Xinming Xu's team of lawyers represented Fulin won against National Intellectual Property Office and Toyota Company in trademark invalidation administrative dispute case

Abstact: No. 5359387 "F " trademark (hereinafter referred to as the “trademark involved”) was applied for registration by Chen Mouqin, a shareholder of Qingdao Fulin Tire Co., Ltd. (hereinafter referred to as “Fulin”) on May 19, 2006, and was designated for use on products such as "vehicle tires", the Trademark Office issued an announcement and authorization on May 7, 2009. In 2010, Liu Mojin, a shareholder of Fulin, signed an agreement with Chen Moqin who agreed to transfer the trademark involved to Fulin. Later, a lawsuit occurred because Chen Moqin refused to cooperate to transfer the trademark involved. During the litigation, on January 14, 2014, Toyota Motor Corporation (hereinafter referred to as “Toyota”) applied to the Trademark Office for cancellation of the trademark involved on the ground that it had not been used for three consecutive years. Due to Chen Mouqin’s change of mailing address, she failed to receive the notice of reply sent by the Trademark Office. During the period when the Trademark Office issued announcement of the cancellation application, Fulin learned of the announcement and promptly assisted Chen Mouqin to submit evidence evidencing the use of the trademark involved. The Trademark Office rejected Toyota’s application for cancellation in accordance with the law. In September 2015, when Fulin went to the Trademark Office to go through the trademark transfer procedures with the effective judgment of the Court of Appeal, it was learned that Toyota was dissatisfied with the Trademark Office’s decision and filed a review application with the Trademark Review and Adjudication Board. After the review, Trademark Review and Adjudication Board (hereinafter referred to as “TRAB”) determined that the trademark involved had not been used for commercial purposes in designated period and issued the decision to cancel the trademark involved on April 20, 2015. The decision was served by public announcement. Fulin consulted with many attorneys from different law firms and received almost the same reply: as the trademark involved had not been actually transferred to Fulin, Fulin was not the right holder, so it had no right to initiate an administrative lawsuit. Besides, Fulin had also missed the statutory lawsuit period. It is recommended to re-apply for registration of the trademark involved. In this regard, Xinming Xu believes that although Fulin is not the owner of the trademark, it is an interested party of the administrative act and therefore has the right to initiate an administrative lawsuit; and because TRAB had not actually served Fulin for the cancellation review of the trademark involved. Therefore, Fulin did not miss the statutory deadline for litigation, and so can file a lawsuit with the court after receiving the decision. Fulin adopted the suggestion from Xinming Xu and went to the Trademark Office on January 18, 2017 to obtain the trademark cancellation review decision. On February 15, 2017, Xinming Xu represented Fulin to file an administrative lawsuit with Beijing Intellectual Property Court, and the court accepted the case on the same day. Beijing Intellectual Property Court opened two public hearings on the case on October 22, 2018 and June 10, 2019, and made a first-instance judgment on June 27, 2019, revoking the review decision of the TRAB of the National Intellectual Property Office. The National Intellectual Property Office refused to accept it and appealed to Beijing Higher People's Court. Toyota accepted the judgment of first instance without appealing. Beijing Higher People's Court ruled on August 10, 2020 rejecting the appeal of the National Intellectual Property Office and upholding the original judgment.

Irregularities in trademark application registration will leave trouble for the future

Fulin was established in 2003 by major shareholders such as Liu Mojin and Chen Moqin and is mainly engaged in tire R&D, production and sales. Since its establishment, Fulin has been committed to tire high-tech research and development, brand building and market expansion, and has developed world-class tire series products such as 34 inches. Fulin has two production bases in China and Malaysia, covering a total area of about 400,000 square meters. So far, it has developed into a multinational group company integrating the business of research and development, production, and domestic and foreign trade in respect of tires, with nearly 1,000 domestic and foreign distributors. The products sell well in more than 150 countries and regions around the world, and 90% of the products are exported. It sold more than 50 million passenger car tires and 15 million commercial vehicle tires cumulatively, with a cumulative export value of 3 billion US dollars and is one of China's key tire foreign trade enterprises.

