Using copyright to thwart trademark squatting in China

Picture: feiyuezhangjie / Shutterstock.com

China is a first-to-file trademark jurisdiction that does not require trademark applicants to demonstrate use of or an intention to use an applied-for mark. This makes China’s trademark system ripe for abuse by trademark squatters (ie, persons who apply to register third-party trademarks with the aim of selling them back to the legitimate rights holders).

When faced with the threat of misappropriation of their trademarks by a trademark squatter, rights holders typically rely on either prior trademark rights (eg, well-known trademark rights or an earlier registered trademark right) or other prior rights as a basis to oppose or cancel a bad-faith trademark application or registration.

The legal basis for other prior rights may be found under Article 32 of the Trademark Law, which provides that “[t]he trademark application shall neither infringe upon another party’s prior existing rights, nor be an improper means to register a trademark that is already in use by another party and enjoys a certain influence”.

The China Trademark Office (CTMO) and the Chinese courts have recognised several types of prior existing rights, including trade name rights, personality rights, pseudonym rights, merchandising rights and design patent rights. However, recognition of these types of prior rights by a Chinese court or administrative body requires that a trademark owner demonstrate that concrete steps have been taken to establish those rights in China (eg, by filing a design patent application or registering a company).

However, unlike other prior rights (including prior trademark rights), copyright may be recognised as a prior right in China without the rights holder having taken any affirmative steps, by virtue of China being a signatory to the Berne Convention and the Universal Copyright Convention. This unique feature of copyright may in some instances allow a brand owner to claim the upper hand in a trademark-squatting case. This article explores how brand owners may successfully assert copyright as a prior right against trademark squatting in China.

Trademark logos and copyright

Trademark logos embody the interface between trademark law and copyright law: they may be protected either as a trademark registration pursuant to the Trademark Law or as a copyrighted work of fine art in accordance with Article 3(4) of the Copyright Law (2010).

A legal definition of ‘works of fine art’ is provided by Article 9(8) of the Implementing Regulations of the Copyright Law (2013), which states that “works of fine art are two-dimensional or three-dimensional works created in lines, colours or other media which, when being viewed, impart aesthetic effect, such as works of painting, calligraphy and sculpture”.

To determine whether a logo may be the subject of copyright protection, reference is made to Article 2 of the regulations, which stipulates that “[f]or the purposes of the Copyright Law, work(s) shall mean original intellectual achievements in the literary, artistic and scientific domains that can be reproduced in a tangible form”.

Accordingly, two elements must be met for a logo to qualify as a work of fine art: the work must be reproducible in a tangible form and it must possess originality.

Evidencing that a logo is reproducible in a tangible form is relatively easy and can be demonstrated by the ability to print identical logos en masse.

Proving that a logo possesses originality, on the other hand, requires more effort, due in part to the courts and administrative authorities throughout China having failed to adopt a uniform position on the minimum originality requirement for a copyright work or assessing originality.

To date, the predominant approach for assessing originality follows the method outlined in the Beijing Higher People’s Court Answers to Several Issues Concerning the Trial of Copyright Disputes Cases (1996), which states that ‘originality’ is the product of an author’s independent conception and creation (without copying), and that the author’s efforts can be used as a factor to determine whether there is originality in a work. The answers also provide that originality should be assessed separately from the monetary or artistic value attributed to a specific work.

If the Copyright Law protects the product of an author’s original thoughts, then determining whether a logo may be called a work of fine art involves considering whether the logo (or parts thereof) is the unique manifestation of the author’s independent thoughts and expression. When considering this question in the context of the Trademark Law, a logo that is honestly devised to be used as a trademark should have been created for the purposes of serving as a distinctive design in order to convey to the relevant public the unique origin of the goods or services. Accordingly, the distinctiveness of the logo serves – by its very nature – as a strong basis for establishing its inherent originality, thereby allowing the logo to qualify as a work that is subject to protection under the Copyright Law.

