Features

Changing Approach to Letters of Consent in China

Published: January 18, 2023

Yongjian Lei

Yongjian Lei Wanhuida Intellectual Property Beijing, China Trademark Office Practices Committee

Chinese courts have always faced a dilemma between the private autonomy of will and public interest in deciding whether they should accept the coexistence of two similar, or perhaps even identical trademarks in circumstances in which both trademark owners agree to coexist. This is of particular relevance where trademark applicants seek to overcome a citation of a prior trademark by filing letters of consent with the aim of having their application accepted for publication.

Though the Beijing High People’s Court (BHPC) in its Guidelines for the Trial of Trademark Right Granting and Verification Cases in 2019 set out some general principles when it formally addressed the issue of coexistence, many subjective and technical matters that impact the acceptability of the coexistence agreement and/or the letter of consent in trademark prosecution proceedings make coexistence a complicated matter.

Two cases involving trademark coexistence in the Supreme People’s Court (SPC), Beijing High People’s Court (BHPC), and Beijing Intellectual Property Court (BIPC), respectively, illustrate some of the most pertinent factors and developments:

  • Google LLC (Google) Trademark Review and Adjudication Board (TRAB) (Nexus case) ((2016) SPC Retail No. 102));
  • Orbital Systems AB (OS) CNIPA (Orbital case) (2020) Jing 73 Administrative Preliminary No.1481).

In the Nexus case, after carefully looking into the visual effects, distinguishing the goods, and commenting on the role of the letter of consent from the owner of the prior mark, the SPC ruled that word trademarks composed of identical letters may coexist.

In the Orbital case, the BIPC challenged the validity of the letter of consent by questioning the power of the signatory on behalf of the prior corporate trademark registrant.

The Nexus Case

Mark No. 11709161 Preliminarily Refused Cited Mark No. 1465863
Filed by Google Owned by Shimano Inc.

Google filed an application for the above NEXUS trademark for hand-held computers and portable computers in Class 9 on November 7, 2012. However, the China Trademark Office (CTMO) rejected it due to the cited mark NEXUS registered for computers for bicycles in Class 9 owned by Shimano Inc. The Trademark Review and Adjudication Board (TRAB), the Beijing First Intermediate Court (BFIC), and the BHPC successively affirmed the decision.

Although Google argued that it had a trademark coexistence agreement with Shimano concerning these two marks, underlined by the letter of consent that it also submitted, the courts did not consider this agreement. The courts held that the two marks were too close to rule out the possibility of consumers’ confusion. The BHPC further commented that: “The legislative intent of the Trademark Law was to protect the interest of trademark holders on the one hand and to protect the interest of consumers on the other. Therefore, the coexistence agreement should not be considered.”

Google applied for a retrial before the SPC, which reversed the TRAB decision together with the judgments of BFIC and BHPC and approved the registration of Google’s NEXUS trademark. The SPC ruling was based on the following elements:

  • The visual effects of both marks were different although they were composed of identical letters.
  • The “computers for bicycles” goods that were designated by the cited mark were close to the sport of cycling while the “hand-held computers and portable computers” of Google’s mark belonged to consumer electronics.
  • It was inappropriate to disregard the letter of consent from the owner of the cited mark as well as its right to dispose of its own interest when there was no objective evidence to prove that coexistence would damage the consumer interest.

The Nexus case was an extremely rare example of two marks with identical letters being allowed to coexist on the trademark registry. The SPC adjudicated on it at the end of 2016 and one could consider it a pro-private-right case. The SPC considered  Google and Shimano’s good reputations in their respective fields, in concluding that the registration of Google’s trademark would not harm the national or social interest. However, its assessment concerning the similarity of the goods was unpredictable. For instance, in another SPC decision rejecting Nestle’s request for a retrial in a case involving a trademark coexistence concerning the trademark ECLIPSE in 2019, the SPC confirmed that “electric apparatus for making coffee and tea” was confusingly similar to “gas burners.”

 

Although Google argued that it had a trademark coexistence agreement with Shimano concerning these two marks, the courts of first and second instance did not consider this agreement.

After the latest reform of the trial-level system, which took effect from October 1, 2021, the SPC has basically closed the door on retrials of cases with no national significance. The Nexus case shows that the TRAB, BIPC, and BHPC are much more unlikely to accept trademark coexistence concerning marks of identical letters, so one can imagine that under this reform, it will become even more difficult, if not impossible, to get such a trademark coexistence agreement/letter of consent accepted.

The Orbital Case

Mark IR No. 1423623 Preliminarily Refused Cited Mark No. 12545479
Filed by Orbital Systems AB (OS) Owned by Mag Aerospace Industries, LLC. (MAI)

The authorities rejected the trademark application filed by OS for ORBITAL SYSTEMS in Class 11 due to the prior registration of ORBITAL owned by MAI. The BIPC also analyzed the distinctiveness issue, ruling that the more distinctive part in the refused mark should be ORBITAL. Therefore, the two marks would confuse the relevant public.

What’s even more remarkable is that the BIPC specifically challenged the power of the signatory who issued a letter of consent agreeing with the registration of the rejected mark. The BIPC stated that MAI had not submitted any evidence to prove the signatory was authorized to sign the letter of consent on its behalf. Therefore, the validity of the letter could not be confirmed.

 

One can imagine that after the latest reform of the trial-level system, it will become even more difficult, if not impossible, to get a trademark coexistence agreement accepted.

Courts are becoming more demanding about the formality of the coexistence documentation. The letter of consent should be notarized and legalized; additional materials, notarized and legalized as well, should be filed simultaneously to prove the capacity and power of the signatories who appear on the coexistence documentation.

Key Takeaways

Both the CNIPA and the courts have become more cautious about accepting trademark coexistence agreements or letters of consent. Although the Nexus case showcased the possibility of approving the coexistence of two pretty much identical marks, no similar cases have been seen in recent years.

The following elements in coexistence agreements or letters of consent will improve the chances of Chinese courts accepting them:

  1. Clearly identifying the information of the two parties including their names and addresses, and making sure such information is consistent with that recorded before the CNIPA;
  2. Clearly identifying the information of the two parties’ trademarks that are to coexist, including but not limited to the trademark numbers, classes, and goods that are acceptable in the People’s Republic of China (PRC);
  3. Specifying PRC as one of the applicable jurisdictions;
  4. Not confining the coexistence with time limits;
  5. Not setting up conditions for the coexistence to take effect;
  6. Emphasizing both parties’ full awareness of the legal consequences of the coexistence and full willingness to take all necessary actions to prevent confusion;
  7. Having the coexistence agreements and/or letters of consent executed by authorized persons and preparing documents to prove such authorization; and
  8. Notarizing and legalizing the coexistence agreements and/or letters of consent, the authorization documents, and documents proving the good standing of the prior trademark owner.

Last but not least, the party seeking the letter of consent would be wise to get consent to both the registration and use of the trademark in dispute from the prior trademark owner. By doing so, even if the registration is not finally secured for various reasons, this would eliminate the risk imposed by the prior marks forming the basis of trademark infringement proceedings.

Although every effort has been made to verify the accuracy of this article, readers are urged to check independently on matters of specific concern or interest. 

© 2023 International Trademark Association

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