Ｎｏｎ－ｒｅｇｉｓｔｅｒｅｄ Ｔｒａｄｅｍａｒｋｓ Ｓｈｏｕｌｄ Ｎｏｔ Ｂｅ Ｐｒｏｔｅｃｔｅｄ：Ｐｒｏｔｅｃｔｉｏｎ ｏｆ Ｎｏｎ－ｒｅｇｉｓｔｅｒｅｄ Ｔｒａｄｅｍａｒｋｓ ａｓ Ｖｉｅｗｅｄ

Many reports are positivecomments on the case，arguing that theprotection of the non-registered famous servicemark， the Little Fat Sheep，should be under the sameprotection for a registeredwell-known trademarkand holding that the LittleFat Sheep Corporation isentitled to the exclusiveright to use the LITTLE FATSHEEP trademark，

The hearings of the case of first andsecond instance， the Inner Mongolia Little Fat Sheep Restau-rant Chain Co.， Ltd. (Little Fat Sheep Cor-poration for short) v. the Inner Mon-goliaHuacheng Science Trade Co.， Ltd.(Huacheng for short)， has drawn much at-tention from the society and been widelyreported by the major mass media. Manyreports are positive comments on the case，arguing that the protection of the non-reg-istered famous service mark， the Little FatSheep， should be under the same protec-tion for a registered well-known trademarkand holding that the Little Fat Sheep Cor-poration is entitled to the exclusive right touse the LITTLE FAT SHEEP trademark.

This writer takes a different view. Forhim the Beijing courts' rulings in the caseare lawful， but not justifiable. Protectionof non-registered trademarks under the Chi-nese Trademark Law is not justifiable.Based on the case， this article will be pre-senting of non-registered trademarks.

The facts of the LITI'LE FAT SHEEP case are tabulated on the next page:

As the evidence presented by Huacheng at the court hearings shows， one-or-two-year-old sheep is customarilyknown as \"little fat sheep\" in the Xilin ColLeague of Inner Mongolia. In 2003， therewere as many as 12 restaurants named\"FAT SHEEP\" or \"LITTLE FAT SHEEP\"in the urban center of the Hohhot City. Inthe restaurants， consumers were told notto use any seasoning while eating themotton. For Huacheng， \"fat sheep\" or\"little fat sheep\" is generic term for sheepin Inner Mongolia.

As the Beijing Courts' rulings show，following issues exist in connection withthe protection of non-registered well-known marks:

Any goods have their particular re

gion of distribution， and trademarksused on particular goods have their owninfluence only in the correspondingmarket. This is also the case with non-reg-istered trademarks in that it is very muchlikely that manufacturers of goods in othermarkets do not know about the trademarkof the goods， nor do they know that thetrademark is well known， nor know thatsomeone else has used a trademark identi-cal with or similar to it. Under this situation，these manufacturers are likely to use or evenregister the same trademark， and trademarkconflicts are inevitable that are originallyavoidable with the help of the system forsearching the registered trademarks. In thepresent case， the Little Fat Sheep Corpora-tion thought of registering the\"LrlTLE FATSHEEP\" trademark， but the Trademark Of-fice held the phrase \"little fat sheep\" was ageneric term， refused to register it for lackof sufficient distinction. The Trademark Office did not approve the \"LITTLE FATSHEEP\" trademark for registration in 2000;the Little Fat Sheep Corporation did nothave the exclusive right to use thetrademark. As a result， anyone， in-cluding Huacheng， may use the\"LITTLE FAT SHEEP\" sign.Indeed， there are many restarurantsnamed \"LITTLE FAT SHEEP\"selling instantly-boiled mutton. Hadthe \"LITTLE FAT SHEEP\" trade-mark been registered， the presentcase would have been a case oftrademark infringement.

2.It is impossible for a socialmember to actively stay awayfrom a conflict with any non-reg-istered well-known mark. Well-known trademarks are dynamic in that aformer well-known mark may disappear，and a former unknown trademark may be-come well known. When a trademark is notwell known， social member A would notthink it is there， register a trademark exactlyidentical， or directly use it in the market-place (as is the case with Huacheng). Oncethe trademark becomes well known， trade-mark conflict would arise. The present trade-mark conflict has arisen not because of so-cial member A's improper act. His act iscompletely proper and lawful when he be-gins to act in this way. No one would fore-see that some unknown trademark (one thatcannot be searched among those registeredwith the Trademark Office) would becomewell known some day. Even if he is awareof， and trys actively to avoid， the trademarkconflict that would be likely to arise in thefuture， he is impossible to do so. What onearth is the law that is impossible not to beviolated? Protection of a non-registeredwell-known mark is likely to violate the gen-eral non-retroactive principle of law.

