Editor’s note:
    The publication of the special report titled ”The Determination of Trademark Proximity in the Case Study of “长城牌” Trademark Infringement” in the previous issue gave rise to a heated debate. Some scholars, lawyers and judges have voiced their opinions from different perspectives. In this regard, the present issue’s IP Forum specially selects a contribution from an attorney with a dissenting view to those expressed by legal scholars in the previous issue, and shares it with our readers.  
Case Summary:
    In November 2004, China National Cereals, Oils and Foodstuffs Imp. & Exp. Corp. (“COFCO”) filed an action with Beijing High People’s Court for an order requiring that Beijing Jiayu East Wine Co., Ltd. (“Jiayu Company”) immediately cease its trademark infringement, and pay damages in the amount of 100 million yuan on account that the grape wines of Jiayu Company sold under the trademark of “嘉裕长城” had infringed upon COFCO’s exclusive right to its registered “长城” trademark. COFCO also applied to the court for the preservation of evidence and property against the alleged infringing products worth 4 million yuan.
    On April 20, 2005, Beijing High People’s Court rendered its judgment that Jiayu Company had infringed upon COFCO’s exclusive right to “长城”, its registered trademark, that Jiayu Company immediately cease producing and selling wines under the brand name of “嘉裕长城” and “嘉裕” upon the date that the judgment came into force, and that Jiayu Company compensate COFCO 15,527,479 yuan within 10 days from the date that the judgment became effective. Disagreeing with the judgment, Jiayu Company appealed to the Supreme People’s Court.
    On August 10, 2006, the Supreme People’s Court issued its final judgment for the case: Jiayu Company had, without due permission from COFCO, used trademarks proximate to the registered trademark of COFCO, on commodities similar to those sold by COFCO. Therefore, the Court held that Jiayu Company had infringed COFCO’s exclusive right to the registered trademark and should be subject to civil liabilities under law. Moreover, the Supreme People’s Court reduced the amount of damages ordered in the first instance court’s judgment from 15,527,479 yuan to 10,614,090 yuan.

Views
    1. Zhang Hui, Attorney for Plaintiff: If “A+B” is the distinctive part of a trademark, any other trademark containing “A”, “B”, or “A+B” is a proximate trademark, despite any modifier, such as a prefix or suffix, or any difference in pronunciation, shape or meaning. In this way, infringement can be clearly determined without any dispute.
“Confusion” is a possible outcome and can be established through presumption without the burden of proof as long as other parties have used any distinctive elements of an existing registered trademark in their trademarks, which may easily cause consumers to believe there is some special connection between such other trademarks and the existing registered trademark.
    2. Zhang Junhao, Specially Invited Professor, the Pilot College of Beijing University of Technology: The similarity between trademarks is determined by a combination of such elements as their respective components, the layout and the correlation between the components. The similarity of the major part is only one of the essential conditions rather than a sufficient one for determining proximity between trademarks. To go a step further, two trademarks with similar major parts may or may not be similar, but are not necessarily so.
    3. Xu Chuncheng, Associate Researcher, IP Research Center, China University of Political Science and Law: The alleged infringing trademark and the registered trademark are not proximate unless they have similar constructive elements and the possibility of causing confusion. It actually confirms that the principle of correspondence of subjectivity and objectivity is applicable in the determination of trademark proximity.
 
1. Rules for the Determination of Trademark Proximity
    A major focus of the “长城牌” trademark infringement case involved the determination of trademark proximity. In Article 9 of the Interpretation of the Supreme People’s Court for Some Issues Concerning the Application of Law in the Trial of Trademark Civil Disputes  (“the Interpretation”), “trademark proximity” is defined as existing when the alleged infringing trademark is similar to the registered trademark with regard to its shape, pronunciation or meaning of its words, or the composition or color of its device, or the whole structure of all the constructive elements combined, or the 3-D shape or the color composition of the trademark, which may easily lead the relevant public to mistakenly believe that the origin of the commodities under the infringing trademark is the same as or specially related to that of the commodities under the registered trademark”. Article 10 of the Interpretation describes three principles to determine the proximity between trademarks as follows: i) the criterion is the general perception of the relevant public; ii) the comparison shall be done on both the whole and major part of the trademarks while they are separate; iii) the distinctiveness and fame of the trademark shall be considered when a request for protection has been filed. These three principles are the only prescription for determining trademark proximity in the present trademark protection system, and also serve as the criterion for judging trademark proximity in the adjudicative process. 
    The author thinks that the language in Article 9 of the Interpretation stating, “the alleged infringing trademark is similar to the registered trademark with regard to its shape, pronunciation or meaning of its words, or the composition or color of its device, or the whole structure of all the constructive elements combined, or the 3-D shape or the color composition of the trademark” is a comparison between trademarks in terms of their physical properties and visual features; while the language “which may easily lead the relevant public to mistakenly believe that the origin of the commodities under the infringing trademark is the same as or specially related to that of the commodities under the registered trademark” represents a comparison of the proximity between trademarks after they are placed in the market place for commercial purposes. The judgment of trademark proximity shall not merely apply to their apparent physical properties or visual differences, but to the information conveyed to the general public, which may cause confusion to the public as to the origin of the goods.   
