China: Q&A Re: Distinctiveness Of Trademarks

Last Updated: 13 June 2017
Article by Watson & Band Law Offices

What is trademark distinctiveness?

The basic function of a trademark is to distinguish the source of the goods or services. To realize such a function, the trademark for which registration is sought must possess enough distinctiveness to identify it as a trademark capable of identifying the source of goods or services in the eyes of the target market. Since only trademarks possessing distinctiveness can distinguish the source of goods or services, distinctiveness is the minimum and most fundamental requirement for trademark registration.

How should the distinctiveness of a descriptive trademark be determined?

When determining the distinctiveness of a trademark containing descriptive elements, a method that combines an overall evaluation of the trademark and a comprehensive survey of the trademark's reputation should be applied.

The overall evaluation of a trademark should review and determine whether or not the trademark possesses distinctiveness based on the general understanding of the target market in connection with the goods designated for the use of the trademark.

A comprehensive survey of a trademark's reputation should be conducted in a manner that can generate or enhance the distinctiveness of the trademark. The trademark's ability to distinguish the source of the goods or services based on its reputation should be considered evidence of the acquisition or enhancement of the distinctiveness for the trademark.

Do trademarks containing generic names possess distinctiveness?

Trademarks containing generic names do not necessarily lack distinctiveness. Even if a part of a trademark is a generic name, as long as the other parts are distinctive enough to be identified, the trademark can be approved for registration. Business operators must be prudent in selecting the trademarks before filing applications for registration; specifically, they should avoid using words that are identical or similar to generic names so as to enhance the distinctiveness of their trademarks and avoid possible revocation of the trademark for lack of distinctiveness.

In social life, many business operators choose to use trademarks similar to generic names at their venture stages for the purposes of obtaining a free ride and attracting consumers to enter their shops out of an interest in the generic names or similar shops. It is true that this strategy might function as an effective shortcut at the venture stage. Since consumers cannot identify the connections with existing shops using similar names, and since they might mistake the new shops for chain stores or branch locations of the old shops, they might enter the new shops out of misunderstanding, thereby helping the operators generate customers. Nevertheless, from a long-term perspective, such a choice impedes the ability of such operators to establish their own brands. Because of the generic names in their trademarks, the problem of lack of distinctiveness will surely arise sooner or later. Even if the trademarks are not be revoked later for lack of distinctiveness, it will be difficult to distinguish these operators from other operators based on generic trademarks. This could turn out to be an insurmountable obstacle to the establishment of the operators' own brands.

Consequently, in consideration of the quality and validity of the trademarks and the long-term development of the enterprise, an operator should do its utmost to avoid similarity between their trademarks and generic names. Even if it should be necessary to use generic names, they should try to individualize generic trademarks and ensure distinctiveness by adding representative logos or wording.

What is trademark dilution?

Trademark dilution refers to the unlicensed use of words, devices or a combination of these that are identical or similar to a well-known trademark on other goods or services that are neither identical nor similar. Such use typically results in a decrease in the identifiable elements or the distinctiveness of the well-known trademark and further harms or impairs its reputation. Generally speaking, trademark dilution may be divided into three types: weakening, defacement and degradation. Degradation means that the trademark becomes a generic name because of improper use and therefore loses its function of distinguishing the source of the goods or services. This type of dilution is undoubtedly the most harmful and destructive to the trademark rights owner, since it will thrust the well-known trademark into the public domain and eliminate its function of identifying the source of the goods.

What are the causes of trademark dilution?

Trademark dilution can arise from many causes, including: (i) weakening the distinctiveness of the trademark; (ii) improper use by the rights holder or an infringer; (iii) improper use by the government; (iv) erroneous descriptions by dictionaries or media, or (v) the long-term monopolistic position of the enterprise's product. When enhancing the reputation of a trademark, the enterprise should prevent the trademark from becoming so famous that it becomes generic. In response to the risk that a trademark may be diluted due to its incorporation of a generic name within the industry, the enterprise should take active anti-dilution measures to protect its trademark, such as adding distinctive elements to the trademark, prohibiting its own improper use of the trademark and monitoring the use of the trademark by the government or other organizations.

Will an improper trademark application result in trademark invalidation?

Article 4 of the P.R.C. Trademark Law provides that where a natural person, a legal person or other organization needs to acquire the exclusive right to use a registered trademark for its goods or services, it should file an application with the Trademark Office for registration of the trademark. Based on the spirit of this provision, an application for registration of a trademark submitted by a legal person should meet the following requirements: (i) a real intention to use the trademark in commerce; (ii) for the purpose of satisfying its need for the use of the trademark; and (iii) the reasonableness or legitimacy of the registration application. If an application for registration does not meet the requirement on reasonableness or legitimacy, it might be classified as "registration acquired through other improper means" under Article 44.1 of the P.R.C. Trademark Law, which would result in invalidation of the trademark.

Generally speaking, if any of the following applies to an application for registration of a trademark, it will probably violate Article 4 and Article 44.1 of the P.R.C. Trademark Law:

  1. The registrant has registered a great many trademarks, the number of which far exceeds the number of trademarks necessary for an ordinary business operator;
  2. The scope of goods or services designated for the registered trademark far exceeds the scope of business of the registrant, who has no real intention to use the trademark;
  3. The great many registered trademarks include trademarks that are identical or similar to the well-known trademarks of other parties; or
  4. The registrant has attempted to illegally obtain large amounts of transfer payments or compensation through transfers or lawsuits connected with the registered trademarks.

In the administrative ruling granted by the Supreme People's Court ([2013] Zhi Xing Zi No.41), the Court cited Article 4 and Article 44 (Article 41 before the latest amendment) of the P.R.C. Trademark Law, and clearly noted that the registration of a great number of trademarks without reasonable cause and without any real intention to use such trademarks will not confer legitimacy upon a registered trademark; instead, such registrations represent an improper occupation of public resources and an disturbance to the order of the trademark registration system. On that basis, the Court invalidated trademark No. 4706493 "海棠湾" that was registered by retrial petitioner Longfeng Li.

(Abstracted from The Determination of the Distinctiveness of Trademarks Containing Descriptive Elements by Yuan Mei)
(Abstracted from How to Determine the Distinctiveness of Trademarks Containing Generic Names by Jingwen Ding)
(Abstracted from Do Not Dilute Trademarks by Shanshan Zhang)
(Abstracted from Legal Regulations on Large-Scale Registration and Hoarding of Trademarks without the Real Intention to Use by Yuan Mei)

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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