The Anti-unfair Competition Protection For Trade Name Right – Intellectual Property

    II.    The
constitutive elements of the protection of trade name right against unfair
competition

If the trade name right is infringed, the right owner can resort
to the protection of Anti-Unfair Competition Law. According to
Article 6 of  Anti-Unfair Competition Law, a business
operator shall not conduct any of the following acts of confusion
to cause its products from being mistaken for the products of
others or from being mistaken as having specific connection
with others:……(2) Where the business operator uses, without
authorization, others’ enterprise names (including
abbreviations, trade names, etc.), social organization names
(including abbreviations, etc.) or names (including pen names,
stage names, translated names, etc.) that have certain
influence…… (4) Other acts of confusion enough to cause its
products from being mistaken for the products of others or from
being mistaken as having specific connection with others.
Based on this, the elements of the protection of trade name right
against unfair competition include the following:

1.    The name or logo
accused of infringement is same or similar to the prior trade
name

The establishment of an infringement does not require that the
accused infringing name is exactly the same as the prior trade
name. In the judgment (2018) Zhe 01 Min Chu No. 2953, the court
ascertained that the evidence submitted by Multivac was sufficient
to show that its foreign name “MULTIVAC” and the
corresponding Chinese translation
“莫迪维克” had been well-known in
mainland China long before the establishment of Multepak Company.
Under this premise, Multepak Company did not avoid the similarity
in selecting the company name. Instead, they chose
“MULTEPAK” and
“莫迪派克” which are similar to
“MULTIVAC” and
“莫迪维克” to be registered and
used as their English and Chinese trade names. Subjectively, it is
difficult to be regarded as goodwill, and objectively it is easy to
lead the relevant public to mistake its association with Multivac
Company.

2.    The trade name
shall be used in China prior to the alleged infringing name or logo
is registered or used

If a company wants to claim the trade name right protection, it
shall have the trade name previously used in China. The reputation
of a trade name is usually caused by the company’s production,
sales, or other business activities in the Chinese market. The
evidence submitted by the plaintiff in judgment (2015)Lu Min San
Zhong Zi No. 298 is all about products being exported abroad and
does not target at Chinese consumers and Chinese market. Therefore,
it cannot be recognized by the court as valid evidence, and it
cannot be established that the trade name of the plaintiff could
enjoy the trade name right protected by the Anti-Unfair Competition
Law.

It is not disputed in practice that manufacturers’
unauthorized use of the trade names of other companies with certain
influence constitutes unfair competition. However, whether the use
of distributors or sellers constitutes unfair competition is worth
discussing. In practice, the subjective state of sellers is the
main basis for whether to bear legal liability. If the seller
knows, should know or fails to fulfill the duty of care of
reasonable examination, it needs to bear the legal responsibility
of unfair competition. In the judgment (2021)Xin Min Zhong No. 98,
The defendant Hanxi Business Firm, as a liquor seller, claimed that
the subject of unfair competition stipulated in Article 6 of the
Anti-Unfair Competition Law was the operator, excluding the seller.
The first-instance court held that as an operator engaged in liquor
sales for years, Hanxi Business Firm should have known about the
packaging and decoration of well-known liquor, but still purchased
a large number of infringing products involved in the case, which
clearly belonged to the behaviors of “free-riding” and
“brand copycat”, and constituted unfair competition
against the Plaintiff. In the judgment (2020)Min Min Zhong No.398,
the court of second instance held that the packaging of the
infringing products sold by the defendant, Zhanjiang Haitian
Electric Appliances Distribution Department, bore the words
“Fuzhou Zhongshan Siemens Electric Appliances Co., Ltd.”.
It failed to fulfill their reasonable duty of care in the
examination. Even though they submitted relevant purchase vouchers,
they were not able to prove that they had legitimate sources.
Therefore, Zhanjiang Haitian Electric Appliances Distribution
Department should assume the legal responsibility to stop the
infringement and compensate the damages for its unfair competition.
In the judgment (2019)Su Min Zhong No. 1163, the electric scissors
involved in the case was exported in the name of Golt Company which
is the seller of the products. The electric scissors involved in
the case was marked with “CHAO BA” in many places on the
products themselves and the packaging, and marked with the company
name of CHAOBA Company. The court held that Golt company, as a
professional exporter, did not fulfill certain obligation of
examination, and its behavior was unauthorized use of others’
trade name, which constituted unfair competition.