Evidencing copyright, ownership and date of creation

Copyright

For the purposes of evidencing that a logo design is original and qualifies as a work under the Copyright Law, Article 22 of the Beijing Higher People’s Court Guidance on the Hearing of Administrative Trademark Cases (January 2014) provides that a brand owner can rely on the following types of prima facie evidence to prove that originality, and hence copyright, subsist in a logo:

• documents related to the design of a trademark representation;
• copyright registration certificates;
• contracts commissioning the design of the trademark representation;
• copyright assignment agreements; and
• other materials

Ownership

A brand owner may rely on copyright as a prior right only when qualified to do so, which often requires demonstrating that it also owns the subject copyright.

Proving that copyright subsists in a work does not necessarily prove ownership of it. Nor does ownership of a trademark right for a logo prove that the owner of the trademark right also owns the copyright in the logo.

Establishing copyright subsistence focuses primarily on proving the originality of the work, while copyright ownership requires proving the identity of the author and in some cases the chain of ownership of the copyright from the author to the ultimate owner.

Of course, evidence used to establish copyright subsistence may also assist in proving ownership, such as when a contract commissioning the design of the trademark representation is presented as evidence of ownership.

Date of creation

For copyright to qualify as a ‘prior’ right, the copyright owner must prove that the copyright existed prior to the filing date of the bad-faith trademark application.

Article 6 of the Implementing Regulations sets out that “[c]opyright exists from the date when the creation of a work is completed”. To establish the date of creation, in addition to the evidence listed in the Beijing Higher People’s Court guidance, evidence of dated publications by third parties is often relied upon. This evidence can take the form of trademark registration certificates from foreign jurisdictions, advertisements in newspapers or magazines and promotional materials for specific events.

Copyright subject to protection in mainland China

Even if a logo qualifies as a work of fine art, ownership is established and the date of creation for the work is evidenced as prior to the filing date of a bad-faith trademark application, the rights holder must also show that its copyright qualifies for protection under China’s Copyright Law.

Article 2 of the Copyright Law provides the basis for recognising copyright in mainland China:

Chinese citizens, legal entities or other organizations shall, in accordance with this Law, enjoy the copyright in their works, whether published or not.

The copyright enjoyed by foreigners or stateless persons in any of their works under an agreement concluded between China and the country to which they belong or in which they have their habitual residences, or under an international treaty to which both countries are parties, shall be protected by this Law.

Foreigners and stateless persons whose works are first published in the territory of China shall enjoy the copyright in accordance with this Law.

As China is a signatory to the Berne Convention and the Universal Copyright Convention, a work that was not created by “[C]hinese citizens, legal entities or other organizations” and was first published outside of the “territory of China” will still be protected under Chinese copyright law if it was created by any natural person with the nationality of a Berne Convention or Universal Copyright Convention member state; a natural person who has no nationality of, but is a habitual residence in a Berne Convention or Universal Copyright Convention member state; or a person who is not a national of, but whose work is first published in a Berne Convention or Universal Copyright Convention member state.

Opposing bad-faith trademark applications and copyright infringement

To assert copyright as a prior right against a bad-faith trademark application, the brand owner must show that the trademark contained in the bad-faith trademark application infringes the copyright subsisting in the logo.

The three-step test for copyright infringement may be understood as follows in the context of trademark squatting:

• Did the trademark squatter have access to the copyrighted work?
• Is there a ‘substantial similarity’ between the trademark squatter’s applied-for mark and the copyrighted work?
• Do the substantially similar elements relate to expression which is inseparable from an idea – and is there only one or a limited number of ways of expressing the idea?

Access to copyrighted work

A copyright infringer can copy another person’s copyrighted work only if it is first aware of it. Therefore, access to the copyrighted work is the first evidentiary hurdle that a rights holder must overcome when claiming infringement.

To prove that an infringer had prior access to a work, the rights holder can demonstrate that the bad-faith applicant had direct or indirect access to the copyrighted work.

Establishing that an infringer had prior direct access to a work involves proving that the trademark squatter actually viewed the work at a specific time and location, such as at an exhibition or at a location where the work was displayed.

