As far as consumer goods entrepreneurship is concerned, it should be that the army has not moved, and the trademark first. A trademark is a commercial symbol used to distinguish the different sources of goods and services. A trademark is usually composed of words, graphics, letters, numbers, three-dimensional logo, color combination, sound or a combination of the above elements, which plays an important role in distinguishing the source of goods or services, and is an important component and carrier of a brand. The cosmetics industry belongs to the category of consumer goods, not high-tech industry, and the result of commercial investment will be precipitated into brand value to a large extent. As the core carrier of the brand, the trademark is the most recognizable sign of the cosmetics enterprise, and gradually precipitates into the most valuable intangible assets of the enterprise in the operation. As a cosmetics operator, we must pay attention to brand protection, avoid stepping on the pit, and keep the brand. In the practice of cosmetics business, many cosmetics operators have some misunderstandings about the use of trademarks. Every misunderstanding is a trap in the management of cosmetics brand, and once it falls into it, it will affect the realization of the business purpose of the operator to a large extent, and even lead to the management of zero. Jiao Hanwei, lawyer of Shanghai Guohillhouse Law Firm, will discuss six pitfalls easily touched in the use of trademarks from two perspectives of law and cosmetics business, for the reference of cosmetics operators.

Pitfall 1: No legal feasibility assessment is conducted before the trademark is used

In the practice of cosmetics business, many cosmetics operators consider more commercial factors such as industry relevance, promotion convenience and personal preferences when determining the use of a trademark, while ignoring the legal feasibility assessment of the trademark. In the absence of legal feasibility assessment, operators are likely to face the dilemma of determining the use of trademarks that are the same or similar to the registered trademarks of competing products, which will lead to failure to register or infringement of others' trademark rights, which will not only fail to achieve commercial purposes, but may even cause real losses. Therefore, when cosmetics operators determine the use of a trademark, the correct posture should consider commercial factors such as industry relevance, promotion convenience, and operator preferences, but also consider the legal feasibility of trademark use. This is especially true for business owners' trademarks. The bottom line of legal feasibility is to ensure that the trademark does not infringe on the trademark rights of others' existing trademarks and avoid causing trademark disputes. At the same time, it is also necessary to further judge the probability of trademark registration success, if there are substantial obstacles to registration success, the probability of registration success is very low, it should not be used. If the trademark cannot be successfully registered, it does not enjoy trademark rights and other trademark rights, which means that it cannot monopolize the use of the trademark rights and cannot enjoy the brand value. The trademark defect is a major flaw in law, and it will encounter great challenges in financing and operation.

"Didi Taxi" is a taxi software brand of Beijing Xiaoorange Technology Co., LTD. (hereinafter referred to as "Beijing Xiaoorange Company"). When Beijing Xiaoorange was founded in 2012, it used the trademark Didi Dache. From a business point of view, the average person thinks that the sound of the car horn is didi ~ didi, and it is the most appropriate to name a travel software with "Didi", which is very image. However, Beijing Small Orange Company did not carry out legal feasibility assessment and layout of the company trademark "Di Di" in the early stage of entrepreneurship. Enterprise development into the fast lane, began to carry out the trademark layout, Beijing small orange company found that "Didi" is Hangzhou Miaoying Microelectronics Co., LTD. (hereinafter referred to as "Hangzhou Miaoying Company") registered trademark, the company's "Didi taxi" trademark can not be registered. In fact, as early as March 2011, Hangzhou Miaoke Film company applied for the "Didi" and "Didi" trademarks, both of which were approved for registration in May 2012, and the approved use of goods includes the ninth category 0901 "computer program (downloadable software)" and other commodity items. Later, the small orange company repeatedly communicated with Hangzhou Miao Film Company, hoping to buy the trademark, but because of the price problem, the two sides did not reach an intention. According to Cheng Wei, CEO of Xiaoorange Company, the trademark sale price of Hangzhou Miaoying Micro company is 88 million yuan. In 2014, Hangzhou Miaoke Film Company sued Xiaoorange Company, asking Xiaoorange company to stop trademark infringement and pay 80 million yuan in damages. On the one hand, Beijing Small Orange Company is not far from buying the "Didi" trademark at a high price, on the other hand, Beijing Small Orange Company continues to use the Didi taxi trademark suspected of infringement, so in May 2014, Beijing Small Orange Company announced that its taxi software brand "Didi Taxi" officially changed its name to "Didi Taxi". In terms of trademark imagery and relevance, it is obvious that "Didi Taxi" is not as good as "Didi Taxi". The trademark incident has also had a certain impact on the development of Beijing Small Orange Company. In addition to the Didi renaming event, there is also the "grapefruit" renaming "Mei Grapefruit" event. Meizhuo is a high-tech enterprise in the mobile Internet industry. Founded in 2013, Meizhuo focuses on providing online intelligent services for women, fully serving the entire life cycle of women's menstrual period, pregnancy preparation, pregnancy and hot mother, and comprehensively providing online services such as health management, pregnancy science popularization, community communication and vertical e-commerce. The trademark used at the beginning of the establishment of the United States grapefruit is "grapefruit", found in the operation of "grapefruit" for others registered trademark, after receiving the trademark owner lawyer's letter had to change its name to "United States grapefruit". Therefore, enterprises should carry out legal assessment of the feasibility of trademarks before determining the operation of trademarks to avoid stepping on pits.

