Intellectual property, as we know it, is not so much about the property right for the intellectuals as it is an instrumentality for competition in the marketplace for a share of the economical pie. But competition must be conducted under proper rules, and unfair competition is always suppressed. Protection of economic interest can be achieved only on the basis of preserving the fundamental principles, which should not be altered unless on sound basis.

Ways of favoring certain economic interests may include administrative measures, targeted legislation, and policy considerations in judicial practice, which in most cases would pass legitimacy and rationality tests. Yet, we must be on alert for circumstances where such favoritism is so excessive as to conflict with the fundamental principles.

II. The trademark dispute over 散利痛 and 散列通

The facts of the cases are that F. Hoffmann-La Roche AG (“Roche”) entered into a trademark licensing agreement wit h Southwestern Pharmaceuticals, Co. (“Southwestern”) in 1987 allowing the latter to use its registered trademark SARIDON? with Chinese equivalent 散利痛 (pronounced as SAN-LI-TONG), then an unregistered mark, on analgesic products; that Southwestern filed for in 1992 and obtained registration in 1993 of the mark 散列通 (pronounced as SAN-LIETONG); that Roche filed for in 1996 and obtained registration in 2000 of the 散利痛mark; that Roche subsequently petitioned the trademark authorities for cancellation of Southwestern’s mark on the basis of “obtaining registration through fraudulent means,” and Southwestern also petitioned to cancel Roche’s mark on the basis that the mark was a generic term for the product. Both of the petitions were dismissed by the Trademark Review & Adjudication Board (TRAB, or the “Board”), and both parties appealed to the court which overruled the Board’s decision, finding that provincial drugs catalogs were not proper legal foundation for a finding of genericness. The Board’s decisions were reinstated by the Supreme People’s Court through review, overriding the lower court’s decision.

Now, let’s take a closer look at the decisions made by the various authorities.

1. TRAB decision on the finding of facts about 散列通 was arbitrary and capricious.

Roche’s petition for canceling the 散列通 registration was based on the grounds that the mark conflicted with its prior rights, but the TRAB found enough distinction existed between 散利痛 and 散列通 in terms of word formation, connotation and function, that it was unlikely to cause any confusion to an ordinary consumer with the mistaken belief that they were the same products. Roche has a registration for SARIDON, but not for any Chinese equivalent. Unmistakably, the 散利痛 mark is a Chinese transliteration of SARIDON, and therefore, a Chinese equivalent. As is commonly known, a foreign word may be transliterated in many different ways, with or without similarity in meaning, or even without meaning at all. For instance, the name Stalin may be transliterated as 斯大林, 史達(dá)林, 史太林 etc. Some foreign expressions have official transliterations, some not. In trademark practice, a translation or transliteration of a foreign word, under the Doctrine of Foreign Equivalents, would be considered as equivalent to that foreign word, whether or not the translation is well-accepted. In other words, 散利痛, 散列通 and SARIDON are translational equivalents, without any particular connotation in Chinese, except to the extent of being suggestive of analgesic products, and therefore should be taken as the same mark.

The Trademark Law provides, in Art. 13, that “a mark which is a reproduction, imitation or translation of an unregistered well-known mark used in connection with the same or similar goods, and likely to cause confusion, shall be denied registration, and shall be prohibited from such use.” This provision does not rule out reproduction, imitation or translation of a lesser-known mark. Instead, the statutory language of the provision takes its root in the law of passing-off: to pass off another’s mark is an act of unfair competition, and therefore the passing-off mark shall not be registered and shall be prohibited. In trademark disputes, proving passing off is a tough evidentiary process, and for this reason, since a well-known m a r k h a s been familiar to the public in general, the intention to pass off and the likely result of confusion become a legal presumption (rebuttable though with evidence of absence of reproduction, imitation or translation, or of lack of well-known status). The legislative intent of Art. 13 is apparently to reduce barriers for the protection of well-known marks by providing a special process with a simplified and relatively lower burden of proof. By the same token, passing-off by reproduction, imitation or translation of another’s mark is nonetheless an act of unfair competition. However, this is more burdensome to prove when the mark is not so well-known. Therefore, Art. 13 should not be so narrowly construed as to signal a green light for passing-off by reproduction, imitation of translation, let alone a free pass for registration or use. In other countries, e.g., the U.S., regulatory provisions may be more specific. According to the U.S. Trademark Manual of Examining Procedure , “Under the doctrine of foreign equivalents, a foreign word … and the English equivalent may be held to be confusingly similar” (e.g., BUENOS DIAS≈GOOD MOR N I N G ) ; a n d “Where the primary difference between marks is the transposition of the elements that compose the marks and where this transposition does not change the overall commercial impression, there may be a likelihood of confusion” (e.g., WINE SOCIETY≈WINE CLUB). A well-recognized test for likelihood of confusion derived from a U.S. federal court case, Polaroid v. Polarad, introduced such criteria as: 1. Strength of senior mark; 2. Similarity between marks; 3. Similarity between goods; 4. Likelihood of senior mark bridging the gap; 5. Evidence of actual confusion; 6. Defendant’s good-faith in selecting mark; 7. Quality of defendant’s product; and 8.Sophistication of consumers. The likelihood of confusion, against the above criteria, can be analyzed as: 1. The senior mark SARIDON and its Chinese equivalent, being fanciful, have undisputable distinctiveness; 2. Defendant’s mark 散列通, being another transliteration of senior mark, may be considered as equivalent to SARIDON or 散利痛; 3. Products are the same; 4 No gap to be bridged; 5. (see below); 6. No good-faith in defendant’s selecting of 散列通 since it was under license to use SARIDON and 散利痛; 7. Defendant’s product quality unknown; and 8. OTC drug to ordinary consumers.