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Generic trade marks in Asia's developing markets

Most trade mark owners would like nothing better than to own the leading brand in their market sector. But such huge marketing success is a double edged sword. Becoming the dominant ‘go-to’ brand in response, for example, to a request for ‘cola’, ‘tissues’ or ‘sticky notes’, can lead to the worst possible catastrophe for brand owners: the mark becomes so ubiquitous and well-known amongst the public that it loses its essential distinctive function as a trade mark. It no longer serves as a badge of origin, a designation of the source and quality of the goods or services in relation to which it is used. If consumers ask for a Coke, a Kleenex, or a Post-It note and are happy to accept a competitor’s product, then the mark has become a generic term used to describe the product type. Generic use of a mark is a global issue; it creeps up jurisdiction by jurisdiction, eroding brand value in stages, sometimes without the brand owner’s headquarters being aware. Historically, it was a developed world problem because that’s where the largest markets were. But, as this article about the markets of the Asia region shows, the concept of marks becoming generic is increasingly well understood throughout the developing world. In globalised markets, brand owners with any degree of risk should undertake a regular detailed analysis of each of the markets in which they operate, to avoid losing trade mark rights in particular countries.

The laws

There is no international source of law on generic marks. TRIPS, the Paris Convention and other treaties do not regulate the issue. As a result there are no consistent legislative rules as these examples show:

The risks

When a mark becomes generic, the owner loses control of the brand. The brand ceases to hold any proprietary goodwill or be an exclusionary IP right; registrations can become vulnerable to attack. Applications can be refused outright by a country’s intellectual property registry. Third party competitors may see ‘genericide’, i.e. a mark’s becoming generic, as a good opportunity to start using the mark in relation to their products. They might also oppose new applications or initiate cancellation proceedings against vulnerable registrations. In several countries around Asia, including China, intellectual property offices themselves can bring ex officio actions to cancel such registrations. ‘Genericide’ can also be used as a defence to infringement, in both civil and criminal cases, and it can be relied on in counterclaims aimed at delaying infringement proceedings. As a result, enforcement becomes very difficult.

The difficulty for a trade mark owner, often based in a distant country, is that it may not know when a mark has become, or is in danger of becoming, generic in a particular market. Having effective monitoring in place is crucial. Given a likely lack of understanding of the issues in the local subsidiary company or distributor, the role of the IP holder’s trade mark agent is crucial. In-house trade mark counsel need to ensure that an educated group of stakeholders is briefed to monitor and report regularly. Given that use of a brand may frequently be oral, a trade mark department may not know that the brand is being misused. Policing of market usage, as well as written use of the mark, is vital; with the speed of travel, internet use and cross border communication, generic use can quickly travel across borders. A trade mark owner with some sense that a mark is at risk in one or two markets, should ensure that global or at least regional monitoring is carried out. Such monitoring should be on the look-out also for local language versions of the mark; these too can spread across the region quickly.

Because people in Asian countries are increasingly mobile, and many countries have a high degree of access to international media, not only is generic use of a mark likely to spread from one country to another, but it is also becoming easier than it was in the past to challenge a trade mark registration on the ground that the mark has become generic. Previously, evidentiary requirements made such challenges difficult. That situation is changing. In Asian civil law jurisdictions, the burden of proof normally rests with the challenging party and there is an emphasis on hard physical evidence like dictionaries and reference books. Because it can take a long time before oral generic use is recorded or reflected in writing, it was often difficult for a challenger to establish that a mark had become generic. Now, when both trade mark usage and media distribution readily crosses borders, there is likely to be substantial reliance on internet evidence in such cases, making it easier than it was in the past to produce the necessary evidence.

In some developing Asian jurisdictions the law on ‘genericide’ still isn’t clear. And there are sometimes conflicting procedural rules. In Indonesia, there has never been a reported generic trade mark case, so there is virtually no guidance on how to proceed. In Vietnam, cancellation actions can only be brought within a certain time limit – but ‘genericide’ normally happens gradually, so what happens outside the time limit – does it become legally impossible to cancel a generic registration? Or in China, where there are no time limits, can a cancellation action still be brought even after a trade mark owner has regained control over a formerly generic mark? Perhaps it is only these uncertainties that have held back a number of cancellation actions based on ‘genericide’ in developing jurisdictions, but brand owners should take care. Litigation of this sort is on the increase in Asia, and previously benign jurisdictions are becoming increasingly perilous for brand owners.

