Company name adjudications clearer, but more guidelines needed

When one company believes another has violated the principle of good faith in registering a name similar to its own, thus infringing on its legitimate rights and interests, it can submit the dispute to the administrative authority for adjudication.

Although the Provisions on Administration of Enterprise Name Registration, revised in 2012, provided for the handling of disputes concerning enterprise names, they mainly regulated the use of enterprise names without specifying the administrative procedures.

Another revision in 2020 clarified for the first time that if an enterprise believes other registered names infringe its legitimate rights and interests, it may bring a lawsuit to court or request the enterprise registration authority handle the dispute.

CASE BACKGROUND

Company A is the Chinese headquarters of a global electronics manufacturer. The manufacturer first began doing business in China in the early 1970s, and invested in a number of enterprises, including company A, in mainland China in the early 1990s. All such enterprises bear the same brand name, which enjoys a distinct reputation in China. The brand name of company A has no literary meaning in the Chinese language, and the registered trademark with the same characters has been officially recognised as a well-known trademark. Companies B and C, established in 2005 and 2006, respectively, bore the exact same brand name in their enterprise names as company A. Their registered business scope was also largely identical to that of company A.

Company A believed the enterprise names registered by companies B and C infringed on its legitimate rights and interests, and engaged us to file an administrative adjudication request with the enterprise registration authorities of companies B and C, respectively.

NATURE OF ADJUDICATION

In this case, both companies B and C claimed that the original registration authority had approved their enterprise names, their registration was legal and compliant, and thus they should not be required to change it. Under the enterprise name pre-approval system, such a defence has been accepted by some administrative authorities.

According to the provisions, an enterprise name shall not be the same as or similar to the registered enterprise name in the same industry within the jurisdiction of the registration authority. After comparing the enterprise names of companies B and C with the registered enterprise names in the same industry within its jurisdiction, the registration authorities approved the registration of their enterprise names.

This process was administrative licensing, occurring between the registration authority and the two companies.

However, the dispute arose between company A on the one hand, and companies B and C on the other. Companies B and C registered the same brand name and operated similar products, damaging the prior enterprise name right enjoyed by company A. Company A applied to the administrative authority to settle the dispute, the lawful ruling of which would be an administrative adjudication, and so different from the administrative licensing.

As Suzhou Intermediate People’s Court pointed out in the Jiangsu Red Ant Design Decoration Engineering v Kunshan Market Supervision Management Bureau (2018) administrative judgment, “The settlement of disputes over enterprise names is different from the enterprise name registration application system. It has different system functions and value orientations, focusing on correcting inappropriate enterprise names and protecting the civil rights and interests of the prior right holder.” This difference in nature is particularly evident under the current enterprise name application and commitment system.

UNFAIR COMPETITION

In cases of registering brand names of other enterprises and causing confusion, as specified in article 6 of the Anti-Unfair Competition Law (AUCL), how can the right holder connect the enterprise name dispute with the administrative complaint procedure of unfair competition?

Article 21 of the provisions provides, “if an enterprise believes other enterprise names infringe the legitimate rights and interests of its own name, it may bring a lawsuit to the court or request the enterprise registration authority that handled the registration of the alleged infringer to settle the issue”. Article 22 provides, “where an enterprise name is used to engage in unfair competition, it shall be handled according to relevant laws and administrative regulations”. Thus, article 21 resolves the disputes over infringement upon the prior rights and interests of others during registration of enterprise names, while disputes arising from use of enterprise names shall be resolved under the AUCL as provided in article 22.

The practical implications of these regulations are: (1) the choice of administrative authorities. At present, the administrative examination and approval service bureau is responsible for handling disputes over enterprise names in some areas, and the administration for market regulation is generally responsible for complaints of unfair competition; (2) the choice of procedure.

The above-mentioned regulations are to provide a legal basis for decisions of administrative authorities. However, to protect rights, all the procedures mentioned can require the infringer to change the enterprise name. For example, if the infringer registers and uses the name, claims can be made simultaneously under article 21 of the provisions and the AUCL. If the infringer only registers but does not use the name, or does not use the name illegally as provided in the AUCL, when claiming under article 21 of the provisions, the right holder should elaborate on the possibility of confusion, such as the popularity of the previous brand name, the competition within the same industry, and the subjective state of the infringer. Company A’s cases fell under such a category, and they resulted in companies B and C changing their names.

GRADUAL IMPROVEMENT

The provisions set out the administrative adjudication procedure for disputes over enterprise names, but supporting rules are still required to ensure their smooth implementation and further improve the enterprise name relief mechanism and measures. The State Administration for Market Regulation issued the Interim Measures for Settlement of Disputes over Enterprise Names (Draft for Comment) in February 2021, but the official version has not yet been promulgated. Moreover, relevant regulations can be formulated against registered enterprise names that obviously “take advantage of famous brands” for the administrative authorities to handle them in a uniform and consistent manner.

Wan Rui Law Firm is a member of Sanyou IP Group