A deep dive into trademark confusion

31 July 2023

The likelihood of confusion remains the main reason for the refusal or invalidation of a trademark, with a registered trademark owner opposing the registration of a later trademark that is identical or similar to their goods. — Excel V. Dyquiangco

Trademark confusion, in its simplest sense, refers to the inability of the consumers to distinguish between marks when the marks are similar and the goods and/or services for which they are used are so related. In such cases, an average consumer believes that the goods and services under the marks belong to the same source.

In China, prior to the 2013 amendment to the Chinese trademark law, the term confusion was the main criteria to decide whether trademark infringement had occurred – although there was no explicit legal concept of confusion. The Supreme People’s Court (SPC) first recognized the concept in 2002 when it published the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law to the Trial of Trademark Civil Disputes Cases (Ref. No. Judicial Interpretation 2002-32).

Article 11 of the 2002 Interpretation refers to similar goods or services that the relevant public considers to have a connection and thus easily cause confusion. It is worth noting that China is a member of the World Trade Organization and, therefore, a signatory to the TRIPS Agreement of 1994, which provides in Article 16.1 of that agreement that the owner of a registered trademark shall have the exclusive right to prevent third parties without the owner’s consent from using in the course of trade, identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion and in a case of the use of an identical sign for identical goods or services, a likelihood of confusion shall be presumed.

The third amendment to the trademark law in 2013 made explicit reference to the concept of confusion. Article 57.2 states that the use without the permission of the trademark registrant of a trademark similar to its registered trademark on identical goods or the use of a trademark identical or similar to its registered trademark on similar goods where the same is likely to confuse shall be an infringement of the exclusive right to use a registered trademark.

Meanwhile, in India, the concept of confusion has been covered in Sections 9 and 11 of the Indian Trade Marks Act, 1999. Section 9(2)(a) of the Trade Marks Act, 1999, states: “A mark shall not be registered as a trademark if it is of such nature as to deceive the public or cause confusion.”

Section 9(2)(a) is primarily concerned with the deceptive nature of the mark by virtue of something inherent in the mark or its use, such as to the nature, quality or geographical origin of the goods or services. This section covers the confusion caused by the misrepresentation of a mark with respect to its characteristics and marks that contain false or misleading information.

The concept of confusion is also envisaged in Section 11(1) of the Indian Trade Marks Act, 1999, which states:

Save as provided in Section 12, a trademark shall not be registered if, because of

its identity with an earlier trademark and similarity of goods or services covered by the trademark; or
its similarity to an earlier trademark and the identity or similarity of the goods or services covered by the trademark,
there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the earlier trademark.
“This section covers confusion in reference to other similar marks,” said Ankita Sabharwal, an associate at Chadha & Chadha in Gurugram. “The main difference between the two sections is that deception or confusion envisaged in Section 9(2)(a) flows out of something contained in the mark itself sought to be registered and not out of resemblance with any other mark. The question related to resemblance arises under Section 11(1).”

Michele Ferrante, Founder and Managing Partner, Ferrante Intellectual Property, Beijing

The mark of the confusion

“It is important to understand exactly what is understood by the term trademark confusion, as the concept can be assessed by reference to how the public may become confused by trademarks that are identical or similar to other marks, and this can best be explained in the context of how the public becomes aware of the goods or services in question,” said Michele Ferrante, founder and managing partner of Ferrante Intellectual Property in Beijing.

Direct confusion, or source confusion, occurs at the time of purchase by the consumer, as the goods displaying the infringing mark cause them to believe that they are purchasing the original products of a well-known brand such as Armani or Versace, not counterfeit copies.

Initial interest confusion, or pre-sale confusion, occurs when the consumer becomes aware of the infringer’s use of an identical or similar pre-existing trademark. However, by the time the purchase is close to completion, they are either aware that they are being misled or they intend to purchase the counterfeit goods. An example is when the infringer uses the original trademark as a keyword to promote their business in a search engine online, which leads the consumer to the infringer’s site.

After-sale confusion occurs when the consumer has purchased counterfeit goods, but confusion arises when others are confused about the origin and status of the goods. For example, a consumer buys a bag with a trademark or design identical or similar to a well-known brand, and others assume that it is an original item from a high-status brand.

Two other examples of confusion are indirect or sponsorship confusion and reverse confusion. The former category arises when the public becomes confused about the potential association between the infringer and the original trademark holder rather than assuming the source of the goods or services in question. They may mistakenly assume that the infringer has a sponsorship arrangement or license agreement with the trademark holder or that the parties operate a joint operation.

