The Impact of the Ban on Advertising in the Architectural Decoration Materials Industry

The new Trademark Law is about to take effect. The provision prohibiting the use of the term “well-known trademark” in advertising is sounding the alarm for, among others, Architectural decorative materials the doors of numerous enterprises across the industry. How to mitigate legal risks has become a pressing concern for many coatings companies.

This is the first coatings company to publicly disclose its approach to handling the promotional use of “well-known trademarks” since the Amendment to the Trademark Law (hereinafter referred to as the “New Trademark Law”) was reviewed and adopted by the Standing Committee of the National People’s Congress on August 30 last year. The New Trademark Law stipulates that producers and operators may not use the words “well-known trademark” on goods, product packaging or containers, nor in advertising, exhibitions, or other commercial activities (hereinafter collectively referred to as the “prohibition on the promotional use of well-known trademarks”).

According to available information, the new Trademark Law will come into effect on May 1, 2014. In other words, from the date of its adoption to its entry into force, the new law provides an eight-month transition period, giving enterprises sufficient time to address the “prohibition on publicity” concerning well-known trademarks. Those who violate this prohibition may face substantial legal penalties. Under Article 53 of the new Trademark Law, local administrative departments for industry and commerce are empowered to order producers and operators found in violation of the “prohibition on publicity” to make corrections and impose a fine of RMB 100,000.

Although many companies that hold the “well-known trademark” designation are reluctant to comply with the advertising ban, the implementation of the new Trademark Law is an undeniable fact. The Zhuhai Administration for Industry and Commerce in Guangdong Province posted a notice on its official Weibo account, requiring well-known trademark holders to promptly revise their promotional materials: “Well-known trademark holders and operators that distribute well-known trademark products must promptly replace product packaging and update advertising slogans to avoid violating relevant laws and regulations.”

Why has the “ban on publicity” for well-known trademarks left enterprises in such an awkward position? To understand this, we must start with the way the function of the “China Well-Known Trademark” designation has been distorted. Originally, the purpose of recognizing a well-known trademark was to protect the mark from unlawful infringement. As far as we know, the system of well-known trademark protection is an internationally accepted intellectual property regime that first appeared in the Paris Convention for the Protection of Industrial Property, signed in 1883. China joined the Convention in 1984, becoming its 95th member state. After the turn of the 21st century, the “China Well-Known Trademark” came to be regarded—alongside “National Inspection-Free Products” and “China Famous Brand Products”—as one of the three major “state-branded” certifications, enjoying widespread popularity. This clearly demonstrates that, by then, the well-known trademark had already shifted from its original protective function to a promotional one. Subsequently, following the Sanlu milk powder scandal in 2008, both the latter two designations were, within a few years, ordered by the relevant state authorities to cease or suspend their use. The emergence of the judicially certified “China Well-Known Trademark” is seen as an accomplice and driving force behind the accelerated “promotionalization” of well-known trademarks.

It is thus evident that the reason why the “advertising ban” on well-known trademarks has such a profound impact on enterprises lies not in the so‑called “original sin” of well-known trademarks themselves; rather, it stems from the widespread practice of promoting well-known trademarks across various industries—and the resulting market disorder—that has driven this trend. While well-known trademarks may no longer be used for promotional purposes, their original purpose of “protection” remains intact. Moreover, following the imposition of the advertising ban, the State Administration for Industry and Commerce has deliberately sought to strengthen the protection afforded to well-known trademarks.