3.    The use of the
trade name shall “have a certain influence”

In the field of Anti-unfair Competition Law, not all registered
companies can certainly apply the law to protect their trade names,
and not all unauthorized use of the trade name of others
constitutes unfair competition. In order to be protected by the
Anti-unfair Competition Law, the trade name shall “have a
certain influence”. “Having a certain influence” can
be understood as “having certain market popularity and being
known to the relevant public”. In the judgment (2017)Yue 73
Minchu No. 2239, Guangzhou IP Court held that the word
“certain” in “having certain market popularity and
being known to the relevant public” clearly indicates that it
is not required to be industry-wide popularity. The word
“certain” clearly indicates that it does not have to be a
high degree of popularity. However, the scope of protection of
trade name right varies with the degree of “certain
influence”. The higher the popularity, the wider the regional
scope and public affected by the influence and the stronger the
protection it will receive. The names of international or national
companies with high influence can be protected across regions and
industries, while the trade names with low influence may only be
protected in the same or similar scope of business within their
administrative area, and non-influential trade name will not be
protected by Anti-Unfair Competition Law. Influence is mainly
determined according to the evidence submitted by the parties. The
influence of a trade name can be judged from the use time and
geographical scope of the name, the scale of the enterprise, the
profitability, the duration, degree and scope of publicity, records
for protection and awards and other factors. Evidence proving tbe
influence includes annual reports, honors (the higher the honor
level, the higher the influence), contracts and invoices for sales,
promotion and exhibition, and news reports on well-known national
websites and newspapers, etc.. The collection of evidence proving
influence can refer to the collection of evidence for well-known
trademarks. In the judgment (2017)Yue 73 Minchu No. 2239, Guangzhou
IP Court held that the basic function of trademarks is to
distinguish the source of goods and the basic function of a trade
name is to distinguish between market entities. Goods come from
market entities. In the case that the text of the trademark used by
an enterprise is different from the trade name, the trademark
indirectly points to the enterprise by indicating the source of the
goods, and the trademark awareness can indirectly prove the trade
name awareness. However, when the trademark text used by an
enterprise is the same with the trade name, the trademark actually
directly points to the enterprise, and the trademark awareness can
directly prove the trade name awareness. Therefore, if a
party, whose trademark is identical to its trade name, has a
well-known trademark record, it can directly prove that the
influence of its trade name can spread to different industries
across the country. With the in-depth development of “Internet
+” transaction mode, both goods and services can have an
impact across administrative regions. Therefore, in the field of
anti-unfair competition law, the recognition of relevant market and
within-industry competition relationship are gradually
weakened.

4.    The generation of
confusion

The generation of confusion is an important factor in
determining the protection granted by Anti-unfair Competition Law.
When considering whether confusion will occur, the court will
comprehensively consider factors such as the popularity of the
prior trade name, the similarity between the trade name and the
alleged infringing logo, the use status and subjective status of
the accused infringer. In the judgment  (2014)Wei Min San Chu
Zi No. 75, the court held that the anti-unfair competition
law’s protection of trade name emphasized the prevention of
free-riding and improper use of the goodwill of others to cause
market confusion due to malicious use of the same or similar trade
name. Therefore, in deciding whether the use of the trade name by
the operator constitutes unfair competition, it is necessary to
examine the popularity of the trade name, whether the business
operator is subjectively malicious, and whether it is sufficient to
cause market confusion. If the awareness of the prior trade
name does not reach the area of the accused name or logo and the
accused infringer does not have any malice and confusion does not
occur, the court will determine that unfair competition is not
established. In this case, the plaintiff did not have evidence to
prove the popularity and influence of its prior trade name, and the
defendant provided a lot of evidence to prove publicity of the
online shop name without malicious intent to free ride any
reputation of the plaintiff, so the court did not support the
plaintiff’s claims.

