Intellectual property, as we know it, is not so much about the property right for the intellectuals as it is an instrumentality for competition in the marketplace; for a share of the economical pie. But competition must be conducted under proper rules, and unfair competition is always suppressed. Protection of economic interest can be achieved only on the basis of preserving the fundamental principles, which should not be altered unless on sound basis.

 

Ways of favoring certain economic interests may include administrative measures, targeted legislation, and policy considerations in judicial practice, which in most cases would pass legitimacy and rationality tests. Yet, we must be on alert for circumstances where such favoritism is so excessive as to conflict with the fundamental principles.

 

 

The facts of the cases are that F. Hoffmann-La Roche AG (“Roche”) entered into a trademark licensing agreement with Southwestern Pharmaceuticals, Co. (“Southwestern”) in 1987 allowing the latter to use its registered trademark SARIDON® with Chinese equivalent 散利痛 (pronounced as SAN-LI-TONG), then an unregistered mark, on analgesic products; that Southwestern filed for in 1992 and obtained registration in 1993 of the mark 散列通 (pronounced as SAN-LIETONG); that Roche filed for in 1996 and obtained registration in 2000 of the 散利痛mark; that Roche subsequently petitioned the trademark authorities for cancellation of Southwestern’s mark on the basis of “obtaining registration through fraudulent means,” and Southwestern also petitioned to cancel Roche’s mark on the basis that the mark was a generic term for the product. Both of the petitions were dismissed by the Trademark Review & Adjudication Board (TRAB, or the “Board”), and both parties appealed to the court which overruled the Board’s decision, finding that provincial drugs catalogs were not proper legal foundation for a finding of genericness. The Board’s decisions were reinstated by the Supreme People’s Court through review, overriding the lower court’s decision.

 

Now, let’s take a closer look at the decisions made by the various authorities.

 

 

Roche’s petition for canceling the 散列通 registration was based on the grounds that the mark conflicted with its prior rights, but the TRAB found enough distinction existed between 散利痛 and 散列通 in terms of word formation, connotation and function, that it was unlikely to cause any confusion to an ordinary consumer with the mistaken belief that they were the same products. Roche has a registration for SARIDON, but not for any Chinese equivalent. Unmistakably, the 散利痛 mark is a Chinese transliteration of SARIDON, and therefore, a Chinese equivalent. As is commonly known, a foreign word may be transliterated in many different ways, with or without similarity in meaning, or even without meaning at all. For instance, the name Stalin may be transliterated as 斯大林, 史达林, 史太林 etc. Some foreign expressions have official transliterations, some not. In trademark practice, a translation or transliteration of a foreign word, under the Doctrine of Foreign Equivalents, would be considered as equivalent to that foreign word, whether or not the translation is well-accepted. In other words, 散利痛, 散列通 and SARIDON are translational equivalents, without any particular connotation in Chinese, except to the extent of being suggestive of analgesic products, and therefore should be taken as the same mark.

 

The Trademark Law provides, in Art. 13, that “a mark which is a reproduction, imitation or translation of an unregistered well-known mark used in connection with the same or similar goods, and likely to cause confusion, shall be denied registration, and shall be prohibited from such use.” This provision does not rule out reproduction, imitation or translation of a lesser-known mark. Instead, the statutory language of the provision takes its root in the law of passing-off: to pass off another’s mark is an act of unfair competition, and therefore the passing-off mark shall not be registered and shall be prohibited. In trademark disputes, proving passing off is a tough evidentiary process, and for this reason, since a well-known mark has been familiar to the public in general, the intention to pass off and the likely result of confusion become a legal presumption (rebuttable though with evidence of absence of reproduction, imitation or translation, or of lack of well-known status). The legislative intent of Art. 13 is apparently to reduce barriers for the protection of well-known marks by providing a special process with a simplified and relatively lower burden of proof. By the same token, passing-off by reproduction, imitation or translation of another’s mark is nonetheless an act of unfair competition. However, this is more burdensome to prove when the mark is not so well-known. Therefore, Art. 13 should not be so narrowly construed as to signal a green light for passing-off by reproduction, imitation of translation, let alone a free pass for registration or use. In other countries, e.g., the U.S., regulatory provisions may be more specific. According to the U.S. Trademark Manual of Examining Procedure , “Under the doctrine of foreign equivalents, a foreign word … and the English equivalent may be held to be confusingly similar” (e.g., BUENOS DIAS≈GOOD MORNING); and “Where the primary difference between marks is the transposition of the elements that compose the marks and where this transposition does not change the overall commercial impression, there may be a likelihood of confusion” (e.g.,WINE SOCIETY≈WINE CLUB). A well-recognized test for likelihood of confusion derived from a U.S. federal court case, Polaroid v. Polarad , introduced such criteria as: 1. Strength of senior mark; 2. Similarity between marks; 3. Similarity between goods; 4. Likelihood of senior mark bridging the gap; 5. Evidence of actual confusion; 6. Defendant’s good-faith in selecting mark; 7. Quality of defendant’s product; and 8.Sophistication of consumers. The likelihood of confusion, against the above criteria, can be analyzed as: 1. The senior mark SARIDON and its Chinese equivalent, being fanciful, have undisputable distinctiveness; 2. Defendant’s mark 散列通, being another transliteration of senior mark, may be considered as equivalent to SARIDON or 散利痛; 3. Products are the same; 4 No gap to be bridged; 5. (see below); 6. No good-faith in defendant’s selecting of 散列通 since it was under license to use SARIDON and 散利痛; 7. Defendant’s product quality unknown; and 8. OTC drug to ordinary consumers.

