The Impasse for the Ferrero trademarks

2013/3/7By Angel Liang, China IP,[Trademark]

Facing passing-off and packaging copycat, the sweet chocolate of Ferrero Rocher (Ferrero) has had a bitter taste on the bumpy road to getting trademark applications through in China. This August witnessed another Waterloo for Ferrero: the Beijing No. 1 Intermediate People’s Court rejected Ferrero’s use of its long standing figurative trademarks for the “Kinder Bueno” series of products on the grounds that the trademark applications lacked distinctiveness and were incapable of acquiring the same even through use. The decision upheld the decision from the Trademark Appeal Board (Board) of the State Administration for Industry & Commerce, which rejected Ferrero’s request for a review of the application. The decision is currently in effect.

The bitter taste for Ferrero

The marks underlying the Ferrero applications covered the series of figurative marks of milk ripples and milk drops, used mainly in connection with the packaging of “Kinder Bueno” series chocolate products. The applications were originally filed in December 2007 in Italy in colors ranging from deep orange, shallow chestnut, blue, yellow, green, rice white to pure white for “coffee, tea, cocoa and artificial coffee,” in international Class 30.

Meanwhile, Ferrero also applied for trademark protection through territorial extension to China. In November 2008, the Trademark Office issued an office action, denying all Ferrero trademark applications for territorial extension on the designated class for lacking distinctiveness.

Ferrero subsequently sought review with the Board, which in May 2011 again denied territorial extension for the goods of coffee, etc. in Class 30. Unsatisfied with the results, Ferrero brought a lawsuit with the Beijing No. 1 Intermediate People’s Court, which at last affirmed the Board’s decision of dismissing all Ferrero’s requests for appeal.

He Jing, Senior Counsel of ZY Partners believed that the key issue of the dispute between Ferrero and the Board is whether the trademarks possess distinctiveness capable of registrations.

Ferrero contended that its trademark applications fell in line with Article 5 of the Several Opinions of the Supreme People’s Court on Hearing Administrative Cases Concerning Trademark Registration and Trademark Right Verification (Opinions), that “[a] trademark shall be deemed as distinctive even if the mark contains descriptive elements which do not negative the distinctiveness of the mark as a whole, or the descriptive mark is presented in such a unique way that the relevant public can identify the source of the underlying goods,” and therefore should be allowed for registration.

The Board ruled that the marks applied for would, in the ordinary sense of the society, be taken by the relevant public as the packaging design or promotional devices rather than trademarks for the products. since the marks were incapable of identifying the source of the goods, they were thus deemed as lacking distinctiveness.

The court echoed the Board’s view, finding that because the identifying parts of the marks directly indicate the main raw materials and usages of the goods, they have no distinctive characters. In addition, since the composing elements of the marks are all direct descriptions to the specified goods, the appeals of Ferrero on the ground of the exceptions of the Opinions were also dismissed by the court. Furthermore, since Ferrero uses the marks differently from the traditional trademark term, the marks cannot achieve distinctiveness through use. According to the evidences provided by Ferrero, although the marks are fully cited in the packaging design and the advertising of the “Kinder Bueno” series products, the fact that they almost cover the entire products and the whole advertising web page makes them more like packaging designs or advertising layouts. Consumers accessing to the aforesaid packages or advertising materials will not think them as trademarks either.

What is trademark protection for territory extension?

In the above case, the Board rejected not only Ferrero’s trademark registration applications, but also the company’s applications for trademark protection for territory extension in Class 30. So what is trademark protection for territory extension? How can an applicant obtain such protection?

China IP consulted an expert in this field who explained that territory extension is a specific application filed by an applicant or a right holder of an international mark when the applicant is seeking trademark protection in all member countries of the Madrid Union.

Trademark protection for territory extension could be applied through two ways: (1) when filing an application for registering an international mark, the applicant is permitted to name specific countries and seek protection in the designated countries directly in the application form. (2) If an applicant wants to extend the protection after registration approval, further countries may be designated subsequently through the International Bureau. In both procedures, as long as the trademark office of a designated country does not refuse protection within a specified period, the protection of the mark is the same as it has been registered by that Office.