It is worth discussing whether a former or original trade name,
which has been abandoned by the owner and been changed to a new
trade name, can be protected by the Anti-Unfair Competition Law. In
practice, the judgment criterion is that if the influence of the
former trade name still exists, and it is easy for consumers to
associate the alleged infringing name with the former trade name,
the trade name right over the former trade name will continue to be
protected until it is transferred to the new name. The change of
trade name is essentially the transfer of accumulated goodwill. The
greater the influence of the original trade name, the longer the
transition period required for such a transfer. At this time, the
possibility of market confusion still exists. If others use the
original trade name without authorization, their behavior may still
replace the association established by the owner of the trade name
with the existing market, which is a kind of behavior of stealing
goodwill and may constitute unfair competition. (Huang Qiuping, Gao
Tian). In the judgment (2019)Jing 0102 Min Chu No.8392, the court
pointed out that the scope of protection of a trade name
depends on the influence of the trade name, especially when the old
trade name is used by others after the change. The change of the
trade name does not mean that the goodwill carried by the original
name is immediately cleared and the connection with the owner is
immediately cut off. In the field of anti-unfair competition law,
similar to gaining influence, the influence of a trade name on the
market does not disappear in a single stroke. The disappearance
speed is related to the scope of influence of the trade name. If
there is no alternate use, with the replacement of the new name,
the influence of the old name will show a process of weakening and
finally being completely replaced. At this time, it is no longer
easy to cause public confusion, and the old trade name will be
released into the public domain. In this case, the defendant
registered the plaintiff’s original trade name one year after
the plaintiff changed the original trade name to a new one.
However, the plaintiff only submitted the Certificate of High-tech
Enterprise as evidence to prove that its trade name
“中量安测 (zhongliang Ance in
Chinese” had certain influence. The court held that the
corresponding relationship between the plaintiff and its old trade
name was not immediately cut off with the name change. The
correspondence between the original trade name and the plaintiff
will be weakened gradually with the use of the new name. As for
when it can be deferred, it still depends on the plaintiff to
provide proof. However, the evidence submitted by the plaintiff is
not enough to prove that the original trade name had a certain
influence, nor can it prove that the influence of the original
trade name and the corresponding relationship established with it
can last more than one year after the name change, until the
defendant used the name. Therefore, the court did not support the
plaintiff’s claim.

    III.   
The forms of unfair competition against trade name
right

There are various forms of unfair competition against trade name
right, and the most common ones are the following:

1.    Register or use
trade names and online store names identical or similar to
others’ trade names

It is relatively common to register or use a trade name that is
identical or similar to another’s trade name to constitute
unfair competition. Most of the cases involved in the first and
second parts of this article are of this type.

Whether only registering a trade name without using the trade
name, which is identical or similar to a prior trade name with
certain influence, constitutes unfair competition? The legislation
intention of Article 6 of Anti-Unfair Competition Law is to curb
market confusion through the use of other’s trade name. The
trade name that has been registered but not used will not cause
confusion. However, for domestic registered companies, registration
is the premise of use. From the social function of enterprises, the
purpose of registration should be to carry out business activities.
Therefore, in order to effectively curb this type of unfair
competition, it is also workable to regulate the trade name
registered in China that has not yet been used.

In the context of the Internet, names on the Internet that serve
to identify the identity of the operator, such as the name of an
online store, should also be regulated. In the judgment (2015)Lu
Min San Zhong Zi No. 298, the alleged infringing name was the name
of an online store. The defendant used the plaintiff’s trade
name as the name of the online store, and the plaintiff claimed
unfair competition. In the judgment (2015)Lu Min San Zhong Zi No.
164, the court ascertained that the defendant Zhongkang
Pharmaceutical Company knew perfectly well the popularity of the
plaintiff Zibo Xinhua Pharmacy Chain Co., Ltd., but still used
“Xinhua Pharmacy” as its online pharmacy store name
without justified reasons. It had obvious malice and constituted
unfair competition.

2.    Use logos, which
are identical to others’ trade names with famous reputation, as
registered trademark

In (2008)Min Ti Zi No. 36, the Supreme People’s Court held
that if, without authorization, using logos, which are identical to
others’ trade names with famous reputation, as registered
trademark is sufficient to cause confusion among the relevant
public about the source of the goods, such activity infringes the
rights and interests of the trade name owners and constitutes
unfair competition.

