Research On Application Of The Rule Of Trademark Prior User Right

The Rule of Trademark Prior User Right is applied when the trademark registrant alleges that the prior user in good faith constitutes trademark infringement because of using the unregistered mark identical to or similar with his registered trademark on the identical or similar kind of goods or service. The prior user in good faith may make a defense under the Rule and if established, the prior user will be entitled to continue using his unregistered mark accordingly.This Rule has just been established in our country. There are few relevant cases making detailed reasoning, let alone any judicial interpretation for reference. What are the requirements of the Trademark Prior User Right? Any limitations? The Rule added requirements of “Having used before the registrant used” and “Having some popularity”, and maintained the terms of “Original using scope” and “Proper identification mark”, compared to the initial draft. What do they actually mean? Any other issues should have our attention during the application process? All these problems have to be solved. In order to solve these problems fundamentally, we must go back to the theoretical basis and the legislative purpose of the Rule of Trademark Prior User Right. Therefore, this article just starts from the theoretical basis and the legislative purpose of the Rule of Trademark Prior User Right, and then studies the requirements and limitations of Trademark Prior User Right on this basis, especially three distinct issues therein, i.e. “the very point to decide whether prior or not”, the meaning of “Having some popularity” and the meaning of “Original using scope”. This article also tries to solve three potential issues that may occur during the application process, i.e. “What to do when the registrant is malicious”, “Could the Trademark Prior User Right Defense still be established when a trademark license agreement has been performed between both parties in good faith” and “Could Article 92 of ‘Implementing Regulations of the Trademark Law’ be applied alone”. Figuring out all these issues, this article hopes to establish a system of the application of the Rule of Trademark Prior User Right, so that to do the courts a favor.The exact theoretical basis and legislative purpose of the Rule of Trademark Prior User Right is the fundamental premise to correctly apply it. Before the Rule established, the very issue the court encountered was that whether the prior use of the unregistered trademark in good faith could form an interest the law recognizes to defend against the exclusive right of the identical or similar trademark later registered on the identical or similar kind in good faith under the registration principle in our country. This article gets a positive conclusion to this issue. The theoretical basis is as follows: Prior use in good faith could form existing social order which is stable and deserves legal protection, i.e. consumer subscription order and operator competition order. On the other hand, trademark registration is just a right verification serving for actual use, other than empowerment, thus the registered trademark has no absolute priority to the unregistered trademark and the later registration in good faith cannot eliminate the existing social order originating from the prior use in good faith. There are two ways to protect the prior user’s existing social order—recognizing exclusive right could also be empowered from using, or recognizing Trademark Prior User Right which means the prior user in good faith will be permitted to continue using his unregistered trademark within the original using scope where he has formed existing social order instead of instituting trademark infringement under the registration principle. The former is much too unsafe and inefficient, and the legislators chose the latter. That’s the legislative reason why the Rule of Trademark Prior User Right established.There are four requirements of the Trademark Prior User Right, “Prior”, “Use”, “Having some popularity” and “Good faith”. Any one of them is not met, the Trademark Prior User Right Defense cannot be established. Requirement “Prior” requires the prior user to have used his unregistered trademark before the registrant’s “Application Date” other than “Registration Date”. Otherwise, it will go against the policy of encouraging filing applications for trademark registration timely. What’s more, the prior user probably uses the unregistered trademark between “Application Date” and “Registration Date”, with the knowledge that the trademark has been applied for registration through accesses like the SAIC website. If the Trademark Prior User Right Defense still establishes in this case, it will be against the principle of good faith. “Having used before the registrant used” in the requirement “Prior” should not be interpreted rigidly. Otherwise, it will deprive the trademark users, who started using their unregistered trademark in good faith between “The date the registrant(or his prior holder) started using” and “Application Date” in a different area, from their deserved rights. Thus, the court should find whether the unregistered trademark user and the registrant are in the same area, and whether the user is in bad faith, other than directly cross out the possibility of applying the Rule of Trademark Prior User Right when a case like this come before them.Requirement “Use” requires that the prior user has actually and legally used his unregistered trademark within China. Two points deserve our attention here: Firstly, mere advertising by itself without actual sale generally does not establish actual use, however, sustaining and broad advertising together with sufficient customer orders is enough to meet the requirement. Secondly, merely illegal business operation(e.g. with no Production License or Business License) without any illegal trademark use, does not prevent Trademark Prior User Right Defense from establishing.Requirement “Having some popularity” is necessary. That’s