China: The need for close collaboration
Kangxin Partners PC
Successful use of fluid marks calls for close collaboration between creative trademark lawyers and marketing teams
Fluid trademarks have been enthusiastically adopted by many Chinese online businesses, including leading search engine Baidu and popular online chat forum QQ. Variations of an original mark (eg, the well-known Google Doodle) are often inspired by or created specially to commemorate holidays, anniversaries and historical milestones, as well as a range of other topical events. Regardless of whether they are created by altering forms or adding other elements or images, fluid marks help to keep a brand fresh and consumers engaged.
Due to China’s first to file doctrine, a trademark – including a fluid mark – can obtain legal protection only through registration. According to Articles 8 and 9 of the Trademark Law 2013 and the Examination Standard of the China Trademark Office, if the same applicant files similar or serial variations of a registered mark, registration may be permitted even though the variants are similar to prior applications from the same rights holder.
However, the rule of one application per mark could make it challenging for a rights holder to file separate applications for each variation of its fluid mark. In addition, the length of time that it takes to register a mark, compared to the short period during which specific variants of a fluid trademark are actually used, suggests that maintaining a large portfolio of registrations is not the most effective strategy for rights holders to pursue.
Risks of fluid marks
While fluid marks can help to upgrade a brand and attract consumer attention, they can also involve potential legal risks. Because of their dynamic nature, fluid trademarks can easily lose their association with the original mark. Article 49 of the Trademark Law stipulates that if a trademark is modified in its use, the local administration for industry and commerce may issue a warning to the registrant requesting correction; otherwise, the registration risks being cancelled altogether.
In 2010 the Supreme People’s Court issued the Opinions of the Supreme People’s Court on Certain Issues Concerning the Trial of Administrative Cases of Trademark Authorisation Confirmation, which recognises that the principle of using static marks is flexible. The Supreme People’s Court stated: “despite the nuanced difference between a trademark in actual use and an officially registered trademark, if the distinctiveness thereof is not altered, it can be deemed as use of a registered trademark.”
This leaves room for rights holders to retain rights in their registered mark, provided that any variations do not alter its distinctiveness. However, if the mark’s distinctiveness is altered, use of the fluid mark may be deemed as not fulfilling the original function and it may become vulnerable to cancellation. This can lead to a situation where, on the one hand, a variant mark cannot be protected because it is not registered, while on the other hand the original mark risks cancellation because it has been modified.
In order to preserve the validity of a trademark registration in China, the modified mark must reflect the essential distinctiveness of the original mark and create the impression that it is essentially the same mark. However, due to its dynamic, new and eye-catching nature, a fluid mark can all too easily be deemed to have altered the original mark’s distinctiveness.
This is especially true when there is an obvious split over interpreting the term ‘nuanced difference’ between the Supreme Court on one side and the China Trademark Office, the Trademark Review and Adjudication Board and local administrations of industry and commerce on the other. This leave rights holders facing a dilemma as to whether their unregistered variants have the same legal standing as their registered marks.
In addition to the potential risks of cancellation for non-use, rights holders should make clear statements about the potential risks of unauthorised consumer variations of a given mark.
Due to their interactive nature, fluid trademarks may imply an invitation for consumers to respond to changes in a given mark by creating their own unique modifications.
In the United States, for example, unauthorised consumer variations of a given mark can be deemed nominative fair use if certain criteria are satisfied and therefore may be beyond the rights holder’s control. Thus, a Chinese brand owner with a fluid mark could find itself in the unenviable position of choosing between allowing its mark to be used and manipulated freely and suing its own customers.
In addition, too many different variations of the underlying mark might create consumer confusion and raise the risk of weakening the distinctiveness of the underlying mark. This in turn might dilute the brand’s reputation among consumers.
Despite the difficulties of prosecuting and protecting fluid marks in China, rights in such marks can still be enforced under the current legal framework – especially in cases of infringement.
Enforcement should be the rights holder’s first choice if it discovers that its mark is being infringed. Available enforcement actions include administrative raids and court action, although these are available only for the registered underlying mark. Unless the rights holder has applied for protection for variants of its marks, effective legal actions cannot be launched if a third party uses one or more signs that correspond to these.
However, the rights holder can attempt to prove confusion or misleading associations between the protected underlying mark and the sign being used by the alleged infringer. This can be particularly effective where there is a strong relationship between the underlying mark and the variant, as a court might plausibly find that the third-party use also infringes the registered trademark.
Rights holders might also want to consider copyright as an alternative way of protecting non-registered variants of their underlying marks. Unlike trademark protection, copyright protection does not require frequent use or substantive examination. From the point of view of copyright law, third-party use of a trademark variant is infringing unless it is intended for specific purposes, such as criticism, polemic, review, education or scientific work. A competitor will thus be blocked from using variations of the fluid trademark, which enjoy copyright protection for commercial purposes.
Finally, rights holders have the option – uniquely in China – of protecting variations of their fluid marks through design patent protection, provided that certain patentability criteria are satisfied.
Given these risks and benefits, rights holders should bear the following in mind when using fluid trademarks in China.
Choose a distinctive underlying mark
Before adopting a fluid mark, rights holders should ensure that the underlying mark is sufficiently strong and distinctive to minimise the risk of consumer confusion. In this way the public will understand that a given fluid variation is indicative of the same source as the underlying mark.
Register the underlying mark
Registration of the underlying mark in China is critical if a third party is infringing any variants thereof. Considering that registration is both time consuming and expensive, rights holders should consider carefully whether it is worth registering particular variations of the underlying mark.
Use the underlying mark continuously in commerce
Rights holders should continue using the underlying mark in its registered form when adopting a fluid mark. This avoids the risk of abandonment and allows the rights holder to rely on the priority date of the underlying mark, which the variation can then be tacked on to. Meanwhile, each variation comprising a fluid trademark should maintain any distinctive features which could identify characteristics of the underlying mark (eg, signature colours or a stylised font) which consumers can use to identify the source of the services or products.
Clear rules for fair use
A fluid trademark should engage and interact with the public to achieve best market value. If fair use and parodies of fluid trademarks are permitted, the terms of fair use should be stated clearly. Google maintains a Rules for Proper Usage webpage regarding use of its mark, through which it permits use in only limited ways and subject to certain requirements. For example, users must distinguish the GOOGLE mark from the surrounding text and use the mark only as an adjective rather than a verb or noun.
Fluid marks offer rights holders a unique opportunity to deepen and broaden the emotional connections between their brands and consumers. However, they also present potential risks from the perspective of IP law. Successful use of fluid marks calls for close collaboration between creative trademark lawyers and marketing teams, through which the rights holder’s IP portfolio and its brand can be enhanced and promoted by going fluid.
Celia Y Li was admitted to practise as an attorney at law in 2000. Before joining Kangxin Partners PC, she worked at the Hebei Provincial High Court. Ms Li’s familiarity with the legal protection of IP rights and the judicial process ensures a high success rate for her cases. Ms Li also specialises in litigation relating to patent and trademark infringements, where she investigates and deals mainly with administration, unfair competition, arbitration and customs.