IP protection allows copyright owners to protect their rights and interests and maintain steady business operations. However, if abused, it may hinder profits and economic development. This article dives into a high-profile case to analyse the issue.
The Tongguan Roujiamo Association conducted a trademark protection campaign against street food merchants with the banner “Tongguan Roujiamo (潼关肉夹馍)” all over China. Hundreds of merchants were sued for compensation or payment of trademark royalties. Some merchants were forced to pay fines or settlement fees ranging from RMB6,000 (USD942) to RMB10,000 or a “franchise fee” of RMB2,400 annually, after “friendly negotiation”.
After it was reported by various media, the infringement case continued to ferment. On 23 November 2021, “sellers of Tongguan Roujiamo are being sued” became a trending topic on Weibo.
On 26 November, the China National Intellectual Property Administration (CNIPA) responded that Tongguan Roujiamo contained a geographical indication registered as a collective trademark, and its registrant had no right to license use of the trademark to merchants outside the specific area of Tongguan, charge a franchise fee, or prohibit merchants in specific areas of Tongguan from properly using the geographic term.
After the response, the Tongguan Roujiamo Association apologised to vendors of Tongguan Roujiamo across China and promised to immediately stop its actions, while properly settling all existing arrangements. What is the specific legal basis for this response from CNIPA? It can be analysed from the following aspects.
(1) What is the registration basis of the trademark Tongguan Roujiamo? Tongguan, as a geographical indication, is registered as a collective trademark in accordance with the Trademark Law, the Regulations for the Implementation of Trademark Law, and the Measures for the Registration and Administration of Collective Trademarks and Certification Trademarks. On 14 December 2015, under the former State Administration for Industry and Commerce, the Trademark Office approved the registration of No. 14369120 Tongguan Roujiamo trademark with figure and text, which was approved for use in “roujiamo: of class 30 commodities”.
(2) Is the association the right holder? The original trademark registrant of Tongguan Roujiamo was Tongguan Traditional Snack. On 27 January 2021, approval was announced to change the name of the trademark registrant to Tongguan Roujiamo Association. The association registered Tongguan Roujiamo, but the trademark right is owned by all its members. Therefore, the association is the trademark registrant, but not the right holder.
(3) What are the restrictions on geographical indication trademarks? There are strict origin restrictions on geographical indications as collective trademarks. Such trademarks can only be used after merchants within the scope of origin, such as local merchants, become franchised. Merchants elsewhere can neither join the membership nor the franchise, let alone use the trademark.
It is clearly recorded in the conditions of using the geographical indication that the scope of origin includes six towns in Tongguan County. Only merchants of roujiamo in the area of origin may use the collective trademark “Tongguan Roujiamo”. Accordingly, merchants outside the specific area of Tongguan cannot use the collective trademark.
Therefore, Tongguan Roujiamo cannot ask merchants outside Tongguan to pay franchise fees.
(4) What is a collective trademark? A collective trademark is one registered in the name of a group, association or other organisation, which is used by members of the organisation in commercial activities to indicate their membership. Association members can use the collective trademark, but cannot authorise others to use it.
The definition shows that the collective trademark is provided for members of the organisation to use, but all merchants of roujiamo in Tongguan cannot be forced to use it. Even roujiamo vendors in the area of origin can choose not to join the association, but to use other expressions to distinguish from the trademark, such as Tongguan Sun’s Roujiamo.
Therefore, the Tongguan Roujiamo Association cannot collect royalties from merchants outside the area, nor does it have the right to prohibit merchants in specific areas of Tongguan from properly using the geographical term in the collective trademark.
The Tongguan Roujiamo Association’s approach to rights protection, large-scale litigation and bargaining is against the legislative intention of Geographical Indications Registered As Collective Trademarks, and an abuse of IP rights protection. The CNIPA’s decision stopped the public rights abuse and simultaneously suppressed the continuation of other similar malicious lawsuits, such as Xiaoyao Town Spicy Soup, drawing a well-defined line for IP protection.
This case piqued our interest to further reflect on trademark registration. In this case, most defendants are small businesses with relatively weak awareness of rights protection, and likely to be satisfied with a refund.
The author hopes relevant laws and regulations in China will be further improved so corresponding fines can be imposed for malicious litigation to curb the abuse of IP law enforcement and safeguard the balance between the interests of rights holders, market players and the public.
Zhang Qin is a patent agent at Sanyou Intellectual Property Agency