The comfort of consent
Letters of consent to co-exist (LOCs) are letters issued by registered trademark rights owners, in which they consent to the registration of a later-applied-for mark that may be similar or identical to their previously registered trademark and which designate the same or similar goods or services.
Historically, China’s Trademark Review and Adjudication Department (TRAD), a department within the China National Intellectual Property Administration (CNIPA), and Chinese courts would not permit the registration of two nearly identical trademarks that designate similar or identical goods and services. In these cases, a LOC could be provided to assure the trademark authorities and the courts that two marks will co-exist without any confusion.
However, the TRAD and the courts tended to give little weight to the opinions of the parties to a LOC, and would, instead, prioritise their roles in preventing consumer confusion due to the co-existence of a previously registered mark and a later-applied-for mark.
The TRAD and courts limited the value of LOCs, as evidence that may be used to reduce—to a certain extent—a determination that there will be a likelihood of confusion, due to the use of two trademarks, and it remained that, in the view of the TRAD and courts, a LOC could not, per se, exclude that a likelihood of confusion would arise from the concurrent use of two trademarks.
However, Synlait Milk v the China Trademark Review and Adjudication Board (2019 Zui Gao Fa Xing Zai No. 245) shows that LOCs—or more accurately the opinions of the parties to a LOC—should be given greater evidentiary weight and may only be disregarded in exceptional cases involving bad faith or where there will be consequential harm to national interests, public interests, or to the interests of a third party.
The Synlait case
Synlait applied for the ‘Xin Lai Te’ mark (application number 19088699) in February 2016, which specified, inter alia, “milk powder; etc” in class 29, which was refused by the TRAD due to Shanghai Bright Dairy’s two registered ‘Lai Te’ marks that covered the same and similar goods under class 29.
Following a failed first appeal of the TRAD refusal to the Beijing IP Court, in which a LOC provided by Bright Dairy was rejected, Synlait filed a second appeal with the Beijing High Court.
Although the Beijing High Court accepted Bright Dairy’s LOC, the High Court upheld the first decision, based on the following determinations:
- Synlait’s ‘Xin Lai Te’ mark incorporates Bright Dairy’s ‘Lai Te’ mark in its entirety and differs only with the addition of the character 新 (“new”).
- The meanings of the two marks were not easily distinguishable from one another, and it would also be reasonable for Chinese consumers to believe that the two marks are related as a series of marks.
- Although Synlait and Bright Dairy claimed that their companies operate under different business models and serve different consumers in the LOC provided by Bright Dairy, Synlait’s and Bright Dairy’s business activities overlap as dairy producers.
- Bright Dairy’s LOC was inadequate, as it did not explain the measures the parties would take to avoid consumer confusion, that might arise from the concurrent use of Synlait’s ‘Xin Lai Te’ and Bright Dairy’s ‘Lai Te’ marks.
