David C. Buxbaum spoke at the seminar held by LexisNexis on 28th July 2011. He compared certain laws and practices in the USA and China in the IP field. The first part of his talk discussed, “Similar Courts and Different Methods of Proceeding”, including ex-parte cases, motion practice, unfair competition in the court and defenses. The second part of his talk discussed, “Similar Laws and Different Interpretations”, including dilution of trademarks, work-for-hire doctrine and standard setting organizations and patents.
The full text is as follows：
Overseas Intellectual Property Rights of Chinese Enterprises–Major Risks & Current Status of Protection
中国企业海外知识产权主要风险以及保护现状
by: David C. Buxbaum 包恒
Anderson & Anderson LLP
- 1. Similar Laws and Different Interpretations
相似的法律，不同的解释
While the laws of China and the USA are similar, since both are members of the TRIPs Convention, and for example, both bound to protect famous marks against dilution[1], nevertheless, there are substantial differences in interpretation.
- a. Dilution of trademarks
商标淡化
In each country, there are considerations of consumer protection and protection of the investment made by the trademark owner. China seems to emphasize consumer protection more than trademark owner protection. Dilution is quite different than infringement, however in China, the standard used is often consumer confusion rather than dilution. In the USA, the owner of “famous mark” is entitled to relief from dilution under the Trademark Dilution Revision Act of 2006 (“Trademark Dilution Act”), “ ‘dilution by blurring’ is association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark. In determining whether a mark or trade name is likely to cause dilution by blurring, the court may consider all relevant factors…”. A dilution cause of action in the USA for a famous unregistered trademark in use of the USA, would be recognized by American courts. Furthermore, “A mark which would be likely to cause dilution by blurring or dilution by tarnishment under section 43(c), may be refused registration only pursuant to a proceeding brought under section 13. A registration for a mark which would be likely to cause dilution by blurring or dilution by tarnishment under section 43(c), may be canceled pursuant to a proceeding brought under either section 14 or section 24”, Trademark Dilution Act.
China’s Trademark Law, Article 13, states the following:
“Where a trademark in respect of which the application for registration is filed for use for non-identical or dissimilar goods is a reproduction, imitation or translation of the well-known mark of another person that has been registered in China, easily misleads the public and is likely to create prejudice to the interests of the well-known mark registrant, it shall be rejected for registration and prohibited from use.”
Nevertheless, Chinese courts and administrative organs often consider dilution to be part of likelihood confusion[2]. The Supreme Court of China, on 23rd April 2009, issued an Interpretation[3]. The Interpretation is concerned with the weakening of distinctiveness for the wrongful use of the reputation of the well-known mark. While dilution still remains hard to prove in China, the Supreme Court Interpretation should be helpful in this regard. Where there is an appearance of connection between two marks which are similar, which results in weakening the distinctiveness of the older mark, or an improper use of the reputation of the well-known mark is made, such act should be prohibited[4].
- b. Work-for-hire doctrine
雇佣作品之说
“There are radical differences in how IP ownership may be determined in civil law and common law countries. In the context of copyrightable works, most common law countries recognize the work-for-hire doctrine, i.e., the rule that an employer may own, as the original “author”, the copyrightable works created by its employee during the course of employment. In contrast, most civil law countries do not recognize the work-for-hire doctrine, and consequently do not permit the initial vesting of copyright ownership in the employer. The definition of an “author” in most civil law countries is limited to the person who actually creates the work. Certain civil law jurisdictions go a step further to prohibit parties from overriding default rules of copyright ownership through contractual provisions. Consequently, the issue of who owns the copyright in works created by employees during the course of employment (or independent contractors, in the case of commissioned works), is treated inconsistently in the global area[5].”
Neither the Berne Convention nor the TRIPs Agreement have significant impact on this issue regarding ownership of copyrighted works. The United States position is, absent a contract to the contrary, that an employee who creates a copyright work in the course of employment, is not the owner of the copyright work. Pursuant to the Copyright Act 1976[6], when the parties agree the work is one-for-hire and falls within one of the nine categories listed, then the commissioning party shall be the author of the work.
