What issues drive infringements of trademark in automotive industry?

By Eric Su and Elena Li, HFG
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MCompany is a global, diversified technology enterprise that occupies a significant position in the markets of motor vehicle maintenance, repair and automotive care in China, and provides professional automotive after sales products and services.

Eric Su Partner HFG Shanghai
Eric Su
Partner
HFG
Shanghai

M Company, following approval from the Trademark Office of the State Administration for Industry and Commerce (SAIC), secured the goods mark “M” for protective plastic overlays for motor vehicles, vessels and similar goods, and adhesive sealants for automotive glass in Class 17, namely the various types of “adhesive films” frequently used on motor vehicles, as well as registering and securing the service mark “M” for vehicle repair services in Class 37.

Certain car care shops that have not been authorised by M Company not only have opted to use M products when providing their services, but also have prominently used M representations directly on their shop signs when providing the services, thereby potentially infringing M Company’s exclusive right to use the M goods and service marks. This column explores significant issues with respect to determining infringements of the exclusive right to use a trademark in the automotive service industry.

Using someone else’s mark

Can another’s goods or service mark be used in the course of providing automotive services? Pursuant to the Trademark Law, a trademark rights holder enjoys exclusive trademark use rights to the goods or services for which its registered trademark is designated. Accordingly, with respect to the service mark “M”, only M Company and the automotive care shops licensed by it have the right to use the registered trademark when providing automotive care services. The use of the service mark “M” by a car care shop without authorisation constitutes infringement of the exclusive right to use a registered trademark. With respect to the goods mark “M”, even though an automotive care shop has not been authorised by M, it nonetheless has the right to sell M Company goods. Accordingly, it naturally has the right to reasonably use the goods mark “M” in selling M Company goods.

What is legitimate use?

Article 49 of the Implementing Regulations for the Trademark Law specifies that, “The holder of the exclusive right to use a registered trademark has no right to prohibit others from making legitimate use of the generic name, device or model number of the goods in question, or direct expressions of the quality, principal raw materials, functions, purpose, weight, quantity or other characteristics of the goods, or place names, which are included in the registered trademark”.

Reference can also be made to the Answers to Several Questions Concerning the Trial of Trademark Dispute Cases issued by the Beijing Municipal Higher People’s Court in 2006.

Article 26 specifies that an act that constitutes legitimate use of a representation of a trademark is required to fulfil the following conditions: (1) use is made in good faith; (2) it is not used as a trademark for one’s own goods; and (3) the use is solely for the purpose of explaining or describing one’s goods.

Article 27 specifies that the acts set forth below that satisfy the conditions specified in Article 26 constitute legitimate acts of use of a trademark representation: “(3) when selling goods, using a representation of another’s registered trademark within the necessary scope to explain the source, indicate the purpose, etc.; (4) compliant use of one’s enterprise name and the trade name therein that is identical or similar to another’s registered trademark.”

Elements to consider

Given that the trademark “M” does not contain the generic name, device or model number of the goods in question, does not directly express the quality, principal raw materials, functions, purpose, weight, quantity or other characteristics of the goods, and does not contain a place name, “reasonable and legitimate” use, in the course of the sale and use of M brand automotive adhesive film by automotive care shops not authorised by M Company may only be for the purpose of explaining that the automotive adhesive film is M Company’s product, and the trademark may only be used in the narrative description of their services. Such use is predicated on the M brand products that they provide and sell being genuine.

Elena Li Legal Consultant HFG Shanghai
Elena Li
Legal Consultant
HFG
Shanghai

This author believes that, for the benefit of consumers, a business should be permitted to directly use descriptive language that explains the scope of the goods it deals in and the services it provides, e.g. “we sell M brand products” and “we use M brand adhesive film in our adhesive film services”. The purpose is to make things clear to consumers and would not result in confusion or misidentification, or harm the interests of the trademark rights holder.

The Standards for Trademark Examinations and Hearings formulated by the Trademark Office of the SAIC and the Trademark Review and Adjudication Board specify that, “Similarity of a product and a service means that there exists a specific connection between a product and a service such that it is likely to cause confusion among the relevant public”; “when determining whether a product and a service are similar, the uniformity of such aspects of the product and the service as their purpose, users, normal effect, sales channels, sales practice, etc., shall be comprehensively considered”.

In our example, the prominent use of “M” on a shop sign or naming a shop “M Automotive Care and Decoration Brand Store” would cause the relevant public to mistake the source of the services provided by the shop and mistakenly believe that there is a specific connection between the shop and M Company (e.g. mistakenly believing that the shop is an automotive care shop licensed by M Company), thereby objectively having the effect of utilising the market reputation of another’s registered trademark to promote one’s own services. This clearly infringes the exclusive right to use the registered goods mark “M”, harming M Company’s interests.

As a product used in automotive care services, there is no doubt that there is uniformity in several such aspects of the automotive adhesive film and the services as their purpose, users, normal effect, sales practice, etc. In such a circumstance, a service provider is not absolutely prohibited from using another’s goods mark as long as, in the course of use, it is able to ensure that the relevant public will not, as a result of its use of a certain goods mark, mistakenly believe that there exists a specific connection between such goods and the service.

Eric Su is a partner and Elena Li is a legal consultant at HFG in Shanghai

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