The Beijing High People’s Court has recently issued rulings recognizing Novartis in Chinese – 诺华 – as a well-known trademark. Aira Apivala, Ling Zhao and Hui Gao explain how using the company’s name on packaging of pharmaceutical goods led to well-known trademark status.
Recently, the Beijing High People’s Court issued judgments of the second instance recognizing trademark registration No. 1144779 诺华 (Novartis in Chinese) owned by Novartis AG as a well-known trademark in Class 5 and granting cross-class protection to Class 3. The disputed trademarks are registrations No. 16739466 诺华露 (Novartis LU) and No. 16739516诺华妥飘 (Novartis TUO PIAO). The decisions were reported at 2022 JING XING ZHONG 4305 and 2022 JING XING ZHONG 4306, administrative judgments issued by the Beijing High People’s Court.
Foci of the case
One of the foci of the case is if the use of 诺华 (Novartis in Chinese) on packaging of pharmaceutical goods is considered use of trade name or use of trademark.
Novartis claimed that the use of 诺华 (Novartis in Chinese) and the use of product names on the packaging can both distinguish the source of the pharmaceutical goods. The product names can also identify the pharmaceutical product categories and will not affect the role of 诺华 (Novartis in Chinese) as a trademark in identifying the origin of goods.
The court decided that although 诺华 (Novartis in Chinese) is the company’s trade name, it is also registered as a trademark (under Nice Class 05) and its use on packaging of the pharmaceutical goods in a predominant way can distinguish the source of the goods and this is use as a trademark.
Another focus of the case is whether the well-known trademark on pharmaceutical preparations in Class 5 can obtain cross-class protection to goods in Class 3 covered by the disputed marks.
With strong evidence and reasoning, Novartis claimed that the goods covered by both parties’ marks overlapped in distribution channels and consumer scope. “Medical shampoo” and “cosmetics for medical use” are common commodities in the market, and in other valid judgements, protection of well-known mark in Class 5 has been extended to Class 3.
Finally, the court does not only support the claim that 诺华 (Novartis in Chinese) should be recognized as a well-known trademark because of its extremely high popularity and influence based on long-term and extensive use, but also recognizes that the use of the disputed marks on “cosmetics, etc.” in Class 3 is likely to mislead the relevant public and to damage the interests of Novartis as owner of the well-known mark.
This is the first time that the trademark 诺华 (Novartis in Chinese) has been recognized as a well-known trademark in China and obtained cross-class protection. This is Novartis’ landmark achievement in brand protection in China. This recognition helps Novartis to better protect its house mark in China. It will increase its chance of success for opposition/invalidation actions against same or similar marks regarding dissimilar goods and service classes and will help Novartis to better enforce its rights against bad faith trademark filings, which in China has been very problematic.
Well-known trademarks in China will receive more attention and stronger protection in enforcement proceedings against infringers either before the Chinese administrative authorities or the Chinese courts across the country and invalidation actions are not limited to 5-year term for such trademark proprietors. This is a very positive outcome to the reputation of Novartis in China and will be of advantage to maximize the market value of the brand and supports continuous business development in China.
Protection of well-known trademarks in the pharmaceutical industry in China
If a trademark of pharmaceutical goods has obtained well-known status through long-term and extensive market use, it should be recognized and protected as a well-known trademark under provisions of Article 13 of the current trademark law. According to the statistics from the MOZLEN data platform, in the list of well-known trademarks published by the former State Administration for Industry and Commerce in 2017, 570 pharmaceutical trademarks in Class 5 were recognized as well-known trademarks, accounting for 6.3 percent of the total number of 9,027. Among the owners of the 570 published well-known trademarks for pharmaceutical goods, 547 are from China, 12 from the United States, four from Switzerland, two from Germany, two from the United Kingdom, one from Denmark, one from the Virgin Islands and one from South Korea. Among all of the recognized well-known marks in the 45 classes, the number of well-known trademarks in Class 5 ranks sixth, only second to that identified in Class 25. The number of well-known marks in Class 30 is at the top of the list.
The above statistic does not include the well-known trademarks recognized by China National Intellectual Property Administration (CNIPA) and the courts at all levels in various cases after 2017, and is far less than the number of recognized well-known trademarks for pharmaceutical goods to this day. However, to a certain extent, it can prove that many trademarks for pharmaceutical goods are protected as well-known trademarks, and the market entities in this industry are relatively active.
Strengthening of well-known trademark protection by the Draft for Comments on the Revision of the Trademark Law
Enhancement of protection of unregistered well-known trademark
The Draft for Comments on the Revision of the Trademark Law recently issued by the CNIPA revised Article 13.2 and Article 13. 3 of the current trademark law.
The current trademark law is based on registration system and first-to-file principle. Use is not a prerequisite for obtaining trademark registration. However, prior use is the pre-condition for protection of unregistered trademarks. In the procedure of authorization and determination of trademark rights, the protection of unregistered and prior used trademarks is mainly reflected in protection of unregistered well-known trademarks and prior used trademarks with certain influence, which both take prior use and reputation as key requirements. The criteria for reputation for well-known trademarks are more demanding than that for prior used trademarks with some influence. According to the current trademark law, where the trademark on identical or similar goods is a reproduction, imitation, or translation of unregistered well-known trademark in China and is liable to cause confusion, its registration should be refused, and its use should be prohibited. Therefore, an unregistered well-known trademark can only be protected on same or similar goods, and they cannot be protected on cross-class dissimilar goods as registered well-known trademarks.
