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Nan WANG
Chinese Trademark Attorney

 
In today’s globalized business landscape, trademarks serve as a company’s core intangible asset, playing a pivotal role in market competition and showcasing increasing value. The Trademark Law, a specialized legal framework that governs trademark registration, use, protection, etc., embodies multiple functions including maintaining market order, protecting consumer rights, and stimulating economic growth. A key component of the Trademark Law is the prohibition on registering or using deceptive marks, as outlined in Paragraph 1(7), Article 10 of the Trademark Law, which states that “the sign that is deceptive and may mislead the public about the quality, characteristics, or origin of goods shall not be registered.” This clause is aimed at safeguarding public interests. However, in recent years, its application has become increasingly stringent, leading to a steady increase in the number of trademark applications refused on the grounds of violating this clause. The complexity of these issues presents a significant challenge to the law’s fairness and administrative efficiency, and also causes considerable difficulties for trademark applicants. This article intends to analyze the current status and case studies of the application of the “deceptive” clause of the Trademark Law, in an effort to provide useful references for applicants to accurately understand and apply this clause, and to help enterprises avoid risks and increase the success rate of trademark registration.

I. Overview of “Deceptive” Clause

1. Connotation of “deceptive” clause and its determination standards

“Deceptive” Clause derived from the Paragraph 5 (2) (iii), Article 6 of the Paris Convention for the Protection of Industrial Property, which states that trademarks that violate ethics or public order, especially those that are deceptive to the public, should be refused for registration or declared invalid. Since the implementation of China’s Trademark Law in 1983, the law has included provisions that reflect the principles of good faith and public interest protection. The legislative purpose is to prevent any “deceptive” signs from misleading consumers into making wrong purchasing choices, and to ensure that trademarks can accurately indicate the origin of goods or services, so as to maintain the normal order of the market, safeguard the legitimate rights and interests of consumers as well as producers and business operators, and promote the healthy development of China’s socialist market economy.

In Article 8(8) of the Trademark Law enacted in 1983, the “deceptive” clause is stated as “trademarks shall not use the word or device that is an exaggerated publicity and deceptive”. However, compared with the Paris Convention, this provision in China’s Trademark Law limits its application to both “exaggerated publicity” and “deceptive”. In practice, this limitation has made it difficult to effectively regulate many signs that are “deceptive” but do not involve “exaggerated publicity”, thus limiting the applicability of this provision. In addition, the generality of the expression has also led to differences in the applicable standards, making it difficult to provide society with stable expectations.

To address these issues, during the third amendment to the Trademark Law in 2013, the restrictive expression of “exaggerated publicity” was removed, and the clause  added “likely to mislead the public about the quality, characteristics, or origin of goods”. This amendment has established a clear and precise standard for determining the misleadingness, thereby improving the law’s applicability and operational efficiency. This content has persisted to the present day.

Article 10(1)(vii) of the current Trademark Law provides that “A sign that is deceptive and likely to mislead the public about the quality or other characteristics of the goods or their place of origin shall not be registered.” 2021 Trademark Examination Guidelines provides its interpretation of Article 10(1)(vii) as follows:

●The term “deceptive” in this article refers to the sign indicating the quality or characteristics, or source, of the goods or services that either exceeds its inherent level or is inconsistent with the truth, which is likely to lead to a mistaken understanding among the public about the quality or characteristics, or source, of the goods or services.

●To determine whether or not a sign fall within the scope of this circumstance, a case-by-case analysis should be made, on the basis of the characteristics of the designated goods or services. If the sign is prone to mislead consumers about the quality, quantity, the cultivation manner of the goods, and other characteristics, it shall fall within this circumstance. However, if the public is not likely to misidentify the quality, the source, or other characteristics of the goods or services designated by the sign on the basis of their daily life experience, etc., the sign does not fall within the scope of this circumstance.

