Guiding Case No. 162: Chongqing Jiangxiaobai Liquor Co., Ltd. v. China National Intellectual Property Administration and Third Party Chongqing Jiangjin Distillery (Group) Co., Ltd.
(Administrative Dispute over Invalidation of Trademark Rights)  

Key Words: Administration, Invalidation of Trademark Rights, Distribution Relationship, Principal's Trademark

Key Points of Judgment

Where the parties have concurrently executed both a sales contract and a customized product sales contract, although a distribution relationship existed between them, the disputed trademark design and product specifications were solely proposed by the agent party, and the customized product sales contract expressly stipulated that the principal was prohibited from using the product concepts or advertising materials related to the customized products without the agent's authorization. In the absence of prior use by the principal, the disputed trademark cannot be recognized as the “principal's trademark” as defined under Article 15 of the Trademark Law.

Basic Facts

In the administrative dispute over the invalidation of the trademark right between Chongqing Jiangxiaobai Liquor Co., Ltd. (hereinafter referred to as "Jiangxiaobai Company") and the China National Intellectual Property Administration (CNIPA), and Chongqing Jiangjin Distillery (Group) Co., Ltd. (hereinafter referred to as "Jiangjin Distillery"), the disputed trademark was the No. 10325554 "江小白" (Jiangxiaobai) trademark. It was filed for registration on December 19, 2011, by Chengdu Geshang Advertising Co., Ltd. and was approved for use on Class 33 alcoholic beverages. Through subsequent assignments, the ownership of the trademark was successively transferred to Sichuan New Blueprint Trading Co., Ltd. (hereinafter referred to as "New Blueprint Company") and later to Jiangxiaobai Company.

On February 20, 2012, Chongqing Jiangjin District Sugar & Liquor Co., Ltd. (including affiliated entities such as Jiangjin Distillery) and New Blueprint Company (including its subsidiaries and regional offices) entered into both a Sales Contract and a Customized Product Sales Contract. The Customized Product Sales Contract expressly authorized New Blueprint Company to sell customized products under the "几江"(Jijiang) brand series of alcoholic beverages, with no mention of the "江小白" (Jiangxiaobai) trademark.

Article 1 of the Customized Product Sales Contract stipulated: "Party A (Jiangjin Distillery) authorizes Party B (New Blueprint Company) to act as the distributor for customized products of the '几江(Jijiang) brand' Jiangjin Laobaigan 'Qingxiang No. 1, 2, 3' series, Super Clear series, and Aged Vintage series."

Article 6.2 clearly provided: "Party B shall be responsible for product concept development, packaging design, advertising planning and implementation, as well as recruitment and maintenance of secondary distribution channels, with Party A providing full cooperation. Party A shall respect Party B's product concepts, packaging designs, advertising materials, marketing slogans, and promotional strategies, and shall not use them for products sold directly by Party A or by Party A's other clients without Party B's authorization."

In May 2016, Jiangjin Distillery filed an invalidation request against the disputed trademark with the former Trademark Review and Adjudication Board of the State Administration for Industry and Commerce (hereinafter referred to as "TRAB"). TRAB determined that prior to the filing date of the disputed trademark, Jiangxiaobai Company should have been aware of Jiangjin Distillery's "江小白" (Jiangxiaobai) trademark. The registration of the disputed trademark constituted circumstances prohibited under Article 15 of the 2001 amended Trademark Law (hereinafter referred to as "2001 Trademark Law"), which provides grounds for refusal of registration and prohibition of use. Accordingly, TRAB ruled to declare the disputed trademark invalid. Dissatisfied with this decision, Jiangxiaobai Company initiated administrative litigation.

Judgment

The Beijing Intellectual Property Court rendered the Administrative Judgment (2017) Jing 73 Xing Chu No. 1213 on December 25, 2017: 1. Revoke the TRAB’s Decision on Invalidity Declaration Request Concerning the No. 10325554 "江小白" (Jiangxiaobai) Trademark (Shang Ping Zi [2016] No. 117088); 2. Order the TRAB to reissue a ruling on Jiangjin Distillery’s invalidity declaration request against the No. 10325554 "江小白" (Jiangxiaobai) trademark. The TRAB and Jiangjin Distillery appealed to the Beijing Higher People’s Court. The Beijing Higher People’s Court rendered the Administrative Judgment (2018) Jing Xing Zhong No. 2122 on November 22, 2018: 1. Revoke the Administrative Judgment (2017) Jing 73 Xing Chu No. 1213 of the Beijing Intellectual Property Court; 2. Dismiss Jiangxiaobai Company’s claims. Jiangxiaobai Company was dissatisfied and applied for retrial to the Supreme People’s Court. The Supreme People’s Court rendered the Administrative Judgment (2019) Zui Gao Fa Xing Zai No. 224 on December 26, 2019: 1. Revoke the Administrative Judgment (2018) Jing Xing Zhong No. 2122 of the Beijing Higher People’s Court; 2. Maintain the Administrative Judgment (2017) Jing 73 Xing Chu No. 1213 of the Beijing Intellectual Property Court.

