China's Unusual Trademark Case: Legal Protection For Innovation - Critical Essay

An-un-usual trademark case in China, when a court in China found in favour of Xintong Tiandi, a seller of leather goods with the name “iphone’ on them.  Apple lost the argument that the name was recognised as theirs.

The legal protection for those who innovate (create new concepts. ideas. products, services etc) is not fit for purpose ? Critically review with relevant examples.

The present case is based on the term trademark (Drahos 2016). This case is evolved with the trademark fight between Apples, a U.S based company and Xintong Tiandi, a Chinese leather company. Trademark law deals with the use of certain device by another that is invented by others. Trademark denotes the sign that is impressed on a goods or product. Trademark right is imposed on the product or the person who is invented the matter for the first time (Dogan 2014). Trademarks are also known as service mark. In the states of America, there are certain types of trademark. In case of the government registration, it is marked as “R”, in case of unregistered trademarks; it is marked as “tm”. The provision of the trademark is applied when the right of the owner is getting infringed by another. The rights are getting infringed by way of using the registered marks by another person. It is a legal right (Shang 2017).

The main aim of the report is to analyse the provisions of the case regarding the decision of the Beijing Court in Apples v. Xintong Tiang. The subject matter regarding the case is based on the confliction raised for the use of the trademark that is particularly owned by the Apples and an attempt has been made by discussing the aspects of the trademark law in this report (Lemley 2015).

Objectives of the report are to identify the legal provisions of the trademark law that are applied to this case and the main fact of the law that are enlightens the respective provisions of the case. This will help to understand the several important dimensions of the law and loopholes of the decision if any.

There are certain methods that are applied to this case. Methods relating to the trademark law, infringement of the trademark rights, consequence of the same and the case laws and the decision of Beijing Court regarding the matter has been discussed in this case.

The main theme of the report is to analyse the case study of the Apples and Xintong Tiandi. There are certain scopes regarding the application of the trademark law regarding the issues raised in between the two companies. Trademark is a part of the intellectual property, where it is strictly, if no one can use the mark of other companies without informing them about the facts. There are certain outcomes of the study will help to reach at a fruitful solution regarding the contradiction arose between two companies (Busch 2014).

Trademark law:

There are certain rights that are imposed on the intangible properties and secure the interest of the individual regarding their rights that are secured by the provision of law. These rights are governing by the intellectual property Act. There are certain types of intellectual rights present under the particular chapter of the intellectual property Act. Trademark law protects the rights of a person relating to the mark that are getting protected under the provision of the law. Trademark law will applied to any legal person who applied for the protection of any mark that depicted the identification of the company.

Objective of the Study

Therefore, it has been observed that the trademark Act is a legal right against the product marks of a particular company. If there is any violation regarding the same can be occurred, it will be prohibited under the law relating to the trademark (Merges 2014). Infringement takes place when the other company is using the mark of another company. If the mark of a company is identical or confusing in nature, then also there is a chance of infringement regarding the same. If the violation is happened, the victim shall have a right to take legal steps against the infringer. In the countries like United States, there is a separate Act named as Trademark Counterfeiting Act 1984 that regulates the infringement provision regarding the trademark (Pitkin 2014). There are certain rules that are applicable in many countries regarding the violation of trademark. In some countries, there is a rule that if the trademark is not registered, the same cannot be infringed if some other copied the mark.  

In AMC Inc. V. Sleekcraft Boats 1979 it was held that there are certain essentials compose the facts of the case regarding the trademark. There is a likelihood of confusion regarding the particular mark. They are as follows:

• Strength of the mark that particularly states the standard of mark copied.
• Proximity regarding the goods, subjected to the trademark law.
• There should be certain similarities regarding the mark that is copied.
• There should be evidences about actual confusion regarding the subject matter.
• Intention of the respondent, who is trying to imitate the mark is important.

. Many cases are delivering important judgment regarding the trademark law. The above noted elements are necessary for proving the matter that whether the rights under the trademark have been infringed or not (Gesuato 2016).

In the present case, a dispute cropped up in between the Apples and Xintong Tiandi regarding the violation of trademark by the later company. Apple is a technology-based company that designs or develop the electronic product and provide software services having its head quarter at California. The company was founded by Steve jobs, Steve Wozniak and Ronald Wayne in the year 1976 (Mireles 2014).  The company is using a specific mark as their company module and the mark is very much related to the company. On the other hand, Xintong Tiandi is a local Chinese brand who manufactured leather product and sell the same in the various provinces of China.