Establishing indirect access to a specific work requires the rights holder to demonstrate that there was a reasonable likelihood that the work was viewed by the trademark squatter. This may be achieved by demonstrating either of the following:

• The work was made available to the public in China prior to the filing date of the trademark application through publication, exhibition or other means; or
• The trademark squatter would have had neither the ability nor the resources to create the alleged infringing work before the filing date of the trademark application.

Based on the above, proving direct or indirect access is generally a challenge where the rights holder has not conducted any form of business in China and the bad-faith applicant is from mainland China with no history of travelling abroad.

However, in some instances a rebuttable presumption can be made that the trademark squatter had previously accessed a work, if its mark is identical or almost identical to a work; this would support the position that the trademark squatter’s mark was not an independent creation. In addition, if the trademark squatter’s mark incorporates the same errors as those found in a work, this would support the position that the appearance of the same errors in both the trademark squatter’s mark and the original work is more than a mere coincidence.

Accordingly, even where a copyright owner cannot prove that an infringer had direct access to its work or that there is a reasonable likelihood that the copyright infringer viewed a work in China prior to the filing date of a bad-faith trademark application, the owner may still benefit from a rebuttable presumption that the trademark squatter had previously accessed the work if the applied-for mark and work are identical or almost identical.

Substantial similarity

The test for substantial similarity is whether the general public would be of the impression that the applied-for mark and the work were basically the same. When assessing whether two works are substantially similar, reference is made to their original elements. In some cases a work may also incorporate content that belongs to a third party or comes from the public domain; this type of content cannot be relied upon by a copyright owner in a copyright infringement action.

Expression and ideas

The third step of the test for copyright infringement stems from the dichotomy between ‘expression’ and ‘ideas’ under copyright law. Copyright law is designed to protect expression, not ideas, procedures, methods of operation or mechanical concepts. If an expression is inseparable from an idea, and there is only one or a limited number of ways to express the idea, then that expression cannot be protected by copyright law as this would give the copyright owner a monopoly over the idea.

Limitations of copyright as prior right

In spite of the advantages that copyright has over other forms of prior rights, it is still subject to some important limitations.

Generally, copyright protection is not available for words or short phrases, as these are viewed either as insufficient to meet the requirement of originality or as expressions that are inseparable from the ideas that they embody. Accordingly, copyright cannot be asserted against a bad-faith trademark application for a pure word mark.

From a cost perspective, foreign companies that assert copyright as a prior right against a bad-faith trademark application can expect costs to be on average more expensive than when relying on other prior rights. Often this is due to much of the evidence required to prove creation and ownership of copyright coming from outside mainland China and being subject to China’s formal evidentiary requirements (eg, notarisation, legalisation and translation), which typically increases costs considerably.

Relying on copyright as a prior right may also present some systemic challenges, which may lead to unpredictable results. For example, the CTMO, which is responsible for hearing oppositions against bad-faith trademark applications, specialises in trademark matters, not copyright matters.

A CTMO examiner hearing a claim for prior copyright may thus be incapable of assessing the originality of a work or determining whether a copyright work has been infringed.

Conclusion

Trademark squatting has been and continues to be a serious problem for trademark owners in China; and although all brand owners may be targeted by trademark squatters, it follows that companies coming late to China are especially vulnerable to losing their trademarks in this way. Unlike those trademark owners that have some history in China, brand owners with little or no commercial history in China often find the evidentiary hurdles in establishing most prior rights in China insurmountable.

For this reason, copyright may be viewed as more user friendly for brand owners, given that no additional steps need be taken to establish copyright as a prior right in China. Consequently, the copyright subsisting in logos may serve as the only recourse for brand owners that are late coming to China and are in danger of having their trademarks misappropriated.

Another advantage that copyright holds over other prior rights is that it is unrelated to goods and services. Other forms of prior rights, such as trademark and trade name rights, are inextricably tied to particular goods and services; in most cases these prior rights cannot be asserted against a bad-faith application unless the prior right is associated with goods and services that are the same as, similar to or related to those specified by the bad-faith trademark application. Copyright, on the other hand, can be asserted against bad-faith applications across all classes of goods and services.

In view of the above, under the right circumstances copyright may be viewed as the ideal prior right for thwarting trademark squatting in China.