An unregistered Chinese equivalent of a trademark refers to the Chinese translation of a trademark whose origin is in a foreign language (including transliteration, free translation, or both), which in practice may have been adopted by either the original proprietor of the foreign language trademark, or the public and media. Recent litigations involving Chinese equivalents of foreign trademarks being squatted or used without authorization have caught the attention of professional circles. Foreign trademark owners, after adopting their trademarks, usually obtain registrations for the original foreign language trademarks very soon, but some, for various reasons, act slowly in registering the Chinese equivalents. And when they do, they may find the Chinese equivalents have been squatted or used without authorization. In such circumstances, the trademark owner would usually seek to recapture the Chinese equivalents or enjoin the infringing acts through opposition proceedings or infringement litigation, only to find that such legal proceedings can be extremely burdensome at times. The oversight seems to be a common error for quite a few foreign businesses who have failed to timely secure trademark registrations on Chinese equivalents. This, together with the statutory loopholes, provides opportunities for trademark squatters to penetrate into registration, or even sustain a successful court battle. Such is the concern for many foreign trademark proprietors. This article will review relevant legislation and a number of typical cases in a bid to analyze the current state of trademark protection for the Chinese translation of unregistered trademarks and provide recommendations for improvement.

 

China’s trademark system follows the first-to-file doctrine in registration. The protection of unregistered trademarks only serves as a supplement to the first-to file doctrine to protect trademarks which have been previously used and obtained a certain degree of fame. Chinese laws on registered trademarks are mainly reflected in Article 13 of Trademark Law regarding unregistered well-known trademarks, Article 31 regarding trademarks which have been previously used and obtained a certain degree of influence, and relevant provisions under Unfair Competition Law on unique denominations of well-known products.

 

Article 13 of the Trademark Law provides that in the event of an application for registration of a trademark that is a reproduction, imitation, or translation of another’s well-known trademark not registered in China on same or similar goods, and consequentially is likely to create confusion, the application shall be rejected and the trademark shall be prohibited from use.

 

Article 31 of the Trademark Law provides that an application for trademark registration shall not prejudice any pre­existing right of others. It is prohibited to forestall the registration, through any improper means, of a trademark that is already used by another party and has produced a certain influence. The article aims to protect unregistered trademarks which have obtained a certain influence but have not been declared as well-known trademarks, and grant the prior users certain rights of cancellation.

Article 2 of Unfair Competition Law provides that business operators shall, in market transactions, adhere to the principle of good faith and observe generally accepted business ethics. Article 5(2) of the Unfair Competition Law provides that business operators shall not use the name, packaging, or decoration unique of a well-known product without authorization. In addition they may not use any name, packaging, or decoration similar to that of a well-known product, thereby creating confusion in distinguishing the product concerned from another’s well-known product.

 

This shows that China has a high threshold in the legal protection for unregistered trademarks. This protection is limited to trademarks which have been previously used extensively and obtained a certain degree of fame, such as well-known trademarks, or trademarks with “a certain influence,” or unique denominations of well-known products. However, it is difficult for many lesser-known unregistered trademarks to get any protection under the Trademark Law.

 

In addition, to quash trademark squatting, it helps to prove the Chinese translation is similar to the foreign language trademark in opposition proceedings, or in terms of unauthorized use by others. The infringing party may be subject to trademark infringement liabilities for the unauthorized use of the Chinese translation by demonstrating the two constitute similar trademarks under Article 52(1) of the Trademark Law. However, the Chinese translation and the foreign language trademark are not generally similar trademarks. In order to conclude they are similar, one must prove that the Chinese translation and the foreign language trademark have a sole and peculiar association and direction between them, measured by the understanding of the relevant public.

 

Rosemount Inc. v. Shanghai RSMT Instrumentation Co., Ltd . is an early case in which the plaintiff succeeded in overcoming the registration of the defendant’s mark under Art. 52, by proving that the mark was a translation similar to the unregistered Chinese equivalent of its foreign language mark. The first-instance court found that the plaintiff had been using the Chinese equivalent of its mark in commerce for a long time; that when defendant prominently used “上海罗斯蒙特” (“SHANGHAI ROSEMOUNT”) or“罗斯蒙特” (“ROSEMOUNT”) on its products and promotional materials, the relevant public would naturally associate it with the registered trademark “ROSEMOUNT” or thought that there was a certain connection with the registered trademark; and that “罗斯蒙特”was similar to “Rosemount.” The court assessed civil liabilities and damages in the amount of 300 thousand Yuan.