    In this case, the key to determining the alleged infringement of the exclusive right to use the registered trademark is to judge whether “嘉裕长城 and device” used by Beijing Jiayu East Wine Co., Ltd. (Jiayu Company) is proximate to the registered trademark “长城牌” (Registered Trademark No.70855) used by China National Cereals, Oils and Foodstuffs Imp. & Exp. Corp. (COFCO). However, due to the difference in the overall appearance between these two trademarks, some scholars hold the view that “the dissimilarity of the whole must lead to a finding of NO proximity between trademarks ” or “two things can never be proximate if they are dissimilar with or different to some degree from each other in terms of the whole ”. These views are too absolute in the author’s opinion. The author thinks that these scholars have not grasped the essence of the trademark proximity issue, nor have they analyzed the essence of the trademark’s role in the commercial marketplace. A comparison between trademarks is different from that between ordinary things. Its purpose is not to discover the difference between the two trademarks, but whether the similarity between them will cause confusion in the market. A Trademark is a symbol for distinguishing the origins of commodities or services. The connotation it carries is far greater than merely its words or devices. Especially for famous or well-known trademarks, the value implied is immeasurable, for it reflects the consumers’ trust and choice. Such a “comparison of similarities instead of differences” rule is usually adopted in judicial practice. “We buy a commodity because we need it, not because we want to verify its genuineness.  Therefore, we will not purposely compare the trademark of a commodity to be purchased with our impression; that is, we get accustomed to considering them as being the same. Similar to our purchasing habits, what we are concerned with in the judicial determination of trademark confusion is to find out where the similarities between trademarks exist; whether they involve the essential part for both trademarks, and whether they will create overall confusion, rather than merely observing the differences between the two trademarks ”. Obviously in this case, “长城” is the major part of the trademark “嘉裕长城 and device” when used in grape wines. The reason is that COFCO’s “长城牌” grape wine brand, through years of development, has obtained prestigious market good will, enjoys a good reputation and is popular. The information carried by this trademark is revealed by “长城”. If the trademark “嘉裕长城 and device” is used in commodities other than wine, the major part is different. For the major identifying part of the “长城牌” trademark, the Supreme People’s Court rendered its final judgment (2005) Min San Zhong Zi No.5 (Judgment No.5), which fully and accurately elaborates that:   
   “长城牌”(Registered Trademark No.70855) is a well-known trademark as appraised by the State Administration for Industry and Commerce as it was registered a long time ago and enjoys a good reputation and fame in the market. The grape wines of COFCO under the “长城牌” trademark are also very famous in the domestic market. According to the specific features and the usual pronunciation, such a constructive element as “长城” or “长城牌”’s words, as it is used more frequently and more identifiably, has witnessed a fixed relationship between these constructive elements and the grape wines of COFCO in the wine market. The relevant public, as long as they see or hear “长城(Changcheng)” or “长城牌(Changcheng Pai)”, would usually associate it with COFCO’s grape wines and brands. Therefore, the words “长城” or “长城牌” is the major part of the trademarks as it is obviously a distinctive feature for identifying COFCO’s grape wines. Although “嘉裕长城and device” is a combination of words and device and contains the characters of “嘉裕”, the fame and distinctiveness of “长城” and “长城牌”’s words in COFCO’s “长城牌” trademark (Registered Trademark No.70855) are sufficient for the relevant public in the wine market to confuse the wine under the trademark of “嘉裕长城and device” with those under the trademark of “长城牌”, as both of them contain the words of “长城”, or at least to believe there is a certain connection between the two in origin. Therefore, “嘉裕长城and device”, the trademark of Jiayu Company, has used the most distinctive word components of COFCO’s “长城牌”, registered trademark (Registered Trademark No.70855) and may easily lead to confusion among the relevant public in the market.
    This paragraph clearly demonstrates that “长城”, instead of “嘉峪”, is the major part of the “嘉裕长城trademark and device” used in grape wines, and results in the finding of trademark proximity between “嘉裕长城and device” and “长城牌” as used for grape wines. In a similar way, when we see the trademark “齐鲁海尔” used in washing machines, we understand that the major part is “海尔”, instead of “齐鲁”, and will associate it with the trademark “海尔” and thus mistakenly believe that there is a certain connection between the two in origin. Therefore, to determine trademark proximity, one criterion is to examine whether the information conveyed by the registered trademark or its major part is the same or partially similar to the allegedly infringing trademark or its major part. When such similarity is prone to cause confusion to the relevant public, consumers will incorrectly identify it, and accordingly infringement occurs. “Due to the public’s uncertainty about it, the general judgment concerning infringement is still dependent on the judge’s interpretation, which interpretation is not to be subjective, but is to be based on certain rules consistent with the public’s cognitive process. The judgment shall also be made based on the understanding of the semiotic essence of the trademark, the reasonable interpretation of the marks, the extraction of the trademark’s distinctiveness, and whether confusion results. Such judgment is subjective in form, but objective in content: the conclusion that confusion exists is objective ”. The judges through their judgment merely express the objective existence of information carried by the infringed upon trademark and the allegedly infringing trademark. The judgment is based on the evidence raised by both parties and the facts that exist objectively, and as a result, it embodies the judge’s personal will, but fundamentally reflects the objective facts.
