalidation of the disputed trademark. Therefore, the court decided that the cited trademark is a well-known trademark, which protects the legal rights of the well-known trademark owner to the greatest extent. In the end, Beijing Intellectual Property Court recognized Nike’s trademark as a well-known trademark, providing it with well-known trademark protection on the same or similar goods.

As opposed to the Nike case where the applicant had to request the protection of well-known trademarks beyond the five-year time limit, which is in essence still subject to the principle of recognition on a needs basis, in the earlier administrative case involving trademark dispute over “安箕富强及图” trademark,[8] Beijing Higher People’s Court clearly explained in its judgment the reasons for granting well- known trademark protection on same or similar goods, which embodied the legal interpretation principle of “analogizing the heavier situation if such case shall be decriminalized,” and catered to the legislative purpose of well-known trademarks.

In this case, although the  applicant  Angel  Company  raised  the  dispute  within  the five-year time limit, Beijing Higher People’s Court still held that although the goods labeled with disputed trademark were same or similar to those with the cited trademark I and cited trademark II, and Angel Company claimed that its well-known trademarks were registered trademarks, which did not exactly correspond to the specific expression of the relevant provisions in Article 13 of the revised Trademark Law, the relevant provisions of Article 13 of the Trademark Law are designed to give stronger protection to well-known trademarks than ordinary registered trademarks. As provided in Paragraph 2 of Article 13 of the Trademark Law, “[w]here a mark is a reproduction, imitation, or translation of a well-known trademark of another party which has been registered in China in respect of different or dissimilar goods, which may mislead the public, and cause damage to the interests of the registrant of the well-known trademark, no registration shall be granted and the use of the mark shall be prohibited.” The scope of well-known trademark protection shall cover the same or similar goods. Especially, given the difference in the time limit for the review application involving well-known trademarks and ordinary registered trademarks, a longer time limit should be applied to the review application involving well-known trademarks, thus truly reflecting the original legislative intent of the Trademark Law to give special protection to well-known trademarks.

The court’s support for the judicial practice of “recognizing well-known trademarks on the same class” does not mean that it supported such recognition under any circumstances, nor does it mean that the court defies the principle of “recognition on a needs basis.” Certain preconditions are required to be met for such recognition. This precondition, we believe, is mainly manifested in trademark infringement cases where the trademark used by the party accused of infringement is a trademark approved and registered through legal procedures, and its use is within the scope of goods approved for use. That said, it is actually a conflict of rights between the exclusive rights to use registered trademarks. Although it shall be decided by the authority  that grants the exclusive right to use the trademark in accordance with general legal provisions and principles, based on the higher, stronger and wider protection scope and strength of the well-known trademark granted by the law, the court should be able to solve the conflict of rights between different registered trademarks and determine whether it is well-known as long as the prior trademarks claiming for protection were well-known when the applications of trademarks of the accused infringing party were filed, and the cancellation time of the accused infringing trademark has not expired. There is another case where the accused infringing party uses other’s well-known trademarks as its trade name by way of reproduction, imitation, and translation, but does not use it prominently. Under such situation, in order to resolve the conflict of rights between the exclusive right to use the trademark and the rights and interests  in the enterprise name, the court may also determine whether the prior trademark is well-known in accordance with the Anti-Unfair Competition Law of the People’s Republic of China and the basic requirements of the Trademark Law for recognizing well-known trademarks.

In the trial of administrative cases of trademark authorization and confirmation, in addition to the above situations, the court may also consider the subjective malice of the applicant in applying for registration of the trademark that has been declared invalid, and consider whether it is necessary to recognize a well-known trademark.

In a word, through review of the judicial practice of “recognizing well-known trademarks on the same class” in the aforementioned cases, we can basically come to the conclusion that the recognition of well-known trademarks needs to follow   the principle of recognition on a needs basis, and such principle also applies in “recognizing well-known trademarks on the same class.” The prudent approach of the court on the issue of “recognizing well-known trademarks on the same class” actually reflects the court’s deeper understanding of the well-known trademark protection system, and the principle of recognition on a needs basis has also undergone new developments in the process of being challenged.