Trademark Protection and E-Commerce-Free-Samples for Students

Question: Discuss about the Trademark Protection and E-Commerce. Answer: Introduction Intellectual property (IP) is a statutory term that refers to the industrial property rights. It deals with the protection of trademark, copyrights, designs and patents rights. Despite being intangible, it holds significant value similar to the tangible or physical property. The value of the IP rights have enhanced owing to its relevance in advanced technology of the contemporary era. IP includes original expressions, new ideas, distinctive appearance and names that make a product valuable and unique. IP is closely related to e-commerce as more than any other business systems, e-commerce includes selling of services and products that mostly related to IP and its licensing. For instance, music, software, photos, designs, etc are all traded through e-commerce and IP being the main component of such services and products it holds great importance[1]. The research paper aims at analyzing two jurisdictions in the context of International treaties, impact of the online commerce in the enha nced utility of Trademark as a means of a brand protection. It shall also discuss how online commerce affects some aspects of rights enforcement by stakeholders. The two different jurisdictions include China and USA and this paper shall determine the interdependence of the e-commerce and intellectual property at the international level. The rationale for selecting the two jurisdictions is that USA is one of the economic superpower of the world and China is considered as the upcoming economic superpower and protection of IP rights, in particular, trademark law is a fundamental element of a successful economy. The two nations are globally recognized for their excellent centers for trade and commerce. China and Trademark protection China first enacted legislation on trademark of the country in 1950 and 1963. The trademark legislation in 1963 became effective in 1980 when the country became a state party to the World Intellectual Property Organization (WIPO). The domestic statutes that govern the trademarks laws in the country include the Trademark Law 2013 and the Implementing Regulation of the Trademark Law 2014[2]. While the enactment of the Trademark law, there was no specific definition of what constituted a trademark and did not include any precise definition of the terms collective marks, or service marks[3]. At the time of enactment of the trademark legislation in the country, majority of the Chinese companies were owned by the state due to which the competition and infringement of services and products were very less. The emergence of a market economy in China and the gradual rise in the competition between the services and goods led several companies to imitate the reputable service marks of other companies. Consequently, this led to unfair confusion and competition, which eventually affected the reputation of the original owners of such marks. This is one significant reason why the country enacted legislations to safeguard the trademark rights. The Trademark Law describes a registered trademark as one that has been registered and approved. Subsequent to the registration of the trademark, the registrant becomes entitled to the legal protection of the trademark exclusively. Although the law does not prevent the use of a trademark that is not registered, only that such trademark is excluded from the legal protection that is otherwise accorded to a registered trademark. Since the trademark law of the country, do not provide any precise definition of the term trademark, it provides that designs, words or combination of the two may be used as trademarks which should be distinctive to be distinguishable from other words, designs or combination of both[4]. Therefore, in general, any mark that is used as a trademark refers to a mark that is distinct and different from other forms of marks. Registered trademark is denoted with an encircled letter R and the validity of registered trademark lasts until 10 years subsequent to its approval. The first amendment of the 1993 Trademark law extended protection to include service marks and making all the legal provisions applicable to trademarks to be equally applicable to service marks. However, despite such extension, neither the statute nor the amendment defined service marks or trademarks. This omission distinguishes the Trademark law from other regional intellectual property laws and Chinese intellectual property laws. China and International treaties China is a signatory to the following IP-related international treaties include the Madrid Agreement, the Madrid Protocol, the Berne Convention, the Nice Agreement, the Agreement on Trade-related Aspects of Intellectual Property Rights and the Paris Convention[5]. In case of any dispute, international treaties shall prevail over the national statutes[6]. The country agreed to the international treaties to strengthen the trademark laws of the country especially the Madrid Agreement Concerning the International Registration of Marks (Madrid Agreement) and the International Convention for the Protection of Industrial property (Paris Convention) in 1989[7]. However, Turban (2018) states that despite persisting broadcast by