“The U.S. relies upon factors laid down by the courts in CCNV. v. Reid[7] and Aymes v. Bonelli[8]…”.[9]
While China is civil law country, China Copyright Law, Art. 9, gives recognition to companies as original copyright owners, however, one who creates a work on the job, pursuant to a task given to him by his employer, will own the work, subject to certain exceptions[10]. Certain software regulations give copyright ownership to the employer, for work created in the course of employment.
Even when ownership is invested in the employee, the employer has the right to exploit the work for its business, without charge.
Where specific work is commissioned, pursuant to the Copyright Law, Art. 17, the party’s contract will determine who has right to ownership of the copyright.
- c. Standard setting organizations and patents
标准制定组织以及专利
Standard Setting Organizations (“SSOs”) adopt standards for holders of propriety technology[11]. In one of the most famous cases in the U.S., FTC v. Rambus[12], “…Rambus was accused of wrongfully concealing patent applications it held which covered certain technologies incorporated into the standards that Rambus itself participated in developing in the early to mid-1990s”[13]. The FTC found Rambus liable for failing to disclose its technology to the SSO and thereby acquiring monopoly power in violation of the Sherman Act, Section 2. The D.C. Circuit held that Rambus Technology may have adopted its standard, even if it has disclosed its technology[14].
Wrongful acts in standard setting can be attacked in the U.S.A. by more than the anti-trust law. The Federal Circuit Court of Appeals held that Qualcomm waived its rights to enforce certain of its patents, due to its wrongful behavior in concealing its IP from an SSO, whose standards it participated in drafting[15]. The court found implied waiver of the right.
The Third Circuit Court of Appeals held Qualcomm could be sued for anti-trust violations for its failure to “…licence its patents on a reasonable and non-discriminatory (“RAND”) basis to a different SSO, that had developed a standard with Qualcomm’s participation[16].
Group boycotts are prohibited by the Sherman Act, Section 1. In the case of Golden Bridge Technologies, Inc. v. Nokia, Inc.[17], participants in an SSO removed their technology from a standard and were held liable for a group boycott. This case raises the concerns that communications among participants, in a standard setting process, though informal, may give rise to an anti-trust claim of illegal conspiracy[18].
Promises by participants in standard setting procedures, who promise in order to get their technology adopted, to licence their technology to users of the standard at a nominal fee, can be enforced[19].
- 2. Similar Courts and Different Methods of Proceeding
相似的法庭，不同的诉讼方法
- a. Ex parte cases
单方案件
As in China, the United States courts permit ex parte proceedings. For example in China, one can move, even prior to commencement of litigation, to freeze assets, seize evidence, etc.
In the United State, for example, one can bring an ex parte action against the United States Patent and Trademark Office (“USPTO”) for refusal to register a mark20. In the case of In re Hotels.Com LP21, the Federal Circuit Court considered genericness on an ex parte basis, when it upheld the Board’s ruling that “Hotels” is a generic name in the context of this case22.
The Federal Circuit has ruled on many ex parte applications, with regard to decisions of the USPTO, for example, proof of acquired distinctiveness23. At times, the Federal Circuit will reverse the USPTO’s rulings, for example, in the case of In re Husqvarna Aktiebolag24, where the Federal Circuit reversed the refusal to register HOP as a service mark for providing warranties for consumers.
- b. Motion practice
动议程序
Motion practice, or their equivalent, is permitted in Chinese courts; however, it is much less common than in American litigation. Very often in the United State courts or USPTO, motion practice revolves around discovery.
The Board rules of the USPTO25, required a party to serve its initial disclosure before its discovery applications can be served on the other party. Failure to timely serve initial disclosure may prevent an applicant from moving to compel discovery26.
On the other hand, when one objects to discovery, one must explain its objections27 candidly.
The Board, like the courts of United States has power to grant sanctions for failure to comply with a discovery order of the Board28.
Summary judgment applications, coming before United States court and before the Board, can only be made after one files its initial disclosure29.
