1. Model Cases
(1) Administrative reconsideration of the rejection of the trademark registration application for “BEST BUY and image”
A. Basic Facts
On February 12, 2004 the Jia Xuan Corporate Services Company filed an registration application (No. 3909917) with the P.R.C. Trademark Office for “BEST BUY and image” (hereinafter referred to as the “trademark”) under Class 35 for Promotion (on behalf of another party) and Import & Export Agency Services, etc. The trademark was comprised of the English words “BEST” and “BUY” (the former on top of the latter) and a tag-like square frame with a yellow background.
On February 28, 2006 the Trademark Office rejected the application on the ground that the use of the two words as a trademark on certain services merely directly expressed the quality and characteristics of such services. On March 17, 2006, the Jia Xuan Corporate Services Company petitioned the Trademark Review and Adjudication Board for reconsideration of the decision.
Whether the trademark as used for certain services possessed distinctiveness became the focus of the reexamination of the rejected trademark application.
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Trademark Review and Adjudication Board (Review of the Rejection of Trademark Registration Application for “BEST BUY and Image” No. 3909917, Shang Ping Zi  No. 05222): The word “BEST” means excellent and optimal, while the word “BUY” means to purchase, to deal and transact; therefore “BEST BUY” can be translated as the best deal or the best transaction. When the trademark is used for specific services, it merely directly represents the quality and characteristics of such services and thus lacks the distinctiveness required of a trademark.
Beijing First Intermediate People's Court [Administrative Judgment (2009) Yi Zhong Xing Chu Zi No. 388]: The trademark is a text-pattern combination mark comprised of the English words “BEST” and “BUY” (the former on top of the latter) and a square frame with a yellow background, wherein the composition of the pattern is simple and the text portion consists of two commonly-used English words vertically arranged. Compared with the pattern, the text portion more easily attracts consumer attention and therefore acts as the main portion of the trademark for purposes of consumer recognition. Moreover, the words "BEST" and "BUY" are frequently used in English, and Chinese consumers’ awareness of the meanings of these words is relatively high; however, the combination of the two words does not generate any new meaning. Chinese consumers tend to identify and memorize foreign language trademarks by their meanings. When consumers see the trademark on services such as marketing (on behalf of others) and auxiliary business management, they may easily identify the mark as “the best deal” or “the best transaction”, which is a direct description of the characteristics of the services the trademark is used on. As such this mark does not distinguish the source of the services and thus lacks the distinctiveness required for a trademark.
Beijing Higher People's Court [Administrative Judgment (2010) Gao Xing Zhong Zi No. 861]: The overall visual effect of the trademark indicates that the 3 text "BEST BUY" is the most prominent feature. "BEST" and "BUY" as two English words with actual meanings are quite familiar to Chinese consumers. The former word means "the best" while the latter word means "deal or transaction". When they are used on specific services, they do represent the quality and features of the services.
Supreme People's Court [(2011) Xing Ti Zi No. 9]: When hearing administrative cases on trademark rights authorization and confirmation, the People’s Court shall, based on public common knowledge about the commodities represented by the disputed trademark, review and determine whether the trademark possesses the quality of distinctiveness when taken as a whole. Where the descriptive elements contained in the marks concerned do not influence the fact that such marks possess overall distinctiveness and the fact that the public can identify the source of such commodities, such marks shall be deemed distinctive. In this particular case, the trademark is comprised of the English words “BEST” and “BUY” along with a tag-like square frame with a yellow background. Although the words “BEST” and “BUY” are descriptive when used on specific services; taking the tag-like frame and the bright color into consideration, the overall trademark is distinctive and easy to identify. Further, based on new evidence the trademark is well-known worldwide and has been actually put into use in China, thereby acquiring a measure of reputation through use. Considering the foregoing factors together, the trademark can be used to identify the source of services and the public can use the trademark to identify the source of the services. The Trademark Review and Adjudication Board and the first and second trial courts failed to comprehensively consider the distinctiveness of the trademark, and did not consider the new evidence submitted by Jia Xuan Company. As a result, they mistakenly determined that the trademark does not possess distinctiveness. The Supreme People’s Court therefore overturns the erroneous ruling.
(2) Administrative dispute regarding the trademark “Wei Shan Pai and image”
A. Basic Facts
On June 14, 2004, the Xiangwei Tea Factory and the other five companies petitioned the Trademark review and Adjudication Board to revoke all disputed trademarks owned by Changsha Wei Shan Tea Co., Ltd. on the ground that Wei Shan Maojian is a generic name for tea products and that the use of a generic name to register the trademark “Wei Shan and image” (hereinafter referred to as 4 the “disputed trademark”) violated the provisions of Article 11.1 and Article 41.1 of the Trademark Law. The disputed trademark was registered on May 11, 1990 (No. 552102). The publication date was May 20, 1991 and the mark was designated for tea products.
