Trademark registration documents do not constitute proof of copyright rights— Hawley & Hazel Chemical Co. Ltd. v. Guangzhou Heiren Commodity Co., Ltd. et al.

Trademark registration documents do not constitute proof of copyright rights— Hawley & Hazel Chemical Co. Ltd. v.Guangzhou Heiren Commodity Co., Ltd. et al.[1]

Introduction

Considering the intangibility and dispersibility of  works  and the difficulty for copyright owners to prove their ownership,   the burden of proof allocated to copyright owners should not be excessively high. If the copyright owner has submitted preliminary evidence of ownership, such evidence should not  be easily denied unless there is substantial rebuttal evidence. Otherwise, it will become difficult for the prior copyright owner to safeguard his rights. Rebuttal evidence includes, for example, that showing a third party has authored and published the work or the right transfer contract that has been invalidated by an effective judicial decision. However, the prior trademark gazette or trademark registration certificate alone cannot rightfully be admitted as the rebuttal evidence for determining the copyright ownership. It should be supported by other evidence. At the same time, the infringement should be determined based on the nature of the act itself. The use of others’ works on the packaging of goods should constitute the “reproduction” and “distribution” under the Copyright Law of the People’s Republic of China (Copyright Law).

I.Basic facts of the case

Hawley & Hazel Chemical Co. Ltd. (“Hawley & Hazel Chemical”) is the copyright owner of the work “” (the “Work”), which was designed by the natural person named Amy Dresner. The Work’s copyright was transferred to Hawley & Hazel Chemical in 1990 and registered with Taiwan Intellectual Property Office in 1996. Over the years, Hawley & Hazel Chemical and its authorized affiliates have used the Work on the packaging and in the advertising of their products extensively for a long time. The “Darlie Toothpaste” and “Darlie Toothbrush” have high popularity and reputation in China.

Since 2013, Hawley & Hazel Chemical had found mosquito-repellent incense products  printed with the work identical to the Work of Hawley & Hazel Chemical in supermarkets in Guangzhou, Shantou, Nanning, Zhanjiang, Hainan and other regions. It was stated on the packaging of the allegedly infringing products that Guangzhou Heiren Commodity Co., Ltd. (“Guangzhou Heiren”) was the user of the so-called trademark ,and Guangxi Fachang Incense Co., Ltd. (“Fachang Incense”) was the manufacturer of the allegedly infringing products. After investigations, it was found that Du Guibin, the legal representative of Guangzhou Heiren, filed an unauthorized application for trademark registration of the work copyrighted by Hawley & Hazel Chemical, with the PRC Trademark Office of National Intellectual Property Administration (the “PRC Trademark Office”). His trademark was approved for registration on 7 June 2003 in respect of “pest killing agents, mosquito-repellent incense, sanitary cleaning balls” and other products. In addition to using the Work on the packaging of the allegedly infringing products, Guangzhou Heiren also copied, reproduced and disseminated the Work extensively on its official website.

On 22 October 2014, Hawley & Hazel Chemical filed a lawsuit against Du Guibin, Guangzhou Heiren and Fachang Incense in the People’s Court of Baiyun District, Guangzhou City, Guangdong Province, claiming that the above-mentioned use by the three defendants infringed on the rights of Hawley & Hazel Chemical to copy the Work, distribute it and disseminate it through information network.

II.Case adjudication

In the first instance, the three defendants argued that Hawley & Hazel Chemical was not the copyright owner of the Work, nor could it prove that the copyright in the Work had been transferred to it. Since the matters recorded in the copyright registration certificate were not substantively examined, Hawley & Hazel Chemical needed to produce other supporting evidence. Prior to the claimed transfer of the Work by Hawley & Hazel Chemical, Hawley & Hazel (BVI) Co., Ltd., a party not involved in the case (the “Outsider”), had publicly used the Work and submitted an application to the PRC Trademark Office to register a trademark with the Work as its graphic in 1989. This was contradictory to the claim of Hawley & Hazel Chemical. Furthermore, Du Guibin had obtained the exclusive right to use the No.3129592 registered trademark “ .” Thus, his use and licensing others to use the trademark were a legitimate exercise of his exclusive right to use the registered trademark and did not constitute infringement upon the copyright of Hawley & Hazel Chemical.