- c. Unfair competition in the court and before the Board
法庭和美国权利商标局处理不正当竞争
In the United States, unlike China, in its original Trademark Law, rights are based on a trademark holder’s first use30. To establish that it has a valid trademark, the plaintiff must prove that it used the mark in commerce, prior to the defendant’s use of the potentially confusing mark.
In order to trigger liability, on behalf of a defendant, it must be using the challenged mark in commerce31.
The Lanham Act, sections 7(b), provides that “certificate of a mark upon the principal register… shall be prima facie evidence of the validity of the registered mark…” Once you have a registered mark, some of courts have held that the burden shifts to the defendant to show that the mark is not inherently distinctive32.
““A generic term is the name of a particular genus or class of which an individual article or service is but a member. A generic term connotes the basic nature of articles or services rather than the more individualized characteristics of a particular product.” ” Whether a term is, in fact, generic, obviously has critical significance to its protect ability under trademark law, as ““[t]he generic name of a product-what it is-can never serve as a trademark.” ”33
Unregistered claimed marks, such as “praline,” “king cake,” “buttered popcorn,” “Georgia peach,” “dill pickle,” and “buttercream,” were held unprotectable since they are generic names.
“Descriptive marks define a particular characteristic of [an associated] product in a way that does not require any exercise of the imagination.” Even if the verbal component of a composite mark is descriptive of the associated goods and services, the mark as a whole can escape a finding of descriptiveness if it incorporates stylized lettering or a distinctive design.34
“Assuming that the issue of secondary meaning was contested, courts finding that marks had acquired distinctiveness took various approaches to reach that conclusion. Although even a registration that has not passed its fifth anniversary is at least prima facie evidence that the registered mark is distinctive, one Seventh Circuit district court went beyond such a registration to find that the red knobs used on the plaintiff’s ranges and range tops had acquired secondary meaning under the multifactor test extant in that jurisdiction:
The Court of Appeals for the Seventh Circuit considers the following seven factors [sic] in determining whether a mark has acquired secondary meaning: (1) direct consumer testimony and consumer surveys; (2) exclusivity, length and manner of use; (3) amount and manner of advertising; (4) amount of sales and number of customers; (5) established place in the market; and (6) proof of intentional copying.35”
- d. Defenses
辩护
While many defenses to legal action in China and the United States are similar, in the IP area, there are differences in emphasis. In the U.S., when use of mark has been discontinued with intent not to resume such use, said mark should be deemed to abandon, Lanham Act, section 4536. As one court has held, “Non-use of a mark for a period of three years in prima facie evidence of abandonment. Such evidence creates a rebuttable presumption of abandonment. This presumption has the effect of shifting the burden of production to the owner of the mark to come forward with evidence showing the intention to resume the use of the mark within a reasonably foreseeable time. While the burden of production shifts, the ultimate burden of proof as to abandonment rests with the party claiming abandonment. That burden requires clear and convincing evidence of intent to abandon”37.
“…Evidence proffered to show an intent to resume use of a mark must show the intent to resume use within the three year period of non-use”.
Where a plaintiff has something to prove that it uses its trademark in ten years proceeding the defendant’s adoption of virtually identical mark, except in the white pages directory, “[the court found that the directory listing did not constitute ongoing use, and it was wholly unpersuaded by the argument that the plaintiff’s reopening of a store under its claimed mark rebutted the prima facie evidence of abandonment attaching to the mark’s nonuse under Section 45]”38.
Naked Licensing can also be considered abandonment when the licensor does not exercise quality control over the products or services marketed by the licencee39.
Descriptive fair use of someone’s trademark may be justified that the defendant is using a personal name in his own business, failure or in good faith, only to describe goods and services. Fair use of these marks, including a descriptive failure, excludes one from liability40.
“Under federal trademark law, it is lawful to use another’s trademark, but only to the extent that it is necessary to identify a product as having been manufactured by the mark owner. Thus, it is clear that the court must require the defendants to use only so much of the [plaintiff’s] mark as is necessary to identify the products they are selling. This holding does not mean, however, that the [plaintiff’s mark] may only appear directly before the name of a specific product [produced by the plaintiff]. Nor does it mean that the defendants may not purchase the plaintiff’s mark as a search term from search engines such as Google or Yahoo…[T]he court finds search engines to be a valuable guide to Internet users…[T]he law will destroy the valuable resource that search engines have become if it prevents those search engines from doing what they are designed to do: present users with the information they seek as well as related information the user may also find helpful or interesting”41.
