Perspective | Determining “a Certain Degree of Influence” of Commercial Identifiers in Acts of Commercial Confusion

Commercial confusion acts were already regulated in China’s first “Anti-Unfair Competition Law” enacted in 1993. In 2018, Article 6, Paragraph 1 of the revised “Anti-Unfair Competition Law” replaced the original legislative term “well-known goods” with “goods with a certain degree of influence.” However, the substantive meaning and requirements underlying this change remained unchanged. The primary reason for this revision was that the term “well-known goods” could easily be mistaken for an honorary title, and the process of identifying well-known goods might be misinterpreted as a form of award or commendation. This, in turn, could easily induce operators to pursue competitive advantages by seeking recognition as well-known goods—just as the previous practice of recognizing well-known trademarks under the Trademark Law had led to the distortion of the system itself. By replacing the term with “with a certain degree of influence,” the likelihood of such temptation and misdirection is reduced, making it easier to uphold the original intent of the legal regime during enforcement. This wording also aligns with the expression used in Article 32 of the “Trademark Law,” which refers to “trademarks with a certain degree of influence.” “With a certain degree of influence” constitutes the fundamental condition for a commercial identifier to obtain protection under the “Anti-Unfair Competition Law.” If a commercial identifier lacks any degree of influence or public recognition, others cannot exploit its competitive advantage. Even if such an identifier is imitated, it will not disrupt the competitive order and thus will not fall within the scope of adjustment under the “Anti-Unfair Competition Law.”

The legislators involved made the following remarks regarding this amendment: “During the revision process, there were differing views on whether the protected party needed to have a certain degree of influence in the relevant field—referred to as ‘well-known’ in the specific enumerated items of Article 5 of the 1993 Anti-Unfair Competition Law. One view held that Article 10bis of the Paris Convention for the Protection of Industrial Property prohibits any act that, by any means, creates confusion concerning the business premises, goods, or commercial activities of competitors; this provision does not require the party being confused to have a certain degree of influence in the relevant field. Whether or not the party being confused has such influence, as long as the confusion leads others to mistakenly believe that the goods are those of another party or that there is a specific connection with another party, it will still constitute confusion. Another view argued that, in order for an operator to achieve the goal of ‘free-riding’ or ‘piggybacking on a famous brand,’ the party chosen as the object of confusion is typically an identifier that already has a certain degree of influence in the relevant field; if an identifier lacks such influence in the relevant field, it would be impossible to create confusion. On this point, judicial practice has already reached a consensus and has developed relatively mature criteria for judgment. Therefore, this revision adopts the latter view and explicitly stipulates that the party being confused must be an identifier that ‘has a certain degree of influence’ on others.” This explanation indicates that the term “having a certain degree of influence” used in this legal revision does not alter the meaning of “well-known” as it was under the previous law—it neither raises nor lowers the corresponding legal standards or thresholds.

Some judicial cases have interpreted and determined the meaning of “having a certain degree of influence” in accordance with the above-mentioned understanding. For example, in the case involving the plaintiff Shanghai Tai Xiang Catering Management Co., Ltd. and the defendants Anhui Zhenwang Brand Management Co., Ltd., Anhui Shou La Shou Catering Management Co., Ltd., and the boutique snack shop in Huinan Town, Pudong New Area, Shanghai—regarding unfair competition and copyright infringement—the court of first instance held that Article 6 of the newly revised Anti-Unfair Competition Law governs the prohibition of confusion concerning commercial identifiers. Although the wording of this article has replaced the previous law’s phrase “the distinctive names, packaging, and adornments of well-known goods” with “the names, packaging, and adornments of goods having a certain degree of influence,” thereby aligning it with the wording of Article 32 of the Trademark Law regarding “trademarks having a certain degree of influence,” the key point of this provision remains the prohibition of confusing acts. In other words, regardless of the type of commercial identifier, only those with actual market recognition can effectively serve to identify the source of goods or services and thus prevent market confusion. Therefore, as the plaintiff argued, possessing a certain level of market recognition and public awareness still constitutes a prerequisite for the protection of commercial identifiers under the Anti-Unfair Competition Law. However, the term “having a certain degree of influence” does not represent any substantive difference in terms of the requirements or criteria for determining the recognition of commercial identifiers compared to the earlier phrase “well-known goods.”

