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Tackling Bad Faith Trademark Applications or Registrations in China – Part IV
by Yan Zhang & Austin Chang
When an oversea brand enters Chinese market, selecting a Chinese equivalent of the oversea brand is crucial because native Chinese pronounce and remember the Chinese language much easier than any foreign language. This is precisely why nearly all famous international brands have and use its Chinese equivalent names in China. For example, the well-known tech company APPLE has its Chinese name of “PING GUO in Chinese (苹果)” and MICROSOFT uses “WEI RUAN in Chinese (微软).” Both APPLE and MICROSOFT used literal translation as their Chinese equivalent. Literal translation is one of the ways in selecting a Chinese equivalent. The famous hotel brand HILTON uses “XI ER DUN in Chinese (希尔顿)” and the fashion brand ARMANI uses “A MA NI in Chinese (阿玛尼).” Transliteration is another popular way of creating a Chinese equivalent, which could be highly distinctive and have a similar pronunciation to its foreign counterpart. Literal translation or transliteration, it is critical that the Chinese equivalent has no negative meanings.
A combination of literal translation and transliteration is also used in creating Chinese equivalents. For example, STARBUCKS uses “XING BA KE in Chinese (星巴克).” The first character “XING in Chinese (星)” is the literal translation of “STAR,” and the last two characters “BA KE in Chinese (巴克)” are the transliteration of “BUCK.” Another great example is “LOCK & LOCK,” a Korean household brand. Its Chinese name sounds like “Le kou Le kou” and means “happily locked or buttoned.”
As Chinese equivalents could involve various Chinese translations or non-exclusive transliterations, in China trademark prosecution, a foreign language trademark will not automatically be deemed similar to its Chinese equivalent. So registering the foreign language trademark alone may not be sufficient to establish priority over all Chinese translations, nor prevent others from registering various transliterations.
More importantly, China adopts the first-to-file trademark system. If a Chinese equivalent of a foreign language trademark is not promptly selected, it is likely that distributors, consumers, or media may “self-select” a Chinese name for that foreign language trademark and even have it registered to block that oversea brand owners from using its Chinese marks in China. So it is vital for an oversea brand owner to create and timely protect its Chinese equivalent.
1. Factors considered in prosecution and litigation
Determining whether or not a foreign language trademark is similar to a prior Chinese language trademark, the general understanding of Chinese relevant public shall be considered, and the following factors should be taken into account according to the Beijing High Court Guidelines for the Trial of Trademark Right Granting and Verification Cases: (i) the ability of Chinese consumers to recognize the foreign language trademark; (ii) the relevance or correspondence in meaning and pronunciation between the foreign language trademark and the Chinese language trademark; (iii) the distinctiveness, popularity and ways of use of the cited trademark; and (iv) the actual use of the trademark in dispute. These factors should be comprehensively considered in different proceedings and evaluated on a case-by-case basis.
For the factor “the ability of Chinese consumers to recognize the foreign language trademark,” two elements should be considered, the type of foreign language and the frequency of use of foreign words.
If Chinese consumers cannot recognize a foreign word, it would be unnecessary to discuss similarity between the foreign language trademark and Chinese language trademark. Like in the “Little Black Dress” case, the Court held that the refused mark “Little Black Dress in Chinese” and the cited mark “LA PETITE ROBE NOIRE” do not constitute similar marks, because most Chinese consumers cannot read French, nor do they know the Chinese meaning of the cited French trademark. They would only recognize the cited French trademark as a combination of Latin alphabets and not associate it with a Chinese language trademark.
For the factor “relevance or correspondence between the foreign language trademark and the Chinese language trademark,” as one foreign word can be translated or transliterated into different Chinese characters, and vice versa, when identifying similarity between a foreign language trademark and a Chinese language trademark, correspondence can be considered from either of the two perspectives – translation from Chinese into English and vice versa.
Taking the “FOREVERMARK” case for example, “FOREVERMARK” can be translated into “永恒印记, ” while “永恒印记” can also be translated into “FOREVER MARK.” As “FOREVER” and “MARK” are both frequently used English words, Chinese consumers can readily understand the Chinese meaning of the trademark and will likely associate the trademark with its corresponding Chinese translation.
Based on current practices in China, the substantial examination of a foreign language trademark at the Trademark Office is straightforward. The examiners mainly focus on the literal meaning of the trademark, and refer to the online dictionaries, such as Kingsoft dictionary for direct translation. Hence, the transliterations of a trademark or phonetically similar trademarks will not be cited by the examiners to block the new application of foreign language trademark.