The injunction ultimately entered in the case therefore allowed the defendants to use the plaintiff’s mark when informing consumers that the defendants offered the plaintiff’s products for sale.
While the Lanham Act does not contain a statute of limitations, some states laws of unfair competition do have statute of limitation, who can bar a claim.
Equitable defenses insisting in the U.S. law, but are generally absent in Chinese law. For example, whether plaintiff action is inequitable, related to the subject matter of the claim, it can be barred from its right by the adoption of unclean hands. In the case where the plaintiff’s products suffer from the exact problems of the defendant’s products, bar the plaintiff from at least a preliminary injuncton42.
“Lache is an equitable defense that generally depends on two showings by a defendant invoking it. To prove [the] affirmative defense of laches, a defendant must show that (1) the plaintiff delayed for an unreasonable and inexcusable amount of time in filing suit, and (2) that the defendant was prejudiced as a result of the delay. Moreover, [a] party asserting an equitable defense such as laches must demonstrate that it comes before the court with clean hands”43.
“Res judicata precludes the assertion of a claim after a judgment on the merits in a prior suit [between] the parties or their privies based on the same cause of action. The doctrine therefore bars a plaintiff from relitigating a claim that was raised or could have been raised in an earlier action. [T]he elements required for a res judicata claim are (1) a final judgment on the merits in an earlier proceeding; (2) sufficient identicality between the two causes of action asserted in the earlier and later suits, and (3) sufficient identicality between the parties in the two action”44.
[1] World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPs”), Article 16.3: “Article 6bis of the Paris Convention (1967) shall apply, mutatis mutandis, to goods or services which are not similar to those in respect of which a trademark is registered, provided that use of that trademark in relation to those goods or services would indicate a connection between those goods and services and the owner of the registered trademark and provided that the interests of the owner of the registered trademark are likely to be damaged by such use.”
[2] Laura Wen-yu Young, Dilution in China and Taiwan, “New Matter”, Volume 35, Number 3, Pages 18-20.
[3] Supreme People’s Court Interpretation on Several Issues Concerning the Application of Law to the Trial of Civil Disputes over the Protection of Famous Trademarks, 23rd April 2009.
[4] Laura Wen-yu Young, op cit supra, note 2 at p.19; and Supreme People’s Court Interpretation…, op cit supra, note 3.
[5] Raji Nagarkar, The Work-For-Hire Doctrine in the International Arena, “New Matter”, Volume 35, Number 3, Pages 21-28.
[6] 17 U.S.C. Sec 101.
[7] Community for Creative Non-Violence v. Reid, 490 U.S.730, (1989).
[8] Aymes v. Bonelli, 980 F.2d 857 (1992).
[9] Raji Nagarkar, op cit supra, note 5 at p.23.
[10] Copyright Act, Art. 16.
[11] Howard Wettan, Four Cases and a Business Review Letter: Standard Setting Organizations and Patent Rights, “New Matter”, Volume 35, Number 3, Pages 9-11.
[12] Opinion of the Commission, Rambus, Inc., FTC Docket No.9302 (Aug. 2, 2006).
[13] Howard Wettan, op cit supra, note 11 at p.9.
[14] Rambus, Inc. v. FTC, 522 F3d 456 (D.C. Cir. 2008), cert. denied, 2009 WL 425102 (Feb. 23, 2009).
[15] See Qualcomm, Inc. v. Broadcom, Corp. 548 F.3d 1004 (Fed. Cir. 2008), cert. dismissed, 129 S. Ct. 2182 (2009).
[16] Howard Wettan, op cit supra, note 11 at p.10; and see Broadcom, Corp. v. Qualcomm, Inc. 501 F.3d 297 (3d Cir. 2007).