From the aforementioned provisions and guidelines, it can be seen that in the context of Trademark Law, “deceptive” behavior embodies in the sign indicating the quality or characteristics of the goods or services it is used for, or their place of origin, that exceed their inherent level or are not in line with the truth. The “misidentification” caused by “deception” pertains to the “quality and other characteristics” of goods or the “place of origin”. When determining whether a trademark is deceptive, one should take into account the general level of public awareness and daily experience, in conjunction with the designated goods or services, and make a comprehensive evaluation of the trademark as a whole.
 
2. Main points of trials on “deceptive” clause in judicial practice

The “deceptive” provision under Item (7), Paragraph 1, Article 10 of the Trademark Law, which aims to prohibit registration and use of certain signs, directly constrains the range of choices for business operators in selecting commercial signs to distinguish goods or services, a more cautious approach was taken in the application of such clause in judicial practice.

In the Judgment (2015) Jing IP Administrative First No. 1612 regarding the trademark refusal review case involving Wanglaoji Limited Company’s trademark application No. 11051630, “Worry about Shanghuo(heatiness), Drink Jiaduobao”, the court  held that the determination should meet the following  standards of three conditions:

●Firstly, the sign contains a description of the quality, main raw materials, function, use, weight, quantity and other characteristics of the goods;

●Secondly, the relevant public can easily associate these product detail description with the attributes of the goods for which the sign is applied, and the description is misleading;

●Lastly, this misleading description can influence the purchasing decision of the relevant public.

In the judgment, the Beijing Intellectual Property Court first analyzed the textual composition and meaning of the trademark “Worry about Shanghuo(heatiness), Drink Jiaduobao”, pointing out that the public commonly understands the disputed trademark as “to prevent Shanghuo(heatiness), drink Jiaduobao.” Based on this understanding, and considering the characteristics of the goods covered by the disputed trademark, such as beer, non-alcoholic beverages, and fruit juices, the court noted the possibility that the public might be misled to assume these products have an effect of “relieving heatiness”. However, there is a lack of actual evidence supporting such effect of these products. Thus, the court concluded that the trademark contains misleading descriptions. Lastly, in view of the public’s close attention to healthy lifestyle, the misleading description of the disputed trademark could influence purchasing decisions. Based on these findings, the court ruled that the trademark “Worry about Shanghuo (heatiness), Drink Guangdoubao” violates the “deceptive” clause.

(Translator’s note: Shanghuo (heatiness) is a unique concept in traditional Chinese medicine. TCM describes heaty foods as having the ability to warm and improve circulation, dispel cold and stimulate the body. When these foods are taken in excess (yang is greater than yin, your body will generate too much heat), heatiness is caused, resulting in symptoms such as fever, sore throat, mouth ulcers, acne, excessive thirst, redness of the skin and irritability.)

From the determination logic of this case, when determining whether a sign is “deceptive” or not, the three conditions show a progressive relationship and need to be evaluated in turn. If any one of these conditions is not met, the subsequent judgment can be interrupted and the sign determined to be non-deceptive without further evaluation of the other conditions. Only when all three conditions are satisfied can it be concluded that the sign is “deceptive.” This determination standard has been widely accepted in judicial practice, and has been applied in a number of subsequent judgments to determine whether the “deceptive” clause should be applied in the case.

3. Consequence of violation of the provision

In combination with the following legal provisions, it can be seen that the use of a “deceptive” sign as a trademark may face the risk of being stopped, corrected within a specified period, notified, and fined by the administrative law enforcement authorities, and the CNIPA’s effective decision serves as one of the  basis for administrative investigation by the administrative law enforcement authorities.

Article 52 of the Trademark Law:

Any use of unregistered trademarks as registered trademarks, or the use of unregistered trademarks in violation of Article 10 of the Trademark Law, shall be ordered to cease by the local Administration for Market Regulation. The Administration shall require correction within a specified period and may issue a public notice. Where the amount of illegal exceeds five hundred thousand yuan or more, a fine not exceeding twenty percent of the illegal businesses amount may be imposed. In cases where there is no illegal businesses amount or the illegal businesses amount is less than five hundred thousand yuan, a fine not exceeding ten thousand yuan may be imposed.

