Spill the tea, drastically – the tea trade mark with adverse effect case in China

Article 10.1(8) of the PRC Trade Mark Law (2019 Amendment) concerns one of the absolute grounds for refusal/invalidity. It prohibits the registration and use of signs that are “detrimental to socialist morality or customs, or hav[e] any other adverse effect”.

The meaning of ‘adverse effect’ is not self-explanatory, rendering the official guidelines and interpretations helpful for reference. A previous IPKat post back in November 2020 reported on a Beijing IP Court’s press briefing concerning the ‘adverse effect’ alongside several examples. Example no. 4(1) shows the importance of keeping the integrity of the Chinese language.

This post is an extension of that point: it comments on a judgment handed down on 31 August 2022 that demonstrates how powerful the Chinese language integrity point can strike a trade mark at the root. 

Background 

[Case reference: 1st instance: Administrative Judgment No. 3331 [2020], First, Administrative Division, Beijing, of Beijing IP Court; 2nd instance: Administrative Judgment No. 3518 [2022], Final, Administrative Division, Beijing, of Beijing High People’s Court] 

The device trade mark at issue is shown below with the filing date of 22 September 2004 (No 4281333 in class 43 for, e.g., cafe, cafeteria, restaurant and bar. Registered on 14 March 2008). For brevity, hereinafter this trade mark is referred to as ‘TM A’. 

The verbal part of TM A is composed of four Chinese characters, ‘茶 (tea) 颜 (face) 观 (observe) 色 (colour)’, which, at a glance, has no ‘adverse effects’. 

Hunan Chayue Cultural Industry Development Group Co., Ltd. (‘Hunan Chayue’) have filed and actually used several ‘茶颜悦色’ trade marks since 2013. In class 43, the following three trade marks were the first ones filed by Hunan Chayue: 

The verbal elements of the three respective trade marks (‘TM Bs’) all have only one character that differs from the TM A:

TM A: ‘茶 (tea) 颜 (face) 观 (observe) 色 (colour)’ 

v. 

TM Bs: ‘茶 (tea) 颜 (face) 悦 (happy) 色 (colour)’

TM A was registered years earlier than TM Bs. However, since its filing date, the TM A changed hands several times and was assigned to Guangzhou Luoqi Catering Management Co., Ltd. (‘Guangzhou Luoqi’) in 2018. Until 2018, courts could not confirm the existence of sufficient evidence regarding the genuine uses of TM A. This said, Hunan Chayue has been extensively using the ‘茶颜悦色’ trade marks in its tea business since 2013 and has gained significant market recognition.

Witnessing Hunan Chayue’s booming tea business, TM A’s proprietors started imitating TM Bs’ beverage products, shop decorations and promotional copywriting as of 2017, and actively granted franchises to expand the geographical coverage of such imitations. Some franchise shops were opened directly at the other side of streets where TM Bs' shops were located. 

Both sides eventually moved their battlefield to the courts. Guangzhou Luoqi sued Hunan Chayue for trade mark infringement in 2018. The court ruled Guangzhou Luoqi’s lawsuit to be malicious as it knowingly franchised activities exploiting Hunan Chayue’s high market popularity. 

In 2020, Hunan Chayue launched a reprisal and sued Guangzhou Luoqi for unfair competition. In March 2022, Guangzhou Luoqi was fined a total of 1.7 million CNY in Hunan Chayue’s economic losses and reasonable rights protection expenses. 

Strike at the root 

In 2018, along with the unfair competition and trade mark infringement suits, Mr. Lu Liang (‘Lu’, founder and chairman of Hunan Chayue) embarked upon another strategy: he directly challenged the very validity of the TM A in court and claimed that TM A was an irregular use of the idiom '察言观色'. 

On 31 August 2022, Beijing High People’s Court ruled in support of Lu’s claims:*

Given that the trade mark in dispute is the homophonic use of the idiom 察言观色, the relevant public can easily associate the two.

If the disputed trade mark is used as a trade mark, it will have negative effects on the correct understanding of Chinese language and characters and on the educational and cultural undertakings, which is detrimental to the inheritance of the Chinese language, history and culture and has negative impacts to the construction of national culture and to development of this country’s culture and other social public interests and public order. 

As a result, Beijing High People’s Court held that TM A could not be registered as a trade mark in accordance with Article 10.1(8) of PRC Trade Mark Law. 

Comments

The ‘tea case’ shows that the ground of ‘signs with adverse effects’ is indeed a ‘hard no’ – it blocks signs from being registered or used as a trade mark. Applied properly, it can be a deadly strike indeed. 

Furthermore, for non-Chinese speakers, this ‘tea case’ shows a red flag to watch out for: the very existence of the Chinese idiom (‘Chengyu (成语)’). 

A chengyu mostly consists of only four characters and conveys rich meanings derived from ancient literature. 

If we take the Chengyu cited in the ‘tea case’, i.e., 察言观色, as an example: it was derived from “论语 (Analects), a collection of Confucius’s sayings and ideas. More specifically, the Chengyu ‘察言观色’ evolved from a conversation between Confucius and one of his students (with emphasis added): 

子张问：’士何如斯可谓之达矣？’

Zi Zhang asked, ‘What must the scholar be, who is supposed to be distinguished?’

子曰：’何哉，尔所谓达者？’

The Master said, ‘What is it you call being distinguished?’

子张对曰：’在邦必闻，在家必闻。’

Zi Zhang replied, ‘It is to be heard of through the state, to be heard throughout his clan.’

子曰：’是闻也，非达也。夫达也者，质直而好义，察言而观色，虑以下人。在邦必达，在家必达。夫闻也者，色取仁而行违，居之不疑。在邦必闻，在家必闻。’

The Master said, ‘That is notoriety, not distinction. Now the man of distinction is solid and straightforward, and loves righteousness. He examines people's words, and looks at their countenances. He is anxious to humble himself to others. Such a man will be distinguished in the country; he will be distinguished in his clan. As to the man of notoriety, he assumes the appearance of virtue, but his actions are opposed to it, and he rests in this character without any doubts about himself. Such a man will be heard of in the country; he will be heard of in the clan.’

The complete conversation was condensed into a four-character Chengyu, 察言观色, to stand for the meaning of ‘to read a person (to interpret or infer a meaning or significance based on facial expression, tone of voice, etc.)’. From that perspective, a Chengyu is indeed an important part of the integrity of Chinese languages. 

Moreover, it is notable that the adherence to the integrity of Chinese language can range from identical-verbatim signs to homophonics. Therefore, in order to ensure a solid foundation for one’s trade mark, it is advised to also examine the surrounding territories flagged by homophonics. 

*Translation of the rulings are tried by Tian 

**Translation of the Analects is by the Chinese Text Project. This Kat changed the translation of ‘士’ from ‘officer’ to ‘scholar’, which seems more accurate, in her humble opinion. 

Image of Confucius: by the creative commons licenses