How FMCG firms protect brand rights early in market

Fast-moving consumer goods (FMCG) companies face fierce competition in the market, where brand and product image significantly influence consumer purchasing decisions. Therefore, FMCG enterprises should prioritise the protection of business marks, product names, company names, packaging designs and other business marks during the early stages of market entry. This article examines the issues FMCG enterprises should consider in protecting their business marks from the perspectives of the Trademark Law and Anti-Unfair Competition Law, suggesting ways to protect business marks.

The Trademark Law

Trademarks are among FMCG enterprises’ most crucial business marks, and their registration and protection are vital for maintaining brand image and market position. Under the framework of the Trademark Law, FMCG enterprises should pay attention to several key issues.

Which business marks can obtain trademark registration and protection? Generally, brand names, product names, packaging and decoration designs, as well as cartoon characters, texts and sounds used in advertising campaigns can be registered if they meet the requirements of distinctiveness and recognisability. However, unique sensory experiences like the distinctive smells or tastes of cosmetics and food products are currently ineligible for trademark registration in China.

Three trademark registration strategies of which FMCG enterprises should be aware. First, packaging and decoration designs can be registered as trademarks either as a whole or by selecting individual elements such as patterns, texts or main identification parts for registration. After registering foreign language symbols as trademarks, they can exceed the font size restriction imposed by national standards for cosmetics or food packaging, which typically mandates that the size of foreign text cannot be larger than the corresponding Chinese characters.

Second, if a product’s container or packaging features a unique shape, design or structure, it can be registered as a three-dimensional trademark to prevent imitation.

Third, if packaging and decoration designs have gained certain market influence, they may still receive protection under the Anti-Unfair Competition Law even if not registered as trademarks.

FMCG enterprises should avoid situations where “registered trademarks are not used, and used trademarks are not registered”. Once trademarks are registered, they should be promptly put into use to avoid the risk of revocation because of prolonged non-use.

Rapid changes in packaging, decoration designs and product names in the FMCG industry can cause discrepancies between trademarks used and those registered if communication between updates and trademark registrations are inadequate.

This discrepancy may create a vacuum in trademark protection when counterfeit products enter the market, as the trademarks used by infringers may differ from those already registered by the rights holder.

The Anti-Unfair Competition Law

Which business marks can receive protection under the Anti-Unfair Competition Law? This law primarily protects business marks other than registered trademarks that have a certain level of influence (reputation and distinctiveness), including the names of influential FMCG products, packaging designs, company names and abbreviations.

How does an enterprise prove that a business mark has a certain level of influence? Demonstrating the influence of a business mark is crucial for obtaining protection under the Anti-Unfair Competition Law. Enterprises can prove the influence of their business marks through various means such as advertising expenditure, sales data, distribution channels and awards.

Additionally, in today’s digital age, consumer reviews, popularity indices and engagement on social platforms, self-media, e-commerce, short videos and other platforms can also serve as strong evidence of the influence of business marks.

Special attention should be paid to the issue of dilution of business marks in the FMCG sector. Because of the rapidly changing nature of the FMCG market, some once-influential business marks may gradually lose their distinctiveness. For instance, terms like USB flash drives and instant noodles have transitioned from unique brand names to generic terms.

Therefore, when updating packaging and decoration designs or changing product names, enterprises should carefully assess the potential impact and adjust strategies promptly to prevent the weakening and dilution of relevant marks.

During the initial stages of market expansion, administrative complaints should be the preferred method for protecting business marks. For FMCG enterprises entering new markets, choosing the appropriate approach to protect business marks is crucial. Administrative complaints, criminal prosecution and civil litigation are three commonly used avenues for safeguarding rights.

However, the author recommends that during the initial stages of market expansion, enterprises prioritise administrative complaints to protect business marks.

First, administrative complaints can effectively utilise and motivate existing sales personnel, saving enforcement costs. FMCG enterprises typically have large sales teams with in-depth knowledge of the market and competitors.

Under the guidance of corporate legal departments or lawyers, these sales personnel can actively participate in the investigation, the collection of evidence and the enforcement of administrative cases, thereby enhancing enforcement efficiency.

Second, administrative enforcement is efficient and can quickly establish influence and deterrence in the relevant market. Through administrative enforcement, enterprises can promptly halt infringing activities.

Finally, administrative enforcement can enhance brand visibility and influence within the corresponding market channels, helping enterprises quickly establish channel relationships and enhance market share and competitiveness during the initial stages of market expansion.

In summary, FMCG enterprises should prioritise the protection of business marks during the initial stages of market entry. By effectively utilising the Trademark Law and the Anti-Unfair Competition Law and selecting efficient enforcement methods, enterprises can effectively maintain their brand image and market position, laying a solid foundation for future market competition.

Roy Yang is a partner and director of the executive committee at Hengtai Law Offices. He can be contacted by phone at +86 186 1635 3658 and by email at roy@hengtai-law.com