Company Name Protection

In this case, as the two company names are confusingly similar to each other, it seems that Shanghai GRT may invoke Article 25 of the Provisions for the Administration of the Registration of Enterprise Names (Provisions), which provides that registration authorities must follow the principle of protecting prior rights when deciding disputes arising out of registration of two similar company names.

Under PRC law, a company name must contain four elements:

(i) trade name;

(ii) industry sector;

(iii) form of organization (for example, limited liability company or joint stock limited liability company), and

(iv) administrative region (province, municipality or county in which the company is located).

According to the Provisions, a company's right to its name should be established after registration with the relevant registration authorities, that is, a local administration for industry and commerce (AIC). The registration authorities must ensure that within its jurisdiction a company's name should not be identical with, or similar to, the registered name of another company if two companies are in the same or similar industry.

The Provisions implies that protection of a company's exclusive right to its name is only on a 'regional' basis ­ within the administrative region ­ as indicated in its name. Registering a company name with one AIC does not necessarily exclude another company's right to register a company name containing elements (i)­(iii), which are exactly the same with another AIC, but using a different reference to its geographical region.

In the present case, the first three elements in Guangzhou GRT's company name are exactly the same as that of Shanghai GRT. Although Shanghai GRT registered its company name five years earlier than Guangzhou GRT, Article 25 does not apply because the two companies are registered with different local AICs. This outcome is clarified by an official reply (Reply) issued by the state AIC regarding jurisdiction over company names, providing that two company names cannot simply be deemed as being identical to or similar with each other “merely for the reason that all elements in these two names are the same except for the element of the 'administrative region'”.

For the purpose of resolving disputes between two companies registered with different AICs, the Reply further provides that if one of the companies' names misleads the public and infringes the lawful rights of others, then the company's name will be deemed 'improper' and must be 'rectified'. This is supported by provisions in the Implementing Measures for the Administration of the Registration of Enterprise Names (Measures), which provide that a registered company name must be 'rectified' if it causes deception or confusion among the public or infringes the lawful rights of others when it is used.

Although Shanghai GRT can initiate a lawsuit before a people's court to resolve this dispute, filing a complaint to the Guangzhou AIC may be more cost-effective and efficient. According to the Reply and the Measures, when deciding company name disputes of this nature, authorities should adopt the following principles of:

(i) protecting the earlier registered company name, and

(ii) fair competition.

Therefore, provided Shanghai GRT can collect evidence to prove it registered its company name earlier and that Guangzhou GRT's company name has caused deception or confusion among the public, Shanghai GRT may have a valid claim for likelihood of confusion. Deception or confusion, for example, may arise from Shanghai GRT's reputation in the industry, the company's advertisements in China and Guangzhou and the similarities between the products of both companies.

Under the Measures, Shanghai GRT must submit the following documents when complaining to an AIC in a company name dispute:

(i) an application letter (containing basic information of the two companies in dispute, the claim, and facts and reasons of such a claim);

(ii) a copy of its business licence;

(iii) evidence of prior right, and deception or confusion caused by Guangzhou GRT's company name, and

(iv) other materials regarding the dispute.

Upon receiving the complaint, the AIC will order Guangzhou GRT to respond in writing within one month and a decision will be made within six months.

Endnote

* Author's note: The discussion of a company's name dispute is based only on the regulations as mentioned herein. In practice, we have not seen any successful cases in which an infringing company name is 'corrected' in this manner. Conceivably, a local AIC approving the registration of a disputed company name in the first place would be unwilling to overrule its own approval.