First Declaratory Judgment Action Decided

In January 2005, the Intellectual Property Division of the Beijing No.1 Intermediate People's Court issued a decision on the declaratory judgment action brought by the China Social Science Press (CSSP), a Chinese publishing company, against a British publishing company, Frederick Warne & Co., Ltd.

Peter Rabbit is the major character in the first story ever published by Beatrix Potter, a well-known British writer who created a series of fairy tales with all the iconographies drawn by her. Beatrix Potter passed away in 1943. The British publishing company Frederick Warne & Co., Ltd. was authorized to publish her fairy tales as early as 1903. Having been publishing various editions of Peter Rabbit series books for over a century, Frederick Warne filed trademark registration applications in China for several iconographies in the books, including the well-known "trotting rabbit" figure. In October 1994, 13 trademark applications were approved on goods such books and magazines.

A Chinese writer translated some of the books into Chinese and authorized the CSSP in March 2003 to publish the Chinese version of the Peter Rabbit series. Thereafter, the CSSP re-organized 19 selected works of Beatrix Potter into 4 volumes and published them bilingually in Chinese and English. Some of the iconographies of the original publication, for which Frederick Warne had obtained trademark registrations, were used.

After the books were published, Frederick Warne sent a cease and desist letter to the sales agency of the CSSP and simultaneously filed a complaint with Xicheng Office of Beijing Municipal Administration for Industry & Commerce (Xicheng AIC), a governmental authority responsible for the administrative protection of trademark rights. Frederick Warne alleged that the use of the Chinese characters equivalent to "Peter Rabbit" as the title of the published books and the iconographies of the original publication infringed its trademark rights.

In June 2005, the CSSP initiated a declaratory judgment action in the Beijing No.1 Intermediate People's Court, requesting the court to make a declaratory judgment that the books it published did not constitute trademark infringement. The plaintiff pled that according to the Chinese Copyright Law, the term for copyright protection shall be the lifetime of the author plus fifty years. In this case, the works had entered the public domain as the author passed away more than 50 years ago. Use of "Peter Rabbit" and the iconographies of the original publication in its books was the direct and fair use of the original works necessary for the description of the stories.

In September 2003, Xicheng AIC served an administrative decision to the CSSP, ruling that the CSSP infringed trademark right of Frederick Warne. The CSSP was ordered to cease infringement, hand over 23,000 unsold books and pay a penalty of 350,000 RMB ($42,000) to the government. The AIC decision was on the ground that the well-known "trotting rabbit" figure was used as mark on the cover page, the spine and in the inner-page number area of the books.

Not satisfied with the decision, the CSSP initiated an administrative action against the AIC office in the same court where it initiated the declaratory judgment action.

On December 17, 2004, the Administration Division of the court issued its decision on the administrative action, upholding the decision of the local AIC office. The court ruled that the front cover, the back cover and the spine of a book, as well as the inner-page number area were parts where consumers would pay attention. The "trotting rabbit" figure used in these parts functioned as a trademark, which violated trademark right of Frederick Warne.

Six days later, the Intellectual Property Division of the same court issued its decision on the declaratory judgment action, ruling that the CSSP did not violate nine trademarks owned by Frederick Warne. The court was in the opinion that use of "Peter Rabbit" as title of the series was direct expression of the contents of the books, which was in conformity with the practice of the trade. The original iconographies in the books were not used as trademarks to distinguish the producer of the books. Therefore, such use was fair use and would not cause any confusion among the consumers. However, the court refused to give judgment on the marks "trotting rabbit" and "trotting rabbit and design". The court ruled that the CSSP had obtained judicial remedy from initiating legal proceedings against the AIC decision. The CSSP was not entitled to receive a declaratory judgment on the marks which were subjects of the decision made by the Administrative Division of the same court.

CSSP appealed these two court decisions.