Trademarks or company names: Clearer protection in new revisions

By Han Yufeng and Lu Lei, Rui Bai Law Firm
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Atrademark is used to distinguish the source of a product, while a company name mainly serves to distinguish a market player. Although the two are different in terms of functions and management systems, they sometimes overlap when it comes to embodying a corporate or brand reputation. Instances such as Coca-Cola, which is both a brand name and a company name, are not uncommon.

Han Yufeng Associate Rui Bai Law Firm
Han Yufeng
Associate
Rui Bai Law Firm

However, when an entity uses or registers the same or a similar trademark as that of another entity, conflict is unavoidable. A typical example is using another company’s registered or unregistered well-known trademark in one’s own company name in a manner that misleads the public. Under the current legal framework, such acts of infringement are mainly governed by the Anti-Unfair Competition Law. After many years of judicial practice, rich experience has been accumulated in respect of judging such acts to be infringing, but challenges remain around enforcement, namely, compelling the infringer to stop using the trademark and change its registered company name. The additions to the Anti-Unfair Competition Law (revised draft) which was recently submitted to the NPC Standing Committee for consideration present a solution.

Both administration and justice are viable options, but there are enforcement challenges. As regards the current solution to the problem of using another company’s trademark as one’s own company name, according to relevant regulations, industrial and commercial organs with administrative authority can correct inappropriate company names directly or upon request. In addition, the party concerned may also file an unfair competition lawsuit in court, requesting the defendant to be ordered to stop using or change its company name.

However, enforcement faces real challenges. In terms of administrative approaches, the Administrative Regulations for the Registration of Enterprise Names stipulate that an industrial and commercial organ may correct an inappropriate company name actively or at the request of the party concerned. But how should “inappropriate” be understood in practice? Obviously it is difficult to require all the industrial and commercial law enforcement agencies at numerous levels to have an accurate grasp of the trademark law and the Anti-Unfair Competition Law. The existing law does not clearly stipulate “what corrective measures should be taken”, especially when the party concerned is non-cooperative, usually rendering industrial and commercial organs hesitant about actively enforcing the law.

In terms of judicial approaches, when the party concerned chooses to file an unfair competition lawsuit in court, the court may order the defendant to “stop using or change” the company name that contains another company’s trademark. In the face of such a judgment, the defendant, feeling pressured by the judgment or enforcement, often chooses to change its name. But if the party subject to the enforcement action ignores the judgment, the enforcement body of the court will face the dilemma of seeking the co-operation of the organ in charge of company names.

However, the nature of enforcement power dictates that the enforcement body can only enforce the judgment strictly within the limits of “stop using or change”, namely, requiring the defendant to cancel or change its company name. If the defendant refuses to co-operate, the enforcement body can only resort to measures such as detention and imposition of a fine to compel the defendant’s compliance as there are no legal grounds upon which it can directly require the organ in charge (a third party other than the defendant) to deal with the infringing company name.

Therefore, in the event that the defendant refuses to co-operate, it would be difficult to force the infringer to change or stop using its company name, regardless of whether administrative or judicial approaches are adopted.

Grace Lu Associate Rui Bai Law Firm
Grace Lu
Associate
Rui Bai Law Firm

LEGISLATIVE CHANGES

The Anti-Unfair Competition Law (revised draft) recently submitted for consideration stipulates: where a party uses another company’s registered or unregistered well-known trademark in its own company name in a manner that misleads the public, the supervisory and inspection authority shall order the party to change its registered company name within one month; if the party fails to file an application for change within the time limit, the supervisory and inspection authority shall impose punishment pursuant to the provisions of the preceding paragraph, and the supervisory and inspection authority of its place of incorporation shall remove the company name from the enterprise credit information publicity system by replacing it with the registration number or uniform social credit code and include the party in the List of Enterprises with Abnormal Operations; the party may have its business licence revoked immediately if the offence is serious.

These provisions provide a solution for industrial and commercial organs to deal with such conflicts when the party concerned refuses to comply and undoubtedly make a positive contribution to the solution of the above enforcement problems. But regretfully, the draft fails to address questions such as how to deal with a situation where the court decides that unfair competition has been constituted and the defendant needs to stop using its company name, or how to engage the organ in charge of company names in the court’s judgment.

Countermeasures and suggestions.

The Anti-Unfair Competition Law (revised draft) is still under consideration. The authors suggest that legislators add that the court also has the power to order the party to change its registered company name within a certain period of time, and if the party fails to file an application for change within the period of time, the supervisory and inspection authority of its place of incorporation should follow to remove the company name from the enterprise credit information publicity system by replacing it with the registration number or uniform social credit code. This can thoroughly link up judicial enforcement with industrial and commercial enforcement at the legislative level.

In addition, even if the above new provisions take effect without being modified, the party concerned may refer the case to the industrial and commercial organ pursuant to the new provisions. If not accepted, the party may require such organs to take enforcement action based on a valid judgment on the unfair competition behaviour it has obtained through judicial channels. If the industrial and commercial organ still takes no action, the rights holder may, on the basis of a valid judgment, bring an administrative lawsuit with the court, requesting the court to order such organs to take the administrative action, so as to achieve the final result of stopping the use of, or changing, the infringer’s company name.

Han Yufeng and Lu Lei are associates at Rui Bai Law Firm

北京瑞栢律师事务所
Beijing Rui Bai Law Firm

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