the country of his intellectual property laws and assenting to international treaties, the trademark laws of the country failed to provide sufficient protection to the trademark rights[8]. Further, there is sufficient evidence to establish that China failed to provide maximum benefits to the foreigners from its membership in those Foreign or International conventions[9]. United States and International treaties on Trademark protection While the agreement of the country with the Paris Convention obligated China to safeguard service marks, there were no such methods implemented until the trademark laws was amended in 1993. Giuffrida (2017) states that as per a US trade organization, the International Intellectual Property Alliance estimated that the country has caused a loss of $415 million to the US industries due to the failure of the county to safeguard US intellectual property adequately which resulted in sale of printed goods in the year 1988. In 1991, the US government decided that the country warranted a Special 301 investigation under Title III of the Trade Act of 1974 for its failure to implement intellectual property protections. In order to prevent further loss in US businesses, United States and China signed a Memorandum of Understanding (MOU) in January 1992 whereby both countries agreed to make the laws on infringement of intellectual property rights. Later, the United States agreed to terminate the Special 301 investigations and removed China from its list of priority countries. The Chinese legislators considered amendment of the trademark law to address issues pertaining to protection of service marks, registration of trademarks by deceptive means and the using administrative regions as the name of trademark. Trademarks owned by big US companies that spent large amounts of capital, resources and labor to develop them can be stolen easily through internet or using other means[10]. The Trademark Treaties and International Law (TTIL) Committee include treaties of the US and other foreign countries as well as that of intergovernmental organizations, regulations, statutes or rules that are related to copyright, trademark or patents, unfair competition which are likely to affect the US companies[11]. The US law applicable to trademarks includes the regulations of the US Trademark law, Rule of Practice, Federal Statutes, 15 U.S.C and 35 U.S.C. 1. The secondary sources include Trademark Manual of Examining Procedure 2009 as well as the Listing of Some US Code Sections Protecting Specific Names, Marks and Terms 2009. In regards to the international treaties to which the US is a signatory is the General Inter-American Convention for Trademark and Commercial Protection [1931]. The Federal registration of the trademarks is not valid outside the country. Trademarks rights are territorial and right pertaining to particular trademark exist only within the country that has granted such rights. The US has not signed the Madrid Agreement unlike China, as the international application depended upon the national registration. In other words, the US trademark registration was much longer compared to other nations. The US has faced one essential problem with the Protocol with respect to the description of goods. Where the domestic trademark law of the US requires applicants to enumerate the goods and services associated with the mark specifically, other countries permit for wider association of marks with the goods and services. In fact, the International registration under the Madrid Protocol permits the scope of the trademark protection to rely upon the basic registration. Therefore, US registrants are restricted to the strict association of marks and goods require d by US law. In 2016, the Chinese Government published the draft of its first E-commerce law that aimed at including all the major characteristics of e-commerce, which includes payment and delivery methods as well. The law purports to fortify IP rights and to rebuke the retailers of the fake products and the persons committing infringements. As per the statistical reports, China e- commerce Research center exhibits that the trading volume of e-commerce market in China reached 7.85 trillion RMB in 2012 and 10.5 trillion RMB in 2013. In 2017, the Standing Committee of the National Peoples Congress published the second draft of the e-commerce law which aimed at regulating the rapidly growing e-commerce sector and thus, facilitate growth and maintain market order as well as to eliminate counterfeits and scams. E-commerce law: China and USA At present, the most active e-commerce websites concentrate on the industries like apparel, horticulture, agriculture, textile, machinery and equipment, digital household appliances, food and wine, hardware and tools, pharmaceuticals and healthcare[12]. In addition to this growing online trend, the provisions pertaining to protection of intellectual property rights in the online sphere is being subjected to variety of challenges. According to Cheung, Ming and Cheng-Fu Yang (2016), the important aspects of e-commerce that distinguishes it from the conventional economic model is a hub for transaction and information. In other words, it is the network that is differentiates the modern e-commerce oriented economy from the traditional economy of the