Fulin attaches great importance to intellectual property rights and has successively owned more than 50 tire design patents and registered trademarks in more than 130 countries and regions. However, some trademarks were not registered in the name of Fulin, but in the name of Chen Mouqin, including the trademark No. 5359387 of which the application for registration was filed on May 19, 2006 and which was publicly announced for registration by the Trademark Office on May 7, 2009 and is designated for use on commodities such as "vehicle tires".

Misfortunes never come singly-Fulin encountered both trademark transfer disputes and trademark invalidation disputes

In November 2010, Liu Moujin and Chen Mouqin signed a transfer agreement, providing that Liu Moujin shall pay a consideration of 55 million yuan, and Chen Mouqin shall transfer the equity under her name to Liu Moujin and other shareholders, and transfer the series of trademarks including trademark involved to Fulin.

On January 14, 2013, Toyota applied to the Trademark Office for the cancellation of the trademark involved on the grounds of non-use for three consecutive years. Due to the change of Chen Mouqin’s mailing address, she did not receive the notice of response served by the Trademark Office. It was not until the Trademark Office issued public announcement that Fulin learned the relevant information and promptly assisted Chen Mouqin in preparing evidence to be submitted to Trademark Office. In March 2014, the Trademark Office determined that Fulin and its subsidiaries had effectively used the trademarks involved and made a decision rejecting Toyota's application for cancellation.

After the signing of the transfer agreement, Liu Moujin fulfilled all payment obligations as agreed. However, Chen refused to transfer the trademark involved despite Liu Moujin's repeated requests. In March 2014, Liu Mouqin sued Chen Mouqin to Qingdao Intermediate People’s Court, requesting the court to order Chen Mouqin to perform contractual obligations and transfer the trademark agreed upon in the agreement to a third party, Fulin, Fulin participated in litigation as a third party. On December 5, 2014, Qingdao Intermediate People's Court made a first-instance judgment, ordering Chen Mouqin to coorperate with Fulin on trademark transfer procedures within ten days after the judgment takes effect. Chen Mouqin refused to accept and appealed to Shandong Higher People's Court. On September 15, 2015, Shandong Higher People's Court rejected the appeal and upheld the original judgment.

When Fulin handled the transfer procedures of the trademark involved with the aforementioned effective judgment in the Trademark Office, it was informed that the trademark involved had been cancelled and the transfer procedures could not be handled. It turned out that after the Trademark Office rejected Toyota’s application for cancellation, Toyota applied to the TRAB for review. The TRAB sent a response notice to Chen Mouqin and the notice was returned, and then made an announcement, but neither Chen Mouqin nor Fulin noticed the announcement information. After the trial, the TRAB found that the evidence submitted by Chen Mouqin during the non-use cancellation procedure of the Trademark Office could not prove the effective commercial use of the trademark involved, and made a review decision on April 20, 2015 to cancel the trademark involved. After the cancellation decision was returned, it was served by public announcement.

When Fulin learned that the trademark in question had been cancelled, it was already in late September 2015. If counting from the expiration of the announcement period, it has far exceeded the one-month period for prosecution stipulated in the Trademark Law.

Not afraid of challenges, Fulin entrusted lawyers to sue the TRAB and Toyota

Fulin encountered a problem. On the one hand, the trademark involved has been cancelled, and even if Fulin holds the effective judgment of the transfer of the trademark involved, it cannot handle the transfer procedures. On the other hand, since Fulin has not yet become the owner of the trademark, it seems that it has no right to sue the TRAB, not to mention that the one-month statutory period for prosecution has passed after the expiration of the TRAB’s announcement. Fulin was in a dilemma and was very confused.