Article 18 of the Draft for Comments stipulates that if a trademark used or applied for registration on the same or similar goods is a copy, imitation or translation of unregistered well-known trademark in China and is liable to cause confusion, it should be refused for registration and be prohibited for being used. If a trademark used or applied for registration on dissimilar goods is a copy, imitation or translation of well-known trademark and is likely to mislead the publics and to cause damage to the interests of owner of well-known trademark, its use should be prohibited and its registration should be refused.
In accordance with the above provisions in the Draft for Comments, well-known trademark, no matter if it is registered in China, should be protected on dissimilar goods. This substantially strengthens the protection for unregistered well-known trademark in China and represents the transformation of China’s trademark law from a system of preferring registration to use into a system of emphasizing use. Although it is only a draft for comment at present, it presents the important thinking and direction of the revision of the trademark law.
For unregistered well-known trademarks, to obtain protection, the precondition is their use. The Annual Report of the Supreme People’s Court on Intellectual Property Cases (2009) pointed out that for an unregistered trademark sign, the person claiming rights to the sign must have actual use of the sign and the intention to use the sign as a trademark. In the civil ruling of the retrial for the trademark infringement dispute and unfair competition dispute between Pfizer Co., Ltd., Pfizer Pharmaceutical Co., Ltd. and Shanghai Oriental Pharmaceutical Co., Ltd. Bankruptcy Liquidation Group (2009 MIN SHEN ZI 313 civil ruling issued by Supreme People’s Court), the Supreme People’s Court held that, under the condition that the applicant for retrial clearly recognized that he had never used the sign in China, the sign cannot be recognized as an unregistered mark, let alone an unregistered well-known trademark. Others’ promotion of the sign cannot represent true willing of the retrial applicant.
For unregistered well-known trademarks with reputation and popularity obtained through use, in judicial procedures related to infringement of trademark rights, protection of them should include compensation for damages. In the case of trademark infringement and unfair competition dispute between Commercial Press Co., Ltd. and the Sinolingua Co., Ltd. (2016 JING 72 XING CHU 277 civil judgment issued by Beijing Intellectual Property Court), the Beijing Intellectual Property Court held that “Xinhua Dictionary” constituted an unregistered well-known trademark, and ruled that the defendant should immediately stop the infringement, eliminate the impact and compensate the plaintiff for economic losses of Rmb3 million (US$435,000) and reasonable expenses of more than Rmb270,000 (US$39,000). The “Xinhua Dictionary” case was selected as one of the Top 10 intellectual property cases of Chinese courts in 2017.
In the subsequent case of trademark infringement disputes between Nanshe Branz Co., Ltd. and Huai’an Huaxia Manor Brewery Co., Ltd. (2018 SU 01 MIN CHU 3435 civil judgment issued by Nanjing Intermediate People’s Court), the Nanjing Intermediate People’s Court determined that “奔富” (BEN FU) was an unregistered well-known trademark, and decided that the defendant should compensate the plaintiff for economic losses of Rmb1 million (including reasonable expenses) (US$145,000).
Addition of provisions related to “misleading”
When determining the scope of cross-class protection of trademarks for pharmaceutical goods, the possibility of misleading should be judged in combination with the characteristics of the products.
For example, in the retrial of opposition review of Novo Nordisk A/S v. CNIPA (2018 XING ZAI 87 administrative judgment issued by the Supreme People’s Court), the focus of the case is to determine whether the registration of the opposed trademark violates Article 13.2 of the Trademark Law of 2001. The Supreme People’s Court held that “The opposed trademark is designated on clothing, etc. in Class 25, which are far from ‘medicine for human use’ in Class 5 covered by the cited mark. However, there is almost no difference between the opposed mark and the cited mark in their visual effects. 诺和诺德 (Novo Nordisk in Chinese) is a coined word with strong distinctiveness. The opposed mark is used by its applicant in promotion of products claiming function of preventing diabetic foot. It is displayed at diabetes academic conferences, hospitals and other places. In actual use, the goods bearing the opposed mark and those covered by the cited mark are highly related in terms of marketing channels, consumer groups, etc. When the relevant public see the above goods bearing the opposed mark, it is likely that they will think these goods are provided by Novo Nordisk or have specific connection with Novo Nordisk, thus damaging the legitimate interests of Novo Nordisk”.
In the above-mentioned case of recognition of Novartis in Chinese as well-known trademark, the court’s judgment also states that “Registration and use of the disputed trademark are likely to mislead the relevant public to think there is relationship of considerable degree between the disputed mark and the cited mark and to damage the interests of the plaintiff.”
The provision of “misleading” was added to the Draft of Comments. It means “as for a sign being liable to make relevant public to think there is relationship of considerable degree between the disputed mark and the well-known mark and to weaken distinctiveness of the well-known mark, to derogate market reputation of the well-known mark, or to improperly make use of the market reputation of the well-known mark, its use should be prohibited and its registration should be refused”. This makes the provisions of the trademark law on recognition and protection of the well-known trademark more comprehensive and complete.
Another highlight of the Draft for Comment is the addition of Chapter 9 “Promoting Use of Trademarks and Construction of Brand”, which emphasizes the need for the country to implement trademark brand strategy, promote trademark brand building, advancing the cultivation of famous trademark brands, and accelerate the development of brand economy. Strengthening the protection of well-known drug trademarks will be powerful driving force for economic development.