Pitfall 2: not applying for registration of enterprise trademarks in a timely manner

The trademark may be used, but it does not mean that the enterprise enjoys the exclusive right. The Trademark Law of our country applies to the registration system, and the user of the trademark can obtain the exclusive right of the trademark only if the trademark is registered successfully in the Trademark Office. A trademark approved and registered by the Trademark Office shall be a registered trademark; The trademark registrant shall enjoy the exclusive right to use the trademark and shall be protected by law. In the procedure of trademark registration, China implements the system of trademark registration priority, and the exclusive right of the same trademark is granted in principle to the applicant who applies first. In the practice of cosmetics business, there are three major risks for some cosmetics companies to apply for registered trademarks after their products are listed: first, they will be registered by other market operators; Second, the trademark is defective, can not be successfully registered, need to replace the product trademark; Third, the trademark that has been put into use is the same or similar to the trademark of others, causing legal disputes. Before launching cosmetics business, cosmetics operators should first solve the trademark problem and determine the trademark stability problem, especially to ensure that the product trademark can be successfully registered before the product can be listed for sale. The operator successfully registered the trademark before the product was listed, which not only means that there will be no infringement disputes, but also means that the enterprise can enjoy the exclusive right to a trademark, and then can use a specific trademark for a long time and legally, prohibiting others from using the trademark without permission. In this way, the enterprise may only enjoy the traffic brought by the trademark, and only enjoy the commercial value of the precipitation after brand promotion. The product is listed, the trademark has not been registered is the enterprise trademark management must step past the pit. To register a trademark first and then carry out business is the correct posture of enterprise management.

Hyundai Motor is the largest automobile company in Korea and one of the 20 largest companies in the world. Hyundai Motor was founded in 1967 and entered China in 2002 as Beijing Hyundai Motor Co., LTD. Before entering China, South Korea's Hyundai has grown into a large-scale automobile company in the world. In 2001, the Hyundai conglomerate (including Kia) ranked seventh in the world in terms of sales. However, such a well-known automobile company did not pay attention to the trademark layout work in China in the early stage of operation. In 2002, Korea Hyundai entered China and found that the "Hyundai" trademark had already been registered by others, and if Korea Hyundai Motor was sold in China, it would be suspected of infringement. It turned out that Zhejiang Modern United Holding Group Co., Ltd. had applied for registration of "modern" trademarks in 45 categories as early as 1994. In order to solve the trademark problem, after several rounds of negotiations, Korea Hyundai and Zhejiang Hyundai reached the intention to transfer the trademark in 2003. Zhejiang Hyundai transfers trademark No. 878365 "Hyundai" in the automotive category to Hyundai Korea; The consideration for Hyundai Pay is Hyundai's general distribution right in Zhejiang Province. The total distribution right of Zhejiang Modern Enterprise at that time was estimated at about 40 million yuan; According to relevant data, the 4S stores operated by Zhejiang Hyundai achieved a revenue of 400 million yuan in that year. It should be pointed out that the modern trademark problem is not over yet. Zhejiang now transferred the trademark only for the category of automobiles, motorcycles, bicycles and other categories did not transfer, and authorized other market operators to use on the above related commodity categories. In 2018, Beijing Hyundai sued four companies, including Zhejiang Hyundai, on the grounds of trademark infringement and unfair competition, claiming that the four defendants should stop the infringement and unfair competition, and compensate for losses of 5 million yuan. The case is still pending. Hyundai has paid a heavy price for its improper trademark management. Therefore, business operators to their use of enterprise trademarks, to be registered in a timely manner.