In the next year, Fulin looked around for intellectual property lawyers, hoping to find an effective solution to the problem. However, the replies received by Fulin are almost the same: because the trademark involved has not been actually transferred to Fulin, Fulin is not the right holder, so it has no right to initiate an administrative lawsuit, and Fulin has also missed the deadline of initiating an administrative lawsuit. It is recommended that Fulin reapply for trademark registration for the same mark.

At the end of 2016, Fulin's controlling shareholder, legal representative and other company executives approached Xinming Xu, the chief lawyer of China Intellectual Property Lawyers. Xinming Xu heard the client’s introduction of the case and believed that: First, although the trademark involved has not been actually transferred to Fulin, the effective judgment of Shandong Higher People’s Court has confirmed that the original trademark owner should transfer the trademark involved to Fulin under its name, Fulin is an interested party in the administrative act of the TRAB which made the cancellation decision, and has the right to file an administrative lawsuit against the decision. Secondly, although the TRAB has already served the cancellation decision through an announcement, Fulin has not actually received the cancellation decision, and it is not clear about the specific reasons for the cancellation decision, so Fulin's lawsuit period should start from the day when the cancellation decision is actually received. Once again, the value of a re-registered trademark is not the same as the value of a well-known trademark that has been used for nearly ten years.

Based on the above reasons, Xinming Xu suggested that Fulin should sue the TRAB and Toyota Company. Fulin was so convinced and entrusted Xinming Xu to represent the case with full power.

On January 18, 2017, Fulin authorize its staff to go to the Trademark Office to obtain the Trademark Review [2015] Decision on the cancellation of No. 5359387 trademark (hereinafter referred to as the “decision in dispute"). After receiving the decision in dispute. Xinming Xu began to write the complaint. The writing and revision of the complaint continued throughout the Spring Festival holiday. On February 15, 2017, Xinming Xu represented Fulin to submit litigation materials to Beijing Intellectual Property Court. There were disagreements in the court as to whether the case should be accepted and filed. After communicating with Xinming Xu, the court decided to accept the case on the same day.

The trial process and results of this case

After filing the lawsuit in the court, Xinming Xu directed Fulin to supplement the collection of evidence related to the use of the trademark involved. Xinming Xu personally sorted out the evidence, wrote the evidence statement, compiled the evidence list, and finally made up 49 groups of evidence, 589 pages in total, which were submitted to the court within the time limit for producing evidence.

The Beijing Intellectual Property Court held a hearing on this case on October 22, 2018. Xinming Xu and his assistant appeared in court. After the hearing, based on the evidence in the case, the Xinming Xu, combining with relevant precedents, issued a lawyer’s representative opinion in accordance with relevant laws and judicial interpretations to the collegial panel which elaborated on the relevant procedural issues, substantive issues, factual issues, and legal problem. On June 10, 2019, the court heard the case again in public, and subsequently issued (2017) Jing 73 Xing Chu No. 1074 Administrative Judgment on June 27, 2019, revoking Shangping Zi [2015] No. 29804 regarding No. 5359387 for the trademark cancellation review decision, the defendant, National Intellectual Property Office, was ordered to make a new decision (due to the reform and deployment of the central organization, the duties of the TRAB shall be exercised by National Intellectual Property Office, hereinafter referred to as NIPO).

NIPO refused to accept the judgment of the first instance and appealed to Beijing Higher People's Court. The third party, Toyota, obeyed the judgment of first instance without appeal.

On October 24, 2019, Beijing Higher People's Court held a hearing on this case. Xinming Xu and his assistant appeared in court. NIPO and Toyota were absent. On August 10, 2020, Beijing Higher People's Court issued (2019) Jing Xing Zhong No. 7242 Administrative Judgment, dismissing the appeal and upholding the original judgment.

Whether the use of the trademark involved in combination with other marks is an effective use of the trademark involved

The TRAB determined that Fulin’s use of the trademark involved in combination with other trademarks did not constitute effective use of the trademark involved.

This is wrong.

