A question to start – what are merchandising rights?
In simple terms, merchandising rights are the legal permissions that let someone make and sell products using a brand, character, or other intellectual property. This may include items like toys, clothing, and anything else that features logos, characters, or artwork.
The protection of merchandising rights in China under its Trade Mark Law has been a topic of significant interest and debate for years. Although the concept of merchandising rights is not explicitly defined in trade mark law, it has been increasingly recognized in judicial practice, particularly in cases involving the commercial exploitation of well-known names, characters, or other distinctive elements from various media.
The protection of merchandising rights faces several significant challenges. Firstly, merchandising rights are not universally recognized as distinct legal rights. The absence of a clear definition within trade mark law leads to uncertainty and inconsistency in their protection. Additionally, owners must demonstrate a likelihood of confusion between the unauthorized use of the mark and the unprotected merchandising rights to claim protection. This can be difficult without concrete evidence of consumer confusion or market impact.
Moreover, the threshold for protection is high. The requirement for an evidence of reputation and the difficulty in proving potential harm or confusion pose significant barriers to securing protection for merchandising rights. There is also a need to balance the rights of merchandising rights owners with the interests of third parties and the public, who may have an interest in the free use of certain cultural expressions, complicating the protection process. Lastly, the scope of protection under trade mark law is often limited to cases where there is a likelihood of confusion or direct association with the original work, which may not cover all forms of exploitation.
Despite these challenges, there are several potential solutions that could improve the protection of merchandising rights under trade mark law in China:
1. Legislative Clarification: Introducing explicit provisions in trade mark law that recognize and define merchandising rights can provide a clearer legal basis for their protection. This would help establish uniform standards for what constitutes a merchandising right and how it should be protected.
The term “Merchandising Rights” has not yet been [or is not yet] allowed in decisions or judgments regarding trade mark prosecution and enforcement issues. Introducing the term into trade mark law will allow flexibility for Chinese trade mark authorities to grant protection for brand owners.
2. Development of a Fair Use Doctrine: A fair use doctrine similar to that in copyright law could be developed to allow for certain uses of characters and other elements without infringing on merchandising rights, provided that such use is transformative and does not harm the market for the original work.
3. Enhanced Evidence Gathering: Merchandising rights holders should be encouraged to gather and maintain robust evidence of their rights' recognition and potential consumer confusion. This could include market surveys, consumer studies, sales data
In the opposition case raised by VIACOM INTERNATIONAL INC. (https://www.paramount.com/about/brands/nickelodeon), and owner of the “Sponge Bob” brand, provided evidence in support of its long-term and extensive release and promotion for videos of its cartoon “Sponge Bob” in a full range of video platforms, and convinced the trade mark authority to reject the squatter’s application for “Spongebob” on cigarettes and similar goods. [(2022) Opposition No. 0000091774]
In a recent invalidation action, TURNER ENTERTAINMENT CO. (https://www.warnerbros.com) successfully invalidated an imitation of Tom and Jerry in Chinese on nutrition supplements and etc., relying on sufficient evidence, including but not limited to media reports, Chinese National Library search reports and etc. This strikes against bad-faith filers without well-known trade mark recognition. [TRAD [2024]0000063543]
4. Specialized Adjudicatory Bodies: Establishing specialized courts or tribunals with expertise in intellectual property and merchandising rights could lead to more consistent and informed decisions in this area of law.
5. International Harmonization: Working towards international harmonization of merchandising rights protection can help create a level playing field for rights holders and users across different jurisdictions.
6. Public Education and Awareness: Raising awareness among the public and businesses about the existence and importance of merchandising rights can help prevent infringement and promote respect for these rights. For example, the brand owners may use social media and events and even influencers to connect the brand with customers and fans.
7. Proactive Actions: Merchandising rights holders can/should take proactive actions, for exampleThis increased presence will build reputation before the trade mark authorities, discourage bad-faith filers from imitating and copying the merchandising rights, and prevent potential infringement and market confusion, thereby protecting the legitimate rights and interests of the rights holders.
While the protection of merchandising rights under trade mark law presents significant challenges, a combination of legislative reform, enhanced evidence gathering, international cooperation, and proactive measures can provide effective solutions. By addressing these issues, it is possible to create a legal environment that respects the investments made by creators and rights holders while also allowing for cultural expression and innovation.
The protection of merchandising rights is a nuanced area of law that requires careful consideration of the rights of various stakeholders. As the digital age continues to blur the lines between different forms of media and commerce, it is crucial that the law evolves to protect the valuable intellectual property rights that are central to the modern economy. By implementing the solutions outlined above, it will ensure that the legal system remains responsive to the needs of creators and consumers alike, fostering a fair and vibrant marketplace for creative expression and commercial activity.
Author: Tracy Cui