After the trial in the first instance, the court held that the Outsider published the Work early in 1989 and should have enjoyed the copyright in the Work at that time or obtained authorization from the copyright owner. This was earlier than the time claimed by Hawley & Hazel Chemical enjoying the copyright, which was in conflict with Hawley & Hazel Chemical’s copyright in the Work. The copyright registration certificate was not materially examined. As a result, it was impossible to confirm whether the copyright owner of “ ” was Amy Dresner before 1990, whether there was an Amy Dresner, or when and where the Outsider obtained the copyright or authorization in respect of “.” Although the Outsider issued a statement to prove that it was authorized by the plaintiff to use the graphic “ ,” the source of the copyright in the work prior to that could not be verified. The statement could not prove that Hawley & Hazel Chemical had obtained the copyright of “” before 1989. In view of the above, the court rejected all the claims made by Hawley & Hazel Chemical.

Dissatisfied with the first-instance judgment, Hawley & Hazel Chemical appealed to Guangzhou Intellectual Property Court on 2 December 2015. At the same time, it submitted the letter of Confirmation on the Transfer of Copyright issued by Amy Dresner, to prove that Amy was entrusted to create the Work and had assigned all property rights in the Work to Hawley & Hazel Chemical in 1990. During the second instance, the Trademark Review and Adjudication Board announced the invalidity  of  Du  Guibin’s  No.  3129592  trademark.In the subsequent second-instance administrative proceedings, Beijing Higher People’s Court finally decided that the existing evidence could prove that Hawley & Hazel Chemical was the copyright owner of the Work and that the No. 3129592 trademark “” infringed upon the copyright of Hawley & Hazel Chemical and constituted “registration by other improper means” and thus should be invalidated.

After the trial, Guangzhou Intellectual Property Court held that the existing evidence was sufficient to determine that the copyright in the Work belonged to Hawley & Hazel Chemical. Hawley & Hazel Chemical claimed that the defendant infringed upon its rights to reproduce the Work, distribute it and disseminate it through information network. With respect to such claim, Guangzhou Intellectual Property Court held that: “The Work was printed on the outer package of the products and spread when the products were circulated among the general public. It seems that there is a reproduction and distribution of the Work. However, it is obvious that the above-mentioned acts do not use the Darlie portrait for its value of an art work, but for its source indication function. Therefore, based on the certainty of legal relationship, the reason for such allegation of Hawley & Hazel Chemical is too mechanical,” and therefore its allegation was not supported. In addition, “Guangzhou Heiren displayed the Work completely and separately in a prominent position on its website. Such objective dissemination through information network made the Work accessible for non-specific public at the place and time of their choice and was based on the role  of Guangzhou Heiren as the so-called ‘trademark holder’. Taking into account the relationship between Du Guibin and Guangzhou Heiren,” the court supported Hawley & Hazel Chemical’s claim that the act violated its right to disseminate the Work through information network.

In summary, Guangzhou Intellectual Property Court revoked the first-instance judgment made by the People’s Court of Baiyun District, Guangzhou City, Guangdong Province, and rendered the final judgment, ordering (i) the three defendants to stop using the Work on the packaging of mosquito-repellent incense and other products;

(ii)Du Guibin and Guangzhou Heiren to stop infringing upon the right of Hawley & Hazel Chemical to disseminate the Work through information network; and (iii) the three defendants to compensate Hawley & Hazel Chemical for its economic losses and reasonable expenses totaling RMB 500,000.

