The Anti-unfair Competition Protection for Trade Name Right

Trade name refers to the name used by a company to identify its own business…

Trade name refers to the name used by a company to identify its own business operator in its business activities. It is the name of a market entity and an important business identifier for the company. Consumers or purchasers can distinguish different market entities through different business identifiers, and finally identify the source of its goods. A company normally has a company name legally registered with the company name registration authority, but in actual business operations, operators and consumers will also use the main part of the business name, abbreviation of the company name, corresponding foreign business name, etc. to identify product or service operators. Therefore, the object of trade name right protection discussed in this article includes the full company name registered in China, the main part of the company name, the abbreviation of the company name, and the trade name in foreign languages. For a name that can indicate the identity of the operator, the operator has the legal right to the name via use, that is, the trade name right. The unauthorized use of the same or similar trade name by others causes confusion to consumers, harms the interests of the owner of the trade name, and constitutes unfair competition. Unfair competition against trade names often occurs in commercial activities. Therefore, this article will combine the recent judicial cases in China to analyze the protection of trade name right against unfair competition in order to help business operators in their activities in China

I.The connotation of the trade name right

According to relevant laws and regulations, the full company name registered in China, the main part of the company name, the abbreviation of the company name, and the trade name in foreign languages used in China can all enjoy the trade name right. In the case (2017) Yue 73 Min Chu No. 2239, the Guangzhou Intellectual Property Court held that the rights and interests of trade names protected by the Anti-Unfair Competition Law cannot be simply equivalent to the enterprise names in the “Regulations on the Administration of Enterprise Name Registration” right. The former requires a certain influence, while the latter has no such requirement. The latter can only prohibit the registration of the same or similar names of peer companies within the jurisdiction of the competent authority, and the former has no such restriction. Comparing the trade name right protected by the Anti-Unfair Competition Law with the trademarks right protected by the Trademark Law, although the former is determined by judicial authorities in individual cases and the latter is pre-approved and authorized by administrative authorities, both belong to identification kind of intellectual property rights and the territorial scope of the right of prohibition extends to the whole country, so they are equal and there is no distinction between inferiority and superiority.

II.The constitutive elements of the protection of trade name right against unfair competition

If the trade name right is infringed, the right owner can resort to the protection of Anti-Unfair Competition Law. According to Article 6 of Anti-Unfair Competition Law, a business operator shall not conduct any of the following acts of confusion to cause its products from being mistaken for the products of others or from being mistaken as having specific connection with others:……(2) Where the business operator uses, without authorization, others’ enterprise names (including abbreviations, trade names, etc.), social organization names (including abbreviations, etc.) or names (including pen names, stage names, translated names, etc.) that have certain influence…… (4) Other acts of confusion enough to cause its products from being mistaken for the products of others or from being mistaken as having specific connection with others. Based on this, the elements of the protection of trade name right against unfair competition include the following:

1.The name or logo accused of infringement is same or similar to the prior trade name

The establishment of an infringement does not require that the accused infringing name is exactly the same as the prior trade name. In the judgment (2018) Zhe 01 Min Chu No. 2953, the court ascertained that the evidence submitted by Multivac was sufficient to show that its foreign name “MULTIVAC” and the corresponding Chinese translation “莫迪维克” had been well-known in mainland China long before the establishment of Multepak Company. Under this premise, Multepak Company did not avoid the similarity in selecting the company name. Instead, they chose “MULTEPAK” and “莫迪派克” which are similar to “MULTIVAC” and “莫迪维克” to be registered and used as their English and Chinese trade names. Subjectively, it is difficult to be regarded as goodwill, and objectively it is easy to lead the relevant public to mistake its association with Multivac Company.

2.The trade name shall be used in China prior to the alleged infringing name or logo is registered or used

If a company wants to claim the trade name right protection, it shall have the trade name previously used in China. The reputation of a trade name is usually caused by the company’s production, sales, or other business activities in the Chinese market. The evidence submitted by the plaintiff in judgment (2015)Lu Min San Zhong Zi No. 298 is all about products being exported abroad and does not target at Chinese consumers and Chinese market. Therefore, it cannot be recognized by the court as valid evidence, and it cannot be established that the trade name of the plaintiff could enjoy the trade name right protected by the Anti-Unfair Competition Law.

