China: Conflict Between Enterprise Name And Prior Trademark – Comment And Analysis On Article 58 Of The Chinese Trademark Law 2013

Last Updated: 6 August 2014
Article by Jason Wang

* This article is the English translation for Mr. Wang's article in Chinese published on China Trademark magazine (Issue 12, 2013). China Trademark magazine is sponsored by China Trademark Association under supervision of the State Administration for Industry and Commerce (SAIC) overseeing the Chinese Trademark Office (CTMO) and the Trademark Review and Adjudication Board (TRAB).

The newly revised Chinese Trademark Law 2013 adopts Article 58 which prescribes as follows: "Where the registered trademark or unregistered well-known trademark of others is used as a trade name contained in the enterprise name, which is likely to mislead the public and constitutes unfair competition, it shall be adjudicated under the Chinese Anti-Unfair Competition Law." According to the interpretations from the Legislative Affairs Commission under the Standing Committee of the Chinese National People's Congress, this Article 58 "primarily aims to solve the conflict of rights between enterprise name and trademark under the Chinese Anti-Unfair Competition Law," "such conflict of rights is unfair competition in nature, and this Article 58 is specifically regulated to link up with the Anti-Unfair Competition Law." 1 The issue of rights conflict between enterprise name and prior trademark is rather complicated, and Article 58 of the Chinese Trademark Law 2013 has provided directive guidance for resolution. However, the understanding and application of the newly adopted Article 58 are subject to further discussion and research, and need to be clarified in regulatory documents like Implementing Regulations of the Chinese Trademark Law and practice.

I. How to understand "used as a trade name contained in the enterprise name?"

1. First question: Whether "used as a trade name in the enterprise name" means prominent use of a trade name?

Regarding the prominent use of a trade name, Rule 1(1) of the Supreme People's Court (SPC) Interpretations concerning Application of Laws in Trial of Civil Dispute Cases Arising from Trademarks [Fa Shi (2002) No. 32] expressly stated that prominent use of a trade name constitutes trademark infringement. Namely, "Where the word identical or similar to a registered trademark of others is prominently used as a trade name contained in the enterprise name on the identical or similar goods, which is likely to mislead the public," it shall constitute the situation of "causing, in other respects, prejudice to the right to exclusive use of a registered trademark of others" prescribed by Article 52(5) of the Chinese Trademark Law 2001. However, with respect to "used as a trade name contained in the enterprise name" prescribed by Article 58 of theChinese Trademark Law 2013, it shall refer to non-prominent use of a trade name, which is entirely different from what is prescribed by the SPC Interpretations above. The new Article 58 of the Chinese Trademark Law 2013 expressly prescribes that the use of a trade name contained in the enterprise name is unfair competition, and shall be adjudicated under the Chinese Anti-Unfair Competition Law.

In fact, there have been many relevant precedents in judicial practice before the adoption of Article 58 in theChinese Trademark Law 2013. For instance, the court held in the "Philips" case that, the defendant's act of marking "Supervised by Philips International Group (Hong Kong) Limited" on the product packing boxes is not trademark infringement under the Chinese Trademark Law 2001. However, as the plaintiff's registered trademark "Philips" enjoys a relatively high fame, the defendant's act of marking "Supervised by Philips International Group (Hong Kong) Limited" has violated the good faith principle. Accordingly, the court ruled that the defendant's act constitutes unfair competition under Article 4 of General Principles of the Chinese Civil Law and Article 2 of the Chinese Anti-Unfair Competition Law. 2 In the above case, the defendant does not use the trade name in a prominent way, therefore it is not trademark infringement. However, the above circumstance falls into the scope of Article 58 of the Chinese Trademark Law 2013.

2.Second question: Whether "used as a trade name contained in the enterprise name" means non-prominent use of a trade name?

With respect to the application of law in the conflict between enterprise name and prior trademark, Beijing courts have conducted the probing researches in as early as 2002. Rule 3 of Answers of Beijing High Court on Several Issues concerning Trial of Dispute Cases Arising from Conflict between Trademark and Use of Enterprise Name [Jing Gao Fa Fa (2002) No. 357] stated as follows: "In the conflict between trademark and enterprise name, the nature of infringer's act is mainly to damage in a legitimate manner the goodwill of others, presented by causing the consumers confused regarding the source of the goods or regarding the association among different operators. Therefore, these acts are generally unfair competition, and General Principles of the Chinese Civil Law and the Chinese Anti-UnfairCompetition Law shall apply. Where the word identical or similar to a registered trademark is independently or prominently used as a trade name contained in the enterprise name on the identical or similar goods, which is likely to mislead the relevant public, it shall be deemed as infringement upon the trademark registration right of others, and shall be subject to the Chinese Trademark Law 2001."

