The Story of 永和Soybean Milk

2010/1/10By Eva Yang, China IP,[Trademark]

In the 1950s, some veterans from the Mainland began making a living by operating a breakfast shop near the Yonghe Bridge in Taipei with a menu including soybean milk, clay oven rolls, and fried bread sticks. With rich experience in the Mainland, their shop became popular among the local people. From then on, this town has been closely connected with soybean milk, which has produced many fortune stories.
 
So Many 永和 (yong he ) in Market
According to the survey by China IP, most interviewed could name at least three names about 永和: 永和豆浆(yong he dou jiang),永和大王(yong he da wang),长河永和(chang he yong he). But when asked about the relationship between the products, especially between 永和豆浆and 永和大王, they would ask in reply, “Don’t they refer to the same company?”
Indeed, with so many 永和in the market, not only are the consumers confused, but the concerned parties themselves have been fighting against each other for the related trademark.
Following are some lawsuits about永和:
Plaintiff
Defendant
Time
Reason
Verdict
Wuhan永和
 
2001
Defendant was accused of printing “永和豆浆” in their package and stall decoration without permission of Plaintiff)
Tangshan永和by Liu Fengying
2002
Defendant was accused of infringing the exclusive right of trademark of Plaintiff
A Hong Kong resident named Ms. Li
永和大王
(English Name: YONGHE KING)
2004
Since a county name, 永和cannot be registered for trademark; “King” was accused of false advertising
An out-of-court settlement was reached
 
Shanghai Hongqi Co., Ltd.
2005
Defendant was accused of infringing the exclusive right of trademark of Plantiff
Shanghai Hongqi Co., Ltd. lost the suit
2005
The Intermediate People’s Court of Nanchang City: Defendant  infringed the trademark rights of Plantiff
 
Defendant used a similar shop name as the registered trademark of the plaintiff, Defendant did not use the name for the products like soybean milk in No. 730628
Shanghai Hongqi Co., Ltd. won in the trial of  The Intermediate People’s Court of Nanchang City
But lost in the trial of Jiangxi Higher  People’s  Court
 
2005
Plantiff lodged a complaint against  Defendant for the infringement of its naming rights
 
 
Free Rider Phenomenon
Each participant of 永和 has their own defense for use of the name and this makes 永和cases more complicated. For further information, China IP interviewed Zhu Miaochun, the lawyer from the famous Shanghai Zhu Miao Chun Law firm and Jiang Zhipei, the former chairman of the Intellectual Property Court of the Supreme Court.
 
When asked about the reason for so many uses of 永和, Zhu Miaochun said: “When a trademark becomes famous, free riders appears because of the economic interest that comes with the use of famous brands. 永和豆浆 has opened more than 200 branches in China. With such a high reputation, 永和豆浆can not avoid the free riders.”
 
Jiang Zhipei expressed a similar sentiment. 永和豆浆, with its yummy Chinese food like soybean milk, fried bread stick, and the comfortable dining environment, has created loyalty among consumers. Some people may wrongfully take advantage of the fame for their own interests. Besides free riders, some companies even take a more covert way to steal economic benefits, like using 永和 as their shop name.
The Inconsistency between Trademark Right and the Right of Name
One main controversy in the disputes of 永和 is about trademark rights and the right of name usage. Generally speaking, trademark rights belongs to Shanghai Hongqi Co., Ltd., while local 永和possess the right of name usage. When the two come into conflict with each other, Shanghai Hongqi Co., Ltd. may seem too weak to protect its rights.
 
When trademark rights and the right of name usage conflict, courts follow the principle of priority to resolve disputes. This means that that the first party to obtain the right to use the name takes priority over others. This is a “first come, first serve” approach to trademark usage is common.
 
However, there are exceptions. Zhu Miaochun said, “When trademark rights or the right of name usage is not properly used as regulated by law, the above principle won’t work. For example, a trademark should be utilized within the approved scope on the basis of its nature. Something which is trademarked as a good should not be used as service trademark, and vice versa; one part of the composed mark should not be used independently; misuse of trademark, such as the shop name, is also forbidden. All these activities may do harm to the legal rights of others. ”
 
“This principle was put to use in the case of Ningbo 永和,” said Zhu Miaochun, “Ningbo 永和, which is permitted by Shanghai Hongqi Co., Ltd., made this exact mistake of misusing the goods trademark as service one, and highlighting one part of its composed trademark. As a result, Ningbo 永和lost the suit. ”
 
As Zhu Miaochun said, conflicts often happen between trademark rights and the right of name usage. To just name a couple of instances, in 2003, the Lihua Fast Food Co., Ltd. in Changzhou of Jiangsu sued the Lihua Fast Food Co., Ltd. in Nanjing; and in 2004, the Shanghai Forever Co., Ltd. sued the Shanghai Forever-Linlong Co., Ltd. for the infringement of the right of name usage.
 