In the present case， when Huachengdecided to use the \"LITTLE FAT SHEEP\"trademark in 2001， there was no Little Fat Sheep Corporation， whose predecessor wasa small company with a registered capitalof RMB 80，000 yuan. It was not necessaryat all for Huacheng to lean on such a trivialcompany. Therefore， it was not possible forHuacheng to act in such a way as to utilisethe Little Fat Sheep Corporation's corpo-rate reputation， nor for it to violate the prin-ciple of good faith which any businessshould observe in business activities， nor forit to infringe the special right of name insome non-existent famous service. Eversince its start to use the \"LITTLE FATSHEEP\" sign， Huacheng has been using thesign of \"LITTLE FAT SHEEP\" on itsproduct， the package of seasoning. Its useis continuation of a prior act， not a new one;it does not act in such a way as to \"lean onmoneybags\". However， after the Little FatSheep Corporation becomes famous，Huacheng's act is deemed improper.

3.Registered trademarks are all recorded with the Chinese Trademark Office， so that all the businesses in Chinaand the world over can search themthere to find ont whether a trademark they want to use has been registered byanyone else. The system for trademark reg-istration requires all the participants in themarket to search others' trademarks at theTrademark Office before they put their ownproducts on the market so as to avoid anyconflict. Such a requirement is by no meanstoo demanding. Non-registered trademarksappear within the scope of their use， and itis very difficult for other businesses andconsumers to know about their existence.Even if a non-registered trademark is wellknown， it is so within the scope (a class ofgoods， a given region， or a period of time)of the market of the related goods， and it isunlikely for all the businesses throughoutChina to know about it. It is anunreasonable， uneconomical and impos-sible requirement that all the market par-ticipants search all non-registered trade-marks in all parts of the country beforeputting their products on the market in or-der to avoid conflicts.

4.To protect non-registered well-known marks is invite conflict，create confusion，and not to make con-cession to avoid trouble， nor to keep so-cial stability. Ifthe Chinese trademark lawdoes not accord protection for non-regis-tered trademarks including non-registeredwell-known marks， users of non-registeredtrademarks will not sue to seek legalprotection， nor will users of trademarkssimilar to non-registered trademarks beworried about being charged with trade-mark infringement. There will not be anyconflict， nor would be such an issue as pro-tection of non-registered trademarks. Then，if several businesses use the same non-reg-istered trademark at the same time， suchtrademark， having no function to indicateorigin of goods， may be used by all of them，so no dispute would arise amongthem. Take the present case forexample， \"LITTLE FAT SHEEP\"is not a trademark， but businessesand consumers can still use othersigns to distinguish one businessfrom another. Some may be calledInner Mongolia Little Fat Sheep，and others be Jack's Little FatSheep.

However， under the current Chinese Trademark Law， non-reg-istered well-known marks are ac-corded strong protection. Once itsnon-registered trademark is estab-lished as a \"well-known\" trademark， thebusiness will benefit a great deal. It is quitelikely for it to monopolise the market ofthe goods in connection with which thetrademark is used. Any business wouldstrive for such tremendous interests. It willspare no efforts. Then come the conflictand the issue of protection of non-regis-tered well-known marks.

The issue of the so-called non-regis-tered well-known marks often arises fromthe impossible registration of trademark.If the trademark is registrable， it will notbecome a non-registered trademark. Onlythe issue of opposition or infringement ofa registered trademark would arise. A trade-mark is not registrable for various reasons.For one thing， the trademark is a genericname of a particular goods， or it is descrip-tive of the goods， or it has no function toshow the origin of goods (as is the casewith the present case)， or it fails to meetthe other requirements under the Trade-mark Law. If non-registered well-knownmarks are protected， then trademarks thatare contrary to the Trademark Law and notregistrable by going through normal pro-cedures are under a protection strongerthan that for registered trademarks. Doesn'tthis practice encourage businesses to seektrademark protection by \"abnormal\"means? The \"LITTLE FAT SHEEP\" caseis such an example. With a non-registeredwell-known mark under the enhancedprotection， a business would， despite thefact that the Trademark Office decides notto grant the registration， try its best to usea non-distinctive sign and make it famousin a region or market through use， and thenrequest strong protection for well-knownmark， thus causing trademark conflict. Inthis way， the business acquires its mo-nopoly over the generic name to furthermonopolise the market. In the present case，had the Little Fat Sheep Corporation usedanother distinctive sign， not the descrip-tive sign of LITTLE FAT SHEEP from thevery beginning， there would be no such se-ties of conflicts as we are now faced.

5.Protection of non-registered well-known marks wastes socialresources. In the fight for the exclusiveright to use a non-registered trademark， thebusiness that finally obtains it will gainmaximum interests， but most other busi-nesses that lost in the fight would sufferfrom great losses and waste caused. Theycannot use the trademark involved for theclass of goods， and must search for anothersign for their products. If they had knownthat the mark had been used by someoneelse before using or registering the mark，they would had chosen another mark， andwould not have put in so much money fruit-lessly for it， including the expenditure inthe lawsuit.

