(By Luo Yanjie) Pfizer is the holder of a blue, diamond-shaped mark (the “Pfizer trademark,” number: 3110761). The trademark was approved in Class 5 for pharmaceutical preparation, medicines made for human consumption, antibiotics, medical nutrition supplements, cleaning agents, and veterinary preparation. The registration period for the trademark commenced on May 28, 2003 and will expire on May 27^, 2013.

On July 21, 2005, Pfizer representatives purchased a box of medicine priced at RMB 50 yuan from the New Concept Company. The medicine was mainly intended to cure “erectile dysfunction.” The front and back cover of the package contained both “Viagra”[1] and “TM,” which was underlined and accompanied by the diamond image. The manufacturer was printed as “Jiangsu Lian Huan Pharmaceutical Co., Ltd” (“Lian Huan”) dated on April 14, 2005. The opaque inner packaging also contained the words “Viagra” and “TM,” as well as the manufacturer “Lian Huan.” The packaging of the medicine was also diamond-shaped, in accordance with the shape of the tablet. The medicine itself was light blue in color, diamond compass shaped, and contained the words “Viagra” and “TM.” Pfizer believes that these products constituted three-dimensional trademark infringement and thereby sued the manufacturer and seller.

After the hearing, the Beijing No. 1 Intermediate People’s Court (the “Beijing Court”) held that, when compared, the Pfizer trademark’s diamond shape had larger angles and its color was deeper blue, while the accused infringing trademark had smaller angles and was lighter blue. Even though there was a definite difference in the shape and color, it is not easy for the public using a normal level of attention to distinguish between them. Therefore, the accused product constituted similarity to the Pfizer trademark in terms of the mark shape.

Moreover, as decided by the Beijing Court, although the tablet was wrapped in opaque material, and consumers could not see the appearance of the medicine, the function and value of the trademark is not only to differentiate products in the consumer market but also to show the reputation of the product and its producer. For this reason, consumers familiar with the Pfizer mark who saw the suspected mark would believe that the producer of the suspected products had a relationship with Pfizer based on the similarity of the products in color and shape. This would cause mistaking and constitute infringement of Pfizer’s exclusive use rights. Dissatisfied with the first instance decision, Lian Huan appealed to a higher court.

The second instance court held that the trademark is kind of logo able to differentiate the products or services from one company from those provided by another. In this case, the tablets produced by Lian Huan and sold in New Concept bore the marks “Viagra” and “TM” on both the front and back cover, and Lian Huan Pharmaceutical Co., Ltd. was printed as the producer. The opaque inner packaging also bore these marks. That means that the box and inner packaging of the tablet played the role of distinguishing the origin and manufacturer of the product.

Although the packaging was diamond-shaped to match the shape of capsules and had the word “Viagra” drawn in yellow on the box had a diamond as their backing, the consumer is not likely to judge the shape of the tablet only with the reference to such elements. Therefore, because the packaging is opaque, the tablets cannot be used to show the origin and producer. Even if the external form of the tablet is the same or similar as the Pfizer three dimensional trademark, the consumer purchasing these tablets would not confuse them with Pfizer’s trademark and would also not mistake or associate the relation between the medicine manufacturer and Pfizer. On these grounds, thesecond instance court decided that Lian Hua’s adoption of the trademark did not infringe Pfizer’s trademark.

Afterwards, Pfizer appealed again. The Highest Court determined that under Article 52 Paragraph 1 of the Trademark Law, any unlicensed application of the similar or identical trademarks in the same or similar class of products without a license from the rights holder constitutes trademark infringement. In the case, Lian Huan’s tablet packaging contains the same diamond-shaped bulge, and the “Viagra” on the box of the medicine is also under painted the yellow color. But, consumers are not likely to judge the external form of the medicine from these factors alone. Because the medicine packaging is opaque, the color and shape of the medicine cannot function to indicate the origin of the product and its manufacturer, and therefore shall not be taken as adoption under the trademark law. So, the Highest Court held that Lian Huan’s conduct was not adoption of a similar or identical trademark, and therefore refused Pfizer’s application.

Comments from the lawyer:

The main reason why thefirst instance court reached a different decision than the second instance court and the Highest Court is whether situations where the consumer has no way to distinguish the trademark when purchasing can constitute trademark infringement? Our opinions on that issue are as follows:

Article 52 of the Trademark Law provides that “to use a trademark that is identical with or similar to a registered trademark in respect of the identical or similar goods without the authorization from the trademark registrant” constitutes trademark infringement.

According to this article, the standard for finding trademark infringement is “similarity” rather than “possible mistaking.”

The Interpretations on Several Issues concerning Law Application of Civil Cases in Trademark Disputes states that one of the standards to be considered in trademark infringement is “the likelihood of making public mistake on the origin of the product or on whether there is certain relation between the plaintiff’s product.” At the same time, however, there are no other laws or legal interpretations regulating or explaing the definition of “mistaking.” This caused the different courts in this case to apply different standards on “mistaking.” It is no wonder that there were two different verdicts.

2. The application of different standards for confusion

Thefirst instance court judged that the defendant’s conduct constituted infringement, and it is obvious that the court based its decision on the concept of “confusion after sale.” That is to say that confusion is not restricted to the confusion raised when the consumer purchases the product but extends to the after sale of the product. When the consumer may contact the product in its box or packaging, and the trademark could cause confusion, this will be legally taken as the infringement. That determination is reasonable to some extent, for the trademark not only represents the reputation of the manufacturer from sales but also throughout the whole process of manufacture, sale, and the use by the ultimate consumer. Mistaking in either of these processes could lead the trademark holder to suffer damage. The second instance court, however, did not take that opinion, but limited mistaking to the process of the consumer purchase.

Based on these differences, the first and second instance courts made different decision in the case. But, the decision made by the Highest Court is more of significance in guiding the hearing of the similar cases in the future. And, to some extent, it clarifies the concept of “time period” within “confusion.” But, whether this kind of determination is appropriate for China and its serious IP infringement situation deserves careful thought.

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