Pitfall 3: Brand promotion without trademark registration

In principle, trademark registration in China applies the principle of application first, and the application cost is not high. Due to the low application registration threshold, the number of registered trademarks in China is huge. According to official data, in 2018, the number of trademark registration applications in China was 7.371 million, and the number of trademark registrations was 5.07 million; By the end of 2018, the number of valid trademarks registered in China (excluding foreign registrations in China and Madrid) reached 18.049 million, and the number of trademarks owned by every 10,000 market entities reached 1,724. Such a large number of trademark registrations means that catchy trademarks have been basically registered by operators. Therefore, at present, the probability of trademark registration failure in our country is very high, unless the operator applies for registration of the trademark has a certain originality. If the trademark is still in the process of registration, it is not recommended to make large-scale branding investments unless a very careful legal feasibility assessment has been carried out. On the one hand, enterprises will face the risk of registration failure, and on the other hand, large-scale brand promotion without trademark registration may attract the attention or concern of other competitors, or even be opposed, increasing the uncertainty factor of trademark registration. Therefore, cosmetics operators should consider the registration status of trademarks when carrying out brand promotion, and carefully carry out large investment in brand promotion for trademarks that have not been successfully registered.

Public information shows that Xiamen Meitu Network Technology Co., LTD. (hereinafter referred to as "Meitu Company") was established on June 18, 2003, with the mission of "letting more people become beautiful" and the vision of "becoming a global technology company that understands beauty", creating a series of hardware and software products. Such as Meitu Xiuxiu, BeautyCam, short video community Meitu and Meitu camera phones have changed the way users create and share beauty, and also made the selfie culture deeply rooted in people's hearts. On December 15, 2016, Meitu was listed on the Main Board of the Stock Exchange of Hong Kong (" SEHK ") with the stock code 1357. The trade name and trademark of meitu Company are "Meitu", and the trademark "MEITU" is used in the business. As far as the trademarks themselves are concerned, the "meitu" and "Meitu" trademarks are a great trademark in terms of business relevance and imagery. However, the company's "meitu" trademark has not been successfully registered in Class 45 online social networking services, and may even eventually lose this core trademark. After the establishment of meitu, the company did not register the "MEITU" trademark in the relevant service category at the first time. It was not until May 9, 2017 that meitu applied for the registration of the trademark "MEITU" in the category 45 online social network Services and other categories. On January 24, 2018, the State Intellectual Property Office rejected the above trademark application of Meitu. The reason is that the trademark is similar to the trademark "MEIZU" used by Zhuhai Meizu Technology Co., Ltd. in terms of letter composition and call pronunciation, and there is no significant difference on the whole, which is easy to cause confusion. Therefore, Meitu's trademark registration application is rejected. Class 45 "MEIZU" trademark is a registered trademark of Zhuhai Meizu Technology Co., LTD., which applied for registration in June 2015 and was approved for registration on October 16, 2016. Founded in March 2003, Meizu Technology Co., Ltd. is a well-known mobile phone manufacturer at home and abroad. Headquartered in Zhuhai, China, Meizu is committed to providing consumers with world-class performance and quality electronic products. Since then, Meitu has filed a trademark review on the rejection decision of the trademark Office, and the review was rejected by the Trademark Review and Adjudication Board. Later, MEITU refused to accept, and took the State Intellectual Property Office to court to apply for the cancellation of the original State Administration for Industry and Commerce Trademark Review Board made the "MEitu" trademark rejection review decision. On May 22, 2019, the Beijing Intellectual Property Court rejected Meitu's request in the first instance. The future of meitu's "MEitu" trademark in core Category 45 is uncertain.

Pitfall 4: Renting someone else's trademark

China's trademark law stipulates that a trademark registrant may authorize others to use its registered trademark by signing a trademark license contract; Where a person is licensed to use a registered trademark of another person, the name of the licensee and the origin of the goods must be indicated on the goods on which the registered trademark is used. Therefore, it is legal to rent or lease another person's trademark. However, from the actual situation of cosmetics business, whether to rent others' trademarks depends on the market value of the trademarks themselves and the different commercial purposes of each operator. If it is a well-known brand, the operator wants to borrow the brand influence of the well-known brand to quickly harvest the market, you can consider renting well-known brands in the cosmetics business for cosmetics business, such as BURBERRY, GUCCI and other brands. If the trademark is not a well-known trademark and has no market value, you should not consider renting another person's trademark. If the cosmetics operators plan to invest a lot of brand promotion to cultivate the brand, open up the market, and build a century-old business, they should not rent other people's trademarks. Because a large amount of brand promotion investment invested by operators will precipitate brand value to a large extent, and under the trademark lease model, when the lease term expires or trademark lease disputes occur, cosmetics operators will face a huge business risk of making wedding clothes for others, which is not a good business decision in business. Therefore, cosmetics operators can rent other people's trademark products, but should be careful. The case that Hongdao Group rented the "Wong Lao Ji" trademark and was later recovered by Guangzhou Pharmaceutical Group Co., Ltd. is worth the attention and reflection of operators.

