The Relevant Public and Likelihood of Confusion in Respect of Chinese Character Trademarks

Kat friend Matej Michalec, from V4 Legal in Slovakia, has shared a thoughtful blog post about the challenges of registering a EUTM when the mark contains characters in a pictorial language, such as Chinese.

"Guangzhou Baiyunshan Pharmaceutical Holdings Co., Ltd. (GBP or the Respondent) sought to register a figurative mark, in Classes 5, 30 and 32, containing a device with three fancifully interconnected Chinese characters 王老吉 (pronounced as Wang LAO JI according to Pinyin, i.e. the official romanization system of the Chinese characters), encircled by English text: "Authentic Herbal Tea Wellucky Since 1828". The application was opposed by Multi Access Limited (MAL or the Appellant) on the basis of four of its earlier EUTMs, namely the word mark WANG LAO JI and three marks containing the same Chinese characters 王老吉 (see below). MAL invoked Article 8(1)(b) EUTMR, which provides for a relative ground for refusal of a EUTM application, if, considering the similarity/identity of the marks and goods covered by them, there exists a likelihood of confusion on the part of the relevant public in the EU (in case of EUTMs). The goods were assumed to be identical.

The opposition was rejected by the Opposition Division. MAL appealed. By its decision from 21 March 2017, the Second Board of Appeal dismissed the appeal (R 888/2016-2). The main issues were the the relevant territory and public. The BoA observed that for a EUTM application to be refused, it is sufficient that grounds under Art. 8(1)(b) exist only in part of the EU in light of the users likely to use both the goods covered by the earlier mark and the mark applied for. MAL had claimed before the Opposition Division that the target consumers are Chinese or people with Chinese ancestry who are able to read Chinese and who are living in the EU. On appeal, Appellant sought to extend the target consumers to other Asians, in particular Japanese and Koreans, as they are able to understand Chinese characters to a certain extent.

The BoA referred to the ‘EL BAINA’ judgement (C-147/14), where the CJEU took into account that the relevant public consisted of Muslim consumers of Arabic origin who consume ‘halal’ food products in the EU and have at least a basic knowledge of written Arabic. Furthermore, the CJEU reasoned that for the purposes of assessing the likelihood of confusion between the marks which cover the same or similar goods and contain a dominant Arabic word both in Latin and Arabic script, the meaning and pronunciation of those words must be considered in cases where the relevant public has a basic knowledge of written Arabic.

However, in applying these principles to the current matter, the BoA stated that ‘halal’ food can be considered as targeting a specific Muslim public, unlike Chinese foodstuffs or medicinal and herb products, which are commonly consumed by the average European consumer. Moreover, the BoA opined that although some of the contested goods in Classes 5 and 30 can relate to Chinese nutrition or medicine, the other goods specified in Classes 5, 30 and 32 do not share this feature. Therefore, the BoA reasoned that the lists of goods do not support the conclusion that the products concerned are sold in special Asian stores to clients of mostly Chinese or Asian background more generally.

In addition, the BoA held that it is questionable whether Chinese-speaking people can be considered as forming a substantial portion of the consumers in the EU. The Appellant submitted Wikipedia extracts, according to which people of Chinese/Asian ancestry formed 1.23% of the German population, 0.94% of the population in France and 0.7% in the UK. The BoA questioned the value of data accessible through Wikipedia, but in any case, the values were too small to support the conclusion that a substantial portion of the EU is composed of people having Chinese/Asian origin.

Thereafter, the BoA proceeded with the comparison of the signs. It found that given that the mark was aimed partly at average consumers and partly at professional circles (Class 5) in the EU, the Chinese script as a whole is not understandable by the relevant public. Visually, most of the ‘relevant’ consumers will consider the characters in the contested sign as a combination of lines arranged in a circle, a figurative device having a decorative character, corresponding to something possibly of Asian origin, as opposed to the earlier EUTMs 2), 3) and 4), which will be perceived as depicting three Asian characters (or six in the case of the earlier EUTM 2)).