Article 4, Paragraph 1 of the Supreme People’s Court’s Interpretation on Several Issues Concerning the Application of the Anti-Unfair Competition Law of the People’s Republic of China (March 2022 Edition) provides a definition of “having a certain influence,” stating: “A mark that enjoys a certain level of market recognition and possesses distinctive features capable of distinguishing the source of goods may be recognized by the people’s courts as a mark ‘having a certain influence’ as stipulated in Article 6 of the Anti-Unfair Competition Law.” Thus, the determination of whether a commercial mark “has a certain influence” can be based on both its market recognition and... Significance Start from two dimensions.

Market awareness of a commercial mark is a prerequisite for it to exert influence. When examining market awareness, the following issues should be taken into account:

First, the market recognition of a commercial mark refers to its recognition within the territory of China. Such recognition typically arises from the production, sale, or engagement in other business activities (such as advertising) within the Chinese market. If a commercial mark enjoys high recognition abroad but remains largely unknown within China, even if counterfeit products were to appear, Chinese consumers would unlikely be misled into making mistaken purchases, and the competitive order of the Chinese market would not be affected. Consequently, there would be no need for China’s laws to intervene. Of course, a mark’s well-known status abroad can sometimes serve as a reference factor in determining its recognition domestically.

Second, the market recognition of a commercial mark refers to the extent to which the relevant public is aware of that commercial mark. According to the attributes and characteristics of the goods, a protected commercial identifier only needs to enjoy a relatively high level of recognition among the relevant operators or consumers—not necessarily achieving widespread recognition across all markets or among the entire population. As stipulated in Article 4, Paragraph 2 of the Supreme People’s Court’s Interpretation on Several Issues Concerning the Application of the Anti-Unfair Competition Law of the People’s Republic of China (March 2022 Edition): “In determining whether an identifier specified in Article 6 of the Anti-Unfair Competition Law enjoys a certain degree of market recognition, the people’s court shall comprehensively take into account factors such as the extent to which the relevant public within China is aware of the identifier, the duration, geographic scope, quantity, and target audience of the goods’ sales, the duration, intensity, and geographic reach of promotional activities, and the status of protection afforded to the identifier.” The term “relevant public” is a concept used in the Trademark Law to determine... Trademark recognition The scope of the relevant public. Article 8 of the Supreme People’s Court’s “Interpretation on Several Issues Concerning the Application of Law in the Trial of Civil Disputes Involving Trademarks” defines it as “consumers associated with the particular goods or services identified by the trademark, as well as other business operators closely related to the marketing of such goods or services.” Simply put, the relevant public primarily includes producers (providers), sellers, and consumers of a particular type of good (or service). Different types of goods have different relevant publics—for example, everyday consumer goods have the broadest relevant public, whereas the relevant public for medical devices is limited exclusively to manufacturers, distributors, hospitals, and physicians of medical devices. The requirement that a protected commercial mark need only be well-known among the relevant public stems from the fact that unauthorized use of such a commercial mark alone is sufficient to infringe upon the “triple-layered” legal interests protected under the Anti-Unfair Competition Law—namely, the interests of business operators, the interests of consumers, and the public interest—and particularly undermines the normal order of market competition.

Third, the market recognition of a commercial mark refers to its recognition within a specific geographic area. The recognition of a commercial mark involves two key factors: geographic scope and human factors. Regarding the human factor, as mentioned earlier, a commercial mark need only enjoy a high level of recognition among the relevant public for the goods in question to be protected—there is no requirement that the mark be widely known by the general public. As for geographic scope, it is sufficient for a mark to be well-known within a specific geographic area to meet the threshold of recognition; it is not necessary for the mark to be nationally renowned. Of course, achieving the status of a well-known trademark can also be considered as falling under the category of “certain influence.” With regard to the geographic factor of the market—that is, the extent of the market within which a mark must be recognized to constitute “certain influence”—the Anti-Unfair Competition Law does not provide explicit guidance on this point. From the perspective of administrative enforcement and judicial practice, given China’s vast territory and the wide variety of product conditions across different regions, coupled with diverse consumer levels and preferences, it is often impractical and unnecessary to define the recognition of a commercial mark solely on a national scale. Therefore, it is generally sufficient to determine the recognition of a commercial mark based on regional criteria—for instance, by considering market areas such as provinces or prefectural-level cities.