An example of this category is where the infringer uses the original trademark in its brochures or on its website but not on the actual goods being sold. However, the effect is to allow the infringer to profit from the trademark holder’s goodwill and create confusion in the minds of the public, who may assume a commercial relationship between the infringer and the trademark holder.

On the other hand, the latter category, reverse confusion, is slightly more complicated but relates to the confusion caused when an infringer adopts a trademark that is identical to or similar to a trademark registered to another party earlier and causes the consumer to believe that the adopted trademark originated from the later party or that there is an association between them. This often arises when the later party is a well-known, larger or more successful brand and their investment and brand promotion have an enhancing effect on the earlier party’s business.

“To determine whether two trademarks are similar, it is necessary to consider the general attention of the relevant public, and that should be taken as the standard,” said Ferrante. “When similar trademarks have been used on the same or similar goods or services simultaneously, and the relevant public carries out the isolated comparison, the confusion will be easily incurred.”

Following legal guidelines

In China, following the 2013 Trademark Law Amendment coming into effect on May 1, 2014, the SPC published Guidelines, Provisions on Several Issues Concerning the Hearing of Administrative Cases Involving the Granting and Affirmation of Trademark Rights (the 2016 Provisions). These Guidelines, which concerned the 2013 Amendment, came into effect on March 1, 2017, and were published on December 12, 2016.

Before 2014, the only reference to the concept of likelihood of confusion was in Article 13.1 of the trademark law, which was renumbered 13.2 in the revision. That article prohibited the registration of a trademark applied in respect of identical or similar goods, which is a duplication, imitation or translation of another person’s well-known trademark not registered in China, and the applied trademark was likely to cause confusion.

There was also no reference to confusion in Articles 28, 31 or 41.2 and 41.3 relating to the refusal to register an identical or similar trademark on identical or similar goods, refusal to register a preemptive application by unfair means of a trademark already used and having a certain influence, invalidation of a trademark in violation of Articles 13, 28 and 31. The new Amendment renumbered these articles 30, 32 and 45.1, but there is no change to their contents or reference to the concept of confusion.

The 2016 Provisions introduced the concept of the likelihood of confusion in administrative litigation, and Article 12 advised that in assessing the likelihood of confusion under Article 13.2. The judge should assess not only the degree of similarity of the trademarks and goods but also the degree of distinctiveness and reputation of the “older” trademark, the general attention of the public and “other pertinent factors.” The SPC also provided that the intention of the junior trademark applicant and the potential evidence of actual confusion may be considered to assess the “global picture.”

These provisions have widened the previously restricted criteria for trademark examination. Each case turns on its facts and requires judges to determine the likelihood of confusion, defined as a “threshold of tolerance” beyond which a junior trademark cannot be accepted. The higher the reputation of the prior trademark, the lower the tolerance threshold regarding the degree of similarity. Included in the assessment are factors such as the distinctiveness and extent of the reputation of the cited trademark, whether the trademarks are sufficiently similar, the designated goods, the extent of the overlapping of the relevant public and its degree of attention and whether similar signs are legitimately used by others.

In 2019, China issued a consolidated version of the trademark law, considering amendments up to the Decision of April 23, 2019. The focus of the fourth amendment to the law was the concept of bad faith in Article 4, intended to prevent trademark hoarding by malicious applications, where there was no intent to use the trademark applied for. The new Article 4 is also added as an explicit ground for opposition and invalidation proceedings under Articles 33 and 44, respectively.

On June 15, 2020, the China National Intellectual Property Administration (CNIPA) issued the Standard on Trademark Infringement Determination (standard), which was applied for dealing with and investigating trademark infringement. The Standards contain 38 Articles, with Articles 9 to 12 guiding how to determine whether infringing goods or services are the same as or similar to the designated goods or services and Articles 13 to 18 guiding how to determine whether an infringing trademark is the same as or similar to, another person’s registered trademark.

The standard defines confusion as sufficient to cause the relevant public to consider that the relevant goods or services are manufactured or provided by the trademark right owner, or the provider of the goods or services has a commercial relationship with the trademark owner. The factors to be taken into account regarding the confusion include the use and similarity of the trademarks, the similarity of the goods or services, the distinctiveness and fame of the registered trademark, the characteristics of the goods or services, the degree of attention and recognition of the relevant public, and other related factors.

“These standards offer guidance to enforcement agencies, as well as to the right holders and other relevant parties so that they can be aware of the evidence that they need to obtain and present in support of their claim and to evaluate the strength of their claim or defense,” said Ferrante.

