Preventing TM dilution into a generic name

By Brenda Zhao, Corner Stone & Partners

Trademarks are valuable tools for enterprises to compete in the market. Much competition centres on trademarks, which gives rise to unfair competition or the act of illegal use of others’ trademarks, especially well-known or famous ones.

As direct infringing and/or counterfeiting acts are increasingly being fought, some enterprises are unscrupulously using indirect means to exploit the name brand effect of well-known or famous trademarks. Enterprises with name brands should, in addition to preventing others’ exploitation, be constantly vigilant for the risk of their trademarks becoming generic names.

Brenda Zhao
Senior partner
Corner Stone & Partners

The risk of a trademark becoming a generic name is a common problem for trademark owners. The main reasons include low distinctiveness of the mark, improper use and management by its owner, intentional dilution by competitors, and long-term monopoly of products. A trademark becoming a generic name can result in loss of the trademark’s functions and use, hence cancellation of the mark, so trademark owners should obviously try to prevent this.

Article 8 of the PRC Trademark Law specifies that a trademark’s essential feature is that it is able to distinguish the goods of a natural person, legal person or other organization from those of others. Obviously, as a distinguishing mark, a trademark is not the same as a name of a good. In some cases, however, enterprises unconsciously use their trademarks as names of goods, which gradually dilutes the distinctiveness of these trademarks and eventually causes them to become the names of goods.

At this point, the trademarks face the risk of cancellation. Under article 49.2 of the Trademark Law, where a registered trademark becomes the generic name in a category of approved goods, any organization or individual may request that the Trademark Office make a decision to cancel the registered trademark.

If an enterprise’s trademark is frequently used to describe a certain category of good or service, it will probably soon be reduced to the generic name for that category of good or service. In particular, both the scope and the frequency of trademark use are on the increase in the internet era. Thus, famous trademarks of enterprises should avoid or reduce the risk of being diluted into generic names.

Once an enterprise’s name brand is reduced to a generic name, consumers will equate the brand with a certain category of goods, and this brand will, in turn, lose the function of distinguishability from other brands. This means that the trademark of this name brand will no longer be protected by law, and competitors may use it at will.

Such being the case, the value of the trademark, which the enterprise has struggled to establish, will disappear. In practice, trademark dilution often occurs in two circumstances, where new products come on the market, and they are long used by the public. Many trademarks are not generic names in the beginning, but due to improper use and poor brand maintenance by trademark owners, the distinctiveness of the trademarks diminishes and the trademarks become generic names for goods in the end. Examples include the trademarks “Aspirin”, “优盘” (Chinese pronunciation “You Pan”, meaning flash disk), and “Thermos”.

In view of the adverse effect of trademark dilution on trademark owners, and even the possibility of trademark cancellation, trademark owners should take the following precautions to prevent their trademarks becoming generic names.

(1) Use highly distinctive, creative devices and words/characters to register trademarks. Reduce the probability of trademarks becoming generic names.

(2) Trademark owners should use their trademarks in the correct and standard way, and tighten the management of their trademarks at the same time. In an advertisement: use a trademark along with a name for goods if any; avoid directly substituting a name for a good with a trademark name, in sales and in the advertisement; and avoid emphasizing the trademark in the advertisement.

(3) In the use of a trademark, follow the trademark with descriptive words/characters concerning the name for the goods to highlight the attribute of the trademark. Always remember to clearly display the sign of registered trademark, “®”, on the outer packaging and in related descriptions.

(4) In addition to regulating their actions, enterprises should keep a close watch on the market at all times and carry out market investigations. In the event that their trademarks are in danger of becoming generic names, enterprises should proactively take legal measures to protect their rights in a timely manner, stopping others from using their registered trademarks without permission.

(5) Develop the concept of trademark branding and employ a full trademark development strategy. Register a series of trademarks and defensive trademarks on the basis of the principal mark, facilitate product diversification, and nip any risks in the bud.

(6) Stop in a timely manner competitors’ acts of confusing your registered trademarks with goods names and/or descriptive words/characters, or halt the tendency for consumers to use your trademarks as goods names by giving written notice or placing newspaper/magazine advertisements so as to remove the risk of trademark dilution as soon as possible.

Finally, enterprises should not value trademark registration only but neglect trademark use and management, or value brand promotion only but neglect brand protection. They should make all-round arrangements to ensure their trademarks remain their valuable brand assets.

Brenda Zhao is a senior partner at Corner Stone & Partners

trademark law

Corner Stone & Partners
1905, Tower B, Tian Yuan Gang Centre,
No. 2 Dongsanhuan North Road, Chaoyang District,
Beijing 100027, China
Contact details:
Tel: +86 10 84464600 ext. 806