Asia IP

Two recent decisions of the Supreme People's Court in China have allowed, for the first time, similar marks to coexist on the Register in respect of similar goods, on the basis of a coexistence agreement or consent letter (共存协议) entered into between the parties.

The two appeal cases concerned the following marks filed for registration by Google, both of which were blocked by the following prior mark:

The Trademark Review and Adjudication Board (TRAB) held that Google’s marks are similar to the prior mark in respect of similar goods, and refused them for registration.

On appeal to the court, Google submitted a co-existence agreement during the court appeal of the first instance. As is typical, the court upheld the TRAB’s decisions, and held that even where the parties have agreed to co-existence, if two marks are identical or similar and in respect of identical or similar goods, the latter shall be refused registration to maintain market order and avoid consumer confusion. On second appeal, the TRAB’s decision was upheld a second time.

However, on appeal to the Supreme People’s Court, the decisions were overturned, and Google’s marks were permitted to proceed to registration. The court commented that when considering refusing a trademark application on the grounds of a prior mark, a consent letter issued by the holder of the prior mark is an important factor to be considered. This is because:

• Granting consent is one of the ways the owner of the prior mark disposes of its legal rights, which should be respected if it is not contrary to the interests of the country, society or third parties; and

• Registration and use of the appliedfor mark has a more direct and practical impact on the interests of the prior mark owner than on the interests of consumers generally.

It is clear that the court also took into account the practical differences between the goods covered by the parties’ marks (handheld computers / laptop computers v. computers for bicycles).

Implications

In China, there is no codified or statutory basis setting out how the TRAB and the courts should treat any consent or co-existence agreement between the parties.

Before these two cases, when the TRAB and the courts were considering the impact of prior marks on an appliedfor mark, their general practice was not to give great weight to co-existence agreements. Even where the coexistence agreement stipulates that the respective parties are satisfied that there won't be any consumer confusion, the TRAB and the courts generally still conduct their own independent assessment on whether they believe any two marks should co-exist on the register.

This position is in contrast with jurisdictions such as Hong Kong or the United Kingdom, where “consent is King,” and justifies registration of an identical or similar trade mark for the same or similar goods or services sold in the same market.

These decisions of the Supreme People’s Court will provide guidance to the TRAB and the courts in the future, possibly paving the way for co-existence agreements to hold greater weight even for identical or highly similar marks. Nonetheless, as the court emphasized that consumer confusion is the key consideration, this is not a movement to a “consent is King” style position just yet.

- Edward Chatterton and Horace Lam, partners and co-heads of the Asia intellectual property and technology practice at DLA Piper, Hong Kong