Later, the SPC stated in the SPC Reply regarding Zhen Tai Case [(2004) Min San Ta Zi No. 10], after consulting with the State Administration for Industry and Commerce (SAIC), as follows: "Where, in violation of the good faith principle, the word identical or similar to a registered trademark of others is used as a trade name, which is likely to mislead the relevant public, it may be adjudicated in accordance with General Principles of the Chinese Civil Law and Articles 2(1) and 2(2) of the Chinese Anti-Unfair Competition Law to judge whether it constitutes unfair competition or not." The SPC Opinions on Several Issues concerning Intellectual Property Trials Serving Overall Situation under Current Economic Situation [Fa Fa (2009) No. 23] further clarified as follows: "Where an enterprise name used in a prominent way infringes the right of a prior registered trademark, it shall be handled as trademark infringement. Where an enterprise name is used not in a prominent way, but is sufficient to cause confusion on the market and is in violation of fair competition, it shall be deemed as unfair competition." So far, the methodology, understanding and practice have basically come into mature regarding the application of different laws in dealing with prominent use and non-prominent use of an enterprise name.

Besides, the Chinese Trademark Law 2001 does not prescribe express regulations regarding the conflict between enterprise name and prior trademark. However, Article 31 thereof regulates the conflict between trademark application and prior enterprise name, and Article 5(3) of the Chinese Anti-Unfair Competition Law regulates the conflict between enterprise name and prior enterprise name. Evidently, at the hierarchy of theChinese Trademark Law 2001 and the Chinese Anti-Unfair Competition Law, protection by law for the trademark is not on the same level as the enterprise name, and the trademark is not properly protected under the law corresponding to the degree as it deserves. Rule 53 of Implementing Regulations of the Chinese Trademark Law and Rule 13 of Provisions on Well-known Trademark Recognition and Protection provide the rules regarding the conflict between enterprise name and well-known trademark. However, the content is relatively vague, the adjudication scope is extremely narrow, and the level of legal hierarchy is not sufficiently high. Although the SPC Reply regarding Zhen Tai Case [(2004) Min San Ta Zi No. 10] has prescribed that Article 2 of the Chinese Anti-Unfair Competition Law may be applied regarding the non-prominent use of trade name contained in the enterprise name, courts in practice are still relatively conservative in applying this Article 2. For instance, Jiangsu High Court held in a specific case that the non-prominent use of a trade name contained in the enterprise name does not infringe upon the plaintiff's right of the registered trademark. The court did not apply Article 2 of the Chinese Anti-Unfair Competition Law based on the conflict between enterprise name and prior trademark registration. Instead, the court held that the defendant's said act infringes upon the plaintiff's enterprise name right with prior registration. 3 Article 58 of theChinese Trademark Law 2013 provides that the conflict between enterprise name and prior trademark shall be handled in accordance with the Chinese Anti-Unfair Competition Law, which in fact strengthens the protection of the prior trademark, and confirms, at the hierarchy of the Chinese Trademark Law 2013 and theChinese Anti-Unfair Competition Law, the degree of legal protection for the prior trademark in the conflict between enterprise name and prior trademark.

3. Third question: Whether "used as a trade name contained in the enterprise name" coversthe registration of enterprise name?

Initially, Rule 39 of Implementing Measures for Administration of Enterprise Name Registration and Rule 2 of the SAIC Opinions of on Solving Several Issues Arising from Trademark and Enterprise Name [Gong Shang Biao Zi (1999) No. 81] prescribed principle regulations on the "acquisition" of enterprise name in addition to the "use" thereof, namely, the good faith principle shall be abided by and one shall not take advantage of the fame of other's trademark to conduct unfair competition. Subsequently, Rule 53 of Implementing Regulations of the Chinese Trademark Law and Article 13 of Provisions on Well-known Trademark Recognition and Protection, prescribed the specific provisions, but said specific provisions merely explicitly regulate the registration of enterprise name by using other's well-known trademark. In practice, the registration of enterprise name is closely related to non-prominent use of a trade name in the enterprise name, and the above two situations usually occur simultaneously.  The "use of a trade name contained in the enterprise name" under Article 58 of the Chinese Trademark Law 2013 shall be interpreted broadly as to cover both the non-prominent use of a trade name contained in the enterprise name and the registration of enterprise name.

