The business name is by nature an identifier of market player. However, it is different from that for a natural person in essence in that it originates from business operation and can be assigned. The mainstream views have agreed on the property nature of corporate names (business identity). The Provisions on the Cause of Action in Civil Cases promulgated by the Supreme People’s Court will include disputes related to enterprise name in the category of “intellectual property and competition dispute.”

It should be noted that China has had no specific legislation as yet for business name protection, that clearly defines infringement of a business’ right to its name. Currently, China’s courts apply anti-unfair competition law to business name protection and the understanding of such infringement needs to be continuously improved from judicial practice. By an analogy of other commercial signs, there are at least two kinds of infringements upon business name: the first is counterfeit, which is the most direct and serious infringement and is usually taking the form of counterfeit of others’ goods, trademark, packaging and so on instead of rare counterfeit of other’s business name; the second is the use of another’s business name without prior authorization, which is more difficult to ascertain and the key for judgment in practice is how to determine the “use,” the similarity in business name, and the subjective bad faith of the accused infringer etc.

It can be seen from practice that early typical cases in this regard were mainly disputes of counterfeit. For example, in the typical case of Harbin Magnetizer Factory v. Gaochun County Lights Co., Nanjing Dongfang Glass Head Factory, Nanjing Yuedong Industry Co., and Kunming Cultural Supplies Co., the acts of defendants constituted the counterfeit of plaintiff’s patent, registered trade mark and business name. It is easy to determine and crack down on such infringement because it is not common to see Faker’s false representation of Maker in reality. In contrast, it is more often to see infringement in the form of free rider. In terms of the right to corporate name, its value is just embodied in and increased by the way of its conflicts with registered trademark in a relatively long period.

II. Legal foundation for judicial protection of foreign corporate name

Broadly speaking, foreign business protection in China relates to two types of situation. One is recordation per government procedures for a foreign business that has been registered for incorporating a local branch or a joint venture which carries its business name; the other is unregistered use of business name in commerce in China. The former, which is just like any domestic business, and is governed by corporation regulations, enjoys general protection under the laws; it is the latter, however, worthy of protection, that is in question, which deserves a closer look.

China is a member country of the Paris Convention which is binding authority in China. Consequently, the provisions of the Convention may be relied on in the absence of corresponding domestic legislation, which frequently occurs when a foreign business seeks protection of its name. Problem is that the Convention merely provides broad principles without specifics, which needs to be worked out into domestic laws, because all intellectual property rights are territorial. Many countries, China included, have no particular laws governing the use of business names. In China, Article 5 (3) of Anti-unfair Competition Law prohibits a business operator from unauthorized use of another business’ or individual’s name for passing-off. Moreover, The Interpretation of the Supreme People's Court on Some Matters about the Application of Law in the Trial of Civil Cases Involving Unfair Competition (“The Interpretation”) specifies that “a name of any enterprise registered by the enterprise registration competent authority, or a name of any foreign enterprise used within the territory of China for commercial use shall be ascertained as an enterprise name as stipulated in Article 5 (3) of the Anti-unfair Competition Law. A business name in the name of enterprise that has certain market popularity and is acknowledged by the public concerned may be ascertained as an enterprise name as stipulated in Article 5 (3) of the Anti-unfair Competition Law.” The above can be understood as China’s compliance with the obligations under the Paris Convention through legislation and judicial interpretation for a further regulation of enterprise name protection.

III. Elements for protection for Chinese translation of foreign business names

In order to be given legal protection in China, foreign business name should be used within the territory of China for commercial use and it is usually be used in foreign language and Chinese translation together. A foreign business may of course prohibit others from deceptive or misleading use of its foreign language name if such a name has attained certain reputation in China; the problem is rare, however, over simple foreign business names since most business activities have to be done in Chinese language. It becomes problematic when a foreign business uses a Chinese equivalent, either alone or along with its foreign counterpart, of its business name. How should the business names, and the business names in Chinese, in particular, be treated in relation to their foreign language names, so as to accord proper protection?