Trade mark owners need to pay attention to local translations of their trade marks too. In China in particular these are used more widely than their western counterparts. Given that in-house trade mark counsel will usually be unable to watch out for these, they will need to rely on local businesses, local trade mark agents or a review of translations of local media to spot generic use. They should also be aware that generic use of a local translation of the brand in Singapore could quickly spread to China given the common language.

Case examples

There have been a number of cases involving generic issues, sometimes directly, on other occasions either incidentally as side arguments or as defences.

China

The Bluetooth case

Ericsson, a Swedish mobile phone manufacturer, applied the Bluetooth technology to wireless communication and designed the first mobile phone using the Bluetooth standard. In February 1999, Ericsson filed a PRC trade mark application for BLUETOOTH, which was rejected. Ericsson appealed to the Trademark Review and Adjudication Board (TRAB). During the appeal, Ericsson sold the BLUETOOTH mark to the Bluetooth Special Interest Group (an American company in charge of administering the standard). In January 2004, the TRAB rejected the appeal, whereupon Bluetooth SIG sued (by way of appeal) the TRAB in Beijing’s First Intermediate Court. The Court held that ‘Bluetooth’ was a technology standard for wireless communication so the term ‘Bluetooth’,when used in relation to computer and communications apparatus, served only to indicate that the apparatus complied with certain technical standards. It did not indicate the source of the goods and therefore lacked distinctive character as a trade mark. The Court therefore held that it was incapable of functioning as a trade mark and rejected Bluetooth SIG’s claim. Bluetooth SIG then appealed to the Beijing High Court, but again the Court found that the term ‘Bluetooth’ was used as a general name (generic term) for wireless communications, where it was widely recognised and accepted by consumers throughout Chinese society. This is perhaps a narrow interpretation of the definition of a trade mark, since the technology in question does have a source, namely the Bluetooth standard management organisation and its predecessors. It is also questionable whether Bluetooth in fact is used generically in China

The Sour Yoghurt case

In this case, in the Hohhot Intermediate People’s Court, in the province of Inner Mongolia, Neimenggu Meng Niu Dairy Products (Group) JV [(Meng Niu) v Henan Anyang Snow White Dairy Products Company (Snow White), Meng Niu sued Snow White for infringing its unregistered trade mark 'Suan Suan Ru', which means 'sour yoghurt' in English. The Court ruled in favour of Meng Niu and determined that the unregistered trade mark 'Suan Suan Ru' was a 'well-known' trade mark. Snow White appealed.

In the industry, 'Suan Suan Ru' is regarded as generic - 'Suan Ru' on its own means yoghurt in English, and prefacing it with additional words does not change this. But the Court found that although the words 'Suan Suan Ru' indicated the product's qualities and main raw materials, Meng Niu had spent RMB 290 million (approximately US$ 36.25 million) advertising 'Suan Suan Ru' products and that the value of products sold amounted to RMB 3 billion (approximately US$ 375 million). In those circumstances, the mark 'Suan Suan Ru' had acquired distinctiveness through use, and should be regarded as a 'well-known' trade mark.

The Game Developers’ Conference case

CGDC was the organiser of an event known as the Game Developers’ Conference. It became involved in a dispute with a third party called Think Services which tried to register ‘game developers conference’ as a trade mark. CGDC was concerned that it might not be able to continue to run its conference under the name. The trade mark application was rejected on the ground that the mark was a generic term. This case shows that there is an overlap between marks that have become generic and marks that are descriptive.

Pfizer – ENVACAR

Pfizer’s application for registration of ENVACAR in China was rejected. Pfizer appealed, but the Court upheld the TRAB’s decision and found that the term ENVACAR is a generic term for a type of anti-hypertension drug.Evidence came from the Modern English-Chinese Pharmaceutical Dictionary, which defined the word as a generic term. Pfizer’s argument that the dictionary was wrong failed, because in the process of translation, the term had lost its distinctiveness and become generic. This demonstrates the need to be on the lookout for evidence that could subsequently be used to either support, or defeat, a claim that the mark has become generic, and the need to take special care over the translations that are made of English marks.

