Although three-dimensional trademarks are registrable in China, the recent case Nestlé SA vs. Master Sauce CO. Ltd suggests that enforcement of trademark rights might not always be ensured.
The case involved the shape of a brown, square-based bottle sauce which was designed by Julius Maggi in 1886 and is now used by Nestlé for its products. In 1995, Nestlé obtained registration of a three dimensional trademark in various countries but it was rejected by the Chinese Trademark Office.
Nestlé filed a review in 2007 and the Trademark Review and Adjudication Board ruled that although this three dimensional sign would normally be regarded as a product container and could not itself indicate the origin of the products, Nestlé had submitted enough evidence of use during the review procedure to prove that the trademark had obtained distinctiveness through use and could be approved for registration.
After receiving a cease-and-desist letter by Nestlé, Master sauce Co Ltd, which had been using a square-based bottle since 1983 for various products, took the initiative to file an action for a declaration of non-infringement with the Intermediate People’s Court of Jiangmen City and an application with the Trademark Review Adjudication Board to cancel Nestlé’s trademark.
To date, administrative proceedings are still pending but the courts have issued decisions against Nestlé. On July 2010, the Jiangmen Court found that Nestlé’s mark was weakly distinctive and its use by another party, in conjunction with another trademark, did not constitute infringement.
In November 2010, Nestlé appealed unsuccessfully to the Guangdong Higher people’s Court. Indeed, the Court found the trademark was used as a container by other manufacturers than Nestlé, before the registration of its trademark and concluded the shape of the bottle was not distinctive enough. The Court also noted that Master Sauce did not use the bottle as a trademark and thus did not act in bad faith.
That is to say the Court considered that, however well-known a trademark is outside China, its distinctive character cannot be recognized if the mark is famous in China.