Trap # 5: Holding a trademark certificate makes you think your rights are stable

In practice, many cosmetic operators think that as long as the trademark in their hands has a trademark registration certificate, they can rest easy, which is obviously a major cognitive misunderstanding. The trademark registration certificate obtained by the applicant is a landmark event that enjoys the exclusive right to use the trademark. For most trademarks, the acquisition of trademark registration certificate does mean that there is a stable trademark rights, but in special circumstances, the acquisition of trademark certificate does not mean that the trademark enjoys stable trademark rights. China's trademark law stipulates that if there is legal situation in which the trademark registration certificate has been obtained, the trademark Office, other units or individuals may apply to revoke the registered trademark; After the Trademark Office declares a registered trademark invalid, the exclusive right to use the registered trademark shall be deemed to have ceased to exist from the beginning. What are the legal circumstances under which a registered trademark is revoked? Where a trademark registered by fraudulent means or other unfair means is obtained, a trademark already used by another person and having certain influence is registered, a trademark identical to or similar to a trademark already registered by another person on the same kind of goods or similar goods, or an unauthorized agent or representative registers the trademark of the principal or the represented in his own name Trademark, etc., may apply to the State Trademark Office for cancellation of the trademark. It should be noted that in current judicial practice, a large number of registered or hoarded trademarks, which are not for the main purpose of use, without legitimate reasons, especially those with the transfer or intention to transfer their registered or hoarded trademarks for profit purposes, can usually be identified as "other improper means to obtain a registered trademark situation." According to this, a large number of registered trademarks that are not hoarded for the purpose of use face great challenges in the stability of rights, and cosmetics operators should be cautious about this risk when purchasing trademarks from third parties. In short, cosmetics operators should evaluate the stability of registered trademarks when purchasing trademarks from third parties or before large-scale promotion of their own trademarks, otherwise they may face the risk of brand zero. The ownership of trademark certificates and the stability of trademark rights are two different issues.

Trap # 6: Registered trademarks can be used on cosmetics

In the practice of cosmetics business, some cosmetics operators will have another cognitive misunderstanding, that the trademark registration certificate must be used to produce cosmetics, this view is obviously wrong. Cosmetics belong to special products, the cosmetics industry belongs to special industries, and its business behavior is regulated by the special industry supervision system. As an important part of cosmetics, trademark is a necessary part of cosmetics labels and instructions, which is not only subject to the adjustment of trademark law, but also needs to meet the requirements of cosmetics industry regulatory regulations. For example, cosmetics in China implement a regulatory system of separation of cosmeceuticals, and cosmetics advertisements are not allowed to promote medical effects; Cosmetic labels, small packages or instructions must indicate indications, must not advertise curative effects, and must not use medical terms. In 2019, the FDA once again reaffirmed its regulatory attitude towards the concepts of "cosmeceuticals", "cosmeceuticals" and "medical skin care products" in the form of "Cosmetic Supervision and Management FAQ (1)", clearly pointing out that there is no concept of "cosmeceuticals" in China, and promoting the concept of "cosmeceuticals" and "medical skin care products" are illegal acts. If a trademark held by a cosmetics operator is successfully registered, it may not be used in cosmetics if it promotes medical effects to consumers or contains medical terms. Otherwise, it will face business risks such as product removal, administrative penalties, and other brands such as Doctor Bai and Doctor Li have adjusted due to this problem. The adjustment of brand is a major operational risk for cosmetics operators and has a great impact on the market. Therefore, whether a successfully registered trademark can be used to produce products needs to be further judged from the perspective of regulatory norms in the cosmetics industry. This point needs special attention of cosmetics operators, and many legal workers also have this misunderstanding in practice.

As mentioned above, only by accurately recognizing the cosmetics trademark can we avoid stepping on the pit in the process of using the cosmetics trademark, and can we do a good job in trademark management, and then protect our brand. The above six traps are the problems that must be known in the use of cosmetics trademarks. Every cosmetics operator, especially those in the entrepreneurial stage, must review their trademarks again, look forward and systematically keep their trademarks, and lay a solid foundation for their cosmetics business.

Jiao Hanwei

Chief partner and lawyer of Shanghai Guohillhouse Law Firm

Have more than 10 years of legal service experience and more than 5 years of operating experience in the cosmetics industry, familiar with law and business, He is good at providing enterprises with cosmetics business legal services, legal counsel, equity structure, equity incentive, equity financing, equity acquisition, brand management, brand rights protection, brand acquisition, business negotiation, litigation and arbitration and other solutions for the whole stage of enterprise development from the perspective of law and operation. He has led many corporate equity restructuring, equity incentive, equity financing, factory acquisition, brand acquisition and other cases, and has rich experience in practical operation.