Sai Chen, Attorney-at-Law
Beijing Wei Chixue Law Firm
 
Both trademark and trade name are important commercial signs used to identify the origin of the products and services. In China, the conflict between trademark right and trade name right happens occasionally due to a number of factors, such as different rights are confirmed by different authorities. In practice, it is relatively common that an enterprise uses the trade name of another company with certain reputation. This article introduces the main forms of how trade name infringes prior trademark rights, factors in determining the infringement, and finally the way to handle the matter when a prior trademark is used as trade name by others. 
 
I. Relevant laws and regulations, and forms of trade name infringing prior trademark right 
 
1. Prior trademark as well-known trademark            
According to Article 2 of the Interpretation of Several Issues on Application of Law on Trial of Civil Dispute Cases regarding Well-Known Trademark by The Supreme People’s Court, should the trade name identical with or similar to a well-known trademark, the right holder may initiate a trademark infringement or unfair competition lawsuit. 
 
In the Letter on Application of Law on Trademark Infringement and Unfair Competition Case of Hangzhou Zhangxiaoquan Scissor Factory against Shanghai Zhangxiaoquan Knife & Scissor Main Shop and Shanghai Zhangxiaoquan Knife & Scissor Manufacturing Co., Ltd. by The Supreme People’s Court ([2003] Civil No. 3 Ta No.1, November 4, 2003), the third paragraph of the comments states “the people’s court should prevent the act of using the word which is identical with the prior registered and well-known trademark as enterprise name or part of the name, according to the involved party’s request, under the circumstance that the industry of the enterprise (or business feature) is identical with or closely relevant to the approved goods or services of the registered trademark, which objectively may dilute other’s well-known trademark and damage the legal interests of the prior registered trademark holder.” 
 
2. Noticeable Use of trade names identical with or similar to a prior trademark   
Article 1 of the Interpretation of Several Issues on Application of Law on Trial of Civil Dispute Cases by The Supreme People’s Court (hereafter referred to as “Interpretation”): the following acts constitute the acts which cause other damage to the other’s registered trademark prescribed under Article 52(5) of the Trademark Law:
(1) Noticeable use of a word which is identical with or similar to a prior registered trademark as trade name on identical or similar goods, which is likely to cause confusion among the relevant public;
This paragraph is to regulate the use of trade names on goods in standard manner instead of using it noticeably. Noticeable use mainly refers to the use when the font, size, color and arrangement of the trade name is noticeably prominent from the rest part of the enterprise name. 
 
3. Others 
When a prior trademark is not well-known enough to be a famous mark, and a later trade name user does not use the trade name noticeably, it is always difficult to determine whether the trademark owner can support its claim against the trade name.  
 
The second paragraph of the comments  of the Letter (2004) Civil No. 3 Ta No. 10 from the Supreme People’s Court to Jiangsu Higher People’s Court prescribes: “in respect to the use of a word identical with or similar to a prior registered trademark, which violates the principle of honesty and credibility, and is sufficient to cause confusion as to the origin of the goods or services among the relevant public, based on the plaintiff’s claim, the court may determine whether it constitutes an unfair competition act and seeks civil liabilities of the infringer according to relevant provisions of the General Rules of Civil Law and paragraphs 1 and 2 of Article 2 of the Anti-unfair Competition Law.” Thus, the protection of prior trademarks which have not yet reached well-known status is mainly regulated by the principle of honesty and credibility in Article 2 of the Anti-unfair Competition Law in practice. 
 
Since 2013, the amended article 58 of the Trademark Law prescribed “the use of others’ registered trademark or unregistered well-known trademark as trade name, which is misleading among the public, constitutes unfair competition act, it shall be decided according to the Anti Unfair Competition Law of the People’s Republic of China.”
 
Therefore, with the situation that many trademarks are used as trade names by others in their enterprise names which caused confusion and misunderstanding among the relevant public, the legislature explicitly stipulated from the level of the Trademark Law that not only a registered well-known trademark cannot be used as a trade name by others, a registered trademark or an unregistered well-known trademark also cannot be used as a trade name by others without authorization under certain conditions. 
 