The distinctiveness of a commercial identifier is a prerequisite for its ability to serve as a distinctive mark. Distinctiveness is also a concept under the Trademark Law, primarily defined in Article 11 of the Trademark Law. Together with legality, prior rights, and non-functionality, distinctiveness constitutes one of the four essential conditions for trademark registration. The Trademark Law does not provide an explicit definition of what constitutes "distinctiveness." Generally speaking, distinctiveness encompasses two key meanings: first, the identifier chosen by the operator must be different from those used by others; second, when this identifier is applied to goods, the relevant public must be able to recognize it as a trademark. According to Article 11 of the Trademark Law, generic names of goods, graphics, models, and words that directly describe the characteristics of the goods themselves cannot be recognized as trademarks and are therefore considered lacking in distinctiveness. The Anti-Unfair Competition Law, like the Trademark Law, protects the identifying function of commercial identifiers. Thus, the concept of distinctiveness can be understood by reference to the provisions of the Trademark Law. For instance, Article 5 of the Supreme People's Court’s Interpretation on Several Issues Concerning the Application of the Anti-Unfair Competition Law of the People’s Republic of China (March 2022 edition) stipulates: “If an identifier specified in Article 6 of the Anti-Unfair Competition Law falls into any of the following categories, the people’s court shall determine that it lacks the distinctive feature necessary to distinguish the source of goods: (1) generic names of goods, graphics, or models; (2) identifiers that merely directly indicate the quality, main ingredients, functions, uses, weight, quantity, or other characteristics of the goods; (3) shapes solely derived from the nature of the goods themselves, shapes required to achieve technical effects, or shapes that confer substantial value to the goods; (4) other identifiers lacking distinctive features. If the identifiers specified in the first, second, and fourth items of the preceding paragraph acquire distinctive features through use and enjoy a certain level of market recognition, and the party concerned requests protection under Article 6 of the Anti-Unfair Competition Law, the people’s court shall grant such protection.” The exception provided in the second paragraph reflects the dynamic nature of commercial identifier distinctiveness: distinctiveness can increase or decrease depending on the operator’s usage practices. Therefore, even identifiers that initially lacked inherent distinctiveness may gain acquired distinctiveness through use and thus become eligible for protection under the Anti-Unfair Competition Law.

An analysis of the criteria for determining “a certain level of influence” identifies the factors that can be considered when assessing the market recognition of a commercial mark. The Supreme People’s Court has provided explicit guidance on this issue in its judicial interpretation. Specifically, Article 4, Paragraph 2 of the Supreme People’s Court’s Interpretation on Several Issues Concerning the Application of the Anti-Unfair Competition Law of the People’s Republic of China (March 2022 Edition) states: “In determining whether a mark referred to in Article 6 of the Anti-Unfair Competition Law enjoys a certain level of market recognition, the people’s court shall comprehensively take into account such factors as the degree of public awareness among relevant consumers within China, the duration, geographic scope, quantity, and target audience of product sales, the duration, extent, and geographic coverage of promotional activities, and the status of protection afforded to the mark.” Administrative law enforcement officers may refer to the above-listed factors when determining the market recognition of the commercial mark at issue. Among these factors, the degree of public awareness is relatively subjective and difficult to ascertain; therefore, it may be appropriate to commission a third-party agency to conduct a social survey. Given the regional nature of market recognition for commercial marks, the scope of the survey may be limited to the local administrative region, with the survey population consisting of the relevant public affected by the goods in question. Data on product sales and promotional activities may be referenced according to the provisions of the “Guidelines for Trademark Examination and Adjudication.” For example, the following types of evidence may be used to demonstrate that a commercial mark has achieved a certain level of influence: records related to the earliest date of use or the duration of continuous use of the mark; contracts, invoices, delivery notes, bank statements, import and export documents, e-commerce platform transaction records, or other transaction records pertaining to the goods or services indicated by the mark; data on the geographic scope of sales, sales volume, sales channels, methods, and market share of the goods or services indicated by the mark; commercial advertisements published by the user of the mark in media such as radio, film, television, newspapers, periodicals, the internet, and outdoor advertising, as well as all comments, reports, and other promotional materials involving the mark in the aforementioned media; records related to the participation of the goods or services indicated by the mark in trade shows, expos, auctions, and other commercial events; and any evidence of awards or other forms of reputation associated with the mark. Of course, as long as the evidence submitted by the rights holder of the commercial mark can demonstrate the mark’s recognition and influence, it does not need to cover all categories listed in the judicial interpretation.