In Woodhead International Pty. Ltd. v. Shanghai Werkhart International Architectural Design Consulting Co., Ltd. et al. involving unfair competition, the plaintiff is an Australian company engaged in architectural design and transliterated its corporate name of “WOODHEAD FIRTH LEE”

into “五合富丽” (WuheFuli) in Chinese. In 1999, the plaintiff used a Chinese equivalent “五合国际建筑 设计集团” (WuheGuojiJianzhuShejiJituan, Werkhart International Architectural Design Group) in the corporate seal, and continued to use the seal in such way in the ensuing years. The defendant was incorporated in 2001 and its chief consultant, a Liu, worked at one time with plaintiff’s business in China. The plaintiff contended that the defendant deliberately confused itself with plaintiff by way of using “Wuhe” and “WuheGuoji,” in order to cause mislead the public, which had constituted infringement upon the plaintiff’s right to corporate name.

The focus of the above case is whether the business name in Chinese is eligible for protection. Just as the right of a natural person to his or her name, a business name with legal significance should be unique. It is necessary for a transnational corporation to use its business name in relevant translation for the interest of consumers and market order and this should not be regarded as using several business names. The translation of a business name should satisfy some requirements for legal protection. Otherwise, it would misappropriate resources in public domain and thus harm the public interest. Take the foregoing case for example. “WOODHEAD” can be translated into Chinese such as “five together,” “wood,” “five,” “Wu together” etc. It is inappropriate for the plaintiff to monopolize all the possible Chinese translations of WOODHEAD. The author thinks that the legal protection for Chinese equivalent of a foreign corporate name not only depends on its being used in practice, but also meets the following criteria:

Firstly, the Chinese equivalent should be so distinctive as to be distinguishable, namely, it can distinguish an enterprise from other businesses. It is the distinctiveness that makes it possible for consumers to connect it with a specific business operator and that can cause misidentification or confusion when shop name is used without prior authorization. For a Chinese translation of corporate name, the first step to be distinguishable is to choose unique Chinese characters to make it specific, which is not yet sufficiently entitled to legal protection. In practice, the majority of overseas shop names are translated into Chinese homonym. If such translated text has no meaning of other ordinary characters in Chinese, it shall be ascertained as a sole representation of such enterprise and meet the requirement of distinctiveness. Examples in this regard include 诺基亚, the Chinese translation of Nokia, 柯达 of Kodak, and 索尼of Sony, etc. In fact, the level of distinctiveness is closely related to the reputation of the shop name. A famous business name usually represents a higher goodwill, which enables consumers to connect it with specific business operator and thus be so distinctive as to be distinguishable.

Secondly, there should be a characteristic of correspondence, uniqueness and consistancy between the original shop name and its Chinese translation. By correspondence, the original business name should be consistent with its Chinese equivalent in transliteration or translation. Otherwise, such Chinese translation would be arbitrary. By uniqueness, the obligee shall use one corresponding Chinese translation of its foreign business name, and should not use several translations at the same time. Otherwise, it will be difficult for consumers to connect different translations with the obligee. By consistancy, the obligee should consistantly use such Chinese translation instead of accidental use, and should not alter such translation at will.

The plaintiff in the said case has been basically certain of 五合, the Chinese translation of its corporate name “WOODHEAD” and continuously used it for a period of time. It has acquired certain reputation in the industry which makes 五合 acknowledged by the public concerned, thus, it should be ascertained as having met the foregoing requirements. However, the issue of whether the defendant’s acts constitute an infringement should be determined by whether it is used without prior authorization, whether such use has caused misidentification or confusion among consumers and whether the plaintiff had subjective malice. The defendant in the foresaid case filed an appeal against the first instance judgment and the case was concluded by mediation in second instance procedure.

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 “强生” (Johnson) for a registered trademark in June 2004 because “强生” (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 “强生” (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)