"Zhongyuan Petrochemical" or "China Petroleum"? Lawyer: Legal registration is not a "get-out-of-jail-free card"

Reprinted from: Legal Daily

“Good catch—this is way too much like Sinopec.” Recently, a netizen posted that a gas station in Shijiazhuang, Hebei Province looks very similar to a “Sinopec” gas station. The photo shared by the netizen shows that “Zhongyuan Sinopec” has a red background with white characters, with the letters reading “SNOPEC.” It differs from Sinopec—which also uses a red background with white characters—by only one character. The English letters are also missing just one “I.”

It is understood that relevant departments in Luquan District promptly went to the site to conduct verification. After verification, it was found that the gas station had unilaterally used storefront decor similar to “Sinopec.” It has been ordered to remove the “Zhongyuan Sinopec” storefront decor. The person in charge of the gas station, Mr. Yang, said that they have received the notice and are in the process of rectifying and removing the relevant characters. With regard to the act of the gas station allegedly unilaterally using an identification mark similar to that of another party, which has certain influence, the Luquan District Market Regulation Bureau has filed a case for investigation and will handle it in accordance with the law based on the results of the investigation.

This act is a coincidence

Or is it allegedly “riding on a well-known brand”?

Can lawful business registration

Become a “shield” for riding on another party’s brand reputation?

What penalties could the gas station face?

In response, the reporter interviewed Bi Qiang, a senior partner in equity at Beijing Yingke (Shijiazhuang) Law Firm, from the Legal Daily’s lawyer expert database.

“Judging from the available publicly disclosed information, this conduct aligns more with the typical features of alleged ‘riding on well-known brands,’ rather than a mere coincidence.” Bi Qiang said. The storefront signage, typeface, color scheme, and the English label “SNOPEC” are all highly similar to “Sinopec.” Relevant departments in Luquan District have also verified and determined that it unilaterally used storefront decor similar to “Sinopec,” and have ordered it to dismantle it and have filed for an investigation. Therefore, the core of this incident lies in whether it constitutes “confusingly attaching oneself” rather than whether it “operates with a license.”

Business name registration, in essence, addresses issues related to the establishment of market entities and name management. Whether it constitutes trademark infringement or unfair competition, however, is reviewed based on how the operator actually uses the name in real commercial practices and what market effects it produces. Article 7 of the current Anti-Unfair Competition Law of the People’s Republic of China explicitly prohibits confusion-causing acts that are sufficient to mislead people. The Implementation Measures for the Administration of Enterprise Name Registration Rules also clearly state that when using a name, an enterprise must not infringe on others’ prior lawful rights by ways such as imitation or confusion. In other words, “lawful registration” does not mean “lawful use by default,” and it does not mean it can “hitch a ride” on another party’s goodwill.

How should this situation be legally characterized? Bi Qiang said that in law, such circumstances are usually first evaluated as acts of confusion under unfair competition, and it does not rule out the possibility of constituting trademark infringement. If the focus of the dispute is the highly similar commercial appearance—such as storefront color, fonts, letter combinations, overall layout, and signboard style—then the Anti-Unfair Competition Law should be applied first.

Meanwhile, if the operator highlights the字号 (enterprise identifier within the name) in the enterprise name, and on the same or similar services it is similar to another party’s registered trademark in a way that easily leads to confusion, it may also fall within the scope of Article 57 of the Trademark Law of the People’s Republic of China. In addition, Article 58 of the Trademark Law further provides that if a registered trademark owned by another party is used as the字号 in an enterprise name, misleading the public and constituting unfair competition, it shall be handled according to the Anti-Unfair Competition Law.

“From the perspective of administrative responsibility, if it is ultimately determined to constitute a confusion act as specified in Article 7 of the Anti-Unfair Competition Law, the market regulation authority may order it to stop the illegal conduct and confiscate illegal goods; if the illegal business turnover is more than 50,000 yuan, it may also impose a fine of up to five times the illegal business turnover; if there is no illegal business turnover or if the illegal business turnover is less than 50,000 yuan, it may impose a fine of up to 250,000 yuan; and if the circumstances are serious, it may revoke the business license.” Bi Qiang said.

If the case also proceeds along the path of trademark infringement, the Trademark Law further stipulates that administrative authorities may order an immediate stop to the infringement, confiscate and destroy infringing goods, and confiscate the tools mainly used to manufacture infringing goods and to forge trademark registration marks, and impose fines in accordance with the law; the rights holder may also file a civil lawsuit.

This kind of “gray-zone” behavior is not uncommon in industries such as catering, retail, and others. In this regard, Bi Qiang reminded, “Being able to register” does not mean “being able to use it like this.” For industries highly dependent on storefront recognition and on-the-spot consumer decision-making—such as catering, retail, and gas stations—three compliance reviews should be completed before opening: an enterprise name search, a trademark and signage search, and a comparison of storefront decoration. Even if the name can be approved and registered, if it is similar to another party’s enterprise name or infringes upon others’ prior lawful rights, the enterprise should still comply with decisions such as changing the name as required by the market regulation authorities. Ultimately, an enterprise’s truly sustainable competitiveness comes from its own brand, services, and reputation—not from “visual imitation” of another party’s goodwill.

Author | Li Wen, an all-media reporter of Legal Daily

Source | Legal Daily

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