II. Main factors to be considered in infringement determination 
 
The factors to be considered in infringement determination mainly include the reputation of the prior registered trademark, the status of bad faith of the junior trade name holder, the use manner of the trade name (for example, whether it is noticeably used, and whether confusion is caused), etc. 
 
The use manner of a trade name has been mentioned in the above. In respect of confusion, usually it refers to whether it is likely to cause confusion as to the origin of the goods or services among the relevant public. In practice, it is mainly determined according to the judges’ subjective perception in addition to the consideration of the popularity of the trademark. 
 
The following part of this article would mainly focus on the issues of popularity and subjective bad faith. 
 
1. Popularity of prior registered trademark 
From Article 58 of the Trademark Law and Article 1 of the Interpretation, it can be seen that not all the acts of using other’s trademarks as trade names, or noticeable use of other’s trademarks as trade names on the goods fall under unfair competition. Only when a relevant act is likely to cause confusion, and mislead the relevant public as to the origin of the goods, it is possible to be determined the act as unfair competition act or trademark infringement. 
 
The level of popularity is a main standard when determining confusion. When a trademark is very famous in a certain area, if it is used as trade name by others in the same area, it is very likely for the local consumers to mistakenly think that the goods produced by the enterprise which uses the trade name are from the trademark owner. When a trademark is rarely known, even if it is used as a trade name by others, confusion is hardly found since the consumers have no idea about the trademark. 
 
In judicial practice, it can be said that more than half of the battle has successfully finished as long as the court finds that the trademark is of relatively high popularity. Thus, it is advisable for a trademark holder to collect considerable amount of evidence to prove the popularity of the trademark in infringement dispute cases. The court will consider several factors comprehensively such as the sales time, the sales area, the sales amount and the consumers of the goods, the duration, extent, and territory of publicity, and the historic record of protection as a well-known trademark, etc. in the determination of trademark popularity.       
 
2. Subjective bad faith of a junior trade name holder
Subjective bad faith of a junior trade name holder refers to whether a junior trade name holder is aware of the existence of the trademark and has unfair purpose of taking advantage of trademark reputation when he or she  register the trade name. If the trade name holder has bad faith, it can be determined as a violation of principle of honesty and credibility which constitutes unfair competition according to Article 2 of Anti-unfair Competition Law. The court will consider to a certain extent the level of trademark reputation and whether the trademark holder and the trade name holder belong to the same and relevant industries when determining subjective bad faith. In judicial practice, a trademark holder may prove whether a trade name holder has bad faith through proving whether the trade name registrant or the shareholder of the company is aware of the existence of the trademark. 
 
If a trade name holder has no bad faith, and the use of other’s trademark is due to historic reasons, while the trademark holder delays in exercising rights, the court may well determine that the junior trade name holder does not violate the principle of honesty and credibility and allow the continuous use of the trade name by the owner. But if there is a circumstance that the trade name is used in the manner prescribed in Article 1 of the Interpretation, the court may still request the trade name holder to use the trade name in a standard way to avoid causing confusion among the consumers. 
 
In the trademark infringement dispute and unfair competition case1 between Shanghai Road & Bridge Machinery Equipment Co., Ltd. against Jiangsu Shanbao Group Co., Ltd. tried by Shanghai IP Court, the court held that the defendant’s use of “山宝” (“shanbao” in Chinese characters) had historic reasons. The defendant was the plaintiff’s distributor, and the defendant started to use the name “江苏山宝集团有限公司” (“Jiangsu Shanbao Group Co., Ltd.” in Chinese characters) since 2004. During this period, the two parties had frequent business transactions. The plaintiff did not object the defendant’s use of the trade name in the past years and had continuous business with the defendant. The trade name itself had borne the defendant’s business reputation through many years of operation activities. Thus, the registration and use of the enterprise name “江苏山宝集团有限公司” did not violate the principle of honesty and credibility and business ethics, and it did not constitute unfair competition. 
 
Meanwhile, the court admitted that before the defendant’s use of “山宝” as trade name, the trademark “山宝” registered by the plaintiff has obtained high popularity on products like crushing machines. The defendant’s noticeable use of “江苏山宝集团” (“Jiangsu Shanbao Group” in Chinese characters) is likely to cause confusion to the origin of the goods among the relevant public, which damaged the exclusive right to use a registered trademark by the plaintiff. Thus, the defendant should use its enterprise name in a standard manner. 
 
