Beijing Higher People’s Court recently made a significant ruling in support of “merchandising rights”, which breaks through the barrier of China’s existing legal framework for protecting intellectual property, said legal experts.
“The PRC law provides no definition for ‘merchandising rights’, and there is a lack of consensus on this concept among the academic community as well,” Wan Xing, a Beijing-based partner of DaHui Lawyers, told China Business Law Journal.
“From our point of view, this concept refers to the rights that owners of some well-known or attractive symbolic elements should have to use these elements as merchandise, and benefit from such use.”
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Wan said merchandising rights are in essence property rights, since such rights are based on the commercial value of the symbolic elements and concern economic benefit. According to him, the symbolic elements could refer to the images of real people or animals, film or cartoon characters, as well as names of famous films or games, and the commercial use of such elements can refer to direct use or imitation of names, images, sounds, actions, etc.
The Beijing higher court’s judgement was made on an administrative suit filed by DreamWorks Animation against the Trademark Review and Adjudication Board (TRAB) of the State Administration for Industry and Commerce.
DreamWorks lost the first trial in which the company claimed merchandising rights to its film Kung Fu Panda, disputing TRAB’s granting a third party certain trademarks that used the name of that film.
In the second instance, the higher court overturned the lower court’s decision, finding that although merchandising rights are not expressly protected under PRC law, under certain conditions such rights could constitute “pre-existing rights” supported by the Trademark Law.
Zha Zheng, another Beijing-based partner of DaHui Lawyers, said in recent years’ judicial practice, Chinese courts have begun to gradually recognize merchandising rights as pre-existing rights under the Trademark Law.
Still, evidence is important for claiming merchandising rights. In terms of films, Zha said evidence should be prepared in three areas: whether the film is popular; the source of its popularity; and the level of this popularity.
“The promotion and public screening of a film, and the public knowledge of the film characters, may both be taken as evidence of the widespread popularity of the film,” he said. In addition, “the popularity of a film should come from innovative work, and the sizable investment of human and capital resources”.
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