The dispute cropped up when Xintong used the term I-phone on their bags. Apples alleged that the company is imitating the logo of Apples without any permission from the company. As per the provision of the Trademark Act in USA, the company whose rights have been infringed can sue the alleged company in the competent court of law. Apple had also filed one civil suit in the Beijing Court regarding the territorial provision of the same case. However, the court had delivered its judgment as against the Apples and pronounced its verdict in favour of Xintong Tiandi.

There are certain reasons that are responsible for the decision making right of the court regarding the same topic. it was stated by the bench that the company, Xintong Tiandi had started its business in the year 2007 (Yang 2015). That time, no one in china knows the existence of  Apples. The company, Xintong Tiandi was applied for the logo “I-phone” that time and there was no ill mentality raised regarding the logo similar to Apples. It was contended by the Court that Apples had entered into the provinces of China after the company had registered the trademark and therefore, there is no scope for the Apples to infringe their rights regarding the logo. In the classification system relating to trademark, there is no prevention regarding the Chinese leather company from using the logo of I-phone. Another proposition made by the court is that the product of the Apples is under the category of class 9 that is particularly deal with smart phones and computers. On the other hand, the leather goods are depicts the category of class 18 and the present case is particularly deals with the provision of the class 18.

Methods

It was stated by the prosecution counsel regarding the decision of the China Court that there are certain laxity observed in this case. It was contended by the prosecution counsel on behalf of the Apples that it is not right that the company Xintong Tiandi established in the year 20007. The company was under a Russian company who was directing the company and after the winding up process regarding the same has been done in the year 2011, the present company has been come into existence. It is an important criterion regarding the case as Apples entered into the provinces of China in the year 2009 (Anderson 2014). Therefore, it can be stated that there are many scopes for the violation of the trademark right of the company. There has been certain questions raised by the advocates regarding the good faith of the Chinese company who is violating the fundamental rights of the Apples regarding the trademark law. Xintongg Tiandi had failed to acquire any permission from Apples regarding the usage of the logo and therefore, the acts of the alleged company had gone against the public policy of the company regarding the trademark law.

According to Mr. Matthew Dresden, a scholar who specialises on the intellectual property law that are applicable for the continents of China had stated certain important things regarding the Trademark Act. It was observed by him that this is a question of morality. If it is true that the alleged company, Xintong Tiandi established in the year 2007, it was the duty of the company to search for the logo on worldwide basis. The registration process is not according to the provision of law (Kustina 2015). The register acquired certain duties before registering a logo under the trademark law. The registrar should have done a search whether the mark or logo is available or not or whether the same is getting matched with other logos or not.  Another approaches made by Dresden that the Chinese trademark system is quite different from the system of America. There was a recent implementation regarding the right has been made by the Chinese legislature and an attempt was being made for the application of the same through this case law.

The opposition counsel stated that there is no necessity to narrate the entire history of the company in its case contended it. It is of no importance whether a Russian company owned the alleged company in the past event or not. In the memorandum of the company, it was stated that the company is established in the year 2007 and praying for the logo of the company in that year and got the same. It has been stated by him that there is a rumour spread in the name of the company in the English newspaper and an attempt has been made by them to disgrace the legislation of China. As per the statement of Mr. Xiong, counsel on behalf of the alleged company verified that the issue of the case is based on the problems regarding the subject matter and not on the winning capacity of the parties.

Scope of the Report

There are total 45 classes are present in China that are implicated within the provision of trademark. It was stated by Mr. Dresden that all the classes should be meant to protect the interest of China so that such situation could not be arisen in any subsequent event.

The official newspaper of China, Legal Daily reported that there are certain reasons that help the Court to identify the nature of the case. It was the failure of the company Apple that it had provided insufficient evidences regarding the facts of the case. It has been proved that Apple was not popular during the year 2007 and the logo of Apple was unknown to the common people of China. Therefore, it is valueless that the alleged company had infringed the trademark rule as against Apple.         

There are certain case laws that are adjudged by the China court where there were certain different notions have been taken. In New Balance v. New Barlun, similar facts are being shown. In the year 1994, New Barlun had filed a suit against the alleged company for the violation of the trademark. New Barlun stated that the alleged company is using the name of the same shoe brand and that is quite infringing in nature. It was contended by the alleged company that New Barlun sells shoe in the continental of China, where New Balance sells shoes in the provinces of California. Therefore, there is a huge territorial gap present in between the companies. However, the China court had delivered its judgment against the California-based company and imposed a high rate of penalty over the company. The judgment of the case was uproarious in nature. It was attracted the eyes of several lawyer at that time. The territorial satire plays a vital role to this effect.

