Authored by Mr. He Jing ( and Ms. Lyu Pei ( at Anjie Law Firm

Precis: Ground-breaking decisions have made merchandising rights a useful tool in the battle against bad-faith trademarks

Many rights holders have had frustrating experiences when it comes to fighting bad-faith trademark squatters in China. However, several recent cases have made use of a highly effective new weapon: the merchandising right. 

In a trademark opposition case involving the famous film *Kung Fu Panda* (*Gao Xing (Zhi) Zhong* No 1969 (2015) 高行 (知) 终字第1969号), the Beijing High People’s Court confirmed in its final judgment that DreamWorks Animation SKG, Inc. (“DreamWorks”) enjoyed prior merchandising rights over KUNG FU PANDA and rejected an attempt by a third party to register this mark.  

The case sparked extensive debate because merchandising rights are not explicitly set out in Chinese law. A number of people have expressed serious concerns that the judges in these cases are making laws rather than interpreting them. 

However, despite this controversy, the judgment has been hailed as an innovative attempt to secure more comprehensive protection for rights holders. In a broader context, innovation has been heavily promoted in China at all levels as a driver for economic, political and cultural development. The judicial support for merchandising rights seems to echo this policy. Given this, a discussion on merchandising rights is timely not only because they are so relevant to the ongoing battle against bad-faith trademarks, but also because they offer a cutting-edge perspective on ongoing legal reforms in China.