country. Therefore, the complete transaction process including the payment, information transfer and the delivery of physical commodities that usually occur and are completed concurrently in the conventional form of transactions[13]. This enti re process is differentiated in e-commerce and is completed due to the participation of several service providers. Kotabe (2014) states that these differences result in two types trademark infringement issues in e-commerce. Firstly, majority of the issues take place in the technological data sectors. In regards to the traditional economic mode, transactions are often associated with physical goods like circulation and display of such goods[14]. The definition of trademark law in the light of traditional infringement is based on the characteristics that transactions are associated with physical products directly. For instance, using of trademarks on goods, selling counterfeit goods, etc. On the other hand, Turban (2018) asserts that the e-commerce mode provides information online. Besides the availability of massive information online, identifying, selecting and determining trading partners had become fundamental requisites for conducting a complete transaction, which is equally important as the product itself. The issue that may arise is whether the new form of using trademark that deals with tra nsaction information shall amount to infringement of trademark. Secondly, the other significant issue that may arise is related to the joint infringement of trademark that is, to determine the join liability in such trademark violations. This issue may arise due to the inseparable support that third party service providers extend in every transactions sector, making it one of the significant challenges in e-commerce infringement. Due to global limitations of e-commerce and its rapid growth, the regulation of e-commerce has become an intricate issue. The third party service providers in e-commerce transactions had given rise to joint infringement issues[15]. E-commerce commerce has increased the utility of Trade Marks as a means of brand protection: China and USA The term brand protection refers to online marketplace. It means preventing someone from illegally selling or making a product using a brand name that is owned by another company[16]. Branding is an important means for businesses all around the world that aims to expand their market share in other countries. One of the effective ways to establish a strong relationship between consumers and its brand is to use a unique as well as a simple name: its trademark. While selecting a trademark, it is important to avert any sort of similarity and confusion regarding the name that has been registered ready. If identical trademarks are used in correlation with identical products, it is likely to give rise o confusion. In the context of international law, TRIPS Agreement deals with this problem under Article [16(1)], which states that the use of identical sign for identical services or goods may give rise to confusion and there is no requirement to establish such confusion by providing evidence as it will entitle the owner of the original trademark to full protection[17]. The negative impact of trademark infringement has led the governments undertake measures to reduce such incidence of trademark violations. Liu (2016) states that if a reputed brand is affected by several infringements such as counterfeiters place goods of inferior quality using the brand name of the original otherwise reputed company, the consumers of the brand will lose their faith and confidence in that brand, affecting both the financial as well as social reputation of the company[18]. There have been a rise in the online shopping compared to shopping from local stores and malls in the past years. There are three types of e-commerce namely, business-to-business (B2B), business-to-customer (B2C) and customer-to-customer (C2C). At present, there has been an incline in the B2c and C2C e-commerce type prevalent in China and in the US as well due to the availability of several websites and platforms, which makes such business transactions easy and convenient. E-commerce makes cross-border commerce easy and convenient as well which makes the seller and buyer gain profits[19]. However, Cheung (2018) states that with such profits and convenience relevant issues and threats also accompany such profits. The counterfeiters target certain brands more than the other brands, especially those having higher value, luxury brands dealing with designer accessories attracts more counterfeiters. Social media has become a common and easy means for the brands to enhance their customers and sales. In the absence of any effective regulations, counterfeiter uses this medium to promote their products in a zero-cost and efficiently by impersonating official brands through their personal profiles. Additionally, the counterfeiters continue to sell their fake luxury items using e-commerce websites, marketplace listings, etc. This implies that effective protection of IP rights is of great significance especially for foreign companies that are less familiar with Chinese market because Chinese e-commerce can be both intimidating and challenging at the same time[20]. China presents certain specific challenges for the owners