While in refusal appeal procedure, the examiners apply a broader scope in examining the similarity between a foreign language trademark and a Chinese language trademark, not merely relying on the dictionary meanings. Their broader scope of examination focuses on the two aspects: the general understandings of Chinese consumers and the correspondence in meanings between the foreign language trademark and the Chinese language trademark. The use and reputation of refused marks would also be deemed as a supporting factor but cannot carry much weight.
In reviewing opposition and invalidation cases, however, the Trademark Office and courts apply a more comprehensive analysis using “likelihood of confusion” as the judging standard. In addition to comparison of trademarks per se, other influential factors may be considered when assessing “likelihood of confusion,” such as the cited trademark’s distinctiveness, the use and reputation of the cited trademarks, the relatedness of goods and services, and the applicant’s bad faith.
Chinese courts also apply the “likelihood of confusion” analysis in trademark infringement cases involving Chinese equivalents, requiring only a “stable,” as opposed to “sole” corresponding relationship be established between a foreign language trademark and its Chinese equivalent. However, to achieve the “stable” status, brand owner must provide substantial evidence to prove that its foreign language trademark and its Chinese equivalent have been widely used over a long period of time, and the corresponding relationship has been established and known to the relevant public.
2. Typical cases regarding Chinese equivalents of foreign trademarks
The most common mistake in business practice is that the brand owner does not have an “official” Chinese equivalent for its foreign language trademark, nor does it attempt to use and promote the trademark in Chinese. When a brand owner does not have a Chinese equivalent for its foreign language trademark, its Chinese distributors, public, or media will often self-create and use a Chinese version to refer to the brand owner and its products. This is considered as “passive use” in contrast to the “active use” by the brand owner. In practice, when an issue of determining whether a use is an active one or a passive one is presented to Chinese courts (usually in cancellation actions), the courts will examine whether the asserted “passive use” in the case at hand is used against the brand owner’s will, and whether a corresponding relationship between the foreign language trademark and its Chinese equivalent has been established. Please see below an example case.
In the FREDDIE MAC case, the China Supreme Court held that “FANG DI MEI in Chinese,” as one of the Chinese translations of “FREDDIE MAC,” has been widely used by media reports to refer to Freddie Mac, and “FANG DI MEI in Chinese” has established a corresponding relationship with “FREDDIE MAC” in the field of financial services, although there exists several other translations, like FANG DAI MEI (房贷美) and FU LEI DE MA KE (弗雷迪马克). The FREDDIE MAC case highlights that the existence of several Chinese translations does not affect the establishment of corresponding relationship between the major Chinese translation and the foreign language trademark.
An equally important issue is that the corresponding relationship shall be identified in connection with the specific goods or services used. Taking the FACEBOOK case for example, the Beijing High Court held that, based on the third party evidence including Chinese media reports, and general understanding of Chinese relevant public, the “LIAN PU in Chinese” mark was the corresponding translation of the FACEBOOK mark when used on networking services. Although “LIAN PU in Chinese” has its fixed meaning in Chinese, which means facial makeup in operas, when used in connection with networking services, it refers to Facebook, rather than other entities.
The FREDDIE MAC case and the FACEBOOK case are typical passive use cases where the courts protected the Chinese equivalent of the foreign language trademark. For the passive use, the worse scenario happens when the Chinese distributor created the Chinese name for the oversee brand and registered the Chinese trademark under its own name. Upon the termination of business cooperation, the Chinese distributor may start supplying identical products using the Chinese trademark, which may inevitably mislead consumers about the source of products.
As in the EVOLON case, a Nanjing Company, which was a distributor of Freudenberg, registered the Chinese mark “YI WO LONG in Chinese (依沃珑)” and used it in the sales of Freudenberg’s nonwovens products with the English mark “EVOLON.” The Nanjing Company insisted that the Chinese mark was created by themselves, and it was their efforts that contributed to the reputation of the Chinese mark. The China Supreme Court affirmed the corresponding relationship between the Chinese mark “YI WO LONG in Chinese” and the cited English mark “EVOLON,” and further held that the Nanjing Company used the Chinese mark alone or together with the English mark to promote Freudenberg’s products, which inevitably associated the Chinese mark with Freudenberg and its products.
