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In order to manage, first measure. An accurate valuation of your business is critical to successful management.

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Real estate is often the most valuable asset on the balance sheet. When was the last time you had it reliably valued?

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Often overlooked but always critical. Typically machinery & equipment is only considered for managing depreciation.

Intellectual Property Rights in China – An Introduction of Enterprise Name Right

Composition of Enterprise Name

Following the development of the market economy in China, enterprise name rights have become an important type of intangible asset for companies, and play an important role in the long-term development of companies. Moreover, companies now attach more importance to the publicity and promotion of their names. As a consequence, enterprise name disputes have become more frequent. This article aims to introduce enterprise name rights in China and some associated legal issues. An enterprise name right is the right, available to a lawfully established enterprise, to lawfully use its name. The administrative area, name, trade, and form of the organization are four composites of an enterprise name. 

  • Administrative area: refers to place where the enterprise is located, for example: Beijing or Shanghai
  • Name: refers to the “name” an enterprise uses to distinguish itself from other individuals or entities, such as Jiaduobao or Panasonic
  • Trade: refers to the enterprise’s business field, such as construction or pharmaceuticals 
  • Form of organization: refers to whether an enterprise is a limited company, joint stock limited company, or some other form of organization

Enterprise Name Registration

Enterprise registration is the responsibility of each local Administration for Industry and Commerce, under the Regulations of the People’s Republic of China on Administration of the Registration of Enterprises as Legal Persons, within their particular jurisdiction. Therefore, it is possible that there may be two or more otherwise identical trade names registered in different regions. The regulations are applicable to the following 6 kinds of enterprises:

  1. Enterprises owned by the whole people:
  2. Enterprises under collective ownership;
  3. Jointly operated enterprises;
  4. Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures and foreign-capital enterprises established within the territory of the People’s Republic of China;
  5. Privately operated enterprises;
  6. Other enterprises required by the law to register as legal persons

(Article 2 of Regulations of the People’s Republic of China on Administration of the Registration of Enterprises as Legal Persons)

China is a member country of the Paris Convention. Therefore, companies or individuals in Hong Kong and other member countries of the Paris Convention are able to have their trade name protected in China under the provisions of the Paris Convention. Article 8 of the Paris Convention states that “a trade name shall be protected in all the countries of the Union without the obligation of filing or registration, whether or not it forms part of a trademark”. Article 34 of the “Regulations on Administration of Enterprise Name Registration”, issued by the State Administration for Industry and Commerce of the People’s Republic of China in 2004, further affirmed this protection by stating that the names of foreign enterprises shall be protected as required by international conventions, agreements, or treaties ratified by the nation.

Enterprise Name Right Protection Laws and Regulations

In China legal protection of enterprise name rights can be found in four major laws and regulations including General Principles of Civil Law, Product Quality Law, Anti-Unfair Competition Law and Regulations on Administration of Enterprise Name Registration. Some important aspects of these laws and regulations are highlighted below:

Anti-Unfair Competition Law 

Article 5 of this Law states that a business operator may not use another’s enterprise name and personal name, without authorization, in a manner which may mislead people to believe it is the genuine manufacturer of the goods. Please see the enforcement of this Law in Case 3 below.

General Principles of Civil Law 

Article 99 of this Law states that individual operators, legal persons, and partnerships are entitled to name rights. They also have the right to use and assign their names.

Product Quality Law

Article 5 of this Law prohibits forgery and use of another manufacturer’s name and addresses without authorization.

Regulations on Administration of Enterprise Name Registration

Article 27 of this provision states that in case of unauthorized use of a registered enterprise name by another person, or other acts infringing the enterprise name rights of others, the person whose right has been infringed can seek help from the registration authority in the area where the infringer is located. The registration authority is empowered to order the infringer to stop the infringement act, compensate the economic loss of the person whose right has been infringed, and confiscate illegal earnings of the infringer.

Cases of Enterprise Name and Trade Name Protection in China

Case 1: Pfizer Products, Inc. 

Some infringers register enterprise names which are identical to the trademarks of other companies in order to free-ride on their reputations. In some cases, the infringer might use the prominent part of another company’s trade name instead of using the entire name. One of these cases involved Pfizer Products, Inc., which is a famous US pharmaceutical manufacturer. Pfizer Products, Inc. entered the Chinese market in the 1980s and has registered the Chinese version of “Pfizer” - “Hui Rui (辉瑞)” - and relevant logos since 1995. In 2004, Pfizer brought a suit against a domestic company called “Beijing Herod Bio-tech Co. Ltd (北京辉瑞生物技术公司)”. Pfizer claimed that the domestic company infringed Pfizer’s trademark and Chinese enterprise name “Hui Rui (辉瑞)” by using it in its Chinese enterprise name, product names, and on its website. In 2007, the court held that Beijing Herod Bio-tech Co. shall stop infringement on Pfizer’s trademark and indemnify Pfizer with RMB200,000 for economic losses. After that, the domestic company also replaced its original Chinese name with a new one which did not include “Hui Rui (辉瑞)”.

Case 2: Estee Lauder

“Guangzhou Ya Shi Lan Dai Cosmetic Co. Ltd (广州市雅诗兰黛化妆品有限公司)”, established on August of 2000, was a Guangzhou registered domestic private company. This company’s major business is cosmetic and beauty products. The part “Ya Shi Lan Dai (雅诗兰黛)”of its enterprise name is exactly the same Chinese translation of a world famous cosmetic brand Estee Lauder. However, “Ya Shi Lan Dai (雅诗兰黛)” had previously been registered by Estee Lauder. Moreover, this domestic company also manufactured cosmetic products similar to those of Estee Lauder and incorporated “Ya Shi Lan Dai (雅诗兰黛)” in its promotional materials. In 2004, the Guangzhou Administration of Industry and Commerce, on the basis of “Provisions on Administration of Enterprise Name Registration” and “Measures for the Implementation of Administration of Enterprise Name Registration”, ordered the domestic company to cancel “Ya Shi Lan Dai (雅诗兰黛)” from its enterprise name and promotional materials. In addition, this company is not allowed to use a new Chinese name similar to “Ya Shi Lan Dai (雅诗兰黛)”. With regard to the “Implementing Regulations of the Trademark Law of the People's Republic of China”, the company was also fined RMB200,000. 

Case 3: Woodhouse International

The plaintiff, Woodhead International Pty. Ltd., is a globally reputable Australian architecture consulting firm. It has registered “Wu He Guo Ji (五合国际)” as its Chinese enterprise name since 2000. It was found that two domestic companies established in 2007 by a local person also used “Wu He Guo Ji (五合国际)” as part of their company names. With regard to the “Anti-Unfair Competition Law”, the court held that the two domestic companies’ use of the two Chinese characters “Wu He (五合)” constituted an infringement on the enterprise name of Woodhead and might cause confusion in the market to the detriment of Woodhead’s interests.