Protecting enterprise names in China

Rouse
Jinjie Chen, Lydia Liu and Kevin Yang
[email protected]; [email protected]; [email protected]

While discussion of IP in China usually tends to focus on trademark, patent, and copyright infringement, the misuse of enterprise names (for example, company and business names), which occurs frequently in China, is a matter of equal concern for IP owners.

The number of new businesses being registered in China is increasing rapidly - in 2009 there were more than 420,000. Not surprisingly, there is also an increasing number of businesses seeking to use the enterprise name (and the associated goodwill) of established competitors.

'Enterprise names' and 'trade names' in China

Under Chinese law, protection is provided to 1) 'enterprise names' and 2) 'trade names'.

An 'enterprise name' normally refers to the registered name of a Chinese business enterprise. Pursuant to Article 9 of the Measures for the Implementation of Administration of Enterprise Name Registration (Measures), an 'enterprise name' must consist of the following four elements: territory, trade name, industry, and organisational form. Though not specifically defined by Article 9 of the Measures, it is generally accepted practice in China that 'trade name' refers to the distinctive element in the 'enterprise name': the element that serves to distinguish the particular enterprise from other enterprises.

Although foreign enterprises (those not registered in China) do not need to comply with Article 9 of the Measures, their names can be protected as 'enterprise names' under certain circumstances.

The legal framework for protecting 'enterprise' and 'trade' names

Article 5 of China's Anti-unfair Competition Law (反不正当竞争法)provides that a business operator shall not, without authority, use the 'enterprise name' belonging to another entity so as to mislead the public as to its identity or the origin of its products.

While Article 5 does not provide protection for foreign enterprise names and trade names, the Supreme People's Court Interpretation on Some Issues concerning the Application of Law in the Trial of Civil Cases Involving Unfair Competition (Supreme Court Interpretation) provides that the name of a foreign enterprise that is commercially used within mainland China, shall be deemed to be an 'enterprise name' and, therefore, capable of protection under Article 5 of the Anti-unfair Competition Law. The 'trade name' used by an enterprise (either foreign or local) may also be deemed to be an 'enterprise name' if it has a certain level of market reputation and is known to the relevant public.

According to Article 7 of the Supreme Court Interpretation, 'commercial use' may include using the enterprise name on a commodity, commodity packaging, commodity trade documents, or in advertisements, exhibitions or other commercial activities. According to some juridical practice, references to an 'enterprise name' in media coverage may not be sufficient to constitute 'commercial use'.

For a 'trade name' to constitute an enterprise name – and consequently be eligible for legal protection under China's Anti-unfair Competition Law – it must have a certain level of market reputation and be known to the relevant public.

Dealing with the misuse of 'enterprise' and 'trade' names

Because Article 5 of the Anti-unfair Competition Law specifically prohibits the use of another's 'enterprise name' so as to mislead the public, an 'enterprise name' is not often copied in its entirety. Instead, a different enterprise name will be used, but one which makes use of the same or similar 'trade name'.

To prevent the unauthorised use of its trade name, a 'trade name' owner must be able to establish that its trade name enjoys a certain level of reputation in the Chinese market and is known to the relevant public. In judicial practice, it is not necessary to establish that the 'trade name' is 'well-known', but the extent to which it is protected will depend of the level of reputation that can be established. The following are some of the factors that may be taken into consideration: the scale of business conducted under the 'trade name' within mainland China, the duration of use of the 'trade name', the method, extent and level of promotional activities, the history of legal protection of the 'trade name', and the level of awareness of the 'trade name' amongst consumers and the media. Foreign trade name owners should note that the above considerations are limited to mainland China. Evidence of reputation outside mainland China will not be relevant.

Where a third party uses a Chinese transliteration or translation instead of the original foreign-language 'enterprise name' or 'trade name', the foreign enterprise will be entitled to protection only if it can show that it had commercially used the Chinese version of the name within mainland China.

Some practical recommendations

The following measures should be adopted by foreign enterprises wishing to gain maximum protection for their 'enterprise' and 'trade' names in China.

1. Wherever possible, 'trade names' should be registered as trademarks.

2. Determine and formalise the 'enterprise' and 'trade' names that will be used in China and ensure that they are used consistently.

3. Determine and formalise a Chinese-language 'enterprise' name and 'trade' name to ensure that rights in the name are not limited to the English version.

4. Keep adequate records of commercial use of the name within mainland China.