Despite more and more positive outcomes from Chinese courts, there are cases where Chinese equivalents of foreign language trademarks were not protected because brand owners expressly denied the corresponding Chinese equivalents. The VIAGRA case and SONY ERICSSON case are typical examples. In the VIAGRA case, Pfizer adopted a Chinese name “WAN AI KE in Chinese” for its blue pills, Chinese public and media, however, had already created a Chinese name “WEI GE in Chinese” for VIAGRA. Pfizer opposed a third party’s filing for the “WEI GE in Chinese” mark but failed. The court found that, Pfizer had never promoted their products under the name “WEI GE in Chinese,” and on the contrary, claimed that the Chinese equivalent of VIAGRA was “WAN AI KE in Chinese.” In the SONY ERICSSON case, Sony Ericsson used “SUO NI AI LI XIN in Chinese” as the official translation of its mobile phone brand, but Chinese public and media called it “SUO AI in Chinese” for short. The court held that, Sony Ericsson had no evidence proving their use of “SUO AI in Chinese” and even denied that “SUO AI in Chinese” was the abbreviation for “SUO NI AI LI XIN in Chinese.”
One final important point, the evidence proving the corresponding relationship shall be prior to the application date of the disputed mark or prior to the first use date of the accused mark.
In the New Balance case, New Balance registered its English trademark “New Balance,” but neglected to register the Chinese version. A Chinese individual, Mr. Zhou, registered the trademarks “BAI LUN in Chinese” and “XIN BAI LUN in Chinese” for footwear and later brought an infringement action against New Balance’s use of “XIN BAI LUN in Chinese” mark. The first instance court affirmed trademark infringement and ordered New Balance to pay damages for around USD 15 million. This astonishing high damage was significantly reduced to around USD 770,000 by the second instance court, that said, the finding of trademark infringement is an important lesson to oversea brand owners doing business in China to have a Chinese equivalent trademark.
On the other hand, New Balance attempted to invalidate Mr. Zhou’s registered trademark “XIN BAI LUN in Chinese,” claiming “XIN BAI LUN in Chinese” is a Chinese equivalent of “NEW BALANCE,” but the Beijing High Court recently made the final decision denying New Balance’s appeal, because New Balance used “XIN BAI LUN in Chinese” as the Chinese equivalent of NEW BALANCE later than the application date of Mr. Zhou’s “BAI LUN in Chinese” trademark. And no sufficient evidence was provided to prove the corresponding relationship between “XIN BAI LUN in Chinese” and “NEW BALANCE” prior to the application date of the disputed mark.
Similarly, a famous Australian wine brand Penfolds got involved in a trademark dispute with a Chinese squatter Mr. Li, who registered the mark “BEN FU in Chinese,” which is the Chinese equivalent of PENFOLDS. This registration blocked the Australian brand owner using the “BEN FU in Chinese” mark in China, despite doing business in China for over twenty-five years. In the PENFOLDS case, the Beijing High Court held that the submitted evidence was sufficient to prove the corresponding relationship established between the disputed mark “BEN FU in Chinese” and the cited English mark “Penfolds” prior to the application date of the disputed mark.
Fortunately for Penfolds, before successfully securing the registration of its own Chinese mark “BEN FU in Chinese,” it landed a victory in an infringement action against a Chinese brewing company and its distributor. The local court affirmed the well-known status of “BEN FU in Chinese” as an unregistered mark, based on its corresponding relationship with the English mark “Penfolds,” and held the defendants’ use of the accused “BEN FU in Chinese” mark constitutes trademark infringement. In this case, “BEN FU in Chinese” was protected as unregistered well-known mark based on the evidence prior to the first use date of the accused mark.
The key issue in the New Balance case and the Penfolds case is the cut-off time for collecting evidence. On top of that, sufficiency of evidence is crucial in swinging the outcome of a case.
1) It is highly recommended that oversea brand owners create their own Chinese equivalents before entering the China market. If not, Chinese consumers or media will create Chinese versions in different ways and squatters may even register them.
2) Oversea brand owners should not only register the foreign language trademark, but also file for the Chinese equivalent as soon as possible. Those Chinese equivalents created by the media and public shall be considered and registered as trademark as well, at least for defense purposes.
3) In addition to clearance search, regularly monitoring similar Chinese translations in key classes will help in discovering questionable marks, which allows brand owners to address squatting or counterfeiting problems in a timely manner.
4) Better evidence management is crucial because sufficiency of evidence, especially evidence related to the use and fame of the foreign language trademark as well as the corresponding relationship between the foreign language trademark and its Chinese equivalent, is always a core factor affecting chances of success.
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