Meanwhile, the Supreme Court of India held in the case of Amritdhara Pharmacy v. Satya Dev Gupta that while assessing confusion between trademarks, the following factors need to be considered:

Who are the persons whom the resemblance must be likely to deceive or cause confusion; and
What rules of comparison are to be adopted in judging whether such resemblance exists. As to confusion, it is perhaps an appropriate description of the state of mind of a customer, who, on seeing the mark, thinks that it differs from the mark on goods which he had previously bought, but is doubtful whether that impression is not due to imperfect recollection.

Ankita Sabharwal, Associate, Chadha & Chadha, Gurugram

The question must be approached from the point of view of a person of average intelligence and imperfect recollection who would be deceived by the overall similarity of the two names having regard to the nature of the medicine he is looking for with a somewhat vague recollection that he had purchased a similar medicine on a previous occasion with a similar name. He would consider the word as a whole without splitting the name into its component parts and not going to its etymological meaning.

“These principles form the cornerstone of trademark jurisprudence and are often used by the courts in India while assessing trademark confusion,” said Sabharwal.

Recent developments of trademark confusion

The problem of relying on well-known trademark status in applications for opposition or invalidation of a trademark applied for or registered on identical or similar goods under Article 30 or Article 13.3 of the trademark law has been addressed by the SPC.

According to Ferrante, there is a frequent situation where a registered trademark owner applies to oppose or invalidate the registration of a later trademark that is identical or similar to their goods. The original brand owner asserts that because their registered trademark has a very high reputation, the new trademark is creating a likelihood of confusion, or at least a likelihood of association and dilution.

“Article 13.3 of the 2013 Trademark Law stipulates that the registration and use of marks in all classes of goods are prohibited if they would mislead the public so that the interests of the owner of a well-known trademark are likely to be impaired, but under Article 30 it is not necessary to recognize the well-known status of the trademark,” he said. “It should be assumed that the owner of a well-known trademark should be able to have protection for identical or similar goods as well as for different goods, but the TRAB and the CTMO will not consider requests for well-known status in relation to identical or similar goods.”

The SPC Provisions of 2016 may have solved this problem by allowing the trademark to be registered on identical or similar goods and on different goods.

“The somewhat indirect solution is that where the owner of a registered trademark has filed an opposition or invalidation claim against a later trademark, claiming that it is well-known under Article 13.3, but the TRAB has ruled in the trademark owner’s favor, citing Article 30. The SPC held that the court may apply Article 30 if the application is made within five years after the registration of the later trademark, or Article 13.3 if it has been registered for more than five years,” he said. “This has the effect of the trademark owner invoking well-known status and thereby requesting the appropriate recognition, even where the trademark is registered on identical or similar goods.”

In the case of P&G v. TRAB and Weishda in 2016, the court held that if Article 13.3 can be used after the expiry of the five-year period, it could be used before. However, if the plaintiff can prove a likelihood of confusion, it is not necessary to apply Article 13.3 as Article 30 is sufficient. Where the plaintiff can only prove a likelihood of association and dilution, it should be acceptable to apply Article 13.3 and recognize the trademark’s well known own status.

Ferrante added that the SPC seems to have abandoned the inclusive development theory, which stipulates that the decision whether a later trademark was similar to an older trademark could be based on the status of the market, with the court taking into account the reputation of the registered trademark and the later trademark. Since 2002, the practice has been that if the later trademark had established a reputation in the market because of sufficient use, the court will rule that the later trademark is not similar to the older trademark, and therefore the two trademarks can co-exist.

“The SPC moved against the coexistence theory in 2015, in the case of Nei Lian Sheng v. Fu Lian Sheng, on the basis that if the court accepted that the later trademark had established recognition and a reputation in the market, it would encourage competitors to violate the concept of good faith by ignoring the prior rights of the earlier mark. The situation reached a conclusion with the publication of the 2016 Provisions and the guidance on the assessment of the likelihood of confusion between two trademarks that are in conflict, and that no reference should be made to the reputation of the later trademark.”

He concluded: “The likelihood of confusion, although recognized by the SPC in 2002, has not been an explicit legal concept until the 2013 amendment to the trademark law, which explicitly included in Article 57.2. The confusion can occur before or after the point of sale, and the confusion can be caused as to the source of the goods or services and services or in respect of a perceived association between the original trademark and the imposter. The recent guidelines published by the SPC in 2016 encourage the courts to take account of the ‘global picture’ rather than the more limited similarity or no similarity between the products. The likelihood of confusion remains the main reason for the refusal or invalidation of a trademark and it is to be hoped that the new legislation will significantly change current law enforcement and judicial practices, such that there is more certainty in the process and outcome of trademark litigation, which will benefit both brands operating in China, as well as the Chinese economy and the country’s growing reputation as a location for innovation and growth.”

- Excel V. Dyquiangco