In addition, the evidence in this case proved that Wei Shan Village, located in Ningxiang County in Hunan Province, has been famous for its tea since ancient times, and that Wei Shan's unique geography and natural environment determines the quality and characteristics of Wei Shan tea.
Whether the disputed trademark possessed distinctiveness when used on designated products was a key issue in the trial of this case.
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The disputed trademark
Trademark Review and Adjudication Board [Ruling on the Dispute over Trademark No. 552102 “Wei Shan and image" Shang Ping Zi (2007) No. 265]: The name of the place of production of the tea also indicates those characteristics of the tea that distinguish it from tea originating in other areas. Although the disputed trademark includes an image, general consumption patterns indicate that consumers recognize and refer to the trademark mainly by its text portion. Accordingly the image of the disputed trademark cannot render the trademark distinctive as a whole. The Pinyin text of the disputed trademark corresponds with the text portion “Wei Shan”. Since the text portion lacks distinctiveness, its expression in Pinyin cannot generate distinguishing features. Although the disputed trademark is identical to the name of Changsha Wei Shan Tea Co., Ltd., such consistency is irrelevant to whether or not the trademark is distinctive. Consequently, the disputed trademark does not possess distinctiveness. Beijing First Intermediate People's Court [Administrative Judgment (2007) Yi Zhong Xing Chu Zi No. 647]: Based on present evidence, it can be proven that 5 Weishan town under Ningxiang County Hunan Province has been producing tea since ancient times and that the unique geography and natural environment determines the quality and characteristics of Wei Shan tea. As the disputed trademark consists of text “Wei Shan Pai” and an image, consumers tend to recognize and refer to the trademark mainly by its text portion; therefore, the trademark on the whole does not possess distinctiveness. There is no error in the opinion expressed in Ruling No. 265 issued by the Trademark Review and Adjudication Board that the disputed trademark directly indicates the quality features of the product for which the trademark is used and therefore lacks distinctiveness.
Beijing Higher People's Court [Administrative Judgment (2007) Gao Xing Zhong Zi No. 583]: Based on evidence provided by six companies including the Xiangwei Tea Factory, it can be confirmed that “Weishan Maojian” is a variety of tea, the name of which originates from the unique natural environment including the mountains and waters of the Weishan area, and the process of tea production contributes to the quality and features of the product. In addition, the name of this particular tea has made “Weishan Maojian” a featured natural resource of this area. Thus, the text portion “Wei Shan” denotes the quality of the product and therefore lacks distinctiveness. The disputed trademark not only contains “Wei Shan”, but also the Pinyin text that corresponds to the characters “Wei Shan”; consequently the Chinese characters and the Pinyin text constitute the dominant features of this trademark. Consumers recognize this trademark through its name. Consequently, the trademark lacks distinctiveness and should not be registered as trademark pursuant to Article 11.3 of the Trademark Law.
Supreme People's Court [(2011) Xing Ti Zi No. 7]: To decide whether a disputed trademark should be revoked pursuant to the above-referenced provisions, we should consider whether the trademark possesses overall distinctiveness based on the common public perception of the product that the disputed trademark represents. The trademark shouldn’t be regarded as lacking overall distinctiveness simply because it contains descriptive text. In this particular case, the disputed trademark consists of the Chinese characters “Wei Shan Pai”, the Pinyin representation and the image, not just the characters “Wei Shan Pai” and the Pinyin representation. The mark’s image is also considered a major feature of the mark. Furthermore, based on facts that the trial court has discovered, the disputed mark was approved for registration on May 20, 1991 and has been used for nearly 6 two decades. Moreover, the mark was designated a Hunan Province Well-Known Trademark in 2002. In view of these facts, the Court held that due to long-term use of the disputed trademark, a certain degree of market reputation has been established and the public can use the trademark to identify the source of the product. The trademark no longer represents merely the quality and the other properties of the products such as main ingredients, function, usage, weight and quantity. The Trademark Review and Adjudication Board and the trial court determination that the disputed trademark lacks distinctiveness because it contains the characters “Wei Shan” is in error with respect to the verification of facts and is hereby overturned.