It needs to be noted that the unauthorized registration of
others’ trademark as trade name, resulting in confusion, also
constitutes unfair competition, which is in violation of Article 6
(4) of Anti-Unfair Competition Law. In the judgment (2020) Zhe 0782
Min Chu No. 13500, the defendant changed its name to “He Sheng
Yuan (Beijing) Pharmaceutical Technology Co., Ltd.” shortly
after its establishment. “He Sheng Yuan in Chinese” is
the plaintiff’s trademark and it has established a long-term
and stable relationship with the plaintiff. In addition, the
defendant is the competitor of the plaintiff in the same industry.
When seeing the trade name used by the defendant, ordinary
consumers are prone to misrecognize or misunderstand and think that
the defendant and the plaintiff have a specific relationship or
association. Further, it is believed that the goods produced by the
defendant come from the plaintiff or have a specific connection
with the plaintiff, and so it is easy to cause confusion. Under the
circumstances that the defendant should have known that the
plaintiff’s trademark has a high awareness, it used ” He
Sheng Yuan ” as its trade name when changing the trade name,
which shows that it has an obvious intention to engage in
confusion, and intends to use the plaintiff’s goodwill to
obtain improper benefits. Therefore, the defendant constitutes
unfair competition.

3.   Register domain
names identical or similar to others’
trade names

According to Article 11 of the Interim Administrative Measures
for the Registration of Internet Domain Names in China, the
restriction principles for the naming of domain names below the
third level (including the third level): … (5) Do not use trade
names or trademarks that have been registered by others in
China. Article 23 stipulates that when a third-level
domain name is the same as a trademark or trade name registered in
China, and the registered domain name is not owned by the
registered trademark or trade name holder, if the registered
trademark or trade name holder does not propose objection, the
domain name holder can continue to use its domain name; if the
registered trademark or trade name holder raises an objection, the
domain name management unit at all levels shall reserve the domain
name for the trademark or trade name holder for 30 days from the
day it is confirmed that it owns the registered trademark or trade
name right. The domain name service will automatically stop after
30 days. All legal responsibilities and economic disputes during
this period have nothing to do with domain name management units at
all levels. However, given that CNNIC is responsible for the
management of “.CN”, “.中国”,
“.公司”, and “.网络”
domain names, these regulations only apply to these top-level
domain names. For other top-level domain names, the dispute can be
resolved through litigation.

 Article 4 of Interpretation of the Supreme
People’s Court on Certain Issues Concerning the Application of
Law in the Trial of Cases Involving Civil Disputes over Computer
Network Domain Names  stipulates that the court
shall, in its trial of a case involving a domain name dispute,
determine that the defendant’s act such as registration or use
of the domain name constitutes infringement or unfair competition
if the following conditions are satisfied: (1) The civil rights or
interests for which the plaintiff seeks protection are legitimate
and valid; (2) The defendant’s domain name or its main part
constitutes a reproduction, imitation, translation, or
transliteration of a well-known trademark of the plaintiff or is
identical or similar to a registered trademark, domain name, etc.
of the plaintiff to an extent sufficient to cause misidentification
among the relevant public; (3) The defendant is not entitled to any
rights or interests to the domain name or its main part, and has no
justified reason to register or use the domain name; and (4) The
defendant’s registration or use of the domain name is mala
fide.

In (2014) Jing Zhi Min Chu No. 00081 case, the plaintiff
Columbia Sportswear Company enjoyed the trade name right over
“Columbia” and interests over the domain name
before the registration of the disputed domain
name . The court found that the main part of
the disputed domain name “columbia.com.cn” was
“columbia”, which was exactly the same as the
plaintiff’s trade name and the main part of its domain name.
Prior to the registration of the disputed domain name, the
plaintiff’s Columbia trade name and its Columbia brand outdoor
products already had a certain market reputation in the field of
outdoor sports in China. As a competitor in the industry, the
defendant knew the fact that the plaintiff’s trade name enjoyed
a relatively high reputation in China, but still registered and
used the domain name which was identical to the plaintiff’s
trade name and the main part of the domain name. This behavior
would easily cause the public to misunderstand the business
relations of two parties. The defendant did not submit evidence to
prove that it had any prior rights and interests in the domain name
or the main part of the domain name “Columbia”. It had
malicious intent in the registration and use of the domain name and
constituted unfair competition

4.    Use
other’s trade name as the
name of goods or services

Using other’s trade name as the name of goods or services
may also constitute unfair competition. In the case (2020)E01 Zhi
Min Chu No. 170, the trade name “Feifei” of the plaintiff
Wuhan Jianghu Feifei Catering Co., Ltd. had reached a certain level
of popularity, and the defendant used “Feifei Shrimp
King” as the name of the catering services it provided. The
court held that the most recognizable “Feifei” in
“Feifei Shrimp King” belonged to the plaintiff’s
trade name with certain influence. The defendant’s use of
“Feifei Shrimp King” was sufficient to mislead the
relevant public into believing that it had a specific connection
with the plaintiff or the plaintiff’s services, causing
confusion, and thus constituted unfair competition.