[17] 416 F. Supp. 2d 525 (E.D. Tex. 2006).
[18] Golden Bridge Technologies, Inc. v. Nokia, Inc., 2007 WL 2688487 (E.D. Tex. 2007).
[19] Complaint, Negotiated Data Solutions LLC, FTC Docket No. C-4234 (Sept. 22, 2008).
20 Vol. 101 No.2 The Trademark Report, pages 342-343.
21 In re Hotels.com LP, 91 U.S.P.Q.2d 1532 (Fed. Cir. 2009), page 344.
22 Ibid., page 344.
23 In re Nielsen Business Media, Inc., 93 U.S.P.Q.2d 1545 (T.T.A.B. 2010), page 348.
24 In re Husqvarna Aktiebolag, 91 U,S,P,Q, 2d 1436 (T.T.A.B.2009), page 349.
25 Trademark Rule 2.120(a)(3), 37 C.F.R. 2.120(A)(3), page 383.
26 Dating DNA, LLC v. Imagini Holdings, Ltd., 94 U.S.P.Q.2d 1889 (T.T.A.B. 2010), page 383.
27 Amazon Techs., Inc. v. Wax, 93 U.S.P.Q.2d 1702 (T.T.A.B. 2009), page 384.
28 Myspace Inc. v. Mitchell, 91 U.S.P.Q.2d 1060 (T.T.A.B. 2009), page 385.
29 Qualcomm Inc. v. FLO Corp., 93 U.S.P.Q.2d 1768 (T.T.A.B. 2010), page 386.
30 Knights Armament Co.v. Optical Sys .Tech. Inc., 636 F.Supp.2d 1283, 1297 ( M.D.Fla. 2009), page 391.
31 Ashcrift v. Iqbal, 129 S. Ct 1937 (2009); Bell Atlantic Corp. v. Twombly 550 U.S. 544, page 458.
32 Zobmondo Entm’t, LLC v. Falls Media, LLC, 602 F. 3d 1108, 1114 (9th Cir. 2010), page 406.
33 KM Mentor, LLC v. Knowledge Mgmt. Prof’l Soc’y. 712 F. Supp. 2d 1222, 1243( D. Kan 2010) (quoting Official Airline Guides, Inc. v. Goss, 6 F.3d 1385, 1391 (9th Cir. 1993) ), page 409.
34 Vol 101 No.2 The Trademark Reporter, page 412.
35 Wolf Appliance, Inc. v. Viking Range Corp., 686 F Supp. 2d 878,887 (W.D. Wis. 2010).
36 15 U.S.C. section 1127 (2006).
37 Fifth Ave. of Long Island Realty Assocs. v. Caruso Mgmt. Co., 718 F. Supp. 2d 292, 306-07 (E.D.N.Y. 2010). See also Vol. 101, No. 2, Trademark Reporter.
38 See Vision Ctr. Nw., Inc. v. Vision Value, LLC, 673 F. Supp.2d 679 (N.D. Ind.2009).
39 Henry v. Pro 10 Originals, LLC, 698 F. Supp.2d 1279, 1283-85 (D. Wyo. 2010).
40 15 U.S.C. section 1115(b)(4) (2006), Id. Section 1125 (c) (3) (A).
41 Id. At 646 (internal quotation marks ad citations omitted), see also Vol. 101, No. 2, Trademark Reporter.
42 See Stokely-Van Camp, Inc. v. Coca-Cola Co., 646 F. Supp.2d 510 (S.D.N.Y. 2009).
43 Id. At 1333 (Fed. Cir. 2009) (applying Sixth Circuit law); accord Frayne v. Chicago 2016, 92 U.S. P. Q. 2d 1454, 1459 (N.D.III.2009); Rexall Sundown, Inc. v. Perrigo Co., 651F. Supp.2d.9, 31 (E.D.N.Y. 2009).
44 Shelby v. Factory Five Racing, Inc., 684 F. Supp. 2d 205, 211 (D. Mass. 2010) (quoting Breneman v. United States ex rel FAA, 381 F.3d 33, 38 (1st Cir. 2004).