6.Giving the exclusive right to use anon-registered well-known mark islikely to result in market monopoly， andimpede market competition. When theissue of protection of a non-registered well-known mark arises， it is surely to be an is-sue of trademark infringement， that is to say，many businesses use the same non-regis-tered well-known mark at the same time.Where the trademark per se is or has be-come the generic name of a particular classof goods， giving the generic name of thegoods to one business as its trademarkwould make it difficult for the other busi-nesses to make their products known to theconsumers， and to compete effectively. It isexact for the purpose of avoiding monopolyof the nature that registration of trademarkof any genetic name is prohibited under theChinese Trademark Law. Under the trade-mark system of some countries (e.g. the USTrademark Act)， once a well-known markbecomes a genetic name of particular goods，the well-known mark will lose its exclusivetrademark right. If an exclusive fight to usea non-registered well-known mark is givento a particular business. The role of trade-mark law to promote market competitionwill be hampered.

As the evidence from the Little FatSheep Corporation and Huacheng shows，the instantly-boiled mutton of little fat sheepis a traditional way of chefing typical ofsome regions in Inner Mongolia. Huachengbegan to produce the special \"LITTLE FATSHEEP\" mutton seasoning as early as 2001.The Little Fat Sheep Corporation has spreadthis special chefing to all parts of thecountry， and in doing so， come up with itsown feature， and achieved reputation foritself. But this way of chefing is not itsmvenuon， its evlctence snows mat \"LITTLE FAT SHEEP\"FAT SHEEP\" is associated with the serviceprovided by the Little Fat Sheep Corpora-tion outside Inner Mongolia. When theLittle Fat Sheep Corporation registers whatis a genetic name in the place of origin as atrademark， and owns the exclusive right touse the registered trademark， it willmonopolise the market. Worse still， it willmonopolise the instantly-boiled \"LITI'LEFAT SHEEP\" mutton seasoning. The words\"LITTLE FAT SHEEP\" for the seasoningonly show the use of the product， and donot have the function of showing the placeof production and the producer of theproduct. That is， they do not have the func-tion of a trademark， so there would be noinfringement of the trademark tight at all.However， in the present case， since\"LITTLE FAT SHEEP\" is well known， theinstantly-boiled \"LITTLE FAT SHEEP\"mutton seasoning should not be used.

7.Penalty on the \"infringer\" of a non-registered well-known mark is notjustifiable. The issue of non-registeredwell-known mark possibly results from abusiness disapproved use of a non-distinc-tive sign as a trademark， and， for thatmatter， the resultant losses should be borneby the business. The so-called infringer，like Huacheng， is not at fault. It is unfairto shift the losses to such a faultless\"infringer\".

8.Also， it is not fair to accord the exclusive right to use the non-registeredwell-known mark to its first user. Wherea non-registered well-known mark is usedby many businesses at the same time， it mustbe decided who is the owner and who is theinfringer of the trademark. The trademarkis not well known when it is first used. Thesubsequent users of the trademark are prob-ably users in good faith， and do not know(or impossibly know) that it has been usedby someone else. Besides， the subsequentusers have contributed to the developmentof the market for the goods. It is unfair andunreasonable to give the exclusive right touse the trademark to the first user of thetrademark so that it alone owns it and con-trols the market developed by many.

9.Strong protection of non-registeredwell-known mark affects the stabil-ity of the rights in the registeredtrademarks， trade names， domain names，and other rights， which are limited by timeand the exclusive right of which goes to theprior registrant. By contrast， well-knownmarks are not limited by time， and specialprotection is accorded to those establishedas such to pose resistance against any otherprior or later non-well-known marks， andto request cancellation of other registeredtrademarks， trade names， domain names.The owner of a non-registered well-knownmark may request to cancel a prior regis-tered trademark， which would shake thevery foundation of the entire registeredtrademark system. If a registered trademarkgoing beyond the period of uncertainty(publication and opposition) remainscancelable， what is the point of registeringa trademark?

10.Not protecting a non-registered well-known mark is not in conflict with theIP-related international treaties. All theinternational treaties， including the ParisConvention， in which it was first proposedto protect well-known marks and the presentTRIPS Agreement， require their membersto accord special protection of well-knownmarks， and also require them to provide theprotection under their respective nationallaws regarding how to protect and how toestablish well-known marks. The trademarklaw is a national law. A\"well-known mark\"is under the special protection in a countrywhere it is established as well known. Theredoes not exist anything like a \"global well-known mark\". One trademark may be es-tablished as a well-known mark in severalcountries， but is not registrable and protectable for being contrary to a provisionin another. The Chinese trademark law maypossibly be amended， with one of its provi-sions as this \"any non-registered trademarkshall have no exclusive right for it to beused\". Thus， a non-registered trademarkcomplying with the trademark law isregistrable， and then may be established as\"well known\". Any non-registered trade-mark that is contrary to some provisions ofthe trademark law should not be registered.In case like this， it is not necessary for thecourt to establish it is \"well known\" or not.Then， there would be no conflict over non-registered well-known marks.

Anyway， this writer believes that a non-registered trademark， be it well known or not，should not be protected. For that matter，amendment should be made to Article 13 ofthe Chinese Trademark Law and Article 5 ofthe Chinese Unfair Competition Law.