Of course, with respect to the non-prominent use of a trade name contained in the enterprise name, regardless of the location for the registration of enterprise name, as long as the use of enterprise name occurs within territory of China, the Chinese enforcement agencies shall have jurisdiction.  However, for the registration of enterprise name by using prior mark owned by others, only when the registration of enterprise name occurs within territory of China, will Chinese enforcement agencies have jurisdiction. Regarding the registration of enterprise name occurring outside the territory of China, Chinese enforcement agencies should have no jurisdiction. In addition, where the registration of enterprise name occurs within territory of China, Chinese enforcement agencies may order such enterprise to change the registration of its enterprise name. However, how to execute more effectively judgments and decisions rendered by Chinese enforcement agencies regarding changing the registration of enterprise name? Whether the regulation on revocation of the registration of enterprise name and agencies with revocation authority under Rule 53 of Implementing Regulations of the Chinese Trademark Law may be reserved, and how to change such registration of enterprise name? How to regulate the registration of enterprise name more effectively? These questions still need further detailed analysis and discussion.

II. How to understand "registered trademark or unregistered well-known trademark of others?"

1. First question: Whether "registered trademark" in "registered trademark or unregistered well-known trademark of others" covers the registered well-known trademark? Whether Article 58 of the Chinese Trademark Law 2013 covers the conflict between enterprise name and registered well-known trademark?

No matter judging from the existing legal regulations, or judging from process of the third amendment to the Chinese Trademark Law, or judging from jurisprudential analysis, the "registered trademark" in the "registered trademark or unregistered well-known trademark of others" shall cover the registered well-known trademark.

First, Rule 53 of Implementing Regulations of the Chinese Trademark Law,Rule 13 of Provisions on Well-known Trademark Recognition and Protection, and Rule 10 of the SPC Interpretations concerning Application of Laws in Trial of Civil Dispute Cases involving Well-known Trademark Protection [Fa Shi (2009) No. 3], and Rule 3 of the SPC Reply regarding Zhang Xiao Quan Case [(2003) Min San Ta Zi No. 1] have clearly covered the conflict between enterprise name and well-known trademark. Generally speaking, legislation is the summary and inheritance of legal documents of a relatively low hierarchy and the practice experience, rather than a sudden change out of nowhere or abrupt castle in the air. On the one hand, according to the legislation background and intention as well as the literal interpretation, Rule 53 of Implementing Regulations of the Chinese Trademark Law and Rule 13 of Provisions on Well-known Trademark Recognition and Protection can be comprehended as only regulating the registered well-known trademark, excluding (at least not explicitly including) the unregistered well-known trademark. Article 58 of the Chinese Trademark Law 2013 actually expands the protection scope to explicitly cover the unregistered well-known trademark in addition to the registered well-known trademark. On the other hand, for the registered trademark without well-known status, the Chinese Trademark Law 2001 and Implementing Regulations of the Chinese Trademark Law only provided that those trademarks may prohibit others from using relevant signs on the identical or similar goods or services. However, the above laws and regulations do not prescribe clearly whether those trademarks may prohibit the non-prominent use of a trade name contained in the enterprise name or the registration of enterprise name.  For the registered well-known trademark, the Chinese Trademark Law 2001 provided those trademarks may prohibit others from using relevant signs on dissimilar goods or services, and Implementing Regulations of the Chinese Trademark Law provided those trademarks may prohibit others from using the enterprise name. Article 58 of the Chinese Trademark Law 2013 provides that registered trademark without well-known status may prohibit others from using the enterprise name, which has extended the protection scope based on the past practice experience. If "registered trademark" did not cover the registered well-known trademark, then it would lead to a situation where the extent of protection for the registered well-known trademark is even lower than the unregistered trademark or unregistered well-known trademark.

