By Ice Tang
At the very end of 2021, a series of trademark protection incidents aroused widespread and significant social concerns. It started with the owner of the trademark “XIAOYAOZHEN” affixed on a spicy soup, a famous dish originated in Henan Province, Xiaoyao County, filing a series of trademark infringement litigations against plenty of retailers around the country. Almost at the same time, another trademark owner, which owns the trademark “Tongguan Rougamo” (Rougamo is a well-known snack, a bun filed with diced meat)”, also filed trademark infringement litigations against some retailers, asking each defendant for a franchise fee of nearly RMB 100,000, which finally triggers the controversy and heated debates over the legal protection of a geographical indication registered as a trademark.
It is rare that a legal issue raises such widespread social concerns. We believe that it is because, first of all, majority of the defendants are retailers, which are considered grassroots in the society, and are fighting extremely hard to make both ends meet especially under the covid-19 pandemic. In contrast, the trademark owners are both associations. They have greater access to resources. The public tend to be more synthetic to the defendants.
Secondly, both trademarks involve the protection of geographical indication, which is considered by the public as public resources and thus should be free to use. Besides, not only the protection of geographical indication is a new issue to the public, but also there is lack of detailed and operable law and regulations in this respect.
In this article, the writer wants to discuss this matter from a legal perspective, and help clarify the legal issues buried in this incident.
These two trademarks, “XIAOYAOZHEN” and “TONG GUAN ROU JIA MO”, as shown below were owned respectively by an association located in Xiaoyao County, and an association located in Northwest China’s Shanxi Province, Tonaguan County. The first one is affixed on a spicy soup, and the latter connected with a bun with diced meat known as Rougamo, both of which are famous dishes around the country. These two associations registered these geographical indications as trademarks, only that “XIAOYAOZHEN” is registered as a regular trademark, while “TONG GUAN ROU JIA MO” as a collective trademark.
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Let’s start with the “Tongguan Rougamo” incident. After filing the lawsuits, the owner offered to settle the cases by licensing the trademark at issue, or the defendants paying a franchisee fee to become a member. However, most of the sued defendants are located outside the Tongguan county.
It is noteworthy that “Tongguan Rougamo”, a geographic indication, is registered as a collective mark. A collective mark is a trademark owned by an organization, and used by its members to identify their products, which shall originate from that geographic area, and shall have special quality, flavor, or other credits closely related to the natural or historical features of that geographic area. In this sense, the registrant is not entitled to license the collective trademark “Tongguan Rougamo” to retailer located outside the territory of Tongguan. In other words, The Tongguan association has no legal basis to ask the defendants for a franchise fee.
It is even more noteworthy that when filing for registration, the owner of “Tongguan Rougamo” particularly submitted a declaration that the logo, once allowed, shall be used as a trademark by individuals or entities engaging in commercial behaviors in Tongguan county only. We believe that explains the confusion why the famous mark “SHAXIAN XIAOCHI (snack)”, also a collective mark, can be used by merchants all over the country without resulting in trademark infringement allegation. We think it a better idea to register “Tongguan Rougamo” as a certification mark, because the snack, Rougamo, is generally not dependent on the soil, the sunshine, or other geographical conditions of a territory, but more associated with the way, ingredients, and the like to make the snack, and the merchants can make the same quality snack without having to locating in a certain area.
On the other hands, if retailers outside Tongguan territory use the trademark on the bun, they will infringe the trademark at issue. The owner has all rights to stop the infringers from continuing using the trademark, and claim losses for the infringement. However, the owner is not entitled to license the trademark or claim franchise fee from these defendants. The “Tongguan Rougamo” owner confuses the rights of a collective mark with that of a regular trademark.
Second, the association is not entitled to prohibit the non-member retailers located in Tongguan from using the geographic name “Tongguan” reasonably. A geographic name enjoys legal protection under the Trademark Law and Implementing Regulations of the Trademark Law, as well as administrative ordinances including “Regulations on Registration and Management of Collective Mark and Certification Mark”. According to the related provisions, even if a geographic indication is registered into, particularly, a collective mark or a certification mark, the owner has no authority to prevent others from reasonably and properly using the geographic name itself included in the issued mark.
Specifically, if a user is located within Tongguan and meets the requirements with the use of the geographic indication, he or she is allowed to properly use the registered geographic name Tongguan without having to becoming a member of an association. Those non-members have the rights not to join the Tongguan association, but use Tongguan in a proper way, for example, “Characteristic Roukamo from Tongguan” or use its own trademark in combination with Tongguan, for example, “Tongguan ** Roukamo”.
The other trademark “XIAOYAOZHEN” is registered in classes 29 (spicy soup) and class 43 (catering service) as a regular trademark. Usually, a regular trademark owner shall be an individual or entity involved in market behaviors, including selling or manufacturing, etc. However, the “XIAOYAOZHEN” owner is a non-profit association, which also raises the attention and controversy.
The owner filed trademark infringement lawsuits against hundreds of retailers, also demanding a membership fee or alternatively a license fee. As a regular mark, the mark owner is only entitled to claim a license see as a damage award, rather than a membership fee. Besides, the association, as a non-profit entity, is not engaged in any commercial activities shall not be allowed to register a regular trademark mark, because a trademark serves the purpose of identifying goods.
As is seen from above, these two legal cases triggered social attention due to the owners’ misunderstanding of the boundary and use of a regular mark and a collective mark. The collective mark owner is entitled to a membership fee only from users located in the specific registered territory to cover its costs in the maintenance and protection of the trademark, while a regular trademark owner can offer to transfer or license his or her trademark to any users regardless of the geographic region, and is entitled to damage award if the trademark has been put into commercial use.
Finally, let’s talk about a third geographic indication related trademark, which is owned by a Korla Pear Association located in Xinjiang Uygur Autonomous Region. In contrast, this trademark sets a good example for the legal protection of a geographic indication. This trademark as follows, used on the fruit “pear”, is registered as a certification mark.
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A certification mark is usually owned by an entity that can supervise certain goods or services, but used by a third entity or individual to prove the origin, raw materials, manufacturing methods of the goods or services, or quality used to show consumers that particular goods and/or services, or their providers, have met certain standards.
If the user is not from Korla, his or her pear should not be labeled as “Korla Fragrant Pear”, otherwise it will cause confusion and misunderstanding among consumers. If a user sells fragrant pears from other origins in the name of “Korla fragrant pears”, he or she not only infringes the exclusive rights connected with to the trademark owner, but also constitutes unfair competition and damages the legitimate rights and interests of consumers. The Korla Fragrant Pear Association is entitled to file a lawsuit to stop the illegal use, and claim damage award. A significant difference between a certification mark and a collective mark resides in the users of the mark. If a user meets the standard associated with the mark, the user will be allowed to use the mark on the product or service regardless whether he or she is a member or not. In contrast, a non-member user is not allowed to use the exact same mark.
It is true that a trademark owner has the exclusive right to use a registered trademark. However, the exclusive right is subject to limitation, especially when the registered mark relates to a geographic indication. The geographic indication trademark contains the name of a place, which falls into public resources, and thus the trademark protection shall balance the rights of the owner, the rights of a bona fide user and the interests of the public. In a word, it will be considered as a bona fide use without infringing the trademark rights if the use meets the following: (1) the user has a good intention without an intention to, for example, freeride a registered trademark; (2) the use is directed to the geographic name only rather than the origin of the product; and (3) the user uses the geographic name only to describe or clarify the product.