 

The defendant appealed and lost. The appellate court upheld the first court’s decision and stated that when the defendant established a competing business, it should have known appellee’s trademark had become well known to the relevant public. It ruled the defendant acted with the subjective intention to cause confusion and infringed on a registered trademark.

 

In the above case, the key issue was whether an unregistered Chinese translation constituted a trademark similar to the registered foreign language mark. Because variable translational methods may produce several different names, Chinese translations of a foreign language trademarks do not automatically constitute a similar trademark to the foreign language mark. Therefore, when determining similarity, apart from the common methods of comparison from the perspectives of pronunciation, spelling and meaning, courts consider whether the Chinese translation has formed an exclusive counterpart of the foreign language trademark in the eyes of the relevant public.

 

In the “Rosemount” case, the court held that the corresponding Chinese translation of “ROSEMOUNT” was always “罗斯蒙特,” in terms of either the Chinese translation used in the long-term promotions by the plaintiff in China or the Chinese symbol appearing on advertisements of products bearing the registered trademark “ROSEMOUNT.” Furthermore, judging from the length of promotions by the plaintiff, the “ROSEMOUNT” brand had obtained a high degree of fame in the industry, and any talk about the brand may lead to the sole transliteration of “Rosemount in Chinese characters” which had become the sole Chinese equivalent to the famous “Rosemount” brand and had been known to the relevant public. Based on the above, the court found for trademark infringement on the basis of trademark similarity.

 

In Harley-davidson Inc. v. Beijing Harley Trading Center, a dispute over the “Harley” trademark, is also a successful story in recent years in which the court granted a relatively high degree of protection for the Chinese translation of a trademark. In the case, the plaintiff had obtained registrations for “HARLEYDAVIDSON” (Harley), “哈利-戴维森” (hali-daiweisen) and the “哈利” (hali) marks. (Note: Though a Chinese equivalent, “哈雷” (halei), has been registered by a third party, that issue is not involved in this case. The owner of the Harley trademark has filed a complaint challenging the registration of “哈雷” (halei), and the dispute which is still on­going.)

 

In Chinese characters, defendant used the name “Hummer Harley” in its stores and on the tags of its T-shirt merchandise. In addition, defendant registered “哈雷” as its business name. The court found that reports and the contents of websites related to the alleged infringement indicated that “哈雷” had become a denomination of the plaintiff and its related products among the relevant public. Therefore, the corresponding Chinese transliteration of “Harley” for services on motorcycle repairs and maintenance had infringed on plaintiff’s exclusive trademark. The court also found a likelihood of mistake and confusion among relevant public. After the plaintiff established a certain reputation through extended business and promotion, defendant, being in the competing business of selling motorcycles and parts, and servicing, took “哈雷”as its business name. This was an act in bad faith, and in violation of the Unfair Competition Law. The court ordered injunctions against defendant’s infringing use of the trademark, use of “哈雷” as a business name, and 130 thousand Yuan in damages.

 

The court took a similar approach as in the “Rosemount” case. It ruled that the Chinese translations of the unregistered trademarks have been well-known to the relevant public and had become equivalents of the foreign language registered trademarks. The two cases are different in the use of evidence by the plaintiff in respect of the Chinese translation. In the “Rosemount” case, the plaintiff has used the Chinese translation in product promotions and advertisements for a long time. In the “Harley” case, the evidence submitted by the plaintiff was only the relevant reports and introductions by the media and publications. No evidence of use by the plaintiff of the Chinese translation of“哈雷. This may have something to do with the fact that “Harley” has been registered by others and the plaintiff only registered the trademark “哈利”. But the court was not restricted by such fact, and ruled for the trademark infringement and unfair competition on the ground that the media reports and the relevant public have extensively recognized that “Harley” (in Chinese characters) has become the name of the products of the plaintiff and the sole equivalent to the foreign language trademark of “Harley.”

 

Sony Ericsson China v. Trademark Review and Adjudication Board , concerning trademark squatting of “索爱”by the third party of one Mr. Liu is a recent case causing extensive concern and controversy. After the Trademark Review & Adjudication Board (TRAB) ruled to uphold the registration of “索爱”by the third party Mr. Liu, the plaintiff filed a lawsuit before the court, claiming “索爱”has been, prior to the application date of the trademark in question, established by usage as the shortened form of the well-known “Sony-Ericsson in Chinese characters” and “索尼爱立信”(“Sony-Ericsson”) trademarks, solely and determinately referred to Sony Ericsson Group, including the plaintiff, and their products, extensively reported by the media, and obtained a high degree of influence in the general public. The court of first instance held that prior to the application for registration of the trademark in question, a number of media have reports about “SuoAi cell phones” and other “SuoAi” electronic products, while the manufacturer of these products was all directed to “索尼爱立信（中国）(“Sony Ericsson China”). The shortened form of “索爱”(“SuoAi in Chinese”) has been adopted and widely used by the general public and the media, thus the form has been perceived and recognized by the general consumers. “索爱” has been the publicly acknowledged shortened form of and sole equivalent to “Sony Ericsson in Chinese characters.” Therefore, although the plaintiff has admitted it has not promoted “索爱” as its unregistered trademark, the media and consumer’s recognition worked together to have the same factual effects as use of “Suoai in Chinese characters” trademark by the plaintiff, as a result, “Suoai in Chinese characters” has become in fact the trademark the company uses in China. Therefore, the court of first instance ruled to cancel the decision of the TRAB. But unfortunately, the second-instance court reversed the first-instance ruling, and held that the media reports are not acts of the plaintiff and the plaintiff has not used “Suoai” characters in the sense of a trademark, besides, the plaintiff did not recognize “Suoai” as a shortened form of the company or its products. Based on the above, the court ruled to overturn the first-instance ruling and upheld the decision of the TRAB.

 

One of the controversial issues of the case is that, after the shortened form of “索爱”has been extensively recognized by the relevant public in China as the shortened form and the sole equivalent to “Sony Ericsson in Chinese characters,” allowing registrations by others will render it difficult to avoid public confusion and misunderstanding, while exclusion of public confusion and misunderstanding should be the fundamental purpose of Trademark Law.

 

By reviewing the statutory status quo and the cases, it can be seen that China does provide limited protection for unregistered trademarks (including Chinese translations of unregistered trademarks), which, because of the limitations, namely, heightened requirement for proving extensive use and certain reputation by the trademark owner, sets back trademark owners efforts to curtail bad-faith trademark squatting, thus allowing opportunists to obtain unjust enrichment.

 

Surely, the registration system is an important basis for trademark protection in China. However, in terms of acts of bad-faith registrations of others’ trademarks, if the protection is only limited to trademarks which have been extensively used and obtained a certain degree of fame, it will not be conducive to effectively curb the winds of bad-faith preemptive registrations, protect the legitimate interests of the trademark owners and stick to the principle of good faith. We believe that relevant laws and judicial interpretations should be revised to expressly stipulate that, in order to avoid public confusion, the registered trademark has in fact been able to distinguish the origin of the products or services if there is evidence proving that the Chinese translation of the unregistered trademark has been accepted by the general public and has established a sole corresponding relationship with the original foreign language trademark, then the registration and use by others should be prohibited. The establishment of the sole corresponding relationship may result from use by the trademark owner, or from public recognition or media promotions, or both. In other words, if the public has established the sole corresponding relationship between the Chinese translation and the foreign language trademark, and public confusion may be caused due to registration or use by others of the Chinese translation, such registration or use should be prohibited, and use by the trademark owner should not be listed as a prerequisite. This also agrees with the principle of avoiding public confusion of China’s Trademark Law.

 

China’s current laws and judicial practice have limitations on protection of Chinese translations of unregistered trademarks. In this case, the most important thing is that foreign companies, in their registration of the foreign language trademark, should register the Chinese translation of the trademark in a timely manner in order to eliminate any possibility of bad-faith preemptive registration by others. The domestic trademark registrants should be aware that preemptive registration may ostensibly obtain temporary “profits,” but may lose honesty and reliance of the customers, and finally the preemptively registered trademark may fade out of the public sight as time goes by, because any preemptive registration of others’ trademarks is unlikely to obtain a true success. Trademark legislation and judicial practice should further strengthen protection of unregistered trademarks, appropriately lower protection thresholds and step up efforts to curb acts of preemptive registration in a bid to promote formation of a good-faith and innovative atmosphere.

 

(Traslated by Wang Hongjun)