 

An interesting interposal may be quite illustrative of the above 5: the author of this article was doing proof-reading of the English translation of an analytical comment of the Supreme People’s Court opinion when it came to his notice that the translator, a universitiy English professor , messed up between 散利 痛 and 散列通 in more than 30 places. It is hard to imagine any “clear” distinction between the two marks when even a well educated professor couldn’t make it out.

 

Consciously or unconsciously, the Board failed to notice such glaring facts that both 散利痛 and 散列通 are transliterations of SARIDON and the two a r e so close not only in pronunciation but also on appearance. Overlooking such plain facts, the Board, instead, elaboratedan analytical study of the possible (or impossible) meaning of the meaningless combination of the Chinese characters, thus reaching a conclusion that there was “clear distinction between the marks in connotation and in function.”

 

The Trademark Review & Adjudication Board is equipped with broad discretion in the finding of facts, and it is not constrained by anything like the U.S. jury standards; further, its authority on such “professional” issues as similarity of trademarks is usually given broad deference in the judicial proceedings by courts. In this case, the Board threw out the substantive issues and focused on the “connotation and function” of the marks, which is astoundingly unprofessional: functional marks are not eligible for registration. This should be a subject for study among amateurs. In recent years, to “effectively” crunch the backlog, the Board recruited many new hands who may not become competent within a short time, which is understandably one of the reasons for overlooking such simple facts in this case. Another reason for the Board to shy away is perhaps the policy consideration (or even out-ofcourt fixing) in light of such big name as Southwestern Pharmaceuticals.

 

By now an erroneous conclusion has been formed on the objective facts of similarity between the 散利痛 and 散列通 marks.

 

 

Obv i o u s l y, i n the wake of the Board decision, the court by-passed the similarity issues in the reviewing process by concentrating on the “good faith” problem, and thereby directed for cancellation of Southwestern’s registration for the 散列通 mark.

 

 

(a) Finality of administrative process and retrospectivity of applicable law Southwestern Pharmaceuticals argued the timing issue as to which version of the Trademark Law controls, i.e., the Board made its decision prior to the 2001 amendment of the Trademark Law allowing judicial review, and because of the ex post facto law doctrine, it is not reviewable in court.

 

The Court concluded that, in accordance with its own promulgations, judicial review is available for certain regulatory decisions made before the amendment. This is a correct conclusion, but reached from a wrong angle. Seeking solution on a dispute in court is a fundamental right of the people, a right constitutionally guaranteed in all republican forms of government. Arguable as it is as to a litigant’s standing in court over the acts of government or its employees, the principle has always been clear: no government power should go unchecked; if the people’s rights to peacefully seek solutions in court are suppressed, they will do otherwise.