It is not disputed in practice that manufacturers’ unauthorized use of the trade names of other companies with certain influence constitutes unfair competition. However, whether the use of distributors or sellers constitutes unfair competition is worth discussing. In practice, the subjective state of sellers is the main basis for whether to bear legal liability. If the seller knows, should know or fails to fulfill the duty of care of reasonable examination, it needs to bear the legal responsibility of unfair competition. In the judgment (2021)Xin Min Zhong No. 98, The defendant Hanxi Business Firm, as a liquor seller, claimed that the subject of unfair competition stipulated in Article 6 of the Anti-Unfair Competition Law was the operator, excluding the seller. The first-instance court held that as an operator engaged in liquor sales for years, Hanxi Business Firm should have known about the packaging and decoration of well-known liquor, but still purchased a large number of infringing products involved in the case, which clearly belonged to the behaviors of “free-riding” and “brand copycat”, and constituted unfair competition against the Plaintiff. In the judgment (2020)Min Min Zhong No.398, the court of second instance held that the packaging of the infringing products sold by the defendant, Zhanjiang Haitian Electric Appliances Distribution Department, bore the words “Fuzhou Zhongshan Siemens Electric Appliances Co., Ltd.”. It failed to fulfill their reasonable duty of care in the examination. Even though they submitted relevant purchase vouchers, they were not able to prove that they had legitimate sources. Therefore, Zhanjiang Haitian Electric Appliances Distribution Department should assume the legal responsibility to stop the infringement and compensate the damages for its unfair competition. In the judgment (2019)Su Min Zhong No. 1163, the electric scissors involved in the case was exported in the name of Golt Company which is the seller of the products. The electric scissors involved in the case was marked with “CHAO BA” in many places on the products themselves and the packaging, and marked with the company name of CHAOBA Company. The court held that Golt company, as a professional exporter, did not fulfill certain obligation of examination, and its behavior was unauthorized use of others’ trade name, which constituted unfair competition.

3.The use of the trade name shall “have a certain influence”

In the field of Anti-unfair Competition Law, not all registered companies can certainly apply the law to protect their trade names, and not all unauthorized use of the trade name of others constitutes unfair competition. In order to be protected by the Anti-unfair Competition Law, the trade name shall “have a certain influence”. “Having a certain influence” can be understood as “having certain market popularity and being known to the relevant public”. In the judgment (2017)Yue 73 Minchu No. 2239, Guangzhou IP Court held that the word “certain” in “having certain market popularity and being known to the relevant public” clearly indicates that it is not required to be industry-wide popularity. The word “certain” clearly indicates that it does not have to be a high degree of popularity. However, the scope of protection of trade name right varies with the degree of “certain influence”. The higher the popularity, the wider the regional scope and public affected by the influence and the stronger the protection it will receive. The names of international or national companies with high influence can be protected across regions and industries, while the trade names with low influence may only be protected in the same or similar scope of business within their administrative area, and non-influential trade name will not be protected by Anti-Unfair Competition Law. Influence is mainly determined according to the evidence submitted by the parties. The influence of a trade name can be judged from the use time and geographical scope of the name, the scale of the enterprise, the profitability, the duration, degree and scope of publicity, records for protection and awards and other factors. Evidence proving tbe influence includes annual reports, honors (the higher the honor level, the higher the influence), contracts and invoices for sales, promotion and exhibition, and news reports on well-known national websites and newspapers, etc.. The collection of evidence proving influence can refer to the collection of evidence for well-known trademarks. In the judgment (2017)Yue 73 Minchu No. 2239, Guangzhou IP Court held that the basic function of trademarks is to distinguish the source of goods and the basic function of a trade name is to distinguish between market entities. Goods come from market entities. In the case that the text of the trademark used by an enterprise is different from the trade name, the trademark indirectly points to the enterprise by indicating the source of the goods, and the trademark awareness can indirectly prove the trade name awareness. However, when the trademark text used by an enterprise is the same with the trade name, the trademark actually directly points to the enterprise, and the trademark awareness can directly prove the trade name awareness. Therefore, if a party, whose trademark is identical to its trade name, has a well-known trademark record, it can directly prove that the influence of its trade name can spread to different industries across the country. With the in-depth development of “Internet +” transaction mode, both goods and services can have an impact across administrative regions. Therefore, in the field of anti-unfair competition law, the recognition of relevant market and within-industry competition relationship are gradually weakened.