Second, viewing from the legislative process of the third amendment to the Chinese Trademark Law, Article 124 of the Chinese Trademark Law (2010 Draft for Examination) provided by the Chinese Trademark Office (CTMO) and Article 62 of the Chinese Trademark Law (2011 Draft for Comments) provided by the Legislative Affairs Office of Chinese State Council both referred to the well-known trademark. Article 57 of the Chinese Trademark Law (2012 Draft for Comments) provided by the Legislative Affairs Commission under the Standing Committee of the Chinese National People's Congress prescribed the term as "well-known trademark, registered trademark." Since the concepts of "registered trademark" and "well-known trademark" are not in the same category or level, Article 58 of theChinese Trademark Law 2013 modifies "well-known trademark, registered trademark" to read as "registered trademark, unregistered well-known trademark". "Well-known trademark" includes the unregistered well-known trademark and the registered well-known trademark, and "registered trademark" includes the registered trademark without well-known status and the registered well-known trademark. Thus, the integrated wording of "registered trademark, unregistered well-known trademark" is more logical.

2.Second question: Whether the conflict between enterprise name and registered well-known trademark involves cross Class protection? Shall the term "misleading the public" in Article 58 and Article 13(3) of theChinese Trademark Law 2013 [Article 13(2) of theChinese Trademark Law 2001] be interpreted in the same way? How to interpretsuch term?

First,Rule 53 of Implementing Regulations of the Chinese Trademark Law, Rule 13 of Provisions on Well-known Trademark Recognition and Protection, the Chinese Trademark Law (2010 Draft for Examination) provided by the CTMO and the Chinese Trademark Law (2011 Draft for Comments) provided by the Legislative Affairs Office of Chinese State Council stipulated the terms as "well-known trademark" and "may deceiving or misleading the public." The Chinese Trademark Law (2012 Draft for Comments) provided by the Legislative Affairs Commission under the Standing Committee of the Chinese National People's Congress and Article 58 of the Chinese Trademark Law 2013 stipulated the terms as "well-known trademark, registered trademark" / "registered trademark, unregistered well-known trademark" and "misleading the public." That is, the Chinese Trademark Law 2013 continues to adopt the criteria of "misleading the public" after extending the protection scope from the registered well-known trademark to the registered trademark without well-known status and the unregistered well-known trademark. Then, whether the "confusion" element (confusion standard) applied for the registered trademark without well-known status and the unregistered well-known trademark is corresponding to the "misleading the public" element (association standard and dilution standard) prescribed under Article 13(3) of the Chinese Trademark Law 2013? Where the identical term appears in the same law, should such term be interpreted in the same way? What kind of unified interpretations may harmonize and coordinate the different standards applied to different types of above trademarks?

Second, Rule 3 of the SPC Reply regarding Zhang Xiao Quan Case prescribed as follows:  "Where use of the word identical to the well-known trademark of others with prior registration as the enterprise name or part of the enterprise name, and where the industry (or feature of business operation) of that enterprise is identical to or closely related to the goods or services designated under the registered trademark of others, which may objectively dilute the well-known trademark and damage the legitimate rights and interests of the trademark registrant, the court shall order to cease such act based on the request of the interested party." The SPC Reply deals specifically with circumstances that the industry (or feature of business operation) is "identical to" or "closely related to" goods or services designated under the registered trademark, in the meanwhile, the SPC Reply puts forward with the dilution standard.  It may probably be interpreted and comprehended as follows: The understanding of the legislators and the SPC regarding the protection scope of the registered well-known trademark at that time is so-called "Sole Cross", namely, the protection crosses the different Classes of goods or services (cross Class protection to dissimilar goods or services), "or" (rather than "and"), the protection crosses the different types of commercial signs (extending from the trademark to the enterprise name). As the understanding deepens, Rule 10 of the SPC Interpretations concerning Application of Laws in Trial of Civil Dispute Cases involving Well-known Trademark Protection explicitly expands the protection scope to "dissimilar" goods and services, namely, the plaintiff may request to prohibit the defendant from using the enterprise name identical or similar to the plaintiff's registered well-known trademark on dissimilar goods or services. The above interpretations have expanded the protection scope of the registered well-known trademark to so-called "Dual Crosses" (namely, prohibition scope for commercial signs is expanded from trademark to enterprise name, in the meanwhile, prohibition scope for Classes is expanded to dissimilar goods and services). Lastly, in judicial practice, there are also some precedents regarding the well-known trademark against the enterprise name by crossing Classes of goods and services (namely, "Dual Crosses"), such as "HONEYWELL," "ZHONG XIN in Chinese," "SWAROVSKI in Chinese," and "BMW", etc. 4

