Phony Sony -- or 索爱

The IPKat's friend Paul Jones is a formidable character. Paul has the responsibility for preparing the section on IP in China for the ABA International Section’s Year In Review. In the course of making his preparations he came across a case involving Sony Ericsson that is of great interest to foreign companies doing business in China, particularly those threatened by bad faith registrations in China. He writes:

"A number of famous marks have had problems in China with bad faith registrations by third parties. If somehow the registration of the mark in China has been overlooked, the third parties will register the mark in the Latin alphabet. And if not they will try to register the Chinese characters. It is always important to develop and register a Chinese character version of the brand.

Sony Corporation has a long history of doing business in China, and its Chinese character name, 索尼 (pronounced “suo’ni”) is well recognized. Ericsson was founded in 1876 in Sweden and it too has an established Chinese name, 爱立信 (pronounced “ai li xin”). But in 2001 when they formed a joint venture to manufacture and sell mobile phones a trade mark problem developed in China. How would the new venture, Sony Ericsson, be written in Chinese characters?

Unfortunately for Sony Ericsson a PRC businessman in the electronics industry saw the answer faster than their trade mark counsel. Liu Jianjia from Guangzhou in southern China filed an application to register the mark “索爱” (pronounced “suo’ai”) with respect to DVD/CD players, mobile phones, speakers and entertainment goods, cassette players and the like on March 19, 2003 (No. 3,492,439). Sony Ericsson opposed the application but the mark was registered on August 7, 2004. Sony appealed to the Trade Mark Review and Adjudication Board (“TRAB”) but it lost again. China is a first-to-file jurisdiction.

Sony Ericsson then appealed the TRAB decision to the Beijing No.1 Intermediate People’s Court. The decision, dated August 10, 2008, is available here.

Sony Ericsson had put forward three reasons as to why Mr. Liu’s registration should be expunged. The first reason was that the registration was contrary to Article 10, first paragraph, (8) of the Trade Mark Law. This provision denies registration to marks which are “detrimental to socialist ethics or customs, or having other unwelcome influences.” The court in a somewhat incredulous manner said that while the dispute has a certain public interest, its impact does not reach the field of ideology or the political system.

Secondly Sony Ericsson said that there mark was “well-known.” But the Chinese version of the joint venture, and the plaintiff in this case was known as “Sony Ericsson Mobile Communications Products (China) Ltd.” (in Chinese - 索尼爱立信移动通信产品（中国）有限公司 – Suo’ni Ailixin Yidong Tongxin Chanpin (Zhongguo) Youxian Gongsi) and had only been in existence for a short time, and the evidence to prove such status was insufficient. So Sony Ericsson lost on this point also.

Thirdly Sony Ericsson argued that the registration was contrary to Article 31 of the Trade Mark Law, which provides that "No applicant for trade mark registration may infringe another person’s existing prior rights, nor may he, by illegitimate means, rush to register a trade mark that is already in use by another person and has certain influence'.

Sony Ericsson had advertised on the internet in China from December 2002 using the mark “索爱.” The Court took note of the fact that, to a Chinese speaker, the name 索尼爱立信 (Suo’ni Ailixin) is cumbersome. It is very common in Chinese to shorten such names or phrases by using the first characters of each word. Thus the Court said that the abbreviation of Sony Ericsson to “索爱”would be very natural (其简称是非常自然的). Accordingly it is not surprising that most Chinese would consider the mark “索爱” to suggest goods that are associated with Sony Ericsson.

The Court said that the purpose of Article 31 is to prevent violations of the principle of good faith (“诚实”chengshi). This is a key principle of China’s civil law system and is enunciated in Article 4 of the General Principles of the Civil Law. The Court said that the joint venture between Sony and Ericsson was widely reported in the press and that therefore Mr. Liu would obviously know about it. Therefore his actions do not have a clear legitimacy (不正当性). Mr. Liu’s application for the mark was in violation of the principle of good faith.

Accordingly the Court ruled that the decision of TRAB in favor of Mr. Liu was overturned and that the opposition by Sony Ericsson to the registration of “索爱” by Mr. Liu is to be reviewed again by TRAB.

It should be added that the currently proposed amendments to the PRC Trade Mark Law include a new Article 7 that requires that all applications for and use of a trade mark be undertaken in good faith (诚实)".

The IPKat is heartened to see that things are gradually moving in the right direction. Merpel is less optimistic. This is good news for big companies whose activities are highly publicised in the media, and who have the resources and the patience to press their case -- but how would things work for a smaller, less well known and less persistent enterprise?