III. Methods and solutions to conflict of rights 
 
According to article 4 of the Regulation on Several Issues regarding Civil Dispute Cases of Trial of Conflict between Registered Trademark, Enterprise Name and Prior Rights by the Supreme People’s Court, where the accused enterprise name infringes the exclusive trademark rights or constitutes unfair competition, the court may order the defendant to bear civil liabilities as to stop using or use the name in a standard manner. 
 
Article 10 of Notice of Opinions on Several Issues of IP Trial under Current Economic Circumstance Issued by the Supreme People’s Court (Supreme Court Issuance (2009) No. 23) stipulated that where the use of enterprise name constitutes trademark infringement, it may be determined according to the specific case situation to order the defendant to stop using or limit the manner and scope of using the name. Where unfair use of other’s registered trademark which is of relatively high popularity in its enterprise name, which is hardly to avoid confusion in the market regardless of whether the use is noticeable, the court may order the defendant to stop use the name or change the name according to the request of the involved party. 
 
Any inappropriate use of others’ trademarks with relatively high popularity as trade names, where confusion in the market is hardly avoidable regardless of whether the use is noticeable, should be ordered to stop the use or to change the trade names based on the petitioners’ requests.   
 
Usually when a junior trade name holder uses other’s registered trademark as trade name out of bad faith, he/she always has noticeable use of the trade name on the goods, which constitutes unfair competition and infringement of exclusive right to use a registered trademark by the prior trademark holder at the same time. What action should the superior trademark right holder take to prevent such infringing act? According to our experience in the past years, the following actions may be done to solve the dispute. 
 
1. Warning and negotiation  
Warning and negotiation means to send a C&D letter to the junior trade name holder, negotiate with him/her, and request him/her to stop using the trade name and change it. Some of the infringers are aware of the trademark right when they have the enterprise names registered, but regardless of knowing the law, they take the chances and try to profit from other's products. Upon receiving a C&D letter, they usually accept the request from the right holders under pressure. However, some of the infringers may be stubborn and insist on no infringement based on their registered trade names. Under such circumstance, it is necessary to take further actions. 
 
2. Administrative investigation   
When the accused infringing products are labeled with noticeable trade name, which constitutes trademark infringement, the main aim of applying administrative investigation is to seize the inventory goods on-site and timely prevent the circulation of the infringing goods. Meanwhile, the right holder may use the force of Administration of Industry and Commerce (AIC) which may persuade the trade name holder to change the trade name voluntarily. We have handled a number of trade name disputes in which, since we provided sufficient evidence to prove the infringement and the reputation of the prior trademarks, after our detailed explanation, the local AIC actively cooperated in enforcing the trademark rights by the right holders and eventually changed the trade names of the junior users with the help of AIC force. 
 
However, not all the AICs are cooperative with the right holders to achieve the goal of changing trade names. Especially, at present since the relevant provisions of the Regulations of Determination and Protection of Well-known Trademark and the Opinions on Several Issues of Dealing with Trademark and Enterprise Name by State Administration of Industry and Commerce have been abolished due to the amendment of the Trademark Law, there is a lack of explicit administrative regulations and provisions for AIC to handle such disputes. If the issue could not be solved through administrative investigation, it will be necessary to initiate a lawsuit. 
 
3. Civil lawsuit      
A trademark holder may directly initiate a civil lawsuit to solve a relevant dispute. Although it costs relatively more time and money in a civil lawsuit, it can ensure that the trade name dispute is solved by the court. For example, if infringement or unfair competition is determined, the court shall order the junior trade name holder to change the enterprise name within a limited time. Moreover, it is a chance for the trademark holder to request well-known trademark recognition by the court. In addition, the trademark holder may obtain damages. For example, in the trademark infringement and unfair competition dispute between Foshan Haitian Company against Gaoming Weiji Company2, the trademark holder Haitian Company eventually received 6,550,000 Chinese yuan for damage.    
 
注释译文:
 
1.First instance: (2015) Pu Civil No.3 (IP) First No. 192 Civil Judgment; Second instance: (2015) Hu Civil Final No.754 Civil Judgment
 
2.(2012) Fo Intermediate IP Civil First No.352