2. The substance of the rules for determination of trademark proximity
    The judgment (2005) Min San Zhong Zi No.5, by the Supreme People’s Court elaborates that, “As stronger legal protection is given to the well-known registered trademarks in specific markets, it helps to stimulate the market winners, encourage fair competition and guarantee the market order, and prevents others from unfairly seeking connections with the business reputation of the winners, so as to effectively promote the orderly and healthy growth of the market economy”. From here, we can see that in market operations subsequent operators are required to be prudent with respect to prior rights, avoid conflicts with such rights, and give reasonable concessions to their requirements, so that “in the competitive order, there will be no infringement or stealing of another’s prestige or efforts for the purpose of gaining personal profits” . This represents the embodiment of the principles of equity, honesty and good faith that China’s Civil Law advocates, and that TRIPs’ requires for the protection of well-known trademarks. Article 16 (3) of TRIPs enlarges the prescribed limit of Article 6 (1) of the Paris Convention, so that the well-known trademarks are able to receive more satisfactory protection. TRIPs interpret “confusion” in a broader sense so that the use of another’s well-known trademark does not only cause confusion to similar commodities or services, but to different kinds as well.
     China’s judicial practice has applied this rule in many cases. For example, the judgment (2001) Zhong Zhi Chu Zi No.343 of the case of “Hengsheng Computer (恒升电脑)” vs. “Hengsheng Computer (恒生电脑)” heard by Beijing No.1 Intermediate People’s Court sets forth that:
     As an operator in the same industry, the defendant Hengsheng (恒生) Company should apply the principle of honesty and good faith to give reasonable concessions to the prior rights during its registration and use of its trademark. On the contrary, it disregards the prior legitimate exclusive right owned by others, and registers and permits the use of a trademark proximate to the registered trademark “恒升” upon the same commodity classification. This is a violation of the principle of honesty and good faith.
The judgment (2006) Zhong Zhi Chu Zi No.3986 of the case of “Guomin Insurance Agency (国民保险代理)” vs. “Guomin Life Insurance Company (国民人寿保险)” states that:
    “Therefore, Guomin Life Insurance Co., Ltd. ought to know the existence of “Guomin Insurance Agency” and its trademark “Guomin”, in which case it should give concessions to the prior characters and trademarks, and use different distinctive characters to avoid confusion”.
     The judgment (2006) Zhong Zhi Chu Zi No.1896 in the case of “Mengniu Milk Industry (蒙牛乳业)” vs. “Mengniu Wine Industry “蒙牛酒业” concludes that:
The court determines that the business name of Mengniu Wine Company contains the characters “Mengniu (蒙牛)” which constitutes a conflict with the plaintiff’s “Mengniu (蒙牛) and device” trademark. The plaintiff has used the characters “Mengniu (蒙牛)” not only in its trademark design, but also in its business name. The high popularity of the trademark also involves the fame of the company and its business name. Similarly, the business name of Mengniu Wine Company constitutes a conflict with the plaintiff’s business name. Since the plaintiff has owned the business name and the exclusive right to use the registered trademark, and specifically concerns a highly popular registered trademark, Mengniu Wine Company should have given concessions to the prior rights when it registered its business name containing the same characters as the plaintiff’s. However, it knowingly and willfully violated this rule, and has registered and obtained its business name. This constitutes an intentionally-made conflict with the plaintiff’s legally registered name, caused confusion and usurped the plaintiff’s commercial reputation. 
    All these judgments, with no exceptions, make reference to the concession obligation of subsequent operators. In this grape wine case, when the defendant tried to register a trademark name for grape wine, he should have known of the prior well-known trademark “长城牌”, and should perform his concession obligations (which is absolutely possibly). Required by the principles of equity, honesty and good faith and the maintenance of a normal, healthy and orderly market economy, later operators are obliged to give concessions with a prudent attitude toward the prior rights.
    With the increasing perfection of the nation’s adjudication procedures for intellectual property rights and the strengthening of enterprises’ awareness of the need to safeguard their rights, trademark infringement cases have become more and more complex, and infringement activities have become more and more concealed, which magnifies the difficulty in determining trademark proximity. However, the later operators’ ability to cause confusion by misleading consumers to obtain unlawful benefits from prior right owners will certainly reveal itself to the public. The judgment of the Supreme People’s Court in the case of the “长城”brand name for grape wines provides an instructive reference concerning the criterion for judicially determining trademark proximity. And the substance of the rules for the determination of trademark proximity is instructive both in theory and in practice.

Li Yongbo is a lawyer from Beijing Unitalen Attorneys At Law. 
(Translated by Hu Xiaoying)
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