4.The generation of confusion

The generation of confusion is an important factor in determining the protection granted by Anti-unfair Competition Law. When considering whether confusion will occur, the court will comprehensively consider factors such as the popularity of the prior trade name, the similarity between the trade name and the alleged infringing logo, the use status and subjective status of the accused infringer. In the judgment (2014)Wei Min San Chu Zi No. 75, the court held that the anti-unfair competition law’s protection of trade name emphasized the prevention of free-riding and improper use of the goodwill of others to cause market confusion due to malicious use of the same or similar trade name. Therefore, in deciding whether the use of the trade name by the operator constitutes unfair competition, it is necessary to examine the popularity of the trade name, whether the business operator is subjectively malicious, and whether it is sufficient to cause market confusion. If the awareness of the prior trade name does not reach the area of the accused name or logo and the accused infringer does not have any malice and confusion does not occur, the court will determine that unfair competition is not established. In this case, the plaintiff did not have evidence to prove the popularity and influence of its prior trade name, and the defendant provided a lot of evidence to prove publicity of the online shop name without malicious intent to free ride any reputation of the plaintiff, so the court did not support the plaintiff’s claims.

It is worth discussing whether a former or original trade name, which has been abandoned by the owner and been changed to a new trade name, can be protected by the Anti-Unfair Competition Law. In practice, the judgment criterion is that if the influence of the former trade name still exists, and it is easy for consumers to associate the alleged infringing name with the former trade name, the trade name right over the former trade name will continue to be protected until it is transferred to the new name. The change of trade name is essentially the transfer of accumulated goodwill. The greater the influence of the original trade name, the longer the transition period required for such a transfer. At this time, the possibility of market confusion still exists. If others use the original trade name without authorization, their behavior may still replace the association established by the owner of the trade name with the existing market, which is a kind of behavior of stealing goodwill and may constitute unfair competition. (Huang Qiuping, Gao Tian). In the judgment (2019)Jing 0102 Min Chu No.8392, the court pointed out that the scope of protection of a trade name depends on the influence of the trade name, especially when the old trade name is used by others after the change. The change of the trade name does not mean that the goodwill carried by the original name is immediately cleared and the connection with the owner is immediately cut off. In the field of anti-unfair competition law, similar to gaining influence, the influence of a trade name on the market does not disappear in a single stroke. The disappearance speed is related to the scope of influence of the trade name. If there is no alternate use, with the replacement of the new name, the influence of the old name will show a process of weakening and finally being completely replaced. At this time, it is no longer easy to cause public confusion, and the old trade name will be released into the public domain. In this case, the defendant registered the plaintiff’s original trade name one year after the plaintiff changed the original trade name to a new one. However, the plaintiff only submitted the Certificate of High-tech Enterprise as evidence to prove that its trade name “中量安测 (zhongliang Ance in Chinese” had certain influence. The court held that the corresponding relationship between the plaintiff and its old trade name was not immediately cut off with the name change. The correspondence between the original trade name and the plaintiff will be weakened gradually with the use of the new name. As for when it can be deferred, it still depends on the plaintiff to provide proof. However, the evidence submitted by the plaintiff is not enough to prove that the original trade name had a certain influence, nor can it prove that the influence of the original trade name and the corresponding relationship established with it can last more than one year after the name change, until the defendant used the name. Therefore, the court did not support the plaintiff’s claim.

III.The forms of unfair competition against trade name right

There are various forms of unfair competition against trade name right, and the most common ones are the following:

1.Register or use trade names and online store names identical or similar to others’ trade names

It is relatively common to register or use a trade name that is identical or similar to another’s trade name to constitute unfair competition. Most of the cases involved in the first and second parts of this article are of this type.