This theory of "Sole Cross" and "Dual Crosses" may probably explain the term of "misleading the public" appearing in different provisions of the Chinese Trademark Law 2013. Article 13(3) of the Chinese Trademark Law 2013 prescribes one type of "Sole Cross" (crossing the Classes of goods and services), and the association standard and the dilution standard will apply. While Rule 53 of Implementing Regulations of the Chinese Trademark Law prescribes the other type of "Sole Cross" (crossing commercial signs), and the association standard and the dilution standard will also apply. For the registered well-known trademark against the enterprise name of others, the "Dual Crosses" standard (crossing the commercial signs as well as crossing the Classes of goods and services) is prescribed, and the association standard and the dilution standard will apply as well. Therefore, no matter crossing the Classes of goods and services or crossing the commercial signs, the criteria of "misleading the public" (the association standard and the dilution standard) shall apply.

3. Third question: Is the conflict between enterprise name and registered well-known trademark subject to the Chinese Anti-Unfair Competition Law or the Chinese Trademark Law? Or both of them shall apply simultaneously?

This question concerns not only the registered well-known trademark, but also the registered trademark without well-known status and unregistered well-known trademark. As Implementing Regulations of the Chinese Trademark Law as well as the SPC Replies and the SPC interpretations promulgated before the Chinese Trademark Law 2013 have already provided some regulations on the conflict of enterprise name and registered well-known trademark, those regulations shall be lined up with Article 58 of the Chinese Trademark Law 2013 or make some adjustments accordingly. Therefore, the author hereby discusses the application of Article 58 of the Chinese Trademark Law 2013, by taking the conflict between enterprise name and registered well-known trademark as an example only.

Rule 2(2) of the SPC Interpretations concerning Application of Laws in Trial of Civil Dispute Cases involving Well-known Trademark Protection prescribes that the interested party may bring the lawsuit regarding infringement upon trademark registration or unfair competition lawsuit, on the ground that the enterprise name is identical or similar to its registered well-known trademark. The application of law also varies in judicial practice. For example, the "HONEYWELL" case and the "ZHONG XIN in Chinese" case applied the Chinese Trademark Law, while the "SWAROVSKI in Chinese" case applied both the Chinese Anti-Unfair Competition Law and the Chinese Trademark Law 2001. In the "HONEYWELL" case, the Court held as follows: The defendant's failure to observe the good faith principle or recognized business ethics when translating its enterprise name "KING POWER" into English as "HONEYWELL", which shows obvious fault, constitutes unfair competition. In light of Article 53 of Implementing Regulations of the Chinese Trademark Law which prescribes that the registration of enterprise name by using the well-known trademark of others is infringement upon the right of registered trademark thereof, as the plaintiff's trademark "HONEYWELL" is recognized as well-known in this case, the use of "HONEYWELL" in the defendant's English enterprise name is also in violation of the right of registered trademark owned by others. And the court held that it is not necessary to cite the good faith principle in the Chinese Anti-Unfair Competition Law as the general law when specific laws and regulations like the Chinese Trademark Law could directly regulate the defendant's above act.  Article 58 of the Chinese Trademark Law 2013 has expressly prescribed that circumstances similar to the aforementioned will be adjudicated under theChinese Anti-Unfair Competition Law. Therefore, upon effectiveness of the Chinese Trademark Law 2013, circumstances similar to the aforementioned shall be subject to Article 2 of the Chinese Anti-Unfair Competition Law. However, this shall not hamper the citation of Article 58 of the Chinese Trademark Law 2013, and thus to reflect the association with the Chinese Anti-Unfair Competition Law.

Footnotes:

1 Interpretations of the Chinese Trademark Law 2013 (1st Edition), Standing Committee of the Chinese National People's Congress (Eds.), Legal Publishing House, Oct. 2013, pp. 111-112

2 Beijing First Intermediate Court Civil Judgment (2005) Yi Zhong Min Chu Zi No. 11119

3 Jiangsu High Court Civil Judgment (2004) Su Min San Zhong Zi No. 059

4 Jiangsu Province Wuxi Intermediate Court Civil Judgment (2004) Xi Chu Zi No. 61, Shenyang Intermediate Court Civil Judgment (2005) Shen Zhong Min Si Chu Zi No. 70, Tianjin High Court Civil Judgment (2006) Jin Gao Min San Zhong Zi No. 21, Beijing Second Intermediate Court Civil Judgment (2008) Er Zhong Min Chu Zi No. 10067, Hunan High Court Civil Judgment (2009) Xiang Gao Fa Min San Chu Zi No. 1

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