Chinese Anti-Dilution Law: Are You Sufficiently Confused?

From Ferrari’s loss to Levi’s victory in their trademark lawsuits in China, one of the common elements, as I see it, is the confusion about the Chinese law on trademark dilution. Maybe it is the Paris Convention and TRIPS Agreement in connection with the Chinese Trademark Law that caused the bewilderment. Once you see the interplay among the three, Chinese anti-dilution law will look pretty clear.

First, dilution goes hand in hand with famous or well-known trademarks. The basic purpose behind anti-dilution is to prevent “free ride” by some of famous trademarks, either nationally or internationally. For example, without anti-dilution law, someone can just take the “Coca Cola” mark and use it to market his/her cars, cigarettes, or clothes simple because of consumer’s identification with the famous brand. Over a certain period of time, the fear is that, without restraining, such use of a mark will dilute its ability to assist consumers in identifying products with their sources.

The Paris Convention is an international treaty that protects intellectual properties. Member countries are supposed to protect a famous trademark of another country. Article 6bis provides that if the legislation of a member allows, such country should prevent a well-known mark of a member country (registered or unregistered) from being used in such a way that “constitutes a reproduction, an imitation, or a translation, liable to create confusion”. It further states that protection of the subject trademark is limited to its being used for identical or similar goods.

TRIPS Agreement expands protection of famous trademarks in two ways. First, the Paris Convention Article 6bis protection applies also to service marks. Secondly, it applies to prohibit the use of a registered famous trademark from being used in another country in dissimilar goods and services.

Article 16
3. Article 6bis of the Paris Convention (1967) shall apply, mutatis mutandis, to goods or services which are not similar to those in respect of which a trademark is registered, provided that use of that trademark in relation to those goods or services would indicate a connection between those goods or services and the owner of the
registered trademark and provided that the interests of the owner of the registered trademark are likely to be damaged by such use.

China is signatory to both treaties, and the Chinese Trademark Law (2001) reflects China’s identification with its obligations under the two treaties. Article 13 prevents anyone from using a registered well-known trademark in China for either similar or dissimilar goods or services.

Article 13 Where a trademark in respect of which the application for registration is filed for use for identical or similar goods is a reproduction, imitation or translation of another person's trademark not registered in China and likely to cause confusion, it shall be rejected for registration and prohibited from use. Where a trademark in respect of which the application for registration is filed for use for non-identical or dissimilar goods is a reproduction, imitation or translation of the well-known mark of another person that has been registered in China, misleads the pub1ic and is likely to create prejudice to the interests of the well-known mark registrant, it shall be rejected for registration and prohibited from use.

So, let’s put all of the above in the context of the Ferrari’s horse symbol case that I wrote about. It should make things look pretty clear.

Under the Paris Convention, the Ferrari horse symbol is not registered in China, and the alleged Chinese infringer tried to register the horse symbol for use in clothing, which is a dissimilar to Ferrari sports cars. The Chinese Trademark Law protects unregistered foreign trademarks only to the extent that it is being infringed for use in similar or like goods or services. Therefore, Ferrari's argument that its unregistered famous trademark enjoys protection beyond the automotible industry failed.

Under the TRIPS Agreement, the Ferrari horse symbol still does not get protection in China since it has not been registered as a famous trademark there.

A short lesson here: if you reckon your trademark is famous in your own country (either registered or unregistered), and you don’t want anyone in China to use your trademark in any goods or services, you must obtain a famous trademark registration with the Chinese Trademark Office in order to get protection.

Even more simply--no registration; no easy protection. If you do not believe me, go ask Ferrari.

Ferrari is Famous, But Is the Horse Too?

The Beijing 1st Intermediate Court was called to decided whether the picture of the horse corresponding to the Ferrari trademark is a famous trademark. And it decided that it is not, therefore not entitled to protection that the Ferrari trademark has in China.

Ferrari’s “horsing” saga with a Chinese trademark registrant started back in 1996. A Chinese department in Guangzhou, White Clouds Sports Merchandise (“While Clouds”), sought to register a trademark with a picture of a horse for use in selling a line of clothing on April 1, 1995. When the Chinese Trademark Office published the prospective trademark for public opposition on September 7, 1996, Ferrari filed a timely opposition to the registration, claiming that the trademark at issue would cause confusion among consumers with respect to the emblematic Ferrari horse. The Chinese Trademark Office did not buy Ferrari’s argument, citing that White Clouds registered the graphic of the horse first.

Ferrari appealed to the trademark review board. It advanced the argument that both the Ferrari with the horse graphic trademark and the horse graphic alone constitute famous trademarks; therefore, the registration sought by the opponent, if granted, would cause confusion among consumers. Unfortunately to Ferrari, the review board affirmed the trademark office’s decision. Ferrari then brought its battle to the people’s court for relief.

In the Court, Ferrari averred that the Ferrari, along with the graphic of the horse which is closely tied to the Ferrari mark, should enjoy protection as famous trademarks because the Ferrari trademark has become well known around the world, and it has also gained considerable familiarity among Chinese consumers. However, the Court flatly rejected Ferrari’s claim of fame for its heroic horsy. It states three reasons:
1. Ferrari failed to provide evidence of the use and advertisement relative to the trademark at issue, meaning the “horse.” Ferrari proffered evidence supporting the famous status of a related trademark—“Ferrari”, but that is not sufficient to prove that that the mark in question is entitled to protection as requested.
2. China has established an independent system to recognize famous trademarks. The recognition of “Ferrari” as a famous trademark does not equate to the recognition of the horse graphic.
3. The focal issue in the suit is not the Ferrari trademark; rather it is the “horse” graphic. The “horse” cannot be bootstrapped to the Ferrari trademark for like protection.

After more than ten years of trekking in the Chinese legal system, Ferrari got a disappointing verdict. Hopefully, Ferrari got something else too, a lesson to register its trademark, related trademarks as early as possible. Oh, do some advertising on the horse as well, in China!