New measures aