The trademark proximity case between “Jiayu Changcheng” and “Changcheng Pai and graphic” proceeded through Beijing High People’s Court of first instance and the Supreme People’s Court of second instance before it was finally decided that the two were proximate. In the final judgment, the Supreme People’s Court reasons in detail for the proximity finding by interpreting and applying the Interpretation of the Supreme People’s Court about Several Issues in the Application of Law in Hearing Civil Disputes of Trademark (the Interpretation) on trademark proximity. Due to its theoretical significance, this judgment sets forth concrete criteria for application by the law courts of China in rendering judgments of trademark proximity. For this reason, focusing on the judicial opinions contained in the judgment, this article discusses the rules for the determination of trademark proximity reflected in the judgment and the basic values in the rules.
I. The basis to determine proximate trademarks
    Before we come to the proximity between “Jiayu Changcheng” and “Changcheng Pai and graphic”, we must first know what “proximity” means. As the determining rules for trademark proximity vary from country to country in terms of their trademark laws, we have to start with a positivist study of the determining rules in the Trademark Law of China. It is provided simply in Article 52 of the Trademark Law that with respect to the same commodities, any use of trademarks that are close or similar to a registered trademark of another party constitutes an infringement upon the other party’s right to the exclusive use of the registered trademark. This provision does not clarify what “trademark proximity” means, i.e. what makes a “close or similar” trademark. In the Interpretation, the Supreme People’s Court provides in Article 9 and 10 the manner for determining trademark proximity. Article 9 provides a definition for trademark proximity and Article 10 presents some methods to determine proximate trademarks. We have to base our discussions on these articles as they are the only existing provisions on trademark proximity and its determining rules.
    What is “trademark proximity”? In the judgment, the Supreme People’s Court says that “the two trademarks are proximate if their whole bodies or major parts may cause possible confusion in the market; otherwise, they are not”. It is obvious that the Supreme People’s Court treats trademark proximity as equivalent to the possibility of trademark confusion in the market. In light of this, Article 9.2 of the Interpretation can be simplified as “‘trademark proximity means that the alleged infringing trademark and the registered trademark may, through comparison, possibly be confused with one another in the market with regard to the whole bodies or the major parts of them”. Whether the judicial opinions given by the Supreme People’s Court in the judgment are consistent with Article 9.2 of the Interpretation is worthy of our consideration and discussion.
     In terms of sentence structure, Article 9.2 of the Interpretation can be divided into two parts: Part 1. “the alleged infringing trademark is similar to the registered trademark with regard to the shape, pronunciation or meaning of the characters, or the composition or color of the graph, or the whole structure of all the constructive elements combined, or the 3-D shape or the color combination”; Part 2. “which may easily lead the relevant public to mistakenly believe that the origin of the commodities under the alleged infringing trademark is the same as or specially related to that of the commodities under the registered trademark”.
     What is the relationship between the two parts? In light of the opinions given by the Supreme People’s Court, Part 2 is essential, while Part 1 seems useless. However, as a legal provision, Part 1 should act as a limitation on Part 2 and cannot be overlooked because Part 1 has defined “trademark proximity” by stating that “the alleged infringing trademark is similar to the registered trademark with regard to the shape, pronunciation or meaning of the characters, or the composition or color of the graph, or the whole structure of all the constructive elements combined, or the 3-D shape or the color combination”. In this definition, objectively speaking, proximity is the similarity of the whole or the constructive parts of the trademarks. Similarity, or “likeness”, means the state of having the same or common points. That is, objectively speaking, two trademarks must contain the same elements, which make them partially or fully overlap each other, if they can possibly be proximate.
     Part 2 of Article 9.2 of the Interpretation is a subjective expression which imposes restriction on Part 1. Probably because Part 1 provides too high or too low a requirement for trademark proximity, Part 2 provides further that the proximity between trademarks means a possibility of confusion, i.e. the proximity “may easily lead the relevant public to mistakenly believe that the origin of the commodities under the alleged infringing trademark is the same as or specially related to that of the commodities under the registered trademark”; such possibility of confusion is decided in light of the perception of the relevant public – a subjective judgment. Obviously, Article 9.2 of the Interpretation should mean that 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. This provision, however, is condensed in the judgment of the Supreme People’s Court as “the proximity may be determined if two trademarks may possibly be confused with each other in the market, with regard to the whole or the major part of the trademarks; otherwise, the proximity cannot be determined". In this way, the Supreme People’s Court moves to the subjective end by focusing only on the judgment of the relevant public.
     Trademark proximity can be divided into the similarity of the whole and the similarity of the major parts. In other words, the similarity of the major part constitutes trademark proximity. In this case, “Jiayu Changcheng” and “Changcheng Pai and graphic” are dissimilar on the whole, which is recognized by the Supreme People’s Court as “the two trademarks are different somewhat with regard to the whole design”.
Generally two things can never be proximate if they are dissimilar with or different to some degree from each other in terms of their whole bodies. For example, we cannot say that two persons are similar if they are different on the whole although they have similar noses. However, according to the Supreme People’s Court, the similarity of a major part, as part of the determination of trademark proximity, is distinguishable from the similarity of the whole, i.e. the proximity between trademarks can be established if a major part is similar between the trademarks under dispute. The law in China does not yet regulate what is the major part of a trademark and how to determine it. “In terms of the Trademark Law”, as the Supreme People’s Court says, “the major part of a trademark means such constructive elements of the trademark that are most distinguishing about the origin of the commodity or most possibly make the relevant public relate the trademark to the commodity under it”.
     The Supreme People’s Court has to define it as no laws have defined what “the major part of a trademark” is. Such a definition is academic in nature because it is “in terms of the Trademark Law”. The major parts of a trademark are the major constructive elements of the trademark, but no determination can be made on what is the so-called major part from the trademark alone. For example, in the case of “Jiayu Changcheng”, the major part can be “Jiayu” or “Changcheng”; and in the case of “Changcheng Pai and graphic”, the major part can be “Changcheng”, “Changcheng Pai”, or the “graphic” of the Great Wall. Thus, for a trademark, the major part of it cannot be decided without resorting to the perception of the public. To determine the major part of any trademark under dispute, the only way is to find the relevant public’s perception of the trademark. The opinion of the Supreme People’s Court is worthy of our applause as from it we see its consistent focus on only the subjective judgment of the relevant public.
     Thus, it is obvious that the Supreme People’s Court determines trademark proximity solely on the basis of perception, the subjective judgment of the relevant public. Whatever trademarks the relevant public perceives as similar are proximate trademarks. However, it is questionable whether this tendency complies with the rules for the determination of proximate trademarks.
In this case, the Supreme People’s Court decided that the major part of “Changcheng Pai and graphic”, in the perception of the relevant public, was “Changcheng”. The infringing trademark “Jiayu Changcheng” also contains “Changcheng”. However, it is rather a pity that the Supreme People’s Court did not identify the major part of “Jiayu Changcheng”. Suppose that the major part of “Jiayu Changcheng” is “Jiayu” rather than “Changcheng”. Then, would the two trademarks still be considered proximate?
2. The substance of the rules for determination of trademark proximity
     The Supreme People’s Court took the stance that trademark proximity is solely determined by the perception of the relevant public. Why has it done so? The answer shows itself in the following statement from the judgment of the Supreme People’s Court. “Moreover”, the Supreme People’s Court says, “as stronger legal protection is given to famous registered trademarks in special markets, it helps stimulate the market winners, encourage fair competition and better the market order, and prevents others from unfairly seeking connections with the business reputation of the winners, so as to promote effectively the orderly and healthy growth of market economy”. The statement reflects the attitude of the Supreme People’s Court in the protection of the exclusive user’s right to the trademark. This judgment is more than a judgment, but a proclamation that the Supreme People’s Court is against any unfair use of another other’s commercial goodwill. In this author’s opinion, this is reflection of the substance of the rules for determining trademark proximity.
     As stated above, the Supreme People’s Court delegates the power to the relevant public and bases its decisions on the perception of the relevant public as to whether two trademarks are proximate or not. According to Article 8 of the Interpretation, “Relevant Public” means the consumers related to the commodity or service that the trademark identifies, and the business operators who are closely related to the marketing of such commodity or service. The consumers and business operators, as the relevant public, are constantly changing and cannot be definitely identified. This may lead to a situation in which the relevant public disappears, leaving one entity that is omnipotent and makes all the decisions for the consumers and business operators. Such an entity can only be the court or some administrative organization, which has the power to handle trademark infringement cases. This, however, seems somewhat uncertain because under such a situation, the court or the other organ, which has the power to determine trademark proximity, would be placed in the position of representative of the relevant public. The obscurity of the relevant public results in extreme flexibility and uncertainty in the determination of trademark proximity. Also this flexibility and uncertainty gives the court a broad discretionary power. With this discretionary power, the court can handle cases by applying the latent bona fide doctrine to realize policy goals. As a matter of fact, the Supreme People’s Court’s above statement occurred at a time when a large number of trademark snatchings emerge.
     Thus, the rules to determine trademark proximity essentially grant the courts a discretionary power to deal with disputes concerning proximate trademarks. How to limit this granted discretionary power must be on our agenda for further study. In this author’s opinion, the limitation can be considered from the perspective of evidence. In this case, the Supreme People’s Court relies solely on the reasoning of the court, with no clear evidential support as to why “Changcheng” is the major part of “Changcheng Pai and graphic” and why the two trademarks under dispute are proximate. To make the judgment more persuasive, such sociological methods should be undertaken to randomly sample the relevant public and use the investigation results as evidence. In fact, trademark proximity is an authentication issue except that the authenticator is the relevant public rather than the expert.