China: An Analysis Of Drug Trademark Genericide And Protection Of Brands From Dilution

Last Updated: 17 June 2014
Article by Celia Li and Xiaomeng Li

Most Read Contributor in China, September 2016

Aspirin, formerly known as a brand of painkiller manufactured by Bayer, now generally refers to any painkiller (but is still a registered trademark in Germany). It is the most typical example in the pharmaceutical industry of a registered trademark becoming a generic name. When a famous drug brand finally becomes a generic name used for similar goods even though the research and development of the drug have cost a lot and the success of the brand is due to long-term brand positioning and an accumulation of specific target consumers, it is undoubtedly a heavy blow to diligent drug researchers focusing on life saving.

I. Causes of the genericide of drug trademarks

Generic names of drugs are their legal names prepared by the Chinese Pharmacopoeia Commission in accordance with the General Principles for Nomenclature of Chinese Approved Drugs and filed with the Ministry of Health, are the generic names of drugs sharing the same ingredients or formula, and are mandatory and binding. The generic name of a drug must be used on labels, instructions or packaging of the drug to be sold on the market, while drug trademarks are distinctive signs that are used on drugs to distinguish the source. From the perspective of a trademark, the use of a drug's trade name on the drug is just the drug trademark, and shall have the distinctiveness of registered trademarks. Whether the trade name of a drug can be registered as a trademark is subject to the trademark registration procedure, without the prior permission of the health authorities; whether a drug trademark has become a generic name is subject to the judicial review for the identification in order to safeguard the rights and interests of owners of the unique names of well-known drugs. Why do trademarks originally used for specific drugs ultimately become generic names for all similar drugs? As a form of trademark dilution, the genericide of drug trademarks is mainly due to the following reasons:

1.The distinctiveness of the trademark is weak, and can be easily associated with drugs.

2.The name of the new drug is too professional, lengthy, complicated and unacceptable.

3.The acts of public authorities or external agencies, for example, the release of a drug trademark as the name of the drug by the government authorities due to negligence, and the mistaken inclusion of a trademark as a generic name into dictionaries, false publicity by the media, etc.

4.An infringer or right owner publicizes and uses a drug trademark as an alternative for the drug name for a longer time and in a wider scope.

5.When a drug brand has long been in a dominant position due to market or administrative reasons, it is also easy to result in the genericide of the trademark.

II. Danger of turning a drug trademark into a generic name

Case: In 2001, Hangzhou Minsheng Pharmaceutical Group Co., Ltd. lodged a suit stating that it had managed to register its self-developed trademark "21金维他" in 1987, and also obtained approval from the trademark office for the registration of the English trademark "21SUPER-VITA" in May 1992. In 1988, the Ministry of Health included "21金维他" in the Compilation of Standard Varieties of Chinese Drugs as a trade name. In 1990, Nanchang Sanghai Pharmaceutical Factory began to manufacture "21 金维他" on a pilot basis. On 22 May 2000, the China Food and Drug Administration issued a reply approving the change of the name of "21 金维他" as manufactured by the plaintiff to "Multivitamin and Minerals Tablets (21)" and use of "21 金维他" as a trade name, requiring use of "桑海金维" as the trade name of the "Multivitamin and Minerals Tablets (21)" manufactured by the defendant, and making it clear that the reply took effect on 1 July 2000. At present, however, the defendant still uses "21金维他" and its English version "21SUPER-VITA" for production and sales of the drug. Such use has materially violated the plaintiff's exclusive right to use the registered trademark. Nanchang Sanghai Pharmaceutical Factory argued that "21金维他" is a generic name for drugs, so its production of "21金维他" that had been included in the Compilation of Standard Varieties of Chinese Drugs upon approval complies with legislation and the provisions of the relevant regulations on drug administration. In addition, its use of the trademark "Sanghai" had been registered upon the approval of the Trademark Office. Therefore, its production and sale of "21金维他" under the Sanghai brand did not constitute trademark infringement.

This case is a typical suit triggered by the genericide of a drug trademark, which resulted in frequent conflict between the drug name and drug registered trademark. Another reason for the wide existence of such conflict is the status quo that China's drug administration is inconsistent with its trademark registration system. Health authorities believe that any approved formal drug name is the generic name of the drug. Under the Trademark Law, a generic name cannot be registered as a trademark. Therefore, any application for registration of an approved drug name as a trademark should be declined. While the Trademark Office believes that the question whether it is the generic name of the product should be based on the provisions of the Trademark Law, as long as a trademark subject to a registration application is unique with significant distinctiveness and is in line with the provisions of the Trademark Law, it should be registered regardless of whether it has been approved by the health authorities. As a result, in such a disordered management system, when a trademark becomes generic, it on one hand exists in the records of the health authorities as a generic name, and on the other hand continues to have the exclusive right with the approval of the Trademark Office. Such situation is bound to cause series of disputes, resulting in unnecessary costs and waste of resources.

As stated above, the genericide of a drug trademark can result in the co-existence of the drug name and the registered trademark. Its early consequences may be the use of the drug name by manufacturers of similar drugs. When the trademark owner seeks to safeguard its trademark right through litigation or other legal means, it is very likely that the juridical organ will identify the trademark as having turned into the drug name, and a user of such name without permission does not constitute infringement, thus encouraging other manufacturers to use the name and cause the trademark to become thoroughly generic.

