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Vietnam to Muddle with the Zombie Trademark and Its Residual Goodwill
(Ngày đăng: 2018-08-13)

                                        By Senior Partner Le Quang Vinh

Bross & Partners[1]

Introduction

According to the authors Jerome Gilson and Anne Gilson LaLonde in their article titled “The Zombie Trademark: A Windfall and A Pitfall” published on the INTA’s Trademark Reporter Vol. 98 TMR, zombie brands are also called ghost brands, orphan brands, dinosaur brands, antique brands and graveyard brands. Looking at the Vietnamese IP Law, it seems Section 74(2)(h) is the due provision matching with the concept of zombie trademark.

The National Office of Intellectual Property of Vietnam (the “NOIP”) sometimes uses Section 74(2)(h) as refusal ground, although of which applicability in practice is recently debatable. Such refusal ground states that an applied-for mark shall be rejected if it is or contains signs identical with or confusingly similar to another person’s mark which has been registered for identical or similar goods or services, the registration certificate of which has been invalidated for no more than 5 years, except where the ground for such invalidation is non-use of the mark according to Point d, Clause 1, Article 95 of this Law.

 

At first glance, the above ground for refusal seems to be problem-free, but the existence of different interpretations leads to the emergence of many disputes and persistent complaints over many years and have not ended. 

For the purpose of easy imagination, before looking into the detailed analysis, we assume that the validity of earlier mark has been terminated, namely, the expired mark X (owned by A), another mark applied-for is the mark X’ (filed by the applicant B) and re-applied-for mark X (filed by applicant C, although C is essentially A but its standing has become an applicant at the time of re-filing) and it is also presumed that the marks X and X’ are identical with or confusingly similar to, and used for goods or services identical with or similar to, each other. Accordingly, there are basically three possible scenarios:

Scenario 1: X’ is filed in the period where the validity the expired mark X has not yet expired 5 years and the NOIP’s substantive examination report has not been come out during such 5-year period.

Scenario 2: X’ is filed in the period where the validity the expired mark X has not yet expired 5 years and the NOIP’s substantive examination report has been released on or after the point of time of expiry of such 5-year period.

Scenario 3: Same as Scenario 1 or 2, but Scenario 3 emerges a new relevant incident, particularly, the re-applied-for mark X filed by C (with the filing date later the filing date of the mark X’ but still within such 5-year period). In this circumstance, kindly note that C may also lodge or not file an opposition against the mark X’.

The NOIP’s Implications and Comments

In principle, the NOIP will ex officio refuse the mark X’ for all of the three scenarios. However, in the event that the applicant B of the mark X’ provides for a market investigation evidence showing that the mark X has not been used for at least 5 consecutive years calculated from the point of time of non-use evidence by B backwards then the NOIP, from our experience, in practice, accepts the registration of the mark X’. To our best knowledge, such non-use evidence admitted by the NOIP is understood to comprise the supplement of non-use evidence to the pending applied-for mark X’ before the NOIP’s substantive examination report, or to a written response against the NOIP’s refusal or office action (also unofficially called as Notice of Refusal 1).

Nevertheless, recently the NOIP has fundamentally changed its viewpoint, even a 180-degree change. For example, in some practical cases with similar elements to Scenarios 1, 2 and 3, meaning the mark X’ was rejected even if the applicant B submitted non-use evidence against the expired mark X prior to the point of time of issuance of substantive examination report by the NOIP.  But by reason of an opposition filed by A or C, the NOIP objected protection in favor of the mark X’. Subsequently, the applicant B replied to the Notice of Refusal 1, stating that at the time of his response, the validity of the expired mark X had expired more than 5 years but the NOIP insisted on its refusal by issuing a decision on confirmation of refusal (unofficially known as Notice of Refusal 2). Given the occurrence of the re-applied-for mark X by C, the applicant B was forced to oppose it based on the legal ground stipulated at Section 90(2)[2]. And a case that appears to be simple turns into a double-dispute: the dispute between B and C or/and between B and A, and the appeals by B against the NOIP's refusals. Accordingly, the NOIP's change of viewpoint may also imply that the future similar cases whose facts merely resemble Scenario 1 or 2 would be disapproved by the NOIP the same as Scenario 3.

