As reported (note: the link is in Chinese), the eye-catching trademark battle on Wanglaoji, also known as Wong Lo Kat in Hong Kong, as been adjudicated by Beijing No.1 Intermediate People’s Court on the 13th July 2012, by which Hong Dao Group’s (the “Hong Dao”) appeal to revoke the arbitration decision by CIETAC was refused. This means the arbitration decision shall take effect from 9th May 2012, the two supplementary trademark license contracts signed by the disputed parties are judged invalid, and Hong Dao will no longer use the trademark of Wanglaoji. For the case, we have expressed our opinions in the past post “Will JDB Revoke Wang Lao Ji Trademark Arbitration Award through Litigation?”

However the spokesman of Jiaduobao, the affiliated company of Hong Dao emphasized to the journals that the issue has not yet been finished, and showed a Trademark License Agreement on the adjudication day of the court. By the agreement, Hong Dao, the parent company of Jia Duo Bao, is solely licensed for the manufacture and sales of the red canned and bottled Wanglaoji from 20th January 2003 to 19th January 2013.

Meanwhile, the spokesman of Guangzhou Pharmaceutical Group stated that the shown agreement is only the collateral contract to the first signed two contracts and for industrial and commerce administrative record only. Moreover, Jia Duo Bao has submitted the contracts as evidence, and the arbitration decision is made on that evidence. However Jia Duo Bao insisted the effectiveness of the agreement, and thereby filed arbitration to CIETAC which has been accepted.

For the arguments in the case, we believe there should and will be a just decision, but the recorded contract of trademark has also aroused argument. As was seen in the trademark dispute between Groupe Daone and Wahaha Group, this has also shown two different recorded contracts, and the dispute itself is aroused by the trademark record. Today, we would like to introduce the China Trademark License Record System.

I. The laws and regulations

As provided in Article 40 of the Trademark Law:

Article 40 Any trademark registrant may, by signing a trademark license contract, authorize other persons to use his registered trademark. The licensor shall supervise the quality of the goods in respect of which the licensee uses his registered trademark, and the licensee shall guarantee the quality of the goods in respect of which the registered Trademark is used.

Where any party is authorized to use a registered trademark of another person, the name of the licensee and the origin of the goods must be indicated on the goods that bear the registered trademark.

The trademark license contract shall be submitted to the Trademark Office for record.

Article 43 of the Implementing Regulations of the Trademark Law of the People’s Republic of China

Article 43: Where he licenses another person to use his registered trademark, the licensor shall submit the trademark licensing contract to the Trademark Office for filing within three months from the date on which the contract is concluded.

As regulated in the Interpretation on Several Issues concerning Law Application in Hearing Civil Disputes of Trademark Cases by the Supreme People’s Court

Article 19: The effect of the trade license contract shall not be influences even it has not been recorded, unless otherwise agreed by the parties. The trademark license contract shall not fight against any bona fide third party when no record of it has been made in the trademark office.

II. Issues need attention in the trademark record.

The State Trademark Office of China has promulgated Trademark Licensing Contract Recordal Procedures, which is a legal document for the specification on the contract record, and the followings are the points need attention:

1. The written application shall be submitted for every license of the trademark. Which means, once the trademark license is granted for a class; a written application shall be made and presented.

2. A Chinese translation version of the contract in foreign language when submitting to the administration.

3. Both the licensor and the licensee shall seal and sign on the contract, and foreign entities or other organizations shall signed by the legal representative or the authorizer.

4. The trademark licensed commodity or service shall not beyond the scope indicated on the trademark certificate, so does the term licensed.

5. If the trademark is transferred, the registered owner has been modified, the validity of the trademark license shall not be influenced unless otherwise agreed by the parties.

III. The conflict between the record contract of trademark license and formal trade license contract

China Trademark Office has issued a recommended version of the record contract, by which the trademark record shall be equipped with the following clauses:

1. The name of the licensed trademark and its registration number.

2. The licensed scope of the products and service.

3. The licensed term.

4. The clauses of the supervision by the licensor on the quality of licensee’s using of the authorized commodity.

5. The clauses of the licensee indicating the name of the licensee and the origin on the licensed product

In practice, when the contract submitted by the parties is too complicated, the State Trademark Office of China may not approve the record. Therefore, nearly all the trademark agencies would suggest adopting the sample version of license contract by the licensor and the licensee, namely a very simple version to record. At that time, which contract shall prevail once the recorded one conflicting with the enforcing one.

In my opinion, theoretically by law, the actual enforced contract is the main one signed by the licensor and the licensee, and the submitted one for record is just a collateral one, and the effect of the main of is surely superior to the collateral one. Once there came any conflicts between the contracts, the articles in the main contract shall be the true meaning of the parties. To us, we would like to advice our clients to make a specific clause in the main contract that the recorded one shall only be the collateral contract to the main one, and the clauses on the main contract shall always prevail.

Finally, for the common interfere by China administrative organs, the different contracts between the enforced one and the recorded one could also happen in many other aspects like the articles of associations of the company. But in judicial practices, once the enforced contract or articles are not against the coercive laws, they shall be normally decided effective.

Web link:
http://www.chinaiplawyer.com/wanglaoji-trademark-lawsuit-china-trademark-license-record-system/