Phonetically, the earlier EUTMs 2), 3) and 4) will not be pronounced, thus the aural comparison consisted of juxtaposing the earlier EUTM 1) (WANG LAO JI) to the WELLUCKY part of the contested sign, holding them to be aurally dissimilar. Lastly, only a very low conceptual similarity was found, specifically in relation to Class 5, consisting of a weak link to goods of Asian origin (or possibly Chinese medicine). As a result, no likelihood of confusion was found. (Chinese speakers can find a good summary here.)

Background and Commentary

While perhaps not particularly known among the average EU consumer, in China (including Hong Kong), where it is recognized primarily as a herbal tea brand sold in red cans, 王老吉 is as popular as Coca Cola (see the picture below).

It is noted that the predecessor to the current GBP holding company had licensed the mark to Hong Kong Hong Dao Group (HKHD), authorising it to sell herbal tea in red aluminium cans. HKHD then established Jia Duo Bao Ltd. (JDB) to manufacture red cans labelled王老吉, while the predecessor to the GBP holding company continued to sell herbal tea under the same brand in paper packaging. JDB turned 王老吉 into a huge success. This led to a dispute between GBP and JDB, resulting in the termination of some licenses in 2010 and invalidation of others in 2012. Subsequently, GBP sold herbal tea 王老吉in the red cans while JDB designed its own 加多寳 (Jia Duo Bao) red cans (see above).

It is noted that the predecessor to the current GBP holding company had licensed the mark to Hong Kong Hong Dao Group (HKHD), authorising it to sell herbal tea in red aluminium cans. HKHD then established Jia Duo Bao Ltd. (JDB) to manufacture red cans labelled王老吉, while the predecessor to the GBP holding company continued to sell herbal tea under the same brand in paper packaging. JDB turned 王老吉 into a huge success. This led to a dispute between GBP and JDB, resulting in the termination of some licenses in 2010 and invalidation of others in 2012. Subsequently, GBP sold herbal tea 王老吉in the red cans while JDB designed its own 加多寳 (Jia Duo Bao) red cans (see above).

Numerous lawsuits ensued in China between the two, with the most recent ruling by the Supreme People’s Court in Beijing from this August, here, allowing both companies to use the red can packaging, because both of them contributed to its commercial success. (Chinese speakers can find a good summary here.) It appears that the proceedings before the EUIPO are just a EU sequel to the trademark battle taking place in China. In the present case, the BoA was not persuaded that the relevant public was composed of people of Chinese/Asian origin or that there was a likelihood of confusion.

Perhaps more persuasive evidence on the relevant public or distinctiveness could have been submitted to change that perception. For example, data from more reliable sources, such as the 2011 UK census analysis by the Office for National Statistics (supported by similar evidence from other EU countries) would have shown that there are more than four million people of Asian/Asian British origin living in England and Wales alone, and that Chinese is one of the top 10 ‘Other’ languages used. Similarly, limiting the list of goods to those specifically relating to China could have perhaps tipped the scales in favour of a ruling that the relevant public is composed of people of Chinese/Asian origin.

Further, one may ask whether, in today’s globalized world, treating Chinese (and other alphabet) characters as "mere" figurative marks (stripping them of its conceptuality) is appropriate (See paras. 52 and 83 of the BoA decision). The Chinese Trademark Office is able to assess likelihood of confusion between signs in Latin script. We also note the treatment by the Canadian Trademark Opposition Board, confirmed on Appeal (see, for example, Cheung's Bakery Products Ltd v. Saint Honore Cake Shop Limited) and the UK Comptroller-General, considering the marks in question from the perspective of a consumer of Chinese origin (Wang Lei vs. China National Cereal Oils & Foodstuffs Import & Export Corporation). Wider use could also be made of Sinology experts (as was the case here, albeit his opinion did not change the BoA’s view).

All in all, considering the growing importance of Chinese commercial activity, the ever-increasing number of Chinese tourists, and the sheer number of Chinese speakers, it is fair to predict the growth of the use and influence of Chinese character trademarks in the EU (for those watching UEFA Europe League have a look at the football jerseys of Slavia Prague). Will trademark law adapt to this reality?"

Center photo by Visual China