China: Strengthen Your Fluid Trademark In China

Last Updated: 6 January 2016
Article by Celia Li

Most Read Contributor in China, September 2016

Fluid trademarks are well welcomed by Internet business players in China, say BAIDU, China leading search engine, and QQ, China most popular online chatting forum.

Variations of the original mark are often inspired or created by holidays and noteworthy events, anniversaries and historical milestones, as well as a range of other hot issues up to date. Regardless of whether variants are created by altering forms, or adding other elements, or static images, the driving power behind the strategy is to keep the mark fresh and consumers engaged, which is not easy in information-overloaded market, and saturated with all brands competing for attracting consumer's attention nowadays. Through proper usage, a fluid mark would allow the holder to capitalize its IP strategy and maximize business revenue, as the Google Doodle in practice.

Due to the well-noted doctrine of first-to-file in China, only through trademark registration, could the mark including fluid trademark get legal protection. According to the general regulation of Article 8 and 9 in China Trademark Law (2013), and the Examination Standard of the China Trademark Office (CTMO), if the same applicant would file similar or serial variations of a registered mark, it might be allowed for registration, even though the variants are similar to prior applications or registrations by the mark holder.

Meanwhile, because of the rule of one application per mark, it would be difficult for the right owner to file separate trademark applications for each of the variations, which means registration of the variants of a fluid trademark may not be an effective way to protect a fluid trademark. Considering the time consuming of the registration process, and the short time period that specific variant on a fluid trademark would be used by a brand owner due to the purpose of keeping the brand fresh and consumers engaged as well, it would be big burden for the fluid trademark owner to keep a large portfolio of registrations.

Fluid trademarks can upgrade a brand and attract more attentions from the consumer, but going fluid might take potential risks from the legal point of view. By its dynamic nature, fluid trademarks are easy to lose its identity to the original mark. Article 49 of China Trademark Law stipulated that, if a trademark is modified in its use, the local department of the Administration for Industry and Commerce ("AIC") may issue a warning notice to the registrant requesting correction; otherwise the trademark registration might be cancelled. In 2010, the Supreme Court issued the Opinions of the Supreme People's Court on Certain Issues Concerning the Trial of Administrative Cases of Trademark Authorization Confirmation, according to which the principle of using static marks is flexible. In this opinion, the Supreme Court stated, "despite the nuanced difference between a trademark in actual use and an officially registered trademark, if the distinctiveness thereof is not altered, it can be deemed as use of a registered trademark", which makes room for rights holders to retain the rights in their registered mark, provided that any variations do not alter its distinctiveness. However, if the distinctiveness thereof is altered, the use of fluid trademark is deemed as not being function as the original one and facing the risk of cancelation. The bad result is that the variant mark cannot be protected for non-registration on one hand, and the original mark might be canceled for modification in its use.

In order to keep the registration valid in China, the modified mark must contain the essential distinctiveness of the original mark, and the new form should create the impression of being essentially the same mark. Due to its dynamic, new, and eye-catching nature, it seems very easy for the fluid trademark to be deemed as altering the distinctiveness of the original mark. Especially when there is the obvious split between the Supreme Court on one side and the CTMO, Trademark Review and Adjudication Board (TRAB) and local administrations of industry and commerce on the other, interpretations to clarify the term 'nuanced difference' vary in practice. Such differences in interpretation leave rights holders facing a dilemma regarding whether unregistered variants have the same legal standing as the registered mark.

In addition to the potential risks of non-use cancellation, the trademark owner should also make clear statements against the potential risks of unauthorized consumer-created variations of a given mark. Due to its interactive nature, fluid trademark may imply an invitation that consumers should respond to changes in a given mark, including by creating their own unique modifications to the original mark. In USA, for example, unauthorized consumer-created variations of a given mark could be deemed "nominative fair use" if certain criteria are satisfied, and therefore could be beyond the control of the mark's owner.