III.Case analysis

(I)Admission of evidence proving copyright ownership and the right holder’s burden of proof

In present judicial practice, the admission of copyright ownership mainly relies on preliminary evidence combined with the non-contradictory evidence. As for the preliminary evidence, Paragraph 4, Article 11 of the current Copyright Law of the PRC provides, “In the absence of evidence to the contrary, the citizen, legal person or other organization who is named as author on a work shall be the author of the work.” Article 7 of the Interpretation of the Supreme People’s Court on Issues Relating to Application of Law to Adjudication of Cases of Copyright Disputes (Fa Shi [2002] No.31) provides that: “The copyright related drafts, original copies and legitimate publications, copyright registration certificate, certificates issued by authentication institutions and contracts on right acquisition presented by the parties concerned may be served as evidence. Natural persons, legal persons or other organizations who are named as author on the works or products shall be deemed as the holders   of the copyrights and copyright related rights unless otherwise proved.” Article 1    of the Trial Measures for Voluntary Registration of Works issued by the National Copyright Administration of the PRC in 1994 provides, “The main purposes of registration of works are to protect the legitimate rights and interests of authors or other copyright owners and users of works, facilitate the resolution of disputes arising from the ownership of copyright, and provide preliminary evidence for the resolution of copyright disputes.” It can be seen that the name appearing on works or products as author, copyright related manuscripts, original copies, legitimate publications, copyright registration certificate, etc. can be used as preliminary evidence to prove the ownership of copyright.

In practice, for the purpose of avoiding the right holder’s increased burden of proof, the defendant should submit rebuttal evidence to prove that the right holder of the relevant work is someone else if the right holder has provided the above preliminary evidence. Otherwise, the preliminary evidence produced by the right holder should be admitted. It is inappropriate to require the right holder to further prove the time and place of completion of the work. The Supreme People’s Court (the “SPC”) has also taken this approach in a number of precedents. In a copyright infringement dispute case between Getty Images China and Sinotrans Chongqing Co., Ltd.,[2] the SPC held that: “Firstly, Getty Images is a well-known professional photo supplier in the U.S., and the watermark of ‘Getty Images •’ is shown on the pictures involved, i.e. the name of Getty Images… Secondly, … The pictures involved in this case used by Sinotrans Chongqing are identical to the pictures in which Getty Images owns the copyright. Sinotrans Chongqing did not submit any evidence to prove that the copyright in the pictures involved in this case did not belong to Getty Images. Nor did it prove that its use of the work involved has legal basis. Given the above, it can be presumed  that the pictures involved had been publicly released before Sinotrans Chongqing used them in 2006, and the specific time for release of the pictures involved is not important any more.” The presiding judge of the case had also commented that “to the extent that Sinotrans Chongqing failed to provide sufficient evidence to deny the relevant evidence submitted by Getty Images China, the burden of proof of Getty Images China has been discharged. The court of original instance deemed that Getty Images China failed to fulfill its burden of proof. It required Getty Images China to produce additional evidence to prove the specific time when it obtained the copyright of the pictures involved. Such requirement increased the burden of proof on the right holder. It was not in line with the rules of evidence in civil proceedings or conducive to protecting the legitimate rights of the right holder.”[3] In another case involving Getty Images China, the SPC also established the same principle of allocation of burden  of proof, holding that “the requirements to provide preliminary evidence shall be reasonably placed in combination with the specific circumstances of the case and  the work involved. If the requirement for preliminary evidence is too high, it will be undoubtedly a huge burden on the right holder.”[4]

(II)Filing of trademark applications under the Trademark Law of the People’s Republic of China (Trademark Law) and preliminary approval gazette of trademarks do not necessarily constitute rebuttal evidence to the claim of copyright ownership

In the Darlie case, the court of first instance held that the Outsider filed the application for the registration of the trademark containing the Work in 1989 and should have enjoyed the copyright in the Work at that time or obtained authorization from the copyright owner. This was earlier than the time Hawley & Hazel Chemical claiming its copyright, which was in conflict with Hawley & Hazel Chemical’s copyright in the Work and with its claim. Therefore, the existing evidence could not prove that Hawley & Hazel Chemical enjoyed copyright in relation to the Work.