When the name of a drug is also a registered trademark, does any use of the name on other drugs by anyone else without the consent of the trademark owner constitute infringement? This is undoubtedly a very important question for pharmaceutical operators and researchers. At present, there are two different views in the academic and judicial communities. One view holds that such use does not constitute trademark infringement because the existence of such conflict is a result of the inconsistent systems in China and there is no subjective fault, and the accusation of someone who uses a drug name that is also a registered trademark of constituting infringement would result in a monopoly of the drug by the manufacturer, and thus hinder economic development and social progress. The other view believes that the use constitutes infringement citing the reason that once a trademark is registered upon approval, the owner should have the exclusive right to use such trademark; therefore, the use of the same or similar trademark on the same or similar products will constitute trademark infringement if it could cause any confusion. It is groundless to defend for the reason that the trademark has become a generic name, as the generic name of a drug should be construed according to the provisions of the Trademark Law, and the rules formulated by the health authorities that regard a drug name registered by a drug manufacturer as the generic name of the drug should not conflict with the Trademark Law.

Therefore, for drug researchers and operators, due to the discrepancy between juridical theory and practice, drug manufacturers find themselves unable to predict in advance the legal consequences of their behaviour, and unable to estimate the influence on themselves once their trademarks become a generic name. This would cause more uncertainties for drug researchers and operators, or even result in unpredictable losses to drug manufacturers, for example, causing the exclusive right to use a registered trademark to exist in name, or the scope of protection for drug trademarks to be limited or to be directly revoked.

III. Protection of drug trademarks from dilution

Drug manufacturers must pay attention to the genericide of drug trademarks, and should never consider that the turning of a drug trademark into the name of certain drugs means that the drug is popular among the relevant public and can gain more popularity. In contrast, with the lapse of time, the original drug trademark will gradually enter into the public domain and have no connection with the manufacturer's trademark. In such case, the manufacturer will find it very hard to recover the value of the trademark from the drug name.

At present, there is no clear legislation on trademark dilution and dilution protection in China. When there is indication of the genericide of a drug trademark, the trademark owner has no effective weapon to curb the growth of the genericide. Therefore, it is important to take measures to prevent genericide from the beginning of use of a trademark.

1.Improve the significance of a drug trademark itself and conduct correct publicity. For example, trademarks such as "Dinggui" have been involved in litigation regarding disputes over whether they are generic names or exclusively owned trademarks because they are associated with ingredients of drugs and have lower distinctiveness, and were finally identified as generic names of drugs. The "new Contac" is widely known as a cold drug, but its packaging always contains the trademark sign®, and in advertising, the "New Contac" trademark always appears together with the generic name of the drug "Compound Pseudoephedrine Hydrochloride Sustained Release Capsules", as well as the name of the manufacturer "Tianjin Smith Kline & French Laboratories Ltd.", thus giving the relevant consumers a clear impression that "New Contac" is a drug trademark, making them always associate "New Contac" with the manufacturer.

2.Prevent the practice of directly using trademarks as generic names. "Imada Red Flower Oil" was originally used for red flower oil by the parent company of Lianhua Pharmaceutical, but has gradually become the generic name of red flower oil and has been documented by the relevant administrative authorities over a decade of use as the relevant public is accustomed to using it as the generic name for flower red oil drugs of such type. Since the words "Imada" have no connection with red flower oil drugs, Lianhua Pharmaceutical could have prevented its genericide if it had used "Imada" as a trademark prominently in its promotion efforts.

3.Pay attention to the acts of pharmaceutical health administrative authorities, and prevent relevant government agencies from adding the trademark to documents that include the compilation of drug names. Taking the trademark "Xingling" as an example, when the Pharmacopoeia Commission of the Ministry of Public Health compiled the General Principles for Nomenclature of Chinese Approved drug names for the book titled Chinese Approved Drug Names, it indicated that the name "Xingling Granule", "Xingling" is the name of the drug, while "Granule" represents the form of the drug. However, the ingredient of the drug is mainly gingko, so "Xingling" does not fully indicate the composition of the drug. Therefore, if Shanghai Xingling Pharmaceutical had prevented the health authorities from documenting the trademark as the name of the drug as early as possible, it would have been fully possible to prevent the series of disputes which occurred later.

4.Promptly take necessary legal action to stop any competitor drug manufacturer from using the trademark as name of their drug, for example, asking the Trademark Office not to register any infringing mark and ban its use, requesting the Trademark Office to withdraw any registered trademark, and meanwhile requesting the court to issue an injunction. If anyone intentionally dilutes the reputation of a well-known drug trademark, the drug manufacturer may require the person to bear the relevant damages.

Due to a lack of awareness of the protection of trademarks and incorrect use of trademarks, many pharmaceutical companies have failed to apply for the registration of their product names that have the characteristics of a trademark, or use registered trademarks as drug names, eventually leading to the wide use of these more creative names or trademarks by peers, causing them to be common resources, and finally be diluted into generic names. This causes a huge loss in the various intangible and tangible assets of the companies that are the original owners of these names. It is advised that pharmaceutical R&D enterprises avoid trademark genericide for the reason that the drug brand is too big or the method of promotion is wrong while they are researching new drugs and fostering drug brands. For this, they should pay attention to brand building, and positively take various "dilution protection" measures to increase the degree of protection of their self-made drug brands, avoid their drug trademarks being used as generic names so as to better adapt to the new trends of the pharmaceutical industry at both home and abroad, and create a good competition environment for the pharmaceutical market.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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