Determining Descriptive Fair Use of Trademarks

Fair use is a common defence in trademark infringement actions, with a jurisprudential basis that a trademark owner cannot exclusively monopolise a descriptive phrase and deprive a third party's right to accurately describe its goods. Examples are the Sichuan High Court's appeal decision in the "green prickleyash(青花椒)" case and the Supreme People‘s Court’s trial in the "Japanese honeysuckle (金银花)" case.

The first paragraph of article 59 of the Trademark Law specifies that: "Where a registered trademark contains the generic name, depiction or model number of the good concerned, directly designates the quality, main raw materials, function, intended purpose, weight, quantity or other characteristic of the good or contains a place name, the holder of the exclusive right to use the registered trademark shall not have the right to prohibit others from making fair use thereof." However, there is no specific law or judicial interpretation that specifies the conditions for fair use.

Article 26 of the Answers of the Beijing High People's Court to Several Questions Concerning the Trial of Civil Trademark Dispute Cases of 2006 states that an act of fair use of a trademark is required to satisfy the following conditions: (1) the use is in good faith; (2) it is not used as a trademark for one's own goods; and (3) the use is solely for the purpose of explaining or describing one's goods. In practice, some courts will also consider whether the use will cause actual confusion or misidentification. The following is a brief review of the determination of descriptive fair use in light of precedents.

Subjective good faith.Generally, it is necessary to comprehensively consider the fame of a trademark and the user's purpose and manner of using the trademark or symbol to arrive at a determination. For example, in the 2021 "green prickleyash" case, the Sichuan High Court held that the Chinese characters for "green prickleyash" in the alleged infringing mark were an objective description of the seasoning contained in a special fish hotpot dish, and their use was in keeping with business practice. The current business scope of the trademark rights holder mainly covers Shanghai and Jiangsu, so the trademark is not popular in Sichuan and Chongqing. Accordingly, the alleged infringer displayed no subjective intention to free-ride on the trademark, and the public would not associate it with the trademark far off in Shanghai.

Non-trademark use.Courts will usually consider factors such as the location of use, font size and prominence to determine whether it constitutes trademark use, but that is not an absolute standard. In the 2020 "Dezhou braised chicken (德州扒鸡)" case, the court held that the Chinese characters for "Dezhou braised chicken" used on the alleged infringing goods were distinctive and prominent, and the font and arrangement of the text were similar to those of the trademark. While the alleged infringer's own registered trademark was relegated to the upper left corner of the goods and was significantly smaller than the characters for "Dezhou braised chicken", the manner of use indicated that it was not simply to describe that its braised chicken was sourced from Dezhou, but rather as a sign to distinguish the source of the goods.

In the "85°C" case, heard in 2016 and 2018, the court at first instance held that "85°C" was prominently used in a conspicuous location on the outer packaging of the alleged infringing product, exceeding the limit of fair use, and constituted it as trademark use. However, the appeals court held that although the type size on the external packaging of the alleged infringing product was larger than other surrounding texts, the characters "85°C" were not isolated but accompanied by other characters. Consequently, it held that the characters were only there to indicate temperature.

Solely for the purpose of illustration.This claim requires proof that the words used first and foremost are to describe the features of the good as specified in the first paragraph of article 59 of the Trademark Law. In the 2019 "Skin Expert (肤专家)" case, the court held that the available evidence was insufficient to show that "Skin Expert" was a generic name for the good. Although the trademark rights holder had previously applied for that trademark, it was rejected by the Trademark Office as it directly indicated the functional feature of the good. However, the contested point in the case was whether the use of "Skin Expert" infringed the exclusive right to use the registered trademark "Fu Expert (夫专家, pronounced in Chinese identically to Skin Expert)" rather than whether the infringing mark could be registered as a trademark, so the defence of descriptive use was rejected.

Confusion.Actual confusion or misidentification may have an impact on the determination of fair use. In a different "green prickleyash" trademark infringement in 2019, the Shanghai court held that the manner of use of the alleged infringing "green prickleyash fish (青花椒鱼)" had the effect of identifying the source of the service, while user comments in the Dianping app, used as evidence in the case, showed consumers relied on the mark to determine whether the merchants providing the catering service were the same, or whether there was a connection between them. The comments demonstrated that actual confusion had arisen among the public, so the defence of fair use was rejected.

The boundary of fair use is as critical as it is elusive. From the above-mentioned cases, it can be gleaned that, even in the same case, different courts may reach different conclusions. Whether a specific mark constitutes descriptive fair use is often a matter of comprehensive consideration after taking into account the user's intention, the manner of use and potential confusion induced.

When a trademark rights holder takes action to defend its rights, it must consider whether the defendant will invoke fair use and pay attention to collecting and preparing pertinent evidence, such as whether the infringer had the malicious intent of free-riding, the use was fair and proper, or confusion or misidentification was caused among consumers. Trademark users are advised to conduct risk assessments in their business activities and, where there is a prior registered trademark, stress compliance in use to ward off risks of trademark infringement.