Netac – YOU PAN

Netac Technology Co., Ltd, a Chinese IT company, had its ’YOU PAN’ (‘U DISC’ in English) trade mark registration cancelled by the TRAB. This was done by the TRAB of its own volition, but believed to be supported by Netac’s competitors. The TRAB decided that the mark was generic after competitors successfully showed that it had become a common term for USB flash disks. This case is a special warning for trade mark owners against the potential dangers present in countries where the trade mark registry can take action ex officio, but also of the threats posed by disgruntled competitors.

Singapore

Viacom v Elitist Technologies

This was a dispute over the domain name ‘mtv.com.sg’, heard by Singapore’s Domain Name Dispute Resolution Service. MTV was found to be a generic abbreviation for music videos. Central to this determination was evidence from China, where MTV was printed in a dictionary, and often used to describe karaoke products. This case demonstrates how dangerous foreign evidence can be and how across great distances generic use can spread.

Siemens v Sunonwealth

In this case, Siemens successfully opposed a Taiwanese company’s monopolisation through registration of the term ‘MAGLEV’. Siemens was using the term generically for its maglev trains. The Singapore IP Office found crucial evidence through a simple internet search for the term ‘maglev’, which returned a dictionary entry describing it as a noun meaning magnetic levitation. This case is unusual as a generic user was forced to take action to cancel an incorrectly registered trade mark.

Thailand

The trade mark ‘Dry Ice’ was cancelled some years ago in Thailand. Although no details of the case can be found, it is believed that the registration was cancelled on the ground that the mark was generic. No one else has since tried to register it.

Vietnam

Nestle - MAGGI

MAGGI was a mark registered by Nestle in South Vietnam before the conclusion of the war in 1975. Nestle re-filed to register MAGGI in the 1990s, but by this time the mark was being used by Vietnamese consumers as a reference to ‘soya-sauce’. It had also been included in some Vietnamese dictionaries. Nestle fought aggressively and successfully got some publishers to remove the word ‘MAGGI’ from their dictionaries, or admit that the inclusion of the word in the dictionary was not correct. Ultimately, they were able to secure registration for the mark. This case shows how important aggressive action is to recover marks that borderline on being, or are in danger of becoming, generic.

Conclusion

The above cases demonstrate various dangers to trade mark owners that arise from misuse of their marks in Asia and may lead to their marks becoming generic. As the laws are still evolving, a regular review of the legal position needs to be maintained by in-house trade mark counsel. Trade mark owners need to consider the issue holistically throughout the region. Certain strategies will be necessary on a global and regional level (e.g. cleaning up internet usage or Chinese language texts), others will be national (such as taking action to stop local use). What trade mark owners should not do is let the issue go unnoticed, or let it continue once it has been discovered. Although it is possible to fight back and recover a brand, doing so is not easy - and the cost is likely to be significantly higher than the cost of putting in place at an early stage an effective system to manage the process.

Actions for Brand Owners

• Conduct a survey to assess the degree of risk.
• Put in place an early warning system by educating local company employees and trade mark firms to report generic use.
• Register trade marks as early as possible especially in developing markets.
• Always use the ™ or ® signs after the mark on packaging and in advertising and promotional materials.
• Don’t make the mistake of using the mark generically internally – or it will be used against you.
• Prepare, implement and monitor a proper trade mark usage policy.
• Monitor markets and take action against misuse of the mark (a cost-effective way to do so is simply by sending warning letters).
• Educate the public on how to use the mark correctly, thus increasing their awareness of the mark as a designation of origin.
• Design and operate a regional strategy - what is considered generic in one country may not necessarily be considered generic in another, but usage can leak across borders.
• Watch out for local language variations and monitor translations carefully.
• Consider using your trade mark on multiple goods or services so it is not so closely associated with one type of product.
• Police local media and reference materials (which could be used against you), especially reference materials for your industry.
• Police internet usage globally since this could form evidence for any actions against you.

By Nick Redfearn.

Originally published in Trademark World Magazine, February 2010.