Facts of the Case

Early 1990, CAIC discovered that an entity dealt in a solid orange drink bearing the word ""(Guozhen, a Chinese word similar in pronuciation to "", the Chinese word standing for the trademark "Tang") and it is similar to the package of the "Tang" ("") trademark registered for the same class of goods by the US General Foods Inc. (later renamed the Kraft General Foods Inc.). If the use were unauthorized, it would be an infringement of the trademark. To act carefully, CAIC wrote to the State Trademark Office for instruction as to whether the two marks were similar. On 26 July 1990, the State Trademark Office replied in its No(90)B113 Document that ""and "" were used for the same goods, identical in pronunciation, similar in meaning; hence were similar trademarks. Afterwards, CAIC began to handle the matter in respect of the involved dealer according to the spirit of the document issued by the State Trademark Office. During the investigation, the manufacturer of "" products, the Xinhua Foodstuff Factory in Anbumeixi Chaozhou City, Guangzhou Province (XFF) pleaded that its package of "" was protected under the Chinese Patent Law, and prsented it the Gazette of Patents for the design "Tang" and the certificate of patent granted for the same design. It was found out that XFF applied to the Chinese Patent Office for patent for the design of "" used on the package of the solid drink container for the goods on 27 May 1988, and it was granted patent right for design on 31 May 1989. Article 59 of the Chinese Patent Law provides that "the extent of protection of the patent right for design shall be determined by the product incorporating the patented design as shown in the drawings or photographs." The photograph of the Patent Gazette contains the word "" and it is granted patent right a month earlier than the "" (or "Tang") trademark. Since it was not sure whether the contents of the patent right had constituted a trademark infringement, CAIC wrote on 13 June 1991 to the Trademark Office for further instruction on how to handle the matter.

The Trademark Office conducted a special study on the matter and made a special visit to the Chinese Patent Office. According to the Legal Affairs Department of the Patent Office, what the patent right for design protects is the outer appearance of a product, including the shape of its package, its used colour, pattern, calligraphy of words, arrangement and combination of words and representations and the products the patent right is used for, etc.. As for the word(s) in a design, what is protected is the form, not the meaning. Where the word therein infringes another person's exclusive right to use its trademark, the corresponding liability for trademark infringement should be imposed. This opinion is in keeping with that of the Trademark Office. The Trademark Office replied to CAIC that the "Tang" or "" trademark was registered with the Trademark Office by the US General Foods Inc. on 20 June 1989, and the Trademark registrant enjoys the exclusive right to use the trademark according to law. XFF's unauthorized use of the packaging decoration "" similar to the registered "" trademark for an instant drink is an infringement upon the trademark under Article 38(3) of the Trademark Law and Rule 41(2) of its Implementing Regulations, and it should be investigated and handled as the law provides. Accordingly, CAIC imposed administration adjudication on the dealer infringing the exclusive right to use the "" trademark.

Additionally, upon its discovery that the enterprise in Guangdong Province was granted patent right for the design of "", the US registrant of "" trademark filed an application for invalidation thereof with the Chinese Patent Office, requesting for invalidation of the patent for design according to law.

Analysis

This is a typical case where trademark right and patent right are in conflict.

Theoretically, a trademark and patent should fall into two separate domains of rights. According to the related provisions of the Trademark Law, a trademark is a sign consisting of a word or device or their combination and used to distinguish origins of goods. It is mainly used on the package of goods, with its primary function of distinction. The term of protection for a trademark is ten years, and its registrant may unlimitedly extent it by constant renewal thereof. According to the related provisions of the Patent Law, patent rights include those of invention, utility model and design. A patent is a new technology designed for industrial production, for beautification or improvement of the shape, function, and use of industrial products, or for lowering production costs. Patents for invention and utility model protect patented processes and products manufactured therewith, while patents for design protect the shape, device and colour of products, or new design made out of their combination for the purpose of decoration and suitable for industrial products. According to the provisions of the Patent Law, the term of protection of a patent for invention is 20 years, and that for a utility model or design is 10 years. The term of protection starts from the date of application and is not renewable. These provisions indicate that trademark and patent have their own scope of right, and should be in parallel development in their respective domain.

In practice, both a trademark and design are used on the package of a goods. When a design in its two-dimensional form does not contain anything prohibited from registration under the trademark law, say a generic name or device of goods, the main function, use, raw material of the goods, etc., it may be registered as a trademark upon verification. That is, in certain conditions, a design may become a registered trademark. To pass off as another person's trademark, a trademark infringer mainly imitates the outer appearance of the goods for a goods without a salient sign of trademark of its own. If a trademark registrant enlarges and uses the trademark, so that it becomes an integral part of the outer appearance of its goods, the infringing act of an infringer includes imitation of the trademark and design of a goods. Hence, when the trademark right and design patent right of the same goods belong to different rightholders, the two rights would overlap. The conflict of the two in this case is a concrete example of such overlap.

However, if the provisions of the related laws are closely followed, this conflict can be resolved. According to Article 27 of the Trademark Law and Rule 25 of its Implementing Regulations, a trademark registered by infringing another person's prior right is one registered by an improper means, and the Trademark Office and its Trademark Review and Adjudication Board may revoke the registration according to law. The patent right for design is such a prior right. According to the related provisions of the Patent Law, the Patent Office does not substantively examine the patent right for design. As long as it complies with the provisions of the patent law relating to patent application, it is announced in the Gazette. In this connection, Article 23 of the Patent Law also provides that any design for which patent right may be granted must not be identical with or similar to any design which, before the filing date, has been publicly disclosed in publication in the country or abroad or has been publicly used in the country; Articles 41 and 48 of the same Law provide that where grant of patent right is announced by the Patent Office, any entity or individual considers that the grant of the said patent right is not in conformity with the relevant provisions of the Law, it or he may request the Patent Office to revoke or the Patent Reexamination Board to invalidate the patent right.

In this case, the time to grant patent right for design to the "" solid drink package is 31 May 1989, and the time for "Tang" to be granted its exclusive right to use the trademark is 20 June 1989. The grant of the design patent right precedes the grant of the exclusive trademark right. However, the package of "Tang" trademark to which the design of ""was similar has been publicly used by the US General Foods Inc., in the US and other countries, and the US trademark registrant begins to use it in China much earlier than the application for patent for the "" design. According to Articles 23 and 48 of Chinese Patent Law, the patent right should be invalidated by the Patent Reexamination Board at the request of the US trademark rightholder. Likewise, the contents of the patent right for design in "" does not contain the meaning of the word "", and the similarity of the word "" to the registered trademark "" constitutes a trademark infringement, so, liability therefor should be imposed. In the end, such act of unfair competition to oppose the trademark right with the patent right is thus stopped by the Administration for Industry and Commerce.

This case shows that in its efforts to protect exclusive trademark right, the administrative authority for industry and commerce should, on the one land, guide trademark users not to carry on unfair competition by applying for registration of what has been granted patent for design as their trademark, and, on the other, prohibit acts of unfair competition by utilizing design patent right without substantive examination to avoid the liability for trademark infringement. When an infringer commits its unlawful act relating to a trademark by deliberately taking the patent right as its excuse, it should be firmly imposed penalty according to the trademark law.