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30 July 2018
Article 10bis of the Paris Convention,(1) together with the Agreement on Trade-Related Aspects of Intellectual Property Rights (Trips Agreement), forms the cornerstone of China's legislative framework on the protection of commercial signs. This legislative framework comprises:
The legislature had been planning the recent amendments to the Anti-unfair Competition Law since China's accession to the World Trade Organisation. During the four drafts that followed, substantial changes were made concerning important issues such as the theft of trade secrets. However, as regards the principles set out in Article 10bis of the Paris Convention, most of the main concepts and principles of the original 1993 text have been maintained.
This update analyses Article 6(1)(1) of the new law from the perspective of Article 10bis of the Paris Convention and, by way of a comparison with the corresponding provisions of the Trademark Law, examines how the new law will redefine the legal landscape for protecting commercial signs in China.(2)
Article 6(1)(1) of the Anti-unfair Competition Law prohibits the unauthorised use of "a sign that is identical to or similar with the name, packaging, or decoration, etc. of others' commodity, which has a certain influence".
The original 1993 text included the following prohibition:
Using, without authorization, the names, packaging or decoration unique (or specific) to a famous product, or names, packaging or decoration similar to famous goods, so that their goods are confused with the famous goods of others, causing buyers to be mistaken.
Thus, the final text no longer features the words "unique (or specific)", which has wrongly been interpreted by some to mean that it is no longer necessary to prove that the name, packaging or decoration of products are distinctive or unique.
As previously discussed, the deletion of the words "unique (or specific)" does not mean that the distinctiveness requirement has been removed (for further details please see "Relationship between new Anti-unfair Competition Law and Paris Convention: misleading consumers"). Even if the Anti-unfair Competition Law does not expressly provide for a fair use defence concerning a sign that is non-distinctive or functional, it is likely that the pertinent provisions of the Trademark Law will apply – namely Article 10(1), which concerns "signs prohibited from being using as a trademark". Further, Article 5 of the Judicial Interpretation on Unfair Competition discusses the "name, package or decoration of a commodity that falls under the provisions of Article 10(1) of the [Trademark Law]", which suggests that these will still be considered to constitute the signs listed in Article 6(1)(1) of the new Anti-unfair Competition Law. Correspondingly, a finding that a sign has a purely functional effect (Articles 12 and 59(2) of the Trademark Law) will correspond not only to the sign's shape, but also functional colours, sounds and all other types of functional effect.
Another topic of discussion during the revision of the Anti-unfair Competition Law concerned the list of signs that cannot be copied (ie, names, packaging and decorations). Throughout the revision process, requests were made to add a product's shape to this list. This was officially proposed in the final draft, but was rejected during the law's final reading. Instead, it was proposed and agreed to simply add "etc", which indicates that the list is non-exhaustive and therefore may include a product's shape or even a colour or sound.
This revision is consistent with Article 8 of the Trademark Law, which includes a non-exhaustive list of registrable elements. In judicial practice, the Chinese courts have granted protection to:
Article 3 of the Judicial Interpretation on Unfair Competition affirms that the decoration of business premises, the pattern of business appliances and employee uniforms may constitute an overall, unique business image and may thus be ascertained as the type of decoration protected by the Anti-unfair Competition Law. This agrees with the protectable trademark subject matter provided for in Article 15 of the TRIPS Agreement.
The use of the word 'famous' with regard to trademarks came under intense debate during the revision process and its deletion from the last 2017 draft was hailed as one of the highlights of the amendments. The reasoning for this is simple: commodities per se, without signs affixed to serve as a source identifier, vary in quality. Without signs to distinguish one from the other, it is logically impossible for certain commodities to attain a reputation that is superior to others. It was unreasonable to demand proof of a commodity's fame and the uniqueness of its name, packaging or decoration in order to invoke protection.
In the final wording of the law, the concept of reputation was reintroduced, but in the reduced form of "a certain influence" (the same term as is used in Articles 32 and 59(3) of the Trademark Law).
Following the promulgation of the new law, opinions vary on how to interpret the phrase "a certain influence" to keep it logically consistent with the Trademark Law. It would therefore be advisable to interpret it as a fair degree of influence that is significant, but not very high.
In practice, the application of this condition should be flexible. Geographically speaking, influence could be limited within a small area, such as a county or town, or extended to a vast region, such as a province or a city. The essence of the Anti-unfair Competition Law is that the prior rights holder may fall back on the law to seek protection for its rights. It would be unreasonable if a sign had to be well known or famous across China in order to be entitled to protection.
For further information on this topic please contact Hui Huang or Paul Ranjard at Wanhuida Peksung by telephone (+86 10 6892 1000) or email (email@example.com or firstname.lastname@example.org). The Wanhuida Peksung website can be accessed at www.wanhuida.com and www.peksung.com.
(1) The countries of the Union are bound to assure to nationals of such countries effective protection against unfair competition.
(2) Any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition.
(3) The following in particular shall be prohibited:
1. all acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities, of a competitor;
2. false allegations in the course of trade of such a nature as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor;
3. indications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods.
(2) This update is part of a series that examine the new Anti-unfair Competition Law in view of Article 10bis of the Paris Convention and the Trademark Law. For previous updates in the series, please see "Relationship between new Anti-unfair Competition Law and Paris Convention: general principles" and "Relationship between new Anti-unfair Competition Law and Paris Convention: misleading consumers".
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