The use of trademarks refers to the use of trademarks on commodities, commodity packaging or containers, and commodity transaction documents, or the use of trademarks in advertising, exhibitions and other commercial activities to identify the source of commodities. The law does not prohibit the combined use of two or more trademarks. In fact, there are often situations in the market where two or more trademarks are used on the same product. In this case, Fulin and its subsidiaries respectively used the trademarks involved in combination with other registered trademarks or company names. This combined use has not changed the distinctive features of the trademark involved, and the combined mark as a whole has not been applied for registration as a trademark. Therefore, the use of the trademark in combination with other trademarks is an effective commercial use of the trademark involved.

Whether Fulin is qualified to sue

During the second instance of this case, the collegiate panel held that the trademark involved has not yet been transferred to Fulin and Fulin was not the holder of the trademark involved, and therefore questioned Fulin's eligibility to sue.

Such doubts also seem to be supported by previous cases. In a trademark administrative dispute between Zheng Mouhui and the TRAB of the State Administration for Industry and Commerce ([2015] Gao Xing Zhong Zi No. 3009), Beijing Intellectual Property Court held that “the relationship between Zheng Mouhui and Lingfeng Company is a typical civil law relationship, Zheng Mouhui can file a civil lawsuit on the basis of contract performance and claim contractual rights against Lingfeng Company. The legal consequence of the TRAB’s ruling is to deprive Lingfeng Company of the trademark owner’s right. Zheng Mouhui is not the owner of the disputed trademark. Although he may be involved in the disputed trademark based on the trademark license and assignment contract relationship, the rights and interests he claims arise not only or mainly from the administrative act but from the civil legal act of signing a trademark license and assignment contract with Lingfeng Company. Therefore, if the plaintiff Zheng Mouhui can obtain relief through civil litigation channels, it cannot be determined that he is an interested party to the administrative actions." Therefore, Beijing Intellectual Property Court rejected to accept the lawsuit brought by Zheng Mouhui. Beijing Higher People’s Court held that, “First of all, with regard to the counterparty of the administrative act, the first page of the defendant’s ruling in this case stated that the applicant is Geli Company and the respondent is Lingfeng Company. Therefore, Geli Company and Lingfeng Company are the legal subjects directly targeted by the administrative action of the TRAB. Therefore, the appellant Zheng Mouhui is not the counterpart of the administrative action. Secondly, regarding the interested party of the administrative act, the appellant Zheng Mouhui argues he signed a contract with Lingfeng Company with respect to the licensing and transfer of the disputed trademark, and later the trademark was cancelled by the TRAB, which failed to achieve the purpose of the contract. Zheng Mouhui and Lingfeng Company have a civil legal relationship, its rights can be remedied through civil litigation. The legal consequence of the TRAB’s ruling is to deprive the trademark owner’s exclusive rights to the trademark in dispute, while Zheng Mouhui is not the owner of the trademark and the rights and interests claimed by him are based on the civil legal act of signing a trademark license and assignment contract with Lingfeng Company, therefore there is no administrative legal interest between the affected rights and the administrative act. Thus, the first instance court’s determination that Zheng Mouhui is not qualified as a subject of the litigation is not inappropriate."

As can be seen from the above cases, Beijing Intellectual Property Court and Beijing Higher People’s Court both held that the claimant who is not an administrative counterparty is not an interested party in administrative law as the rights and interests claimed are based on the civil legal act of contract and thus has no right to file an administrative lawsuit against the TRAB’s decision.

As to whether Fulin is qualified to sue, Xinming Xu puts forward the following views:

The first paragraph of Article 25 of the "Administrative Litigation Law" stipulates: "The counterparty of an administrative act and other citizens, legal persons or other organizations that have an interest in the administrative act shall have the right to file a lawsuit."

According to the above-mentioned legal provisions, interested parties have the right to initiate administrative proceedings.

