An Analysis of the Trademark Use Circumstances as a Defense against Misidentification Clauses –Trademark Sign Containing Terms on Raw Materials and Functional features of Goods | Linda Liu & Partners
[author: Keli Zong]
In recent years, the examination of whether a trademark sign violates the misidentification clause in trademark authorization and affirmation cases has become increasingly stringent. The number of related trademark refusals and refusal review cases has been on the rise, while the success rate of refusal review cases has been decreasing by the year. Among these cases, trademark signs that contain terms directly indicating the raw materials and functional features of the goods are the most common types found to be in violation of the misidentification clause.
In the newly released 2023 Top Ten Cases on Judicial Protection of Trademark Authorization and Affirmation, in case No.91-an administrative dispute concerning the invalidation request against the trademark right of “Bamboo Salt”, the focus of dispute lies in whether the trademark sign was deceptive and violated the misidentification clause. This article uses this case as a starting point to analysis the trademark use circumstances as a defense against the misidentification clause, hoping it could serve as reference for readers.
I. Trademark invalidation case regarding Trademark No. 3953036 “竹盐BAMBOO-SALT and device”
LG Life Health Co., Ltd. filed the disputed trademark in 2004 and received approval for registration in 2006. The products that were designated for use were toothpaste, soap, and other goods in Class 3. In September 2020, 14 years after its registration, a company in Foshan filed invalidation request against the trademark, claiming that the term “Bamboo salt” is deceptive and in violation of Item 7 of Article 10(1) of the Trademark Law, as it directly indicates the main raw material of the goods and other features, lacks distinctiveness, and is easy to cause the relevant public to misunderstanding the raw materials, functions, and other features of the goods.
According to the first ruling2 on the invalidation request, the invalidation petitioner submitted evidence materials, including information on national/industry standards related to the salt industry, authoritative papers on “bamboo salt” as a salt product, and information on bamboo salt products of other companies. As the judgment has not yet been made public, it is not possible to confirm whether new evidence materials are submitted at the litigation stage. The Court of Second Instance recognized the applicant’s claim that the disputed mark as a whole only directly indicated the main raw materials, quality and other features of the approved goods, but ultimately upheld the registration of the disputed mark in “toothpaste” only.
According to daily life experience, the constituents of Bamboo salt may be contained in toothpaste, but they are not essential. It is undeniable that the use of the disputed trademark on toothpaste that does not contain bamboo salt may lead consumers to believe that the products contain bamboo salt. What factors does the court ultimately consider when determining that the use of the disputed trademark on the “toothpaste” products is not deceptive?
Based on the published fact of the case, the Court’s decision mainly took into account the fact that the registrant’s toothpaste products contained “bamboo salt” and the disputed trademark enjoyed high popularity in toothpaste. In other words, the actual use of the trademark in dispute by the registrant was the decisive factor in maintaining the registration.
According to reports3, LG Life Health launched the world’s first bamboo salt toothpaste containing bamboo salt in 1992, and has been ranked the first in South Korea in the field of Chinese prescription salt toothpaste. In China, bamboo salt toothpaste is highly popular. The trademark “bamboo salt” was recognized as a well-known trademark for toothpaste in 2008. In the invalidation case, the registrant submitted sales contracts and invoices, publicity and promotion contracts and invoices; audit reports, National Library search information, award certificates, and rights defense information, etc., which confirmed the continuous use and publicity of the trademark in dispute.
It can be seen that emphasizing the actual use of the disputed mark is a viable defense strategy in invalidation cases involving misidentification clauses. Of course, this is limited to cases where the features of the goods actually used are consistent with the descriptive terms contained in the mark.
II. Examination on the actual use of trademark in refusal review cases
Are the circumstances of the trademark’s use useful in overcoming the misidentification clause which served as a ground for refusal in trademark refusal review case?
In the retrial4 case concerning trademark No. 17545726 “Shenyuanchun Rock Sugar Honey Liquid”, the CNIPA and the court of second instance respectively found that the trademark violated Article 10(1)(g) on the grounds that the words “Rock Sugar” and “Honey Liquid” in the trademark sign could easily mislead the relevant public into believing that the designated goods, such as “active pharmaceutical ingredients (APIs)”, contained rock sugar and had the texture of honey liquid. However, the trademark applicant submitted evidence such as the functional test report of the products using the trademark in dispute and the toxicology experiment report on food safety to prove that the product formula of the relevant goods contained the ingredients of rock sugar and honey. In the end, the Supreme Court found that the sign of the disputed trademark alone was not sufficient to conclude that the use of the applied-for trademark on the designated goods would cause the relevant public to have a wrong understanding of the raw materials, ingredients and other features of the goods, and that it was difficult to conclude that it constituted deception of the public, therefore approved its registration.
Coincidentally, in the administrative5 litigation case of the trademark No. 44050872 “Shu Tang Shan DI(纾糖膳底)”, the CNIPA and the Court of First Instance held that “Shu Tang(纾糖)” has the meaning of slowing down the sugar content and controlling blood glucose, and that the trademark as a whole is likely to mislead the relevant public about the functions and usage of the designated goods. However, the Court of Second Instance held that, according to the glycemic index measurement and evaluation report submitted by the applicant for the milk powder products using the trademark in dispute, the milk powder products of the relevant formula could better control blood sugar, and the use of the trademark in milk powder products was not deceptive, and its registration should be approved.