Article 15 of Criterial for Determination of General Trademark Law Violation [CNIPA Fa Bao 2021 No.34] published by the China National Intellectual Property Administration (hereafater referred to as “CNIPA”): The effective decisions made by the CNIPA, which establishes a trademark application violates the provisions of Article 10 of the Trademark Law, may serve as the basis for the investigation and handling by the trademark enforcement authorities in accordance with the law.

II. Analysis of the Application of “Deceptive” Clause in Refusal Review Cases

1.Statistics on its Application in Refusal Review Cases

Based on incomplete statistics from the Mozlen Database (as of October 2024), from 2018 to 2023, the number and results of the trademark refusal review cases involving “deceptive” clause that have been concluded show the following trend: The total number of cases growing from over 10,000 in 2018 to more than 23,000 in 2023. However, the success rate has dropped from 15.7% to 8.0%. The continuous increase in the total number of cases and a declining success rate, clearly illustrates the tightening trend of administrative review on the applications involving “deceptive” clause. Notably, since 2022, the success rate in administrative reviews has fallen below 10%.

As to the rate in judicial stage, official data on success rate in recent years has not been released publicly. In the 4th issue of the Trademark Office’s Legal Affairs Communication in June 2020, the loss rate of the CNIPA being the defendant in administrative litigations initiated by the trademark applicants for the cases involving “deceptive” clause was reported at 1.8% in 2019. Although it increased to 3.4% in 2020, it still remains very low. And then on March 31, 2021, at the briefing on the trial of administrative cases involving “deceptive” clause held by the Beijing Intellectual Property Court, it was also clearly indicated that “the judicial and administrative authorities hold basically the same standard in determination for the ‘deceptive’ clause”. Thus, it can be seen that at the judicial stage, the chances of success in cases of trademark refusal review involving “deceptive” provisions are not optimistic either. The stringent determination standard now requires trademark applicants to consider the “deceptive” clause as a critical factor during the trademark design process.
 

*Statistics from the Mozlen Database (as of October 2024)
Statistics on the refusal cases on the grounds of “deceptive” clause

 

 
2. Exploration of the strategies to avoid the refusal on the grounds of “deceptive” clause based on the case studies

Combined with the Trademark Examination Guidelines and the trademark refusal cases in recent years, the author summarizes the following types of trademarks that frequently trigger the examination of the signs based on “deceptive” clause and the corresponding avoiding strategies, hoping to provide some reference for trademark applicants for their selection of trademarks.

i. Trademarks containing generic names of goods or services

Having a company’s key products or core business operations included in their trademarks enables direct and frequent promotion of their core products and services. Therefore, companies often wish to register trademarks that include generic names of goods or service. However, from the current examination trend, it is suggested that such marks should be limited to the scope of goods and services which are identical with or closely related to the generic name.

If the trademark designates the goods or services unrelated to the generic name contained in the trademark, it’s highly likely to be refused on the grounds of “deceptive” clause. Based on the following case studies, during the trademark review phase, examiners typically do not differentiate whether the designated goods or services are related to the generic name contained in the trademark and make a partial refusal; instead the entire trademark application is likely to be rejected. Only during the appeal stage can the examiners consider the specific relationship between the goods or services and the generic name contained in the trademark according to the applicant’s explanation. Therefore, when applying for a trademark that contains a generic name, it’s advisable to exercise caution in selecting the designated goods or services to prevent unnecessary refusals.
 

 
ii. Trademarks containing raw materials of goods

If the core selling point of a good is a scarce or valuable raw material, trademark applicants often include the generic name of the raw material into their trademarks. However, such trademarks may be refused on the grounds that they are likely to cause a misidentification of the characteristics of the goods, such as the raw materials. In order to avoid being refused based on the “deceptive” clause, the applicant may limit the designated goods only to those containing that particular raw material.  

