IV. Well-known status as a prerequisite for protection for foreign business names?
China adopts a hierarchy system for administration of corporate name registration and the business name is the most distinguishable component of the whole business name. It is generally believed that there is no difference in consequence between the use of a business name that is identical with a business name of a famous corporate name and the use of corporate name. Therefore, Article 6 of the Interpretation states the requirement for shop name protection. However, there are still disagreements on whether the Interpretation can be applied to foreign business names.
In the case of Maeda Metal Industries, Ltd. v. Jinan Zhongpu Technology Co,.Ltd. under the cause of action of counterfeit, the court of first instance held that the plaintiff did not submit evidence to prove the business names of “前 田” (Qiantian) and “Maeda” were business names with a certain market reputation, and had been acknowledged by the public concerned, and that, as a result, there was no legal foundation for the plaintiff’s claim that the defendant had infringed upon its corporate name. The court of second instance ruled that the defendant used the Chinese characters of “前田” (Qiantian) and the English word of “Maeda” that were identical with the plaintiff’s shop name in respect of allegedly infringing products, packaging, decorations, product descriptions & quality certificate and documents for business transactions, that such use was sufficient to cause confusion or misidentification among the public in terms of the source of its products, that such use caused prejudice to the plaintiff’s legitimate rights and interests, and that it constituted unfair competition by way of using the plaintiff’s corporate name without authorization.
The courts of two instances in the case hold different opinions due to their disagreements on whether a certain market reputation should be the precondition for legal protection of foreign business names in China. The court of first instance upheld whereas the court of second instance reversed. The former view is easy to understand from a perspective of legal hermeneutics, whereas the latter view has a certain theoretical foundation, which means that registration should not be the precondition for legal protection of overseas business name, and the requirement of reputation is set for the determination of protection coverage outside registration.
In our view, a foreign business name should attain well-known status in China, before it is eligible for protection.
Firstly, China should give legal protection to foreign business name which is used within the territory of China in accordance with Paris Convention. The so-called “corporate name” refers to the full name of an enterprise. It is unnecessary to give “super national treatment” to overseas enterprises, and as a result, there should be no legal protection for overseas business names without differentiation.
Secondly, there is no contradiction between the purpose of enterprise name protection and the limitation of scope and conditions for corporate name protection according to China’s relevant registration rules. Just as those enterprises proceeded by such words as “Zhongguo” registered at State Administration for Industry and Commerce of the People’s Republic of China (SAIC), its business name should also be famous in order to be given legal protection.
Thirdly, the protection for business name may, in theory, make a breakthrough in terms of geographical and industrial limitation in registration. It is obviously that a business name must be known to the public in order to be protected, which is in conformity with the idea of protection for trans-class registration of well-known trade mark and packaging and decoration of famous commodity. It can be said from this point of view that foreign business name must be famous in China in order to be given trans-industrial protection.
In practice, whether a business name is famous is determined by the evidences submitted by the plaintiff. Where the plaintiff’s evidences meet the basic requirements, an important factor for such determination is whether the defendant is subjectively malicious. When judge makes such determination, there will be an interaction in his or her mind between the judgment of reputation of plaintiff’s shop name and defendant’s subjective intention. In contrast with a mechanical understanding of the standard of “fame,” the referee thought with an interaction between objective and subjective criteria is conducive to the conclusion of a fair judgment.
V. Conflict between registered trademark and business name
Because business name is in the form of words, infringement upon such name by way of confusion may include the practices that the infringer uses such name as its business name and uses it as its word mark that is identical with or similar to the infringed business name. There will be a conflict between registered trademark and a prior business name where the defendant is granted a registered trademark for such representation. The reason for such conflict in appearance is that both plaintiff and defendant have corresponding rights to the same object. However, such conflict of rights is in essence a kind of legal relation related to infringement. From the perspective of orientation of conflict, it should be deemed that the latter one violates the priority right, and conflict arises in consequence. Therefore, the core for the settlement of the conflict between registered trademark and a prior registered business name is how to determine the infringement of the trademark registrant.
In the case of Johnson & Johnson v. Xi’an Johnson Pharmaceutical Co., Ltd. for dispute of exclusive right to registered trademark and unfair competition, the court held that the defendant had an obvious intention of free rider when applying “強生” (Johnson) for a registered trademark in June 2004 because “強生” (Johnson) used by the plaintiff had accumulated a higher reputation in China’s medicine circle, that such application was sufficient to mislead the public, and the registered trademark “強生” (Johnson) owned by the defendant constituted infringement upon the plaintiff’s right to business name.
The court ruled against the defendant by invalidating its registered trademark granted by administrative agency as no legal effect. The author thinks that the court should be prudent on using the coinage of “infringement by using a registered trademark” when hearing cases involving conflict between registered trademark and prior business name because the infringement is defendant’s use of registered trademark instead of its application for trademark registration. It can be explained in more details as following:
Firstly, the SAIC Trademark Office is responsible for the registration of trademarks and the court in charge of civil disputes should adhere to judicial restraint instead of making decision for the former. In accordance with China’s current law, opposition against registered trademark should be filed for administrative decision, and judicial review for such decision should go through administrative proceedings. Therefore, the court should not, in a civil proceeding, announce that a registered trademark is null and void as long as such trademark has not been canceled by competent administrative agency. Otherwise, it will create confusion between the civil and administrative procedures, thus the law shall not be abided by.
Secondly, the nature of unfair competition by way of infringement upon other’s right to business name is the acts that the user applies for trademark registration of other’s business name without authorization, which is different from pure use of such name. It should be admitted that the scope of registration is larger than that of use, which can be exampled by no use of registered trademark in respect of some goods. Therefore, not all infringement should be announced having constituted infringement upon the right to registered trademark.
Thirdly, there will be a significant conflict between China’s Trademark Law and the civil judgment for its denial of legal effect of registered trademark. China’s Trademark Law stipulates that, except for well-known trademark, any request for registered trademark dispute settlement should be filed within five years from the date of registration. The “five years” stipulated here is preemption, and the registered trademark shall have stable legal effect and no opposition shall be requested after five years from the date of registration. Such denial, if permitted, will run contrary to the provision of Trademark Law, which will result in market chaos.
In conclusion, where there is a dispute involving use of registered trademark, the first thing is to determine whether the defendant’s use constitutes an infringement upon the goodwill of a prior shop name for undue interest, whether such use creates confusion among the public or misleads the public in terms of the source of the product. Then it is the determination of whether such use constitutes unfair competition and accurate responsibilities if yes and provides the plaintiff with proper remedy in accordance with the principle of ascertainment case by case on basis of concrete conditions. In practice, there is a combination between the act of infringement on the business name by using a registered trademark and that of other kinds of infringement and unfair competition. Therefore, the court should make a comprehensive examination on all acts of the defendant and an overall evaluation of defendant’s subject intention so as not to be confused by the legitimacy of rights conflict in appearance.
(Translated by Yuan Renhui)