According to Article 12 of the Interpretation of the Supreme People’s Court on the Application of the "Administrative Procedure Law of the People’s Republic of China" (hereinafter referred to as the "Judicial Interpretation of the Administrative Procedure Law") of Law Interpretation [2018] No. 1, the fact that the revocation or modification of an administrative act involves its lawful rights and interests shall belong to the "having interests in administrative actions" as stipulated in the first paragraph of Article 25 of the "Administrative Procedure Law", that is, the subjects whose legal rights and interests are involved in the cancellation or modification of administrative actions are the interested parties of the administrative actions.

In this case, Fulin was the assignee of the trademark involved, and the cancellation decision made by the TRAB affected its legitimate rights and interests. Therefore, Fulin was an interested party.

In the above cases, the two-tier courts excluded the rights and interests of the civil legal act based on the contract from the interests of administrative law, which did not comply with the relevant provisions of the Administrative Procedure Law and the Judicial Interpretation of the Administrative Procedure Law.

Although the assignee in a trademark assignment contract can seek legal relief through civil litigation channels when the disputed trademark is cancelled or declared invalid, while, in many cases, civil litigation does not allow the interested parties to fully maintain the legal rights and interests that have been harmed. In this case, the assignor Chen Mouqin has obtained the consideration for the transfer of the trademark involved, and the court’s effective judgment has ordered Chen Mouqin to perform the transfer of the trademark involved to Fulin. Especially, the trademark involved has been exclusively used by Fulin and its subsidiaries since the very beginning for ten years, the trademark involved has formed a stable corresponding relationship with Fulin and has a high reputation. In the case where Chen Mouqin, the original registrant of the trademark involved, refused to initiate an administrative lawsuit, if Fulin is not allowed to initiate an administrative lawsuit in its own name, the trademark involved will be determined to be cancelled. Even if Fulin claims to require Chen Mouqin to be liable for breach of contract afterwards, the legitimate right arising from its long-term use of the trademark involved cannot be restored. Therefore, Fulin will suffer immeasurable losses as a result, and it is difficult to make up for such losses through civil litigation.

In summary, Xinming Xu believes that Fulin is an interested party in the administrative act of the TRAB declaring the trademark involved to be invalid and is qualified to file the administrative lawsuit unquestionably, it has the right to protect its legitimate rights and interests through administrative litigation.

In the end, the collegiate panel adopted the opinion of Xinming Xu, and accepted Fulin's eligibility to sue.

Whether Fulin's lawsuit has exceeded time limit in law

According to Article 54 of the "Trademark Law", if a party is dissatisfied with the decision of the TRAB, it may file a lawsuit in a people's court within 30 days of receipt of notice. The so-called "receipt of notice" refers to the receipt of the full text of the decision. Only in this way can the parties fully understand the reasons of the cancellation decision, and then write a complaint to the points of the decision, and then initiate a lawsuit. If the parties only see the announcement information, but cannot understand the specific reasons for the cancellation decision, and of course they cannot effectively exercise their right of litigation. Therefore, the statutory time limit for litigation can only be calculated from the date when the parties actually receive the cancellation decision. In this case, the time limit for litigation of Fulin shall be calculated from the date on which it actually received the decision to be sued, that is, on January 18, 2017, and expired on February 17, 2017. Fulin filed this case on February 15, 2017, and it did not exceed the legal deadline.

Conclusion

In the [2015] Gao Xing Zhong Zi No. 3009 trademark administrative dispute case, the court determined that the rights claimed by the party, Zheng Mouhui, were based on the civil legal act of signing a trademark license and assignment contract with Lingfeng Company. There is no administrative legal interest between the affected rights and administrative acts, so Zheng Mouhui is excluded from the interested parties of the administrative acts and is deprived of the right to sue. The meaning of this case is that, in fact, it has overturned the decision of the above-mentioned precedent where the court improperly limited the scope of the interested parties in administrative acts, affirmed the trademark assignee’s eligibility to sue, and thereby broadened the trademark assignee’s channels to protect rights and allow assignee of the trademark to protect their legitimate rights and interests more effectively.