In domestic applications in China, the stringent examination standards for goods descriptions render those containing raw materials not likely to be accepted in the formality examination in the previous stage, as they do not conform to the standard goods outlined in the Chinese Classification of Similar Goods and Services or the acceptable goods recognized by the Trademark Office.

Moreover, once a domestic application is filed in China, it is not possible to amend the goods description, unless the Trademark Office issues a Notification of Modification on its own initiative and requests the applicant to amend the goods. In contrast, the examination standards under the Madrid Agreement are more lenient, allowing applicants to amend the products description via a limitation procedure even after a trademark is refused. Therefore, the trademark filing strategy of adding the name of the raw material to the designated goods to overcome the refusal on the grounds that the trademark is considered “deceptive” is more suitable for foreign applicants in International Registration according to Madrid Agreement. For example, the following case successfully overcame the refusal based on “deceptive” clause by limiting the designated goods only to those containing the relevant raw material.
 

 
iii. Coined trademark containing descriptive Chinese words

In general, descriptive trademarks are more likely to violate the “deceptive” clause than those that are coined.

However, in practice, applicants tend to favor descriptive characters when designing coined trademarks, which may lead to coined trademarks with direct or suggestive descriptions of the characteristics of the goods or services in individual characters or constituent elements, thus touching the boundary of being considered “deceptive”.

As can be seen from the following cases, when examining such trademarks, Trademark Office usually consider both the meaning, pronunciations, and the shape of the characters themselves, and their relevance to the characteristics of the designated goods or services. With the increasingly strict examination standards, the acceptance of this type of trademarks is gradually decreasing. When creating a coined trademark, it is recommended to refrain from using the characters that are closely associated with the characteristics of the goods or raw materials.
 

 
The absence of a defined and clear definition for such trademarks renders the understanding of them subjectively and therefore relatively easy to cause controversy in the determination. For example, in the following trademark refusal case, the trademark application was refused at the administrative stage based on the “deceptive” clause, but the applicant finally succeeded in overturning the determination based on the “deceptive” clause through the administrative litigation, and obtained the trademark right. From practical experience, it is advisable to pursue all available remedies and take proactive measures to protect the rights concerning coined trademarks, particularly those that do not explicitly and directly indicating the characteristics of the goods.
 

iv. Interpretation of the meaning of foreign language trademarks

In practice, the interpretation of the meaning of foreign language trademarks has caused greater controversy compared with Chinese character trademarks. Currently, the examination on foreign language trademarks by the administrative authorities shows the following trends. Although the courts may not fully agree with the practice of CNIPA, it is advisable to avoid these issues to save costs and time.

① The interpretation of the meaning of a foreign language trademark depends not only on authoritative dictionaries and reference books but also on the explanation on online dictionaries and similar resources, both can be a basis in the determination of the meaning of the trademark.
 

② For a coined trademark comprising a meaningful English word, the determination of whether the trademark is deceptive will be made by dividing the word elements thereof and the meaning of the English word will be taken into account.
 

③The meaning of a mark in a non-English foreign language may also be examined.

In China’s trademark examination practice over the years, the main focus has been on the meaning of English trademarks, while the connotations of trademarks in other languages are often not explored in depth. However, with the acceleration of globalization, the international perspective has been broadened in Chinese trademark examination, and in order to protect multiculturalism, the examination of the meaning of non-English trademarks has gradually increased in practice. The following trademark refusal case involving a trademark applied by the Japanese applicant “National Agricultural Cooperative Association” is an apparent example in this respect.
 

v. Examination on the trademark comprising enterprise name 

In practice, it is not rare that trademark applications comprising a business name are ruled to violate the “deceptive” clause due to discrepancy with the applicant’s official name. Pursuant to the Trademark Examination Guidelines, the term “enterprise name” herein encompasses the full name, abbreviated name, Chinese name, English name, and phonetic representation (pinyin) of the name, and the determination of whether it is an enterprise name lies in whether the sign would be readily recognizable to the public as an indication of the business identity.

