Registering trade marks in relation to retail services is now a widely accepted practice in most countries – but not in China.
In China, the Trademarks Office (CTMO) accepts applications for registration in relation to retail services only in certain specific and limited cases. There are, however, signs that things are changing.
This article describes and analyses the current trade mark registration position and the different views that have been expressed by both administrative authorities and the courts. On the basis of this analysis, it goes on to suggest some steps that retailers should be taking to ensure that their brands are adequately protected in China.
Class 35 applications – current position in relation to trademark registration
The latest edition of the International Classification of Goods and Services for trade mark registration (the Nice Classification) provides for the registration of trademarks in relation to “advertising; business management; business administration; and office functions” in Class 35. An explanatory note states that these services include “the bringing together, for the benefit of others, of a variety of goods, enabling customers to conveniently view and purchase those goods” and provides that “such services may be provided by retail stores, wholesale outlets ….”.
In China, however, with one exception, the practice of the CTMO remains in line its Official Reply in 2004 in accordance with 8th Edition of the Nice Classification (2001), which specifically excluded from Class 35 “the activity of an enterprise the primary function of which is the sale of goods”.  The one exception referred to above relates to the 2013 inclusion in Class 35 of retail or wholesale services in relation to various pharmaceutical, veterinary and sanitary preparations and medical supplies .
Despite refusal to register trade marks in relation to retail or wholesale services, however, both the CTMO and TRAB have recognised as well-known trademarks over 50 marks that belong to well-known retailers and wholesalers, and have been registered in relation to “sales promotion (for others)” in Class 35. While this might indicate a more flexible approach, it is not one that has generally been accepted by the courts. In two recent cases, Zhang Lijian v TRAB (2016) and TRAB & Changzhi Parknshop Shopping Centre v Watson Enterprises Ltd, the Beijing High People’s Court held, on appeal, that wholesale or retail services do not fall within the ambit of “sales promotion (for others)”. The basis for the judgment was the CTMO’s 2004 Reply referred to above.
Changing attitude of the courts
Although registration in relation to “sales promotion (for others)” may not be available for trade marks used in relation to retail or wholesale services, the courts are, in some cases at least, taking a different view.
In the following trade mark infringement cases, for example, the courts have considered ‘wholesale or retail services’ to be similar services to ‘sales promotion (for others)’. They have, in effect, allowed trade marks used in relation to ‘wholesale or retail services’ to be protected by virtue of registration in relation to ‘sales promotion (for others)’.
In Suolirong v Hunan Friendship & Apollo Commercial Co. Ltd (2014) Hunan High People’s Court 146, the Plaintiff, which registered “友阿 (Friendship & Apollo’s initials in Chinese) in relation to “sales promotion (for others) in Class 35, sued for infringement. The Defendant had used the mark “友谊阿波罗(‘Friendship & Apollo’ in Chinese) in relation to its department store merchandise sales service i.e. retail services.
The Court considered current commercial practices and the fact that China had not extended trade mark registration to retail services. It recognised that commercial enterprises such as the Defendant are no longer simply sellers of goods, but are inevitably engaged in a range of promotional activities. It concluded, therefore, that Friendship & Apollo’s department store merchandise sales services were similar to the “sales promotion (for others)” in respect of which the Plaintiff’s mark had been registered and that trade mark infringement had been established.
In Shenzhen Milan Station Trading co. Ltd v Milan Station (Hong Kong) Holdings Ltd, the Shenzhen Intermediate People’s Court specifically held that the CTMO’s 2004 Reply, referred to above, should no longer be applicable and that ‘retail services’ fall within the ambit of ‘sales promotion (for others)’. And in Ting Chao (Cayman Islands (Holdings Co. Ltd v Min Fen (2012) the Jiangsu High People’s Court upheld a claim for infringement of the ‘Tesco’ mark registered in relation to ‘sales promotion (for others)’. The Defendant had used the mark in relation to retail supermarket services, which the Court held to be similar to ‘sales promotion (for others)’.
In a trade mark infringement dispute and anti-unfair competition case, Shanghai Maisi Investment Management Co v Victoria’s Secret Store Brand Management Co Ltd (2014) the Shanghai High People’s Court 104, held that the trade marks (VICTORIA’S SECRET and VICTORIA’S SECRET in Chinese), registered in relation to ‘sales promotion (for others)’ in Class 35, had been infringed by the Defendant’s use of the marks in its shops, even though the product being sold in the shops was genuine VICTORIA’S SECRET product. The Defendant had used the mark on walls, containers and cashiers in the store, and on exhibition stands and employees’ name cards. The court held that such conduct may well lead the relevant public to mistakenly believe that the sales services were being provided by, or under licence from, the owner of the VICTORIA’S SECRET trade mark. Such use went beyond the scope of identifying the origin of the goods and identified the origin of services.
Suggested steps for retailers doing business in China
Although the Trademarks Office is still rejecting applications for registration in relation to retail or wholesale services, there are signs that the situation is changing and that practice in China will gradually conform more closely to international standards and market needs. In the meantime, there are steps that retailers can take to improve their position.
First, it is important to give careful consideration to identification of the services being provided under the mark. This is something that should be discussed with your adviser. It may be necessary to distinguish, for example, between use of the mark to identify the source of goods, and use of the mark to identify the source of services. As there are no explicit guidelines in China, reference could usefully be made in this regard to Paragraph 1301 of the Trademark manual of Examining Procedure, issued by the United States Patent and Trademark Office.
Given the attitude that is being taken in the courts, providers of retail and wholesale services should be considering registration in respect of “sales promotion (for others)” in Class 35. As is apparent from the cases referred to above, such registrations may be useful in trademark infringement cases; they may also serve as a defensive tactic against counterfeit products and malicious cybersquatting.
If you have any questions, please contact the author Huang Ye, who is based in our Shanghai office.
 CTMO’s Reply on Whether International Class 35 Should Include Services in Shopping Malls and Supermarkets, 13 August 2004