While, even though there are no clear-cut rules on consumer-created variations in China, and consumer use might not be protected by nominative fair use, a brand owner might not wish to enforce its rights against its consumers. Nevertheless, such action could tarnish the brand's reputation among its customers, thereby harming its business images. Thus, a brand owner with a fluid mark could find itself in the unenviable position of choosing between allowing its mark to be used and manipulated freely, or suing its own customers or fans.

By its nature of constantly changing, when there are too many different variations of the underlying mark, it might create consumer confusion and raise the risk of "weakening" the distinctiveness of the underlying mark, which might dilute the brand with high reputation among its consumers.

Despite said difficulties of prosecuting and protecting a fluid trademark in China, it is still possible to protect fluid trademark under the current legal framework through certain ways when there is infringements in the market place.

1. Trademark infringement enforcement should be the first choice when the infringement activities are revealed, including administrative raid action and court action, which only extends to the registered underlying mark. Assuming that the trademark owner has not applied for trademark protection for its variants, effective legal actions could not be launched when a third party uses one or more signs that correspond to these variants. However, the trademark owner could attempt to prove confusion or misleading association between his protected underlying mark and the sign used by the alleged infringer. Particularly in cases that a strong relationship exists between the underlying mark and the variant, it could be ruled that the use by third party also infringes the registered trademark.

2. Copyright is an alternative way to protect the non-registered variant of the underlying trademark. Unlike trademark protection, copyright protection does not require frequent use and substantial examination. From copyright law point of view, the trademark variant can resist a third party from parody and citation at random, unless third party use it for specific purposes, such as criticism, polemic, review, education or scientific work. A competitor will thus not be allowed to take over the variations of the fluid trademarks, which enjoy copyright protection for commercial purposes.

3. It is unique in China for the right owner to protect the variations of the fluid trademark through design patent protection if certain criterions of patentability could be satisfied.
Given the risks and benefits discussed above, in order to achieve the best protection for going fluid, it is suggested that foreign brand owners bear the following guidelines in mind

when using fluid trademark in China:

1. Choosing the mark with Strong distinctiveness

Before adopting a fluid mark, an owner should ensure that the underlying mark is strong enough with inherent distinctiveness to minimize the risk of consumer confusion by assuring the public to understand a given fluid variation as indicative of the same source as the underlying mark.

2. Filing registration for the underlying mark

Registration of the underlying mark in China is critical if there is a third party infringing any variants of the fluid trademark. Considering the time consuming and cost effectiveness, a brand owner should consider whether it is valuable to register particular variations of the underlying mark to maximize protection over the fluid mark.

3. Using the underlying mark continuously in commerce

A brand owner should continue to use the underlying mark in its registered form when adopting a fluid mark. Ongoing use of the underlying mark avoids the risk of abandonment and allows the brand owner to rely on the priority date of the underlying mark, for which the variation might be"tacked" onto the underlying mark. Meanwhile, each variation comprising a fluid trademark should maintain the distinctive features, which could identify characteristics of the underlying mark, such as signature colors or stylized font, through which consumers could identify the source of the services or products with the variation of the mark, and avoid consumer confusion or dilution of the original mark.

4. Cutting clear rules for fair use

A fluid trademark should engage and interact with the public to achieve the market value, while if fair use and parodies of its fluid trademarks were permitted, terms of fair use should be cut clear covering the terms and conditions of fair use of its trademark. For example, Google maintains a "Rules for Proper Usage" webpage regarding use of its mark, through which Google permits use of its marks only in limited ways and subject to certain requirements, say users must distinguish the GOOGLE mark from the surrounding text and only could use the GOOGLE mark as an adjective rather than a verb or noun.

Fluid marks offer unique opportunities for brand owners to deepen and broaden the emotional connections between their brands and consumers, while they also present potential risks from perspective of intellectual property law. Successful usage of fluid marks calls for close and great collaboration of creative trademark lawyers and marketing teams, through which both the brand owner's intellectual property portfolio and its brand could be enhanced and promoted by going fluid.

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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