We take the view that the NOIP’s point of view of refusal is both inappropriate and ungrounded because the NOIP did not directly go into the response/appeal by B contending that Section 74(2)(h) based-refusal ground had no longer existed at the time of the submission of response by B opposing the Notice of Refusal 1 – the point of time where the certificate of registration of the expired mark X had been abandoned more than 5 years - then why did the NOIP still utilize such provision as a legal ground?!. Instead of persuasive arguments, the NOIP only replied with a simple statement that C re-applied to register the expired mark X, coupling with its continuous making reference to Section 74(2)(h), although it is obvious that such legal ground is inapplicable

Some opine that the owner of the expired mark has the right to maintain the priority date (for the purpose of re-registration) until the last day of the 5-year period since the validity of the expired mark had been invalidated. Or some other similar point of views are that there is the existence of the concept "right to reserve re-registration" whereby C is of course entitled to re-register. However, all of these ideas are not convincing because they are not based on any existing legal grounds.

What is the Rationale?

In order to determine the root cause of the problem, we think it is necessary to revert to the core principles of trademark law. One of the core tenets is goodwill. Goodwill is a concept that is difficult to translate into Vietnamese but we can understand it as the credibility, memory, connection objectively existed between consumers/clients and goods/services bearing that trademark when these goods or services are sold, marketed or supplied. In that sense, objectively speaking, there would be basically many different types of goodwill in terms of content and status, ie. sort (a) no goodwill (this sort corresponds to the status of registered trademark but has not been put into use in commerce yet and Vietnamese consumers have never known its existence), sort (b) having goodwill in an insignificant level (not yet reached the threshold of widely used and recognized under Section 74(2)(g)[3]), and sort (c) having earned goodwill in a very considerable extent, meeting the criteria set out at Section 74(2)(g).

From the rationale analyzed above, it is clear that one of the duties of Section 74(2)(h) is to deal with the matter of residual goodwill that may be still left-over even if an invalidated mark (mainly due to non-renewal). The spirit of law is duly to protect consumers, to avoid the possibility of deceiving them in terms of origin of trade and by so stating, a particular statutory time limit allowing the consumers to forget or end up a connection with a previous source of commerce likely residual in their minds or memories, prior to re-registration by a third party other than previous owner, is an accurate thought.

The above accurate thought, however, needs to be changed to better fit and adapt the contemporary time and business environment that has been inherently changing so fast, especially because of the internet and technology, making the amount and speed of information exchange by the public get more and faster. And of course, the opposite side of such real phenomenon is that the possibility of forgetting old information also becomes much faster and shorter than before, according to which on the one hand the five-year rule existed in Section 74(2)(h) is deemed outdated in comparison with other countries and in the other hand, the same unintendedly causes a unreasonable hurdle irrationally baring the public or competitors from establishing their trademark rights.

By comparing with the trademark laws of some other countries, we find that for example, China allows the re-registration of a trademark which has terminated under the name of another person on the condition that it has exceeded one year from the date of termination[4]. Hong Kong Trademark Law requires that an expired mark use as a ground for refusal of an application for re-registration of such expired mark within one year after the expiry date, unless the Trademark Office has the ground to believe that the expired mark was not used in good faith in Hong Kong within 2 years right before that date[5]. Similar to the two-year rule approach of Hong Kong, Malaysia provides that where a senior mark is removed from the national register for failure to pay the renewal fee, for the purpose of determining the eligibility of a junior mark that is identical with or similar to, the senior mark, and filed in a period of 1 year calculated from the date of expiry of the last renewal then the senior mark would be deemed existent in the national register, except where the registrar has the basis for believing that there is no evidence of actual use of this senior mark for a consecutive 2-year period preceding the point of time on which the senior mark had been removed from the register[6].