In this regard, we believe that trademark right and copyright are two different intellectual property rights, and the way of acquiring and maintaining them is also not the same. Thus, a trademark registrant’s exclusive right to use a registered trademark does not necessarily mean that he has  copyright  in  the  trademark.  Considering that preemptive and dishonest registrations of trademark are rather ubiquitous, the trademark applied for by the applicant is likely to be a work in which others enjoy prior copyright. The trademark applicant may have not obtained the authorization   of the copyright owner of the work for trademark application of the work. Under such circumstances, the filing of trademark application and the corresponding gazette were unauthorized publication of the work. They themselves constitute copyright infringement, and certainly cannot give rise to any rights. Even if there is no malicious registration, the application for trademark registration may only be filed based on the authorization or license of the copyright owner of the trademark graphic. It cannot prove that the trademark applicant is the real copyright owner.

In the cases of “Laorencheng”[5] and “Auchan,”[6] Beijing Higher People’s Court stated that prior trademark registration could not be used as proof that the trademark registrant enjoys copyright in the work involved. In the case of Laorencheng, Beijing Higher People’s Court held that the party claiming the copyright of a work should bear the burden of proof. According to Huayuan, an entity outside the case, it was clearly stated on the application for registration and the announcement of approval of the cited trademark that Huayuan was the right holder of the cited trademark. It meant that Huayuan enjoyed the copyright in the graphic work of the cited trademark. In the case, the existing evidence could also show that Huayuan was the right holder of the cited trademark. However, even if the application for registration of the cited trademark and the announcement of approval could be deemed as the public release of the graphic work of the cited trademark, such act merely indicated to the public that Huayuan was the registered owner of the cited trademark, and did not necessarily prove that Huayuan was the copyright holder of the graphic work of the cited trademark. The court’s determination in the case shows that the application for trademark registration and the corresponding announcement only indicate the ownership of the registered trademark, but not necessarily prove the ownership of the copyright of the graphic work contained in the registered trademark. As provided in Paragraph 4, Article 11 of the current Copyright Law of the PRC, the “presence of name” on a work indicates the identity of the author and delivers the message to the public that the named person is the creator of the work. Information of the trademark applicant and registrant specified in an application for trademark registration and the corresponding announcement of approval is only an indication of the ownership of the registered trademark but not an indication of authorship in the sense of the Copyright Law.

The  presiding  judge  of  the  case,  Liu  Xiaojun,  also  wrote: “The Trademark Law of the PRC provides that trademarks applied for registration shall not infringe upon others’ prior legitimate rights. In review of trademark registration application, however, such trademark will generally not be reviewed as to whether there is any such infringement. Such infringement is taken as a ground for cancellation of a registered trademark in dispute after the trademark right is granted. Therefore, trademark registration applications conflicting with others’ prior legitimate rights will generally be granted. As a result, an application for trademark registration and the announcement of approval are only an indication of the ownership of the registered trademark, not necessarily state the ownership of the copyright of the registered trademark.”[7] The SPC explicitly acknowledged this view in the case of “GREGORY mountain pattern,”[8] holding that the information of the trademark applicant and registrant can only prove the ownership of the registered trademark and is not an indication of the creator of the work as author as specified in the Copyright Law. Therefore, the SPC held that the prior trademark registration certificate submitted by Gregory for the work was insufficient to prove that the trademark registrant enjoyed copyright in the work.

On 10 January 2017, the SPC promulgated the Rules on Issues Concerning the Trial of Administrative Cases Involving the Grant or Confirmation of Ownership of Trademarks (Fa Shi [2017] No.2, effective as of 1 March 2017). Article 19 of the Rules provides: “Trademark gazette, trademark registration certificate, etc. may be taken as the preliminary evidence to prove that the trademark applicant is an interested party that is entitled to claiming the copyright in the trademark.” There are opinions that the provision stated above has specified that trademark gazette and registration certificate can be taken as preliminary evidence to prove the ownership of copyright. However, we disagree for the reasons below. Firstly, that Article set forth specific examples of preliminary evidence that can prove the ownership of copyright in Paragraph 2. If it is believed that trademark gazette and trademark registration certificate can also be used as preliminary evidence of ownership, there is no reason not to include them in that Paragraph. Secondly, that Article clarifies in Paragraph 3 that trademark gazette and trademark registration certificate, etc. may be taken as the preliminary evidence to prove that “the trademark applicant is an interested party that is entitled to claiming the copyright in the trademark,” i.e. the identity of the subject. This Paragraph doesnot relate to the ownership of copyright.