Judgment’s Reasons

The Supreme People's Court held that the main disputed issue in this case was whether the application for registration of the disputed trademark violated the provisions of Article 15 of the 2001 Trademark Law. Article 15 of the 2001 Trademark Law stipulates: “Where an agent or representative registers, in its own name, a trademark of the principal or represented person without authorization, and the principal or represented person files an opposition, the trademark shall not be registered and shall be prohibited from use.” The trademarks that an agent or representative may not apply to register include not only trademarks identical to those of the principal or the party being represented, but also similar trademarks; the goods for which registration may not be applied include not only goods identical to those for which the trademark of the principal or the party being represented is used, but also similar goods. In this case, Jiangjin Distillery claimed that New Blueprint Company was its distributor, that New Blueprint Company designed the disputed trademark for it, and that it had used the disputed trademark first, therefore the application for registration of the disputed trademark violated the provisions of Article 15 of the 2001 Trademark Law.　　

First, the evidence provided by Jiangjin Distillery was insufficient to prove its prior use of the disputed trademark. The majority of evidence submitted by Jiangjin Distillery to support its claim of prior use was generated after the application date of the disputed trademark. The evidence relating to activities prior to the trademark application date consisted of a sales contract between Jiangjin Distillery and Chongqing Senou Liquor Sales Co., Ltd. (hereinafter referred to as "Senou Company"), product delivery notes, and an audit report. The sales contract between Jiangjin Distillery and Senou Company had been submitted during the trademark opposition review proceedings but was not accepted by the TRAB due to the absence of Senou Company's signature/seal and lack of supporting evidence such as invoices. Although the sales contract submitted in this case bore Senou Company's official seal, the contract's indicated signing date preceded the company's establishment date as shown in business registration records. Moreover, Jiangjin Distillery admitted that the contract signing date had been backdated. According to the handwriting appraisal opinion issued by Beijing Shengtang Judicial Appraisal Institute, which was submitted by Jiangxiaobai Company as retrial evidence, there were doubts regarding the authenticity of the signatures on the delivery notes from Jiangjin Distillery to Senou Company. Furthermore, these documents lacked supporting evidence such as invoices. Therefore, the aforementioned evidence could not prove Jiangjin Distillery's prior use of the disputed trademark. Jiangjin Distillery submitted the audit report as evidence of prior use after the first-instance court hearing. However, in the absence of original accounting vouchers, merely referencing "江小白" (Jiangxiaobai) liquor in an audit report prepared later at Jiangjin Distillery's request was insufficient to prove that Jiangjin Distillery had used "江小白" (Jiangxiaobai) prior to the disputed trademark's application date. Additionally, the contract dated February 15, 2012 between Jiangjin Distillery and Chongqing Baoxing Glass Products Co., Ltd. for purchasing "I am Jiangxiaobai" bottles amounted to 690,000 yuan, far exceeding the sales revenue and gross profit recorded in the audit report. This further indicated that the authenticity of the audit report could not be confirmed.

Secondly, although a distributor relationship existed between Jiangjin Distillery and New Blueprint Company, their Customized Product Sales Agreement simultaneously stipulated that all rights pertaining to product concepts and advertising materials for the customized products would remain with New Blueprint Company. During the trademark invalidation proceedings and both the first and second instance trials, the primary evidence submitted by Jiangjin Distillery to demonstrate this distributor relationship consisted of the Sales Contract and Customized Product Sales Agreement executed by both parties on February 20, 2012. The Customized Product Sales Agreement explicitly authorized New Blueprint Company to distribute customized products under the "几江"(Jijiang) brand series, with no reference made to the "江小白" (Jiangxiaobai) trademark. Moreover, the Agreement clearly stipulated that: "Party A (Jiangjin Distillery) shall respect Party B's (New Blueprint Company) product concepts, packaging designs, advertising materials, marketing language, and promotional strategies, and shall not utilize these elements for products sold directly by Party A or through Party A's other distribution channels without prior authorization from Party B." In conclusion, it must be affirmed that Jiangjin Distillery holds no intellectual property rights over any elements of New Blueprint Company's customized products beyond the "几江"(Jijiang) brand designation, including product concepts and advertising materials. This determination confirms that New Blueprint Company's registration of the "江小白" (Jiangxiaobai) trademark did not infringe upon any legitimate rights of Jiangjin Distillery. The evidentiary record fails to substantiate any claim that the disputed trademark rightfully belongs to Jiangjin Distillery. Consequently, based on the submitted evidence alone, there exists no legal basis to conclude that the registration application for the disputed trademark violated the provisions of Article 15 of the 2001 Trademark Law.

Finally, evidence including correspondence between Jiangjin Distillery and New Blueprint Company during their collaboration period demonstrates that the name "江小白" (Jiangxiaobai) and related product designs were initially proposed by Tao Shiquan, then legal representative of New Blueprint Company. The relevant evidence submitted by Jiangxiaobai Company to the court confirms that "江小白" (Jiangxiaobai) and its associated product designs were first conceptualized and provided to Jiangjin Distillery by Tao Shiquan's side. Moreover, according to the Customized Product Sales Agreement between both parties, all rights pertaining to product concepts and designs belonged to New Blueprint Company. The existing evidence is insufficient to establish that New Blueprint Company created the trademark design on behalf of Jiangjin Distillery.

In conclusion, prior to the application date of the disputed trademark, the "江小白" (Jiangxiaobai) trademark did not belong to Jiangjin Distillery. Pursuant to the Customized Product Sales Agreement, Jiangjin Distillery held no intellectual property rights over product concepts, advertising materials or other elements of the customized products beyond its registered trademark "几江"(Jijiang). New Blueprint Company's application for registration of the disputed trademark neither infringed upon the legitimate rights and interests of Jiangjin Distillery, nor violated the provisions of Article 15 of the 2001 Trademark Law.

Relevant Provisions

Article 15 of the Trademark Law of the People’s Republic of China