Case Background

The plaintiff, Lanzhou Foci Company, is a joint-stock entity established in 1956 following the relocation of the original “Shanghai Foci Pharmaceutical Co., Ltd.” to Lanzhou. This company is known for manufacturing several esteemed traditional Chinese medicine products and was honored as a “Chinese Time-honored Brand” by the Ministry of Commerce in December 2006. The “Foci” trademark was registered on April 21, 1996, and has been in continuous use by Lanzhou Foci Company since that time.

On the other hand, the defendant, Xi’an Foci Company, is a limited liability company that was registered in September 2006. It primarily focuses on the production and manufacturing of sterilization and disinfection products, as well as external medicines. While the company does label its factory name on its products, it predominantly utilizes its own “Tianjian” trademark. In 2011, Lanzhou Foci Company reached out to Xi’an Foci Company to discuss the business name issue, but unfortunately, no agreement was achieved.

The plaintiff contends that the defendant has infringed upon its legitimate rights and has initiated legal proceedings, requesting the court to mandate the following: that the defendant cease its infringement of the plaintiff’s “Foci” Chinese Time-honored Brand and the exclusive rights associated with the “Foci” trademark; that the defendant change its business name and issue a public notice to mitigate any negative impact; and that the plaintiff be compensated for reasonable losses, including legal fees.

In response, the defendant asserts that its actions do not constitute infringement and that it should not be held liable for compensation. Xi’an Foci Company claims that its name was inspired by the founder’s experience during a trip, where he encountered the phrase “Our Buddha is compassionate,” and insists that there was no intention to associate with the plaintiff’s name or to infringe upon it maliciously. Additionally, the company emphasizes that it has consistently used its full company name and its own trademark on its products, without prominently featuring the term “Foci.”

Case Focus

The primary issue is whether the registration of the “Foci” trademark by Xi’an Foci Company, which is owned by Lanzhou Foci Company, constitutes trademark infringement or an act of unfair competition.

Case Analysis

To begin our analysis, we need to assess the potential for trademark infringement.

While Xi’an Foci Company prominently features its full business name on its product packaging, the consistent font used effectively represents the manufacturer’s identity. Furthermore, the company has incorporated its own registered trademark, “Tianjian,” on the outer packaging without giving undue emphasis to the term “Foci.” Consequently, it is unlikely that consumers would associate Xi’an Foci Company with the “Foci” trademark or confuse “Tianjian” with it. Therefore, it appears that Xi’an Foci Company has not infringed upon the exclusive rights associated with the “Foci” trademark owned by the plaintiff.

Next, we must evaluate whether Xi’an Foci Company’s actions could be considered unfair competition.

The business activities of Xi’an Foci Company closely align with those of Lanzhou Foci Company, and both organizations are expected to respect the legitimate rights of their industry peers while exercising due diligence. Since Lanzhou Foci Company has been involved in pharmaceutical research, manufacturing, and sales since its relocation to Lanzhou in 1956, it has developed a diverse product range and a strong market presence. The business name and registered trademark “Foci” are well-recognized and distinctive within the industry. Given the similarities in their business operations, geographical proximity, and historical context, Xi’an Foci Company’s choice of a business name that closely resembles that of Lanzhou Foci Company could mislead consumers into believing there is a local affiliation or connection between the two entities.

Additionally, the term “Foci” is not commonly used in everyday Chinese language, which enhances its originality and distinctiveness.

As a result, Xi’an Foci Company’s rationale for using “Foci” in its business name appears insufficient. In conclusion, it can be determined that Xi’an Foci Company’s unauthorized use of the prominent business name and registered trademark “Foci,” which belongs to Lanzhou Foci Company, constitutes unfair competition. Therefore, Xi’an Foci Company should be held accountable for its actions.

Judgment Outcome

Ultimately, the court determined that the defendant, Xi’an Foci Company, is required to cease the use of the term “Foci” in its business name, product packaging, and descriptions. Additionally, the company must publish a notice regarding the change of its business name in the “China Market Supervision News” and provide compensation to the plaintiff, Lanzhou Foci Company, for damages, which includes reasonable legal fees. Following the ruling, neither party chose to file an appeal.

Judicial Interpretation

Registered trademarks and business names serve similar legal functions within market economic activities. Both are designed to differentiate the goods and services offered by specific producers from those of others, enabling the public to easily identify the providers of particular goods or services. This distinction aids consumer decision-making and ensures quality assurance. A key area of contention in intellectual property law revolves around the legal implications of using another party’s registered trademark as a business name.

In judicial practice, the primary legal consideration that differentiates these two concepts hinges on whether there is a prominent use of another person’s registered trademark within the business name. This can lead to two distinct legal outcomes:

Firstly, if an individual registers another person’s trademark as a business name and utilizes it in a manner that does not prominently feature the trademark in their business activities, the public is unlikely to perceive the goods or services as originating from the trademark holder. In this scenario, trademark infringement would not be established. However, the use of another’s registered trademark as a business name can create a resemblance to an existing trademark, product, service, or business name, potentially leading the public to mistakenly believe there is a specific relationship—such as licensing, collaboration, or joint operation—between the two parties. This situation may result in the improper appropriation and exploitation of another’s goodwill, which is typically recognized by courts as unfair competition, thus subjecting the individual to legal responsibility under the Anti-Unfair Competition Law.

Secondly, if an individual registers another person’s trademark as a business name and prominently incorporates it into their business activities, this action constitutes “trademark use” as defined in Article 48 of the Trademark Law. Practices such as emphasizing, enlarging, or displaying the same wording as another’s registered trademark in a highly visible manner on product packaging can mislead consumers, causing the public to mistakenly identify the prominent portion of the business name as the trademark of another party, thereby misattributing the source of the goods. This behavior transcends general unfair competition and qualifies as “trademark use” under trademark law. Consequently, when courts address such cases, they typically conclude that the individual is liable for trademark infringement.