 

In the United States, for example, the Constitution does not positively grant the power to the judicial department to review acts of the legislative department; yet the 1803 Marbury v. Madison case, by textual and historical analysis, decided that the judicial review power over legislative and administrative acts was beyond question. In this country, for a long time, it was widely held that an administrative decision was “final,” causing mistaken belief that it was the last word. This is a misinterpretation and misunderstanding of the word “final.” The doctrine of “finality,” like other doctrines such as “ripeness” or “exhaustion,” is merely a condition to judicial review. An administrative decision is “final” only to the extent it concludes within the administrative process before it can be reviewable in court; otherwise, premature judicial interference would cause waste of judicial resources for abridging the more effective administrative process. Having been long suppressed in this country, judicial review was positively made available in the 2001 Trademark Law amendment upon China’s accession to the WTO. This is by no means a new “law,” but a reaffirmance of the existing universal right. Moreover, the expost facto law constraint applies more to powers than to privileges. For these reasons, retrospectivity should be a nonissue.

 

(b) Genericness

 

The Cour t was misguided in i ts Opinion towards the issue of trademark genericness. What was strange in the Opinion was that it introduces a new theory on deciding genericness as to (pharmaceutical) trademarks, drawing a line between “generic de jure,” – statutorily generic, and “generic de facto,” – generic from customary and popular use. Such a theory is unfounded in law, and unsupported by logic. Furthermore, the Court laboriously explained that during the period of genericness de jure, 散利痛 would not be able to block the registration of 散列通, and yet, 散利痛 itself would become eligible for registration again after the statutory genericness was lifted when it did not become generic in fact or in custom. This has stretched the concept of genericness beyond recognition. Genericness, in the trademark law sense, could not, and would not, be predefined, let alone the distinction between definitions “in law” and “in custom.” This reminds us of the wellknown trademark scandals in the past few years when, by taking advantage of the loopholes of “relevant public,” quite a number of literally unknown trademarks were judicially certified as “well-known.” One U.S. court rejected such contention as “relevant public” which is instrumental to glorifying a literally unknown mark, by requesting that to be well-known, a mark be well acquainted to a significant portion of the public. The generic name of a product cannot be a matter of law; it must be a fact as simple as this: a name generally accepted, and popularly used by the public. If a name has become generic as such, no law can take it back, and vice versa.

 

We term such a mark, in the trademark law sense, as “falling into public domain,” when it becomes generic, which takes its origin from the property law on public domain. Anything in the public domain cannot be exclusively owned by an individual. For genericness, it must be carefully noted that 1) a private intellectual property right may not be taken for public use, unless public interest dominates, and in so doing, reasonable compensation must be accompanied; 2) “public” must be a relevant majority in the public, and not a few interest groups; 3) it is a factual issue whether genericness has taken place, to be decided case by case, not with a preset criterion; and 4) most importantly, once a trademark becomes the generic name for a product, it is permanently lost for exclusive use.This is irreversible and there can be no condition for withdrawing it from the public domain. It can be analogized to the death of a person. When he dies, he is history, and can never be made alive again. If indeed he was resurrected, it would mean that it cannot be established as a medical fact that he died before. As to the effect of the documents (e.g., Medicine Catalog, or “Drug  tandards”) issued by medical and drug authorities, would it be conclusive evidence that a trademark has become generic when the documents denote the drug by the trademark? These issues have been dealt with in trademark, administrative and patent disputes in the United States. In F.T.C. v. Algoma Lumbar Co. (1934), for example, logging companies on the Pacific coast called their yellow pine (pinus ponderosa) “California White Pine,” when in fact it was far inferior to the real New England white pine. Although the name “California White Pine” had been adopted by the U.S. Bureau of Standards, Supreme Court Justice Cardozo determined that the denomination of “California White Pine” was unsupported by botanical naming rules, and it was an act of unfair competition; therefore the Bureau’s publication carried little weight. In another landmark case, Diamond v. Chakrabarty (1980) (patentability of man-made microorganisms), the Supreme Court noted that the Secretary of Agriculture’s comment that a “plant cannot be a patentable subject matter” was his own personal view; and as Secretary, he was outside his authority to comment on legal issues beyond his professional knowledge. It is the authority of the dr ug administration to oversee the quality of dr ugs; it is not, however, their authority to determine whether the drug names selected by applicant drug makers are legally trademarks that have become generic; nor do they possess the professional trademark law sense and knowledge to make such findings. Normally (as is understood), the drug administration merely takes whatever names are submitted to it.

 

Based on the above, it can be seen that the drug administration’s publication carries, at most, referential value in determining whether a trademark for pharmaceutical products has become generic, and cannot be taken as conclusive evidence as such. Conversely, the 散利痛 mark survived a “genericness” challenge in the TRAB cancellation proceeding, which is prima facie evidence that genericness did not take place.