(III)The use of others’ work on product packaging should constitute “reproduction” and “distribution” in the sense of the Copyright Law

The court of second instance in this case corrected the mistake of the court of first instance in determining the ownership of the Work. In its belief, however, the defendant’s use of the Work was not intended to make use of the Darlie portrait for its value of an art work, but for its function of indicating the source of the goods. Therefore, such use was found non-infringement upon the right of Hawley & Hazel Chemical to reproduce and distribute the Work. We disagree with the court on this. Reproduction under the Copyright Law means “to produce one or more copies of the work by means of printing, reproducing, rubbing, sound recording, video recording, duplicating, re- shooting or otherwise,” while the “provision by sale or gift giveaway of original or reproduced copies of works to the public” is distribution controlled by the copyright owner. The Guidelines of Beijing Higher People’s Court for the Trial of Copyright Infringement Cases also points out that “it is a reproduction if a work is re-presented from plane to plane, from plane to stereoscopic, from stereoscopic to plane, or from stereoscopic to stereoscopic without any contribution of original labor.” In this case, the defendant’s use of the Work on the packaging of the allegedly infringing products was obviously the reproduction and distribution of the Work. Thus, it should have obtained the authorization of the copyright owner. In fact, infringement should be determined based on the nature of the act itself, i.e. whether the act is an infringement regulated by the Copyright Law, rather than the subjective intent of the infringer to carry out such act. In the “Hongda Wire” case, the Intermediate People’s Court of Zhongshan City, Guangdong Province determined that: “The graphics in the  logo  used  in the trade dress of the allegedly infringing wire products are substantially similar to the graphics for which Zhongshan Tongda Wire and Cable Industry Co., Ltd. claimed copyright. In addition, according to the trademark application process described by Zhongshan Guzhen Hongda Power Line Factory and Deng Jianqiang, it can be found that during the process, Deng Jianqiang had the opportunity to access the above- mentioned work for which Tongda claimed copyright. As the graphic part of the logo used by Hongda in the trade dress of the allegedly infringing wire products accused of infringement was not approved by the copyright owner, it constitutes an infringement upon Tongda’s rights to reproduce and distribute the work.”[9] In the “Miaoji” case, the Intermediate People’s Court of Suzhou City, Jiangsu Province also pointed out that “Miaoji’s unauthorized use of the art work substantially similar to the registered artwork on its product packaging stickers constitutes infringement upon the copyright owner’s right of reproduction.”[10] In judicial practice, the reproduction of industrial design drawings from plane to stereoscopic is usually not an infringement in the sense of the Copyright Law. As provided in the Guidelines of Beijing Higher People’s Court for the Trial of Copyright Infringement Cases, “The construction or production of projects or products according to the drawings of engineering design or drawings of product design that are not protected by the Copyright Law is not a reproduction.” The reason is that the Copyright Law protects the beauty of line and figure of an industrial design drawing, but not the technical solution behind the drawing. As the completed project or product is not a work protected by the Copyright Law, the process of producing the project or product according to an industrial design drawing is in fact a concrete realization of the technical solution reflected in ideas, or a “reproduction” of the “idea.” This kind of “reproduction” is functional and inconsistent with the original intention of the Copyright Law to protect expressions but not ideas, and thus should not be prohibited. Otherwise, it will make the Copyright Law become a tool to protect technical solutions. In Hawley & Hazel Chemical v. Guangzhou Heiren, it is not the case as described above. The Darlie portrait did not have any practical function, and the defendant in this case reproduced the Work based on the aesthetic value of the Darlie portrait. Therefore, the defendant’s use of the Darlie portrait on the packaging of the allegedly infringing products should be the undisputable reproduction and distribution of the Work.