However, in the present case, People’s Court of China had not precedent the decision of that case and the decision of the case has not been applied to the present case. Here, it has been observed that the court had not adopted the same principle in this regard.   

There are certain legal provisions that protected the rights of the individual regarding the trademark. In United States, the Lanham Act governs the law regarding trademark. The main aim of the Act is to prevent others so that they could not able to imitate the identification mark from others. It is engraved under the law that if an individual get the mark registered then he will be under the umbrella of the Trademark Act. There are certain safeguards provided under the law. Under section 1127 of Lanham Act, the term trademark includes any symbol, name or devices that are specifically owned by others. Marks are sometimes works as an identity for a company. Many company’s name are depicted the character of a company. If there is any breach regarding the same that will be included under the Trademark law. Marks can be of certain shape or sound. Under section 1052 of the Lanham Act, if the individual registered the mark of his company, he shall have an exclusive right over that subject. There are some preventive measures described under the Act that is particularly engraved under section 1114(1). The protection that are owed by an individual regarding the matter is stated as follows:

• If the mark get registered, then that will be  treated as valid one.
• The person, whose name is being listed in the register book, should be regarded as the true owner of the mark.
• In case of incontestability, the mark will  secure certain provisions regarding the same. It cannot be opposed on the fact that it is merely descriptive in nature.
• There is a provision regarding the constructive notice has been imposed on this chapter. It means that the infringer does not adopt the idea that he is unaware of the fact that the identification mark of the company is registered.
• Certain criminal penalties will be applicable as against the infringer in case of violating the sections of the Trademark Act.
• The right to litigate the proceeding over the trademark Act is imposed on the Federal Courts of USA.

Literature Review

The registration procedure regarding the trademark can be of various types. In case of a trademark, the mark can be registered under the primary register. No description regarding the mark is needed here. In case of supplemental register, there is a need to describe the marks. There is another provision regarding the state registration process, where the mark can only be applicable for a particular state only. There is a basic difference regarding the Federal Register and State Register. In State register, the product or the mark is limited within the territorial jurisdiction of a specific state and in case of the Federal Register, the limitation is extended to the nationwide.

In China, the trademark law is governed under the intellectual property law, where certain measures are stated to protect the rights of the individual regarding the same. Intellectual property in China plays a strategic role regarding the policy-making system. The government of China concentrates on the same so that the ability of the country can be well established in the international markets. The Intellectual Property Law in China is amended for a several times and there is a leaning mentality of the government towards the strategic construction of the trademark law.   

It has been observed that trademark is a part of the intellectual property right. In the words of Malwanski, there are three rights that are being protected by the intellectual property rights, where trademark right is a part of it (Hardwick 2015). It is necessary to evaluate the provision of the Trademark right by comparing the statutes and case laws. Trademark Act provides certain safeguards regarding the trademark holder and there are provisions so that the holders can claim compensation from the infringer. There are certain grounds that are provided under the law to be proved for the establishment of the violation of trademark.

There are certain concepts present regarding the registration of the trademarks. In the present case, there is an arbitrariness regarding the China Court has been observed. As per the provision of the Trademarks Act, no person is allowed to violate the provision of the same (Port 2017). Here it is seen that Xington Tiandi has infringed the provision of the Act by imitating the identification mark of the Apples. However, the Court was pleased to set aside the plea of Apples and deliver its judgment in favour of the infringer on some vague basis.

As per Matthew Dresden, the judgments of China Court regarding the matter, are not based on morality. The Chinese company should be taken certain necessary permission from the Apples regarding the same and it is a serious infringement regarding the issue that the logo of a reputed company is being used in the product of another company and that logo is being registered by the government of China without verifies this (Hardwick 2015).

Conclusion:

  Therefore, from the above noted paragraphs, it can be stated that the right for the protection of the identification mark of a company should not be violated and there are  certain safeguard provisions have been stated herein. The report is being depicted through the case law that are specifically denied the fundamental principle of the trademark law. There is an arbitrary attitude of the court regarding the case matter has been followed up. There are certain elements and case laws that are specifically enlightened the principle of the trademark law. The recent case did not fulfil any of the criteria regarding the trademark law.

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