In the aforementioned two cases, the effective judgment held the same viewpoint as that in the invalidation case concerning “Bamboo Salt”, that is, the trademark applicant or the registrant shall produce evidence to prove that the sign does not lead to the corresponding “deceptive” consequences6. And if the applicant or the registrant has accomplished the blocking of the logical inference of the result, the applicant can be found to be unaware of the “deceptive” consequences. If the party proves that the features of the goods in which the trademark is used are consistent with the descriptive content of the trademark, it is presumed that the mark is not deceptive. Therefore, the circumstances of the actual use of the trademark play an important role in determining whether the trademark sign is deceptive or not.
However, in the trademark refusal review case7 of No. 22206123 “Xi Xi WANG(锌烯望)”, the court adopted a diametrically opposite standard of judgment. In this case, the disputed trademark was designated for use on the goods of paints and coatings. The trademark applicant submitted a product analysis report to prove that its products did contain zinc metal and alkene compounds, but the court of second instance held that the report was for some of its products and could not be used to prove that all of the goods designated for use contained such ingredients. The sales invoices, media reports, and other evidence were also insufficient to prove that the trademark in dispute had formed a unique correspondence with the trademark and would not lead to misrecognition of the quality and other features of the goods by the relevant public, and finally rejected the application for registration.
The logic behind this decision is that a registered trademark should not and cannot assume the function of guaranteeing the features of raw materials and ingredients of the goods, and even if the products produced by the parties at that time did contain the relevant ingredients, it still cannot presume or expect the consistency in their future production behavior. Therefore, the actual use of the trademark will generally have no impact on the determination of deception of the sign8.
The author observes a growing trend in recent trademark refusal review cases where an increasing number of review decisions are embracing this viewpoint, for example, the refusal review case of trademark No. 71118858 “AGE PERFECT COLLAGENE ROYAL” (Decision Date: March 12, 20249), Trademark No. 67449566 “猪角PORK RICE and device” (decision date: December 08, 202310), Trademark No. 70408161 “skin79” (decision date: March 12, 202411). The decision explicitly states that “the circumstances of non-registration and prohibition of use stipulated in Paragraph 7 of Article 10(1) of the Trademark Law are legal prohibitions, and the relevant marks which are likely to mislead the relevant public will not be permitted to be registered or used, regardless of whether or not they have the popularity through use”. That is to say, this provision is recognized as an absolute prohibition, and the parties cannot overcome the obstacles to registration through the actual use of the sign. This approach treats a trademark sign that violates the misidentification clause in the same way as a trademark sign that violates other circumstances in Article 10(1). Just as a trademark sign with a negative effect (e.g., Mafia-style organizations) will not obtain registrability no matter how it is used.
It can be seen that in the judicial practice of trademark refusal review cases, there are two different views on whether the actual use of the trademark should be taken into account. Judging from the recent decisions, the CNIPA is inclined not to consider the actual use of the trademark.
- Summary
Trademark rights belong to private rights, and the legislative purpose of Article 10, Paragraph 1 (7) of the Trademark Law is to protect the public interest. In the case of right authorization and affirmation, the application of this provision is essentially a coordination and conflict between the order of public rights and the protection of private rights.
In recent years, the CNIPA and the judicial authorities have become increasingly strict in reviewing whether the misidentification clause is violated or not, clearly prioritizing the protection of the public interest. However, some well-known scholars have pointed out that “The right to select a trademark is a private right that should be granted complete freedom of commercial expression. (Omitted) Consequently, the provisions of the law regarding trademark prohibition should be considered the bottom line of the law; therefore, they should be rigorously regulated to limit the extent of their application. The applicant should be given the most favorable interpretation conceivable when applying for a trademark in the ambiguous area that is termed “equivocal.” Opinions differ as to whether public order or private protection should take precedence.
However, from the trademark invalidation case of “bamboo salt”, from the trademark applicant/registrant’s point of view, when encountered with the absolute refusal grounds of the misidentification clause, the author suggests that the party should proactively produce evidence in combination with the actual use of trademark, and exhaust the legal remedial procedures, in order to maximize the private right.
1 WeChat Public Account: Jingfawangshi Beijing High Court Releases Top 10 Cases on Judicial Protection of Intellectual Property Rights and Top 10 Cases on Judicial Protection of Trademark Right Authorization and Affirmation in 2023 May 23rd, 2024
2CNIPA Adjudication Ruling on Invalidation Request No. [2021] No. 0000228566
3 People’s Daily Korea Channel Why is Korea’s Bamboo Salt Toothpaste Popular among Chinese Consumers? May23rd, 2024
4 SPC SPC Administrative Retrial Judgment (2019) No. 249
5The Higher People’s Court of Beijing Municipality
6Judicial Review of Trademark Right Authorization and Affirmation, P. 33, edited by the Intellectual Property Trial Division of The Higher People’s Court of Beijing Municipality, China Legal Publishing House, 1st edition, September 2014
7The Higher People’s Court of Beijing Municipality Beijing Administrative Final Judgment(2020) No. 349
8ZHANG Zheng, Judicial Application of Prohibition Clause in Administrative Cases of Trademark Refusal Review concerning Deceptive Sign, China Trademarks Journal 2023, No. 9
9CNIPA Adjudication Ruling on Invalidation Request [2024]No. 0000063107
10CNIPA Adjudication Ruling on Invalidation Request [2023]No. 0000352707
11CNIPA Adjudication Ruling on Invalidation Request [2024]No. 0000063350
