China: Trade Dress And Chinese Name, Keys To Foreign Brand's Success In China

Last Updated: 4 January 2018
Article by Gray Liu

A common question in Chinese intellectual property (IP) law posed by many foreign businesses and counsels when they first begin operation in the PRC is the extent to which Chinese characters and colors are protected under Chinese IP law. English is almost universally accepted as the language of international business, but domestic Chinese consumers will typically look for Chinese characters and colors before looking at the English version of a brand name. Therefore, a brand's name in Chinese and its trade dress is critically important to not only the perception of the brand in China but also what effect its branding and marketing will have in helping it to succeed in China. China is currently the world's second largest economy and is expected to overtake the U.S. as the world's largest by the mid 2020's at the latest. Therefore, China and its more than 1 billion potential consumers are a market that no brand can afford to ignore, particularly given the impressive 6-7% growth rates China's economy has enjoyed for more than 20 years.

"Taking steps to ensure the establishment of a successful brand is particularly important"

However, for Western companies looking to establish a successful brand in China there are several legal and cultural factors to consider. First, and critical to the brand's success, is to ensure that the name and the trade dress of the company's Chinese operations/subsidiary are (1) both understandable and relatable to Chinese consumers and (2) protectable under Chinese IP law. It is therefore of the utmost importance that when a company begins its Chinese operations it adopts an "authentic" version of their name in Mandarin Chinese, utilizes trade dress that will not unintentionally offend and/or be off-putting to Chinese consumers, and then protects that brand name and trade dress to possible extent under Chinese law. This can be a process fraught with difficulties, however. From imprecise translations of English names that may unwittingly fall flat or even reflect unfavorably upon the firm, significant risks abound for Western firms seeking trademark protection for their name and trade dress in China. It is therefore imperative for any Western brand looking to obtain protection for both its trade dress as well as its name in Chinese to ensure consistency across a large and diverse country where consumers may not respond the same way to a company uniform or brand name as they would elsewhere in the world.

The Protection of Trade Names under China's Trade Mark Law

Under The Trademark Law of the People's Republic of China, which took effect on May 1, 2014, trade names are protectable from infringement by competitors or other potential users. China uses the 'first-to-file' system, meaning that you may lose legal protection in China if a similar mark has already been registered in China. Therefore it is essential for you to register your trademarks in China before entering the market, so as to diminish the risk of your trademarks being registered by someone else first. It is equally important to register early, as this process can take up to 12 months (9 months for examination and 3 months for possibilities of opposition after publication in the Chinese Trademark Gazette) for a domestic application and possibly even longer for international registrations. For a trade name to be eligible for registration for protection under Chinese law, it must be legal, distinctive, it must not be functional, and must be available for registration. The last point is key, as often times trademark squatters will preemptively register trademarks so that a foreign brand is forced to either negotiate with them to use its own name because they were the first to file that name in China or else the foreign brand will have to settle for some less desirable version of its trade name in Chinese if someone beat it to the registration punch. This is where careful forethought and planning can make a big difference to a foreign brand's success in China.

What is Trade Dress and is it Protected under PRC IP Law?

The case is slightly more complicated when it comes to the ability to protect trade dress under Chinese IP law. The look and feel of products or services, including a product's packaging and design, a business's employee uniforms, and the layout and design of its stores or facilities generally fall into the category "trade dress." In the United States, trade dress is considered a symbol of a business under American trademark law and can be registered and enforced just like any other trademark, such as a business's logo. Therefore, the uniforms worn by McDonald's employees would be considered trade dress and could be trademarked in the United States.

"In China, trade dress is neither well defined nor given any specific protections".

Trade dress is not explicitly protected under the Trademark Law. However, some Chinese judicial decisions provide some hope for foreign businesses looking to protect their trade dress. For example, some Western companies have been granted protections for their product designs. New Balance, a manufacturer of running and athletic shoes, won a lawsuit against an infringer in which the court recognized that the "N" logo embedded in the upper exterior of shoes was "decoration" specifically pertinent to the famous merchandise of New Balance shoes, and ruled that production of shoes bearing the famous "N" logo was infringement. Another example of a Western brand successfully asserting trade dress protection for its products was the Italian chocolatier Ferrero Rocher, which won a challenge to a Chinese competitor in a court case of its golden, paper-wrapped spherical chocolates with a golden-rimmed oval label on the top. These were ruled to be protected trade dress and the Chinese competitor was prohibited from selling similarly packaged chocolates. These are signs that Chinese courts are taking more seriously the importance of trade dress, however, enforcement is, at the moment, not as easy as it is in other jurisdictions.

Steps to Ensure Success in Connection with Trade Dress and Trade Names

It is important to adopt a brand name in Chinese that does not have some sort of negative connotation in the Chinese culture. For example, in the Chinese culture, the colors white and black are both associated with mourning and loss, and are therefore considered unlucky. It then would behoove a Western retail brand opening stores in China not to utilize employee uniforms that are in colors that are considered unlucky in the Chinese culture, even if that is what the company's employees wear all around the world. If Foot Locker were to use the black and white uniforms at its Chinese stores that it uses at its U.S. locations, that trade dress might well fall flat for cultural reasons due to the negative associations with those colors in the Chinese culture.

"You need to ensure that there is a good fit culturally between the brand's name in Chinese, in addition to its trade dress."

The same is true when it comes to translating an English name into Chinese. One need only to think of the example of the French carmaker Peugeot, whose name translates in the southern Chinese dialect to "BiaoZhi". This word, politely translated into English, means a lady of the night. Therefore, it is important for foreign brands to ensure that whatever name they choose to use for their Chinese operation does not unintentionally translate into something embarrassing or even vulgar. The lessons for foreign brands is the need to ensure they adopt a transliteration of their corporate name that will not only be easily recognizable by China's more than 1 billion consumers but can help to ensure the brand's success. An example that is commonly held up as a success is Coca-Cola, which chose the Chinese brand name "KeKouKeLe", which translates as "tasty fun" in Mandarin Chinese. This has helped to ensure the success of Coca-Cola in China and is widely credited as one of the reasons for the company's success in China, as it indicates to Chinese consumers that the company understands the importance of proper branding in reaching out to Chinese consumers. However, this is true not only of a brand's name but also for any trade dress, in particulr, employee uniforms and the look of any stores or outlets the company may have in China.

Conclusion: Do Your Due Diligence When Making Decisions about Trade Names and Trade Dress

This may seem like a difficult concept to a Westerner who is used to speaking English and has an established brand that expanded in the English-speaking parts of the world. However, Chinese consumers may not necessarily see a company uniform or a brand name the same way that someone in New York would, for instance. Therefore, it is particularly important to consult with local experts who may be able to explain why it is a bad idea to use the brand name Peugeot for a car manufacturer looking to open a Chinese subsidiary or why Foot Locker's employees in its Chinese stores should perhaps consider using different uniforms than in their U.S. stores. All of these are important steps that, when taken care prior to entering the Chinese market, will help a foreign brand ensure its success in China.

July 9, 2017

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