5.    Use other’s
trade name as keywords for Internet search

Operators arbitrarily use other’s trade name as keywords in
Internet paid listing to cause confusion and misunderstanding by
the public, and use the reputation and goodwill of others to
achieve the purpose of promoting themselves, which is an act of
unfair competition. The case (2012)Jin Gao Min San Zhong No. 3 is
about this type of unfair competition. The court held that the
defendant set keywords related to the plaintiff’s trade name in
the relevant search engines and used the source code of the website
to directly lead the relevant public to the defendant’s website
when they searched the keywords “Tianjin China Youth Travel
Agent” and “Tianjin Youth Travel”, resulting in
visiting the defendant’s website. The defendant achieves the
effect of using the initial confusion of Internet users to compete
for potential customers. Subjectively, it has the intention to
mislead the relevant public in online searches and inquiries.
Objectively, it improperly used the plaintiff’s reputation, and
harmed the plaintiff’s legal rights and interests. Its behavior
constituted unfair competition.

In summary, for trade names that have been used in China and
have obtained certain influence, the owner enjoyed the trade name
right. If others’ unauthorized use of trade names with certain
influence causes confusion among consumers and damages the
interests of the trade name owners, it constitutes unfair
competition. Unfair competition manifests in various forms. Common
ones include registering or using trade names, online store names,
or domain names identical or similar to others’ trade names,
and using other’s trade names as registered trademarks, the
names of goods or services, or keywords for Internet search. When
judging whether unfair competition can be established, “having
a certain influence ” and “confusion” are the key
factors considered by the court. The degree of influence determines
the scope of protection of the trade name right. The greater the
influence, the wider the scope of protection. In the analysis of
confusion, the subjective status of the accused infringer plays an
important role, especially when the accused infringer is the seller
of the product rather than the manufacturer.

References:

1)     Judgment (2021)Xin Min Zhong No. 98
made by Xinjiang Uygur Autonomous Region High People’s
Court

2)     Judgment (2020)Min Min Zhong No.398
made by Fujian High People’s Court

3)     Judgment  (2020)E01 Zhi Min Chu
No. 170 made by Hubei Province Wuhan Intermediate People’s
Court

4)     Judgment (2020) Zhe 0782 Min Chu No.
13500 made by Yiwu People’s Court

5)     Judgment (2019)Jing 0102 Min Chu
No.8392 made by Beijing Xicheng District People’s Court

6)     Judgment (2019)Su Min Zhong No. 1163
made by Jiangsu High People’s Court

7)     Judgment (2018) Zhe 01 Min Chu No.
2953 made by Zhejiang Province Hangzhou Intermediate People’s
Court

8)     Judgment  (2017) Yue 73 Min Chu
No. 2239 made by Guangzhou IP Court and Judgment (2019)Yue Min
Zhong No. 477 made by Guangdong High People’s Court

9)     Judgment (2015)Lu Min San Zhong Zi
No. 164 made by Shandong High People’s Court

10)   Judgment  (2014) Jing Zhi Min Chu No. 00081
made by Beijing IP Court and Judgment (2019) Jing Min Zhong No. 564
made by Beijing High People’s Court

11)   Judgment (2014)Wei Min San Chu Zi No. 75 made by
Shandong Province Weihai Intermediate People’s Court, and
Judgment (2015)Lu Min San Zhong Zi No. 298 made by Shandong High
People’s Court

12)   Judgment (2011) Er Zhong Min San Zhi Chu No. 135
made by Tianjin No. 2 Intermediate People’s Court and Judgment
(2012)Jin Gao Min San Zhong No. 3 made by Tianjin High People’s
Court

13)   Huang Qiuping, Gao Tian. Statement of the case |
the Trade Name Right and Its Protection Scope in Article 6(2) of
Anti-Unfair Competition Law, Intellectual Property, 13-02-2020.

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