Generally, if the administrative division, geographical name, trade name, industry or business characteristics, or organization form of the enterprise name contained in the sign is inconsistent with the official name of the applicant, it will be deemed substantially disparate from the applicant’s name, unless the enterprise name contained in the sign is inconsistent with the applicant's name but aligns with commercial practices and does not mislead the public regarding the source of the goods or services.
 

  
At present, if an applied-for trademark comprises a business name that substantially differs from the applicant’s official enterprise name, examiners tend to  refuse the application first. In practice, a  common situation is the refusal for trademarks which are companys’ abbreviated names. If it can be proved in the review of refusal that the abbreviated name has establisehd a corresponding relationship with the applicant, it is possible to overcome the refusal on the ground of “deceptive” clause.

Hence, to prevent potential refusal of a trademark that comprises an enterprise name, it is not recommended to include the company’s abbreviated name in the trademark. Otherwise, it may well be necessary to be prepared for fiilng review against refusal in order to obtain trademark registration.
 

 
vi. Summary of other elements not recommended being included in a trademark

The author has found that, in practice, the proportion of trademarks containing the following elements being refused due to “deceptive” clause is extremely high. Consequently, it is advisable for enterprises to pay attention to avoid such elements in the design of their trademarks to minimize the risk of refusal.
 

   

III. Take Aways

In summary, when designing a trademark, the applicants could pay attention to avoiding words that may invoke examination on the grounds of the “deceptive” clause from the following six aspects, thereby enhancing the likelihood of successful trademark registration, safeguarding their interests, and establishing a foundation for the brand’s long-term development.

1. Where a trademark contains a generic name for goods and services or raw materials, the designation of goods or services should be carefully designated so as to ensure that the designated goods or services are within the scope of the generic name of the goods and services and the raw materials of the goods.

2. When designing a trademark, the words and texts describing the characteristics of goods and services, as well as some special sensitive words, should be avoided.

3. When considering including a business name into a trademark, it is recommended that the full name of the business, which is identical to the applicant name, should be used. However, according to the Trademark Examination Guidelines, a sign consisting solely of the full name of an enterprise does not possess the distinctive feature of a trademark. Therefore, when designing a trademark, care should be taken to combine the full name of the enterprise with other elements that have distinctive features.

4. In the case of coined foreign language trademarks, the complete inclusion of the generic name of goods or services, raw materials or descriptive words or texts should be avoided in order to prevent a situation that the word elements of the trademark is split and interpreted during the examination.

5. For foreign-language trademarks, attention should be paid to whether there are mistranslations of their meanings in Chinese online dictionaries and media reports, and if there are, timely communication should be made with the website for correction.

6. For trademarks in non-English languages, it is also necessary to double-check the meaning of the language itself, as well as its meaning in the Chinese context, so as to avoid applications for foreign-language trademarks that may be interpreted as having “deceptive” meanings. 

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References:

1. Paris Convention for the Protection of Industrial Property
2. China Trademark Law (Amended in 2019)
3. Trademark Examination Guidelines 2021
4. China Court: (2021) At 10:00 on 31 March, the Beijing Intellectual Property Court held a briefing on the trial of trademark refusal review cases involving “deceptive” clause.
Website:https://www.chinacourt.org/chat/chat/2021/03/id/52801.shtml
5. Judgment (2015) Jing IP Administrative First No. 1612
6. Criteria for Determination of General Trademark Law Violation
    [CNIPA Fa Bao 2021] 
7. Mozlen Database
8. 4th Issue of the Trademark Office’s Legal Affairs Communication,
    June, 2020
9. Beijing Intellectual Property Court: Zhang Zheng, Law Application of the Clause of the Prohibition on Deceptive Sign in Administrative Cases of Trademark refusal Review (China Trademarks, No. 9, 2023)
Website:https://bjzcfy.bjcourt.gov.cn/article/detail/2023/11/id/7620491.shtml