In recent years, more and more foreign enterprises have entered into the Chinese market. While sparing no effort to explore the market, they also sped up the process by extending their trademark protection in China with the aim of building a complete IP defense and warning system. Among these enterprises, many are international companies having similar experiences as Ferrero. Nord Drive systems (Nord) is one example. When applying for territory extension for its major trademark on its main products, namely, “Nord and Device,” Nord was blocked by a prior right –– the mark had already been registered in China by others. According to the final decision rendered in May 2012 by the Beijing Higher People’s Court, “Nord and Device” was rejected for registration in Class 7 “gears and gear engines” and Class 9 “apparatus and instruments for conducting, switching, transforming, accumulating, regulating or controlling electricity.” The company’s wish of trademark registration evaporated.

The filing time line indicates that Nord filed trademark application No. 727211 for “Nord and Device” with the German Patent and Trade Mark Office in July 1997, and applied for territory extension with China’s Trademark Office on January 5th, 2006. The designated goods were “gears and gear engines” and “apparatus and instruments for conducting, switching, transforming, accumulating, regulating or controlling electricity” in Class 7 and Class 9 respectively. In September 2006, the Trademark Office rejected the applications on the ground that the two trademarks were similar to cited trademarks “北方” (No. 844544), “BEIFANG State-run Harbin Beifang Rubber Plant and Device” (No. 105399), “晋电 and Device” (No.3892905), and “Dorot CONTROL VALVES” (No.4847749).

Soon afterwards, Nord applied for a review, arguing that the applied trademarks were either distinguished from the cited marks in respect of images and pronunciations as a whole, or in their designated goods, therefore the application for territory extension should be approved. In May 2010, the Board ruled to reject the review application for territory extension in Class 7 but it preliminarily approved the application in Class 9. Nord then filed administrative proceedings but both the first and the second instance courts sustained the original decision.

It is thus clear that no matter whether it is a trademark application or an application for territory extension, the trademark itself should have distinctive characteristics.

What is distinctiveness for a trademark?

Attorney He Jing pointed out that the so-called distinctiveness is referred to as an attribute of trademarks which enables the public to identify the source of the goods or the services and distinguish them from that of the other companies’. As the “soul” of trademark protection and the “pivot point” of the operation of the Trademark Law, the distinctiveness of trademark always attracts special attention of both academic and practice circles. Distinctiveness is a precondition for trademark registration. A mark which lacks of distinctiveness cannot serve to identify the source of goods or services, or distinguishing them from other commodities. In other words, signs which are devoid of any distinctive character are only marks, but not trademarks with substantial legal significance.

He Jing thought that as provided in China’s Trademark Law, “any visually perceptible sign, capable of distinguishing the goods or services of one natural person, legal person or any other organization from those of other persons, including words, devices, letters, numerals, three-dimensional signs, combination of colors as well as the combination of such signs, shall be eligible for application for registration as a trademark.” Signs which are devoid of any distinctive character shall not be registered as trademarks, unless they have acquired distinctive character through use and are capable of being readily identified and distinguished. As for packaging designs in common use, they shall not be registered as trademarks unless the applicant can prove that the packaging designs have acquired distinctive characters through use and help trademark application or an application for territory extension, the trademark itself should have distinctive characteristics.

It can therefore be derived that no matter whether the applied trademark is a word mark or a figurative mark, the key to registration is distinctiveness. So how can one determine whether or not a mark has distinctiveness?

China IP consulted experts on this problem. It is said that there are two approaches for a mark to obtain distinctiveness: (i) the applying trademark is capable of being readily identified and distinguished; (ii) it can acquire distinctive characters through use.

With respect to acquiring distinctive characters through use, experts suggest as follows: (i) If the composing signs of a trademark are words and phrases made-up by the applicant and with no specific meanings themselves, or images composed of cartoon animals or patterns presented through unique techniques, it is likely to be a strong trademark, such as “Haier” on refrigerators and “柯达KODAK” on color films. (ii) If the composing signs of a trademark are ordinary words and phrases with meanings animal patterns and devices common in life, then it is likely a weak mark, such as “Great Wall” wine and “Prairie” alcoholic drink. (iii) If the composing signs are devoid of distinctiveness, it is merely a mark rather than a trademark.

In the Kinder Bueno Trademark case, the Beijing No. 1 Intermediate People’s Court held that firstly, the identifying part of the trademarks were devoid of distinctiveness for indicating plainly the main raw materials and the functions of the goods; secondly, the marks were not applied in a traditional trademark sense, therefore, they could not acquire distinctive characters through use.

(Translated by Monica Zhang)

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