 

The Court, by following its own Interpretational Promulgation, and relying heavily on evidence from the drug administration’s use of drug names, calling it “statutory genericness,” failed to provide any guidance in this connection.

 

 

History shows many examples of trademarks becoming generic due to improper use or otherwise.

 

Any business owner in the marketplace would love to see that his product becomes a household word so as to maximize his market share. Often, he would improperly use his trademark as a noun or a verb, rather than an adjective, or he may simply allow consumers to substitute the product name with his mark. For instance, in the case of XEROX® copier, some consumers would say, “I want to buy a xerox,” when in fact he wants a photocopier, or “Can you xerox it for me?” when he wants to photocopy it. Such consumer usage creates a dangerous tendency for XEROX® to become generic.

 

There are too many sad stories, involving, e.g., thermos, escalator, diesel, cellophane, heroin (originally for an analgesic product), and aspirin, etc. We pick the aspirin case for a comparison as it is more relevant to 散利痛.

 

Bayer Co. v. United Drug Co. is one of the landmark cases handled by the famous Judge Learned Hand on trademark genericness. Bayer invented the aspirin analgesic product in late 19th century which chemically was “2-ethanoylhydroxybenzoic acid”; Bayer used a generic name, acetylsalicylic acid, and created the trademark ASPIRIN out of “aspire” and in (a Latin suffix commonly used for drug names). Such a fanciful name was clearly distinctive.

 

During the patent, Bayer was the sole maker of the drug; upon patent expiration in 1904, other drug manufacturers began to produce the same products, but Bayer marked its product packaging with the name “Aspirin,” and sometimes with, and sometimes without “from Bayer.” When this case was brought to trial in 1921, most pharmaceutical manufacturers knew the name “acetylsalicylic acid,” and most pharmacists also knew it but they instead chose to use “Aspirin” as drug name. Consumers, without exception, were unaware of the complex Latin word and the only familiar name was aspirin. The Court found that since 1917, Bayer did not have any control over the use of the mark and had allowed it to become a generic term in the marketplace. Therefore, Judge Hand found the mark ASPIRIN had been degenerated into a common drug name, and was not a trademark, which could no longer be exclusively owned by Bayer.

 

We could not help but mention the historical background of this case. Bayer was the largest pharmaceutical company in Germany. In 1917, the U.S. joined the Allies for the First World War and confiscated Bayer’s U.S. business operations as enemy property After the War, as winners, England and France took the Bayer trademarks (including HEROIN and ASPIRIN) by force in the Treaty of Versailles. In the United States it was taken, not in the notorious Franco- English way, but through litigation (on barely convincing grounds, though). Objectively, the Bayer spirit must be admired for consistently holding on to the high quality standard for such a simple drug over the past hundred years. Even without trademark protection, the aspirin product is still considered by the majority of the consuming public as uniquely Bayer, which all other drug makers can only hope to catch.

 

Another edifier from the Bayer case may be that policy considerations for protecting domestic interests must be used carefully so as not to conflict with fundamental principles, in order to find solutions within the range of the established rules. In simple words, a principle does not rule out exceptions, but too many exceptions would eventually swallow the principles.

 

 

Any solution of a legal dispute involves a dilemma of finding the law between conflicting interests. In lay terms, the law is not about justice. This would mean that justice on one side is injustice on the other, and one side’s gain is always at the expense of the other’s loss. The solution we are seeking ought to be the general principle. In our advanced probe of the law, what is important is not about who wins and who loses; rather, it is important where the line should be drawn. If the general principle has to give way to special interest, or the principle may be indented at will with exceptions, the principle will no longer be there. A principle is a faith, to insist on principles requires courage; a principle is not just a rule by which we follow the past and to be followed in future; it is a powerful tool to remove dilemmas. Principles are not just a faith of the legal practitioners; it is the confidence of the entire society being placed on the political, judicial and governmental institutions. If we lose sight of the principles, we lose the trust of the entire citizenry. As guardians of the law, we must always be on our alert for the faith.

 

A trademark dispute can be said at best as a minor conflict between interests among other social conflicts, and “genericness” is anything but significant in the intellectual property arena, which the majority of the population perhaps has never heard of. Yet, this “anything but” could become nothing but significant with societal ripples, reflecting intense market competition in the pharmaceutical industry. At the same time, it could also be a test for our professionalism and our tenacity to abide by the principles.