As for the handling the conflicts between trademark rights and the right of name, Jiang Zhipei said: “It depends; trademark infringement should be settled according to Trademark Law, while cases should be settled based on Anti-unfair Competition Law if they violate the law. According to the Interpretation of the Supreme People’s Court Concerning the Application of Laws in the Trial of Cases of Civil Disputes Arising from Trademarks, the use of words identical or similar to another’s registered trademark as a trade name in a distinctive manner on identical or similar goods, and thus causing possible confusion among the relative public will be considered as infringement.”
He further said: “The trademark registration system is different from the registration system of an enterprise’s name. As long as enterprises utilize their right of name usage within the approved scope, infringement won’t emerge. But if one maliciously uses words identical or similar to another’s registered trademark as a trade name in a distinctive manner on identical or similar goods, possible confusion among the relative public will be caused, and this is the called free rider. Therefore, a prerequisite condition for the protection of the trademark right and the right of name should fall into their own approved scope. ”
The Fight between 永和豆浆and永和大王
Among these 永和there are two main competitors: 永和豆浆and永和大王. It is reported that the trademark of 永和豆浆was registered in Taiwan in 1985. Ten years later, Taiwan Hongqi Co., Ltd. filed for registration in No.30 products(such as soybean milk)with 永和YUNGHO+a picture of scarecrow.” In 2001, approved by Trademark Office of State Administration for Commerce and Industry (SAIC), “永和YUNGHO+a picture of scarecrow” was transferred to YungHe International Development Co., Ltd., who gave permission to Shanghai Hongqi Co.,Ltd. to use the No.730628 trademark.
Shanghai Yonghe King Food Co., Ltd. (永和豆浆大王) started in 1996. Like 永和豆浆, 永和豆浆大王 was a fast food shop that mainly produced soybean milk, fried bread sticks. In 1997, 永和豆浆大王 was approved registered by SAIC in No.42 (restaurant).
Shanghai Hongqi Co., Ltd. reported 永和豆浆大王to Shanghai Commercial and Industrial Departments for the illegal use of registered trademark. After an investigation, Shanghai Commercial and Industrial Departments sent a Suggestion in 1998 to Shanghai Yonghe King Food Co., Ltd., saying that as the simplified name of your company, 永和豆浆大王, would confuse the relevant public with the 永和trademark in No.30 of Taiwan Hongqi Co., Ltd. Therefore, we suggest you make amendment of your signboard 永和豆浆大王.
Zhu Miaochun held the opinion that 永和大王was registered in the restaurant category, and was permitted to provide many kinds of foods, while 永和豆浆was registered in soybean milk, which itself was a specific kind of food. The ordinary consumer would not know the difference between service trademark and goods trademark. Moreover, both 永和大王and 永和豆浆have commonalities in customers and products. So this will cause possible confusion among the relative public.
In practice, the classification of goods serves as a reference. Whether it will cause confusion or not should make a concrete analysis of concrete problems. In other words, it should not be determinative. Other factors should be considered. Jiang Zhipei cited an example that 采樂 (Pinyin: Cai Le) registered by Johnson & Johnson once had a dispute with 采乐CAILE” of Foshan St-Flora (United) Co. Ltd. Both 采樂 and 采乐produced shampoo. The 采樂shampoo of Johnson & Johnson was sold in hospitals and drug stores, and had a distinctive difference from ordinary shampoo in the products nature, manufacturing and sales channels. Therefore, Consumers could tell the difference between “采乐CAILE” of Foshan St-Flora (United) Co., Ltd. from that of Johnson & Johnson. As a result, the “采乐CAILE” of Foshan St-Flora (United) Co. Ltd. was found not to cause any confusion, and did not undermine the interests of Johnson & Johnson, who had registered the 采樂in pharmaceutical trademark. Both 采樂and “采乐CAILE” were allowed to co-exist in their own market.
Revelation
Disputes between 永和started since last century, and have wasted much money and manpower. Worse still, disputes will do great harm to the brand image.
 
“In the long run,” said Jiang Zhipei, “enterprises should focus on their products and service, so as to make their products and service unique for consumers and easy to pick out in the market. It doesn’t pay for enterprises to fight for things that don’t belong to them through malicious competition. ”
 
Learning from the loss of the Ningbo suit, Zhu Miaochun suggests that enterprises integrate the trademark and the shop name like 永和豆浆. If so, then instances such as the Ningbo suit may lead to an opposite result. He also advices enterprises to unify goods trademarks and service trademarks. In the Nanchang suit, 永和豆浆of Shanghai Hongqi Co., Ltd. was registered in category No.30, and this narrowed down its development and provided little IP protection. Last but not least, he told China IP that enterprises should make full use of the trademark rights and the right of name usage within their own approved scope. The trademark registration system and the registration system of enterprises name belong to two different administration systems; unreasonable use of right will definitely result in a lawsuit.

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