Research On The Ownership Of "Subsequent Commercial Interests" After Trademark Return

In July 2017,the Supreme People's Court sentenced the “famous and special trade dress” dispute between Guangzhou Pharmaceutical Company(GPC)and Jiaduobao(JDB),and determined that both parties shared the rights and interests of the “red can”.This final judgment was originally regarded as the end of long-term war,but this June,when JDB relaunched the red can package,the Supreme Court officially accepted the retrial application from GPC,which caused heated debates once again on the ownership of subsequent commercial interests after the return of trademark rights(hereinafter referred to as “subsequent commercial interests”).Generally speaking,trademarks and the rights related to the designated goods or services,i.e.product name,package,decoration,etc.,have an inseparable relationship in actual use.In most cases,the trademark-related rights shall belong to the trademark owner since the registration and use of the trademark come from the trademark owner.However,for trademark license,the trademark owner and the user are separated from each other,especially when the trademark licensee unilaterally makes the trademark valuable within the license period through substantial input,long-term use and advertising,the ownership of relevant “subsequent commercial interests” becomes controversial.In this case,the “subsequent commercial interests” is not created by the trademark owner alone,but established by the licensee through big investment andresource in actual use,making the “unknown” trademark into a famous or even well-known mark,and accordingly forming the rights of “subsequent commercial interests”.According to Locke's theory of labor value,labor forms private property rights,and “subsequent commercial interests” is the value generated by the work of the licensee,so the licensee seems to have certain rights to the “subsequent commercial interests”.However,if all the rights of “subsequent commercial interests” are transferred to the licensee except for the symbol of trademarks,it will undoubtedly cause confusion among consumers,damage the absolute rights of the trademark owners,and bring a direct challenge to this international system of trademark licensing.Therefore,after the termination of the trademark license agreement,the attribution and distribution of“subsequent commercial interests” has become an inevitable reality.We cannot completely transplant the “subsequent commercial interests” to the creators in a one-size-fits-all manner,which will cause public confusion and damage the trademark owner's rights,nor return all of the “subsequent commercial interests” back to the trademark owner without considering the principle of “balance of interests”.In the modern business society,trademark licensing has become more and more common,and this system has been accepted and recognized by most countries.In China,the status of trademark licensing is becoming more popular as well.In fact,the license recordal is not a mandatory procedure,so there are hundreds and thousands of trademark licensing without recordal.In addition to the normal business model,there is also a growing demand for trademark licensing due to the objective situation of the domestic trademark registration environment.The increasing number of trademark registrations and the serious squatting of the trademarks result in limited trademark resources.The licensee has to obtain the legal right to use the “favorite” trademark from the hands of the trademark owner through trademark licensing.The number of trademark application in China has increased geometrically in the past two decades,and the number of effective trademark registrations has ranked first in the world for 16 consecutive years.Taking a word mark as an example,in general,to register a word mark,firstly,it cannot violate the absolute reason;secondly,it should be distinctive and can play a role in distinguishing the source of goods or services;thirdly,there is no prior identical or similar mark on the same/similar goods/services;finally,from the aspect of commercial interests,the applicants generally choose some simple,memorable,meaningful or suggestive names as the name of the designated goods or services.Under above conditions,there are fewer and fewer trademarks that can meet the applicant's needs and obtain registration.When the “favorite” trademark was registered by others,the applicant can choose the trademark licensing to reach win-win results in addition to the trademark purchase and/or cancellation of some uncertainty.However,the trademark licensing system is also a double-edged sword,because licensing is a dynamic,ever-changing process that may be beneficial to the licensor but unfavorable to the licensee,or may be beneficial to the licensee but unfavorable to the licensor.Although both parties to the license may stipulate or continually adjust the conditions of the trademark license and the ownership of “subsequent commercial interests” through contract,the previous agreement cannot fully cover the later situation.When the dispute arises in the late stage,it is often the unfavorable party to expect the amendments of contract.Therefore,the author believes it is necessary to set up some distribution rules of“subsequent commercial interests” and protection system of the “subsequent commercial interests” creator under the trademark licensing system.Otherwise,the licensee might be cautious in investing the trademark,and lose enthusiasm in establishing the goodwill of trademark,especially when the trademark license agreement is about to terminated,the licensee may be guilty of investing in and using the trademark,and even has the act of prematurely transplanting goodwill or maliciously reducing the goodwill of the trademark,which will undermine the interests of the trademark owner.In view of this issue,this paper intends to analyze by case study,research on the status quo at home and abroad,and to explore a set of “subsequent commercialinterests” attribution and distribution system specialized for China.The full text is divided into the following four parts to explore and propose ways to solve the problem.Introduction part is the introduction of the problem,to reveal the legal significance and practical value of this research,give a basic overview of the research status at home and abroad,and introduce the writing ideas and research methods of this paper.The final section of this part is the main innovations and shortcomings of this paper.Chapter ? is the discussion of “subsequent commercial interests” and the trademark licensing system.The first half introduces the meaning and value of the trademark licensing system,the types and consequences of trademark licensing,the general situation and special circumstances,as well as the typed discussion and case study on the attribution and distribution of “subsequent commercial interests”surrounding the different termination situation of trademark licensing.The second half of this chapter introduces the connotation,characteristics,scope,etc.of goodwill and “subsequent commercial interests”,and focused on if trademarks and “subsequent commercial interests” can be separated.The basic concepts and classifications introduced in this chapter provide a theoretical basis for the subsequent proposal to build a “subsequent commercial interests” creator's rights protection system.Chapter ? discloses the necessity and feasibility of protecting the rights and interests of the creators of “subsequent commercial interests”.It studies the practice of the distribution of “subsequent commercial interests” by the US and Japanese models,and analyzes the advantages and disadvantages of domestic legislation and scholars' views.The opinions of the system construction form the author's views on the protection of the rights and interests of the creators of the “subsequent commercial interests”.Chapter ? puts forward specific suggestions for the construction of Chinese“subsequent commercial interests” creator's rights and interests protection system,including the establishment of a layered protection mechanism of “subsequent commercial interests”,distinguishing the distinctiveness and reputation of thetrademark itself,the type of trademark licensing,and the licensee's input,product quality,sales volume and the value of the “subsequent commercial interests” created by the licensee.The establishment of a buffer mechanism,including conditionally allowing the licensee to legally transplant the “subsequent commercial interests”through the form of successor advertising,and providing a reasonable time for the licensee to re-explore the market by setting a period of ban to the licensor.At the practical level,the trademark licensing agency or the industry association shall issue the standard terms of the trademark licensing agreement,to standardize and improve the content of the trademark licensing agreement,and to add the attribution and benefit distribution term of “subsequent commercial interests”.