Whether only registering a trade name without using the trade name, which is identical or similar to a prior trade name with certain influence, constitutes unfair competition? The legislation intention of Article 6 of Anti-Unfair Competition Law is to curb market confusion through the use of other’s trade name. The trade name that has been registered but not used will not cause confusion. However, for domestic registered companies, registration is the premise of use. From the social function of enterprises, the purpose of registration should be to carry out business activities. Therefore, in order to effectively curb this type of unfair competition, it is also workable to regulate the trade name registered in China that has not yet been used.

In the context of the Internet, names on the Internet that serve to identify the identity of the operator, such as the name of an online store, should also be regulated. In the judgment (2015)Lu Min San Zhong Zi No. 298, the alleged infringing name was the name of an online store. The defendant used the plaintiff’s trade name as the name of the online store, and the plaintiff claimed unfair competition. In the judgment (2015)Lu Min San Zhong Zi No. 164, the court ascertained that the defendant Zhongkang Pharmaceutical Company knew perfectly well the popularity of the plaintiff Zibo Xinhua Pharmacy Chain Co., Ltd., but still used “Xinhua Pharmacy” as its online pharmacy store name without justified reasons. It had obvious malice and constituted unfair competition.

2.Use logos, which are identical to others’ trade names with famous reputation, as registered trademark

In (2008)Min Ti Zi No. 36, the Supreme People’s Court held that if, without authorization, using logos, which are identical to others’ trade names with famous reputation, as registered trademark is sufficient to cause confusion among the relevant public about the source of the goods, such activity infringes the rights and interests of the trade name owners and constitutes unfair competition.

It needs to be noted that the unauthorized registration of others’ trademark as trade name, resulting in confusion, also constitutes unfair competition, which is in violation of Article 6 (4) of Anti-Unfair Competition Law. In the judgment (2020) Zhe 0782 Min Chu No. 13500, the defendant changed its name to “He Sheng Yuan (Beijing) Pharmaceutical Technology Co., Ltd.” shortly after its establishment. “He Sheng Yuan in Chinese” is the plaintiff’s trademark and it has established a long-term and stable relationship with the plaintiff. In addition, the defendant is the competitor of the plaintiff in the same industry. When seeing the trade name used by the defendant, ordinary consumers are prone to misrecognize or misunderstand and think that the defendant and the plaintiff have a specific relationship or association. Further, it is believed that the goods produced by the defendant come from the plaintiff or have a specific connection with the plaintiff, and so it is easy to cause confusion. Under the circumstances that the defendant should have known that the plaintiff’s trademark has a high awareness, it used ” He Sheng Yuan ” as its trade name when changing the trade name, which shows that it has an obvious intention to engage in confusion, and intends to use the plaintiff’s goodwill to obtain improper benefits. Therefore, the defendant constitutes unfair competition.

3.Register domain names identical or similar to others’ trade names

According to Article 11 of the Interim Administrative Measures for the Registration of Internet Domain Names in China, the restriction principles for the naming of domain names below the third level (including the third level): … (5) Do not use trade names or trademarks that have been registered by others in China. Article 23 stipulates that when a third-level domain name is the same as a trademark or trade name registered in China, and the registered domain name is not owned by the registered trademark or trade name holder, if the registered trademark or trade name holder does not propose objection, the domain name holder can continue to use its domain name; if the registered trademark or trade name holder raises an objection, the domain name management unit at all levels shall reserve the domain name for the trademark or trade name holder for 30 days from the day it is confirmed that it owns the registered trademark or trade name right. The domain name service will automatically stop after 30 days. All legal responsibilities and economic disputes during this period have nothing to do with domain name management units at all levels. However, given that CNNIC is responsible for the management of “.CN”, “.中国”, “.公司”, and “.网络” domain names, these regulations only apply to these top-level domain names. For other top-level domain names, the dispute can be resolved through litigation.