of trademarks because in order to enter into a Chinese market, it is important that the owners adjust their brand protection strategies for addressing the problems related to Chinese counterfeits so that they can adapt to the special challenges presented by enforcement in China[21]. Successful enforcement is based on the assessment of the scope of brand infringement, which would be an efficient strategy for action and well-prepared documentation[22]. In order to create an effective enforcement strategy, it is important to comprehend the market places that allure most traffic and such market places should be subjected to constant monitoring to ensure that the products sold are legitimate. China initiated efforts to improve the protection of the IP rights and adapt to international standards when China ratified the bilateral Agreement on Trade Relations between the United States of America and Peoples Republic of China and became a signatory to the WIPO. Subsequent to the economic development, Chinese Government has been attempting to undertake effective measures to avert violation of IP rights like the recent Draft of E-Commerce law, Amendment in the Trademark Law in 2014, development of new policies against trademark infringement and an Action Plan for implementing national IP strategy[23]. The amendments in the Trademark law ensures a stronger and stringent protection system for trademarks owners as it has made proof of infringement easier and has empowered the courts to obtain accounting books of the infringer to calculate the damages. Statutory damages have been enhanced from RMB 500,000 to RMB 3,000,000. The USA pressurized China to improve its IPR protection system and some other essential International Conventions like the Paris Conventions and the Madrid agreement. However, Luo (2016) states that despite such efforts to improve the IPRs protection system and compliance with the provisions of the TRIPS agreement and WTO obligation, China failed to fulfill certain obligations to implementing effective ad stringent IP rights rules. Nica (2015) argues that the US Trade Representative (USTR) used twenty federal agencies to evaluate the activities of China. It was found that China had limited market access to foreign enterprises and goods and lacked transparency, which signified weak enforcement of IPRs. The US Chamber of Commerce and International Intellectual Property Alliance (IIPA) stated that China failed to reduce counterfeiting since its accession to WTO and there was lack of transparency with respect to IPR infringement data rule making and enforcement procedures. Through the mandatory WTO dispute settlement process, the US filed formal complaints against China in 2007 alleging that Chinas criminal prosecution for trademark infringement was declared void. In 2009, China notified WTO Dispute Settlement Body and US that it would require a reasonable period of time that is one year. Within 2010, China affirmed that it has satisfied the requirements that have made amendments in the trademarks regulations. E-commerce has undermined some aspects of rights enforcement by stakeholders China Due to the rapid growth in online commerce, the right owners often face with respect to trademark enforcement is sale of parallel imported goods in the sphere of e-commerce[24]. The goods include those that are though genuine, but they are sold in other countries[25]. Even majority of enforcement authorities or court put such issues to one side. In other words, the courts or the enforcement authorities are careful while determining whether such conduct amounts to violation of infringement. This attitude of courts is evident from the landmark case Victorias Secret v Shanghai Jin Tian[26] that was held for trial in the Shanghai Second Intermediate Peoples Court. However, in certain cases the courts may consider more factors such as Michelin v Tan Guoqiang[27] etc. In this case, the Changsha Intermediate Peoples Court stated that considering the security of transactions through e-commerce, the tire quality is directly associated with the property and personal safety of the passengers and the drivers[28]. Therefore, the tire manufacturers will usually produce as well as sell the tire that satisfies various geographic, climate and complete standard requirements in countries of sale. Similarly, there may be safety concerns but it still violates the legal provisions of China, hence, should be forbidden by law. Hence, Nemeth (2017) states that this case aimed at stating the principle that unauthorized sale may affect the interests of the trademark owner irrespective of the fact who manufactured the products. Chinese consumers are very conscious and perceive trademark as emblems of reputation of a firm and ensured management standard. Trademark recognition often encourages consumers to purchase a product. Therefore, trademark of products highly affects the consumers in China. Alternatively, Friedmann (2016) asserts that deceptive and manipulative use of trademarks are often used to pass fake goods as genuine good, which ultimately will have an adverse impact on the trademark holders. Hence, Chinese officials are justified in considering the trademark laws of the country to be playing a significant role in promoting the commodity economy of the country to