The basic function of a trademark is to distinguish the source of goods or services. To accomplish this, the mark to be registered must be distinctive so that the public will see it as a trademark and use it to identify the sources of goods or services. Only distinctive marks can be used to distinguish the sources of goods or services; therefore, distinctiveness is a necessary and fundamental registration requirement. The distinctiveness of a trademark is generally categorized as follows:
(1) Intrinsic Distinctiveness
Article 11.1 of the Trademark Law provides that if the mark contains only a name, device, or model number that is generic to a class or group of goods; or the mark merely indicates the quality, principal raw materials, function, use, weight, quantity or other features of the goods for which the mark is used or otherwise lacks distinctive characteristics, it shall not be registered.
In essence the provisions of Article 11.1 of the Trademark Law are consistent with the provisions of Article 6.5 B(2) of the Paris Convention for the Protection of Industrial Property, which states: “Trademarks covered by this Article may be neither denied registration nor invalidated except in the following cases: … (ii) when they are devoid of any distinctive character, or consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, place of origin, of the goods, or the time of production, or have become customary in the current language or in the bona fide and established practices of the trade of the country where protection is claimed.” According to this provision, the application for registration of a mark should not be rejected and a registered trademark should not be revoked unless (i) it lacks 7 distinctive character, or (ii) it consists exclusively of signs or indications that may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, place of origin, of the goods, or the time of production, or (iii) it has become customary in the current language or in the bona fide and established practices of the trade of the country where protection is claimed.
In view of the foregoing provisions, a mark typically lacks intrinsic distinctiveness for inherent reasons or because of too close a connection between the mark and the goods/services it represents.
Generally speaking, there are two circumstances in which a trademark lacks intrinsic distinctiveness:
A. Absolute lack of intrinsic distinctiveness
Absolute lack of intrinsic distinctiveness means the trademark lacks distinctiveness when it is used on any type of goods or services.
The Trademark Review and Adjudication Standards jointly issued by the Trademark Office and the Trademark Review and Adjudication Board in December 2005 prescribe the following four factors that indicate absolute lack of intrinsic distinctiveness:
- excessively simple lines, ordinary geometry;
- excessively complex text, graphics, numbers, letters, or a combination of the foregoing elements;
- one or two letters represented in a common way;
- a monochromatic color scheme.
B. Relative lack of intrinsic distinctiveness
Relative lack of intrinsic distinctiveness means that due to the close connection between the trademark and the features of the goods or services that it represents, the use of the trademark on such goods or services renders it non-distinctive.
Article 11 of the Trademark Law and the Trademark Review and Adjudication Standards listed a total of eight factors that indicate a relative lack of intrinsic distinctiveness.
The two factors listed by Article 11 of the Trademark Law are:
- The mark contains only a name, device, or model number that is generic to a class or group of goods; and
- The mark merely directly indicates the quality, primary raw materials, function, use, weight, quantity or other features of the logo.
The Trademark Review and Adjudication Standards prescribe six factors as follows:
- Ordinary forms of Arabic numerals used on merchandise that normally have model numbers or item numbers expressed in numbers;
- Commonly used packages, containers or decorative patterns of goods that the mark is used on;
- Unoriginal phrases or sentences describing the characteristics of goods or services;
- Business location names that are commonly used in the industry or related industries;
- Generic trade terminology or logos that are commonly used in the industry or in related industries; and
- The form of organization of the enterprise, the industry name or its abbreviation.
(2) Acquisition of Distinctiveness
Paragraph 2 of Article 11 of the Trademark Law provides that a mark covered by the preceding paragraph may be registered as a trademark if it has acquired distinctiveness through use and is readily distinguishable.
In accordance with the foregoing provisions, the use of a trademark that is sufficient to generate a reputation can offset a mark’s lack of intrinsic distinctiveness.
3. An Interpretation of the Trial Logic of the Supreme People’s Court and a Summary of Trial Principles
In most cases, the distinctiveness of a mark is based on its intrinsic distinguishing nature. In cases relating to trademark rights authorization and confirmation, it’s very rare for every element of a trademark to completely lack distinctiveness; and it’s also unusual for every element to lack relative distinctiveness. In practice, oftentimes the most contentious cases concern the distinctiveness of trademarks containing descriptive elements. Both of the foregoing model cases involved 9 trademarks that included descriptive elements.
After comparison, we found that the Supreme People’s Court adopted a two-stage analysis for these model cases.
Comprehensive evaluation of the trademark as a whole: Although (i) the words “BEST” and “BUY” in the Jia Xuan Corporate Service Company trademark (NO.: 3909917) “BEST BUY and image” are descriptive when the mark is used on designated services, and (ii) the Chinese characters and Pinyin text in the Changsha Wei Shan Tea Co., Ltd. trademark “Wei Shan Pai and image” (No. 552102) are descriptive when the mark is used on designated goods; since the two trademarks include distinctive images rather than descriptive text only, the images also constitute a crucial portion of the trademarks in dispute.