Proposed Solutions

In the context of the amendment and revision of the 2005 IP Law as revised, including the clarification of the interpretation of Section 74(2)(h) above that would be unlikely take place in the short term and on the other hand, the present context is very in need of a unified understanding of how to resolve conflicts or disputes in an equitable way, to balance the interests of right holders, consumers and the freedom of competition, we have a few suggestions as follows:

  1. The rules and standards set out in Scenarios 1 and 2 should be admissible as previously accepted by the NOIP, meaning that non-use evidence of the mark X provided by B before the NOIP completes the substantive examination report or is provided by B in the written response against Notice of Refusal 1 is sufficient for the mark X’ to be protected; and

 

  1. Any third parties including A or C shall have the right to object to the protection afforded to the mark X’ and the NOIP shall refuse the mark X' if and only if there are grounds to believe that the goodwill of the mark X, that is still residual as of the filing date of mark X’, suffice or satisfy the threshold used and widely recognized under Section 74(2)(g). And in this case the burden of proof shall belong to the opponent;

 

  1. The NOIP will send a written notice (1 time only) notifying an applied-for mark X’ filed by B of A so that A has the right to oppose that application in a particular period of time. If no opposition by A is filed within the statutory time limit, the NOIP will grant protection for the mark X’. Where A or C files an objection in time, he is obliged to prove that the re-applied-for mark X (by C) has acquired priority date better than that of the mark X’ because the goodwill of the re-applied-for mark X has satisfied the Section 74(2)(g) threshold as of the filing date of the mark X’.

In addition, the acceptance of market investigation evidence should be considered consistently, in particular, we would think that the non-use investigation report made by the Industry and Trade Information Center (Ministry of Industry and Trade) or by the Journal of Market Price (Ministry of Finance) should be admissible because they are initially and preliminary evidence whereas the trademark owner is liable for counteracting.

Bross & Partners, a renowned and qualified Patent, Design, Trademark and Copyright agent of Vietnam, constantly ranked and recommended by the Managing Intellectual Property (MIP), World Trademark Review (WTR), Legal 500 Asia Pacific, AsiaLaw Profiles, Asia IP and Asian Legal Business, is providing clients all over the world with the reliable, affordable contentious and non-contentious IP services including IP-related filing and prosecution, enforcement, anti-counterfeiting, litigation and domain name. For further discussion, please get in touch with us via vinh@bross.vn .

 


[1] This presentation was prepared and presented according to the invitation of the Vietnam Intellectual Property Association (VIPA) on the occasion of the roundtable "Industrial property representatives with innovations in the system" jointly held by the VIPA and NOIP taking place on July 24, 2018 at the Muong Thanh Hotel, 78 Tho Nhuom Street, Hanoi

[2] Section 90 of Vietnam IP Law. "First to file" principle

(2) Where there are two or more applications satisfying all the conditions for the grant of a protection title and having the same earliest priority or filing date, a protection title may only be granted to a single application from such applications with agreement from all applicants. Without such an agreement, all such applications shall be refused the grant of a protection title.

[3] Section 74 of Vietnam IP Law. Distinctiveness of marks

(2) A mark shall be deemed to be indistinctive if it is a sign falling into one of the following categories

(g) Signs identical with or confusingly similar to another person's mark which has been widely used and recognized for similar or identical goods or services before the filing date or the priority date, as applicable

[4] Article 50 of the China Trademark Law (Originally in English):

Within one year from the time where a registered trademark is cancelled or declared invalid, or is not renewed upon the expiry of its validity period, the trademark office shall not approve any application for registration of a trademark identical with or similar to the aforesaid trademark.

[5] Article 5(3) of the Hong Kong Trademark Law

A trade mark which is an earlier trade mark under or by virtue of subsection (1)(a) shall continue to be taken into account in determining the registrability of a later trade mark for a period of 1 year after the date on which its registration expires unless the Registrar is satisfied the trade mark has not been used in good faith in Hong Kong during the 2 years immediately preceding that date

[6] The Malaysia Trademark Law 1976 amended in 2006. Section 42. Status of unrenewed trade mark. Where a trade mark has been removed from the Register for non‐payment of the fee for renewal, it shall, nevertheless, for the purpose of an application for the registration of a trade mark within one year from the date of expiration of the last registration be deemed to be a trade mark which is already on the Register except that this section shall not have effect when the Registrar is satisfied either—

  1. that there has been no use in good faith of the trade mark which has been removed during the two years immediately preceding its removal

 

 

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