ensure product quality and safeguarding consumer interests. The acts amounting to infringement include selling of products on e-commerce platforms, which can only be sold directly as per agreement. It includes selling of products online, which is otherwise required to be sold certain regional territory as per its agreements. Further, there are instances where luxury products with luxury brand name are sold on e-commerce whereas the selling of such goods is restricted to specific circumstances that are subjected to restrictions of the trademark owners[29]. Pras (2016) criticizes the lacunae in the trademark status of the country which fails to stipulates whether such statutes are legitimate or not. In the absence of any legal provision that renders such acts or conducts or omission as violation of the trademark law, the trademark owners face challenge with respect to their trademark protection on the internet. Further, in Nippon Company case, brought in Shanghai and Jiangsu province, the courts in both the regions stated that the defendants did not commit infringements on the ground that acts amounted to the fair use of Nippon trademarks[30]. Generally, most of the cases that are brought before the courts require determination of whether the using of others trademarks in the decoration of online amounts to trademark infringement. While determining such cases, the courts usually consider whether such use was proper and fair or whether it would confuse the public or whether such use will cause damages to the trademark owners. USA In the US, the sudden increase of user-generated content on the Internet, the competition among the advertisers and the propagation of domain name registration in order to draw attention of visitors to their respective websites, has pressurized the trademark owners to police their online use of e trademarks by third party[31]. Competitors, consumers and others are posting advertisements, posts, content on internet in which they are freely using the trademarks for their personal purposes that are originally owned by some other parties. According to Pras (2016), anyone who uses a trademark without the permission of the owner should be aware of its liability for infringing the trademark rights. Nemeth (2017) disagrees that any person who uses the unauthorized trademark of another person, such user does not become liable for infringement of trademark. The trademark owners must be able to diligently monitor the use of their trademark online and identify the difference between uses that amounts to infringement and uses that requires further monitoring and harmless uses, which should be ignored, but they do not amount to infringement. In order to safeguard trademarks from being used by others under circumstances where the use of the trademark leads to confusion, the Federal Trademark statute, the Lanham Act has been enacted. This statute created a cause of action of cyber piracy which is also known as cyber squatting that takes place when a person uses a domain name that is confusingly similar or identical to the trademark owned by the original owner. Therefore, using trademark of another party misleadingly or deliberately to deceive the consumers shall hold the person committing such infringement liable irrespective of the fact whether the trademark infringed gives rise to traditional infringement claim or it enjoys a federal trademark registration. Conclusion From the above discussion, it can be inferred that China has not only made amendments to the trademark law, China has improved regulation of its e-commerce market by issuing a specific E-commerce law. The e-commerce platforms shall have particular duties and obligations among which they shall guarantee products quality, use service agreements, consumers protection, and trade policies, which regulate their relationship with customers and operators. In the context of trademark law, China and USA aims at maintaining transparency in the e-commerce platforms. Contracts shall be clearly displayed and made available on the platform website that would be filed with authorities. In the event of any modifications, any stakeholder shall be able to comment and any such operator shall have the opportunity to disagree with the modifications or leave the platform[32]. Trademark infringement and counterfeiting has always remain a significant concern for foreign brands that are willing to expand their business in China owing to rapidly growing Chinese e-commerce market. Given that IP rights are subjected to violation over the internet, in particular, provisions must be included in the e-commerce law that addresses issues pertaining to brand protection and unfair competition[33]. This will set out the unauthorized acts or omissions that amount to unfair competition, thus, fortifying the protection of the intellectual property rights. Since 2012, Chinese Government has been trying to enhance IPR protection in the country for which the country has established IP courts along with other relevant improvements. The other advancement in order to safeguard IPR protection includes enhanced supervisions and support by administrative authorities, growing importance of civil litigation and criminal enforcement of trademark infringements. 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