Review of the trademark’s reputation: The trademarks in dispute had gradually developed a degree of renown through commercial use, and the public was therefore able to identify the sources of the associated goods and services.
Based on the foregoing two cases tried by the Supreme People's Court, we can conclude that when judging the distinctiveness of a trademark containing descriptive elements, the method of combining a comprehensive evaluation of the trademark as a whole with a review of the trademark’s reputation was adopted.
Requirements for a comprehensive trademark determination: Examine and review trademarks from a comprehensive perspective and determine whether they possess distinctiveness based on the common knowledge of the consumers who use the goods bearing said trademarks. In practice there may be two scenarios1: (i) where some elements in a disputed trademark are descriptive and the other elements are non-descriptive; as long as the descriptive elements do not affect the overall ability of the trademark to identify the source of the goods the trademark can be considered distinctive; (ii) certain other trademarks include abstract descriptive words or symbols yet the marks registered are presented in a unique way; and due to the unique presentation the original meanings of the words or symbols they have been altered or weakened; allowing consumers to them as trademarks and thereby identify the source of goods. Under such circumstances, the trademarks should be considered distinctive. Hence, we cannot say that a trademark lacks overall distinctiveness simply because it contains descriptive elements that lack distinctive characteristics.
Requirements for comprehensive evaluation of the trademark’s reputation: The use of trademarks that may generate or increase distinctiveness should be taken into consideration. If the use of a trademark generates a certain reputation among consumers and enables it to distinguish the source of goods, then either the trademark has acquired distinctiveness or its original distinctiveness has been enhanced.
4. More Thoughts
Both of the model cases cited in this Article share one feature in common -- the disputed marks were used and acquired a certain reputation. In practice, however, it’s more common that trademarks containing descriptive elements involved in trademark rights authorization and confirmation proceedings have yet to be used and thus have no reputation. For example, if the two trademarks involved in the model cases (“BEST BUY and image” [No. 3909917] and “Wei Shan Pai and image” [No. 552102]) were never used and did not enjoy any reputation at all, would the courts have found the trademarks non-distinctive?
The author believes that when judging the distinctiveness of marks that contain descriptive elements, one should balance the two principles of comprehensive evaluation of the trademark as a whole and review of the trademark’s reputation in a reciprocal manner. In other words, if the non-descriptive elements of a trademark are more distinctive, then it is appropriate to lower or even abandon the trademark reputation threshold; however, if non-descriptive elements in a trademark are not distinctive, it is appropriate to increase the trademark reputation threshold.
Based on the foregoing reasoning, the author holds that in view of the two models cited in this article:
Trademark (No. 3909917) "BEST BUY and image": Since the non-descriptive element in this mark is a yellow tag-like frame, and since it is a simple combination of a common geometric pattern and a single color, its inherent distinctiveness is quite weak. Therefore, if this mark had never been used and did not enjoy a certain reputation, the mark could have been deemed to lack distinctiveness.
Trademark No. 552102 “Wei Shan Pai and image”: Since the non-descriptive element of the mark is a circular pattern that was processed in an artistic manner resulting in a unique visual effect, it possesses strong inherent distinctiveness. Therefore, even if trademark No. 552102 “Wei Shan Pai and image” were not used and did not enjoy any reputation, the mark would still possess distinctiveness.
Balancing a comprehensive evaluation of the trademark as a whole and a review of the trademark’s reputation can effectively prevent two extreme scenarios:
Under one extreme scenario, excessively high standards for trademark distinctiveness can cause some marks to be denied registration even if they possess overall intrinsic distinctiveness or have acquired the functionality to distinguish the source of the goods they represent through use. The authors hold that the criteria adopted by administrative organs for the identification of a trademark’s distinctiveness should not be overly strict for the following reasons: if a trademark possesses only minimum distinctiveness, the adverse consequences of it being difficult to disseminate and difficult for the public to identify or remember will be suffered by the trademark owner and will not damage the interests of the general public. For this reason, trademark administrative organs should not involve themselves too deeply in the matter.
Under another extreme scenario, an applicant might find it easy to register a descriptive trademark by adding vague non-descriptive elements to the descriptive elements of a mark in order to slip through a loophole in the registration system. The authors hold that a generally descriptive trademark should not easily be granted registration, because the Trademark Law has prescribed reasonable rules for use. Under these rules, the use of the mark by others does not constitute trademark infringement, since the use still falls within a reasonable scope even if the mark registered is descriptive on the whole but lacks distinctiveness. The registration of a trademark lacking exclusive use rights clearly conflicts with the essential attribute of registered trademarks -- the right of exclusive use.