up to the theoretical basis of the Rule of Trademark Prior User Right—to protect the prior user’s existing social order. The unregistered trademarks fail to meet this requirement should not be protected. Otherwise, we will conclude here that “All labor must be rewarded” or “All freedom will be fully protected”. Obviously, the former does not conform to the experience and the latter does not conform to jurisprudence. Put this requirement into practice, the court should get back to “Application Date” to decide whether the unregistered trademark has any popularity under a criterion that whether it is known to the relevant public within a certain geographical area. The court could consider factors of the use duration, geographical area, advertising efforts, sales, etc. while implementing this criterion. This criterion should not be too strict. When it comes to the geographical area, a village or town is enough.Requirement “Good faith” could not be found in the Rule itself. However, it could be inferred from the principle of good faith. The court should interpret it as “Not based on the purpose of unfair competition” and pay attention to decide whether the prior user is in good faith initially and continuously.When the Trademark Prior User Right Defense establishes, the similar even the identical unregistered and registered trademark will coexist on the identical or similar kind of goods or service, which probably will make the relevant public confused. To decrease the likelihood of confusion, the Trademark Prior User Right should have some limitation. Only when the prior user’s subsequent use follows these limitations could his action be protected from trademark infringement. Otherwise, the prior user should be responsible to the excess portion. The limitations consist of three parts, limiting to “Original using scope”, attaching “Proper identification mark” and shall not be transferred or licensed separately. “Original using scope” should limit to the kind of original goods or service, other than the original goods or service itself. “Original using scope” also requires the limitation to the original geographical area where the unregistered trademark has been used. That’s up to the theoretical basis of the Rule of Trademark Prior User Right—to protect the prior user’s existing social order. What’s more, it will probably cause nationwide confusion because of the mobility of the goods or the consumers and then damage the foundation of the registration principle if go beyond the original area. If the prior use is merely use on the Internet, for it is not operable to limit the geographical area, this limitation loses effectiveness. The most reasonable alternative solution is: when the unregistered trademark has considerable popularity on the network platform of this industry by Application Date, the prior user could enjoy all the rights of an unregistered well-known trademark, otherwise nothing.“Proper identification mark” should be sufficient to tell the goods or service of the prior user’s from the registrant’s. The court should fulfill the Obligation of Clarification when it comes to this count of claim. The Trademark Prior User Right is not a complete right, thus it shall not be transferred or licensed separately. However, it could be transferred or inherited together with business.Besides the requirements and limitations, there will be other issues during the application process of the Rule of Trademark Prior User Right, the court should pay attention to these: Firstly, the theoretical basis of the system of regulating registrant malignity is to punish the actions in bad faith, while the theoretical basis of the Rule of Trademark Prior User Right is to protect the prior user’s existing social order. They are totally different. Therefore, the Rule of Trademark Prior User Right should not be applied when the registrant is malicious. In this case, the prior user may make the Registrant Malignity Defense according to the justice policy. If the Defense establishes, and the civil lawsuit is filed within 5 years since Registration Date, then the prior user may continue using his unregistered trademark without any limitation; If the Defense establishes, and the civil lawsuit is filed beyond 5 years, then the prior user may continue using his unregistered trademark with a limitation to the using scope by the very date when it is just 5 years since Registration Date and attach proper identification mark, based on the interest balancing principle. If the prior user does not make the Registrant Malignity Defense in this case, the court should fulfill the Obligation of Clarification.Secondly, the Rule of Trademark Prior User Right should not be applied when a trademark license agreement has been performed between the prior user in good faith and the registrant in good faith. This is because now that the prior user in good faith himself chose to enter into a trademark license agreement other than continue exercising his Trademark Prior User Right after he knew the registrant had a registered trademark identical to or similar with his, he could not claim to exercise his Trademark Prior User Right again, otherwise, it will be against the principle of estoppel.Thirdly, Article 92 of current “Implementing Regulations of the Trademark Law” does not require the prior user of two kinds of unregistered trademark—“The service trademark continuously used to July 1st, 1993” and “the trademark continuously used to the date when the Trademark Office accepts the application of this newly accepted kind of goods or service for the first time—to “Having some popularity”. However, the foundation that the prior user of these two kinds of unregistered trademark has to make the Trademark Prior User Right Defense is still the existing social order deserving legal protection, with no difference with other prior users. As a consequence, this article could only be deemed as an affiliated article to the Rule of Trademark Prior User Right. It could never be applied alone, eliminating the requirement “Having some popularity”.