Article 4 of Interpretation of the Supreme People’s Court on Certain Issues Concerning the Application of Law in the Trial of Cases Involving Civil Disputes over Computer Network Domain Names stipulates that the court shall, in its trial of a case involving a domain name dispute, determine that the defendant’s act such as registration or use of the domain name constitutes infringement or unfair competition if the following conditions are satisfied: (1) The civil rights or interests for which the plaintiff seeks protection are legitimate and valid; (2) The defendant’s domain name or its main part constitutes a reproduction, imitation, translation, or transliteration of a well-known trademark of the plaintiff or is identical or similar to a registered trademark, domain name, etc. of the plaintiff to an extent sufficient to cause misidentification among the relevant public; (3) The defendant is not entitled to any rights or interests to the domain name or its main part, and has no justified reason to register or use the domain name; and (4) The defendant’s registration or use of the domain name is mala fide.

In (2014) Jing Zhi Min Chu No. 00081 case, the plaintiff Columbia Sportswear Company enjoyed the trade name right over “Columbia” and interests over the domain name <columbia.com> before the registration of the disputed domain name <columbia.com.cn>. The court found that the main part of the disputed domain name “columbia.com.cn” was “columbia”, which was exactly the same as the plaintiff’s trade name and the main part of its domain name. Prior to the registration of the disputed domain name, the plaintiff’s Columbia trade name and its Columbia brand outdoor products already had a certain market reputation in the field of outdoor sports in China. As a competitor in the industry, the defendant knew the fact that the plaintiff’s trade name enjoyed a relatively high reputation in China, but still registered and used the domain name which was identical to the plaintiff’s trade name and the main part of the domain name. This behavior would easily cause the public to misunderstand the business relations of two parties. The defendant did not submit evidence to prove that it had any prior rights and interests in the domain name or the main part of the domain name “Columbia”. It had malicious intent in the registration and use of the domain name and constituted unfair competition

4.Use other’s trade name as the name of goods or services

Using other’s trade name as the name of goods or services may also constitute unfair competition. In the case (2020)E01 Zhi Min Chu No. 170, the trade name “Feifei” of the plaintiff Wuhan Jianghu Feifei Catering Co., Ltd. had reached a certain level of popularity, and the defendant used “Feifei Shrimp King” as the name of the catering services it provided. The court held that the most recognizable “Feifei” in “Feifei Shrimp King” belonged to the plaintiff’s trade name with certain influence. The defendant’s use of “Feifei Shrimp King” was sufficient to mislead the relevant public into believing that it had a specific connection with the plaintiff or the plaintiff’s services, causing confusion, and thus constituted unfair competition.

5.Use other’s trade name as keywords for Internet search

Operators arbitrarily use other’s trade name as keywords in Internet paid listing to cause confusion and misunderstanding by the public, and use the reputation and goodwill of others to achieve the purpose of promoting themselves, which is an act of unfair competition. The case (2012)Jin Gao Min San Zhong No. 3 is about this type of unfair competition. The court held that the defendant set keywords related to the plaintiff’s trade name in the relevant search engines and used the source code of the website to directly lead the relevant public to the defendant’s website when they searched the keywords “Tianjin China Youth Travel Agent” and “Tianjin Youth Travel”, resulting in visiting the defendant’s website. The defendant achieves the effect of using the initial confusion of Internet users to compete for potential customers. Subjectively, it has the intention to mislead the relevant public in online searches and inquiries. Objectively, it improperly used the plaintiff’s reputation, and harmed the plaintiff’s legal rights and interests. Its behavior constituted unfair competition.

In summary, for trade names that have been used in China and have obtained certain influence, the owner enjoyed the trade name right. If others’ unauthorized use of trade names with certain influence causes confusion among consumers and damages the interests of the trade name owners, it constitutes unfair competition. Unfair competition manifests in various forms. Common ones include registering or using trade names, online store names, or domain names identical or similar to others’ trade names, and using other’s trade names as registered trademarks, the names of goods or services, or keywords for Internet search. When judging whether unfair competition can be established, “having a certain influence ” and “confusion” are the key factors considered by the court. The degree of influence determines the scope of protection of the trade name right. The greater the influence, the wider the scope of protection. In the analysis of confusion, the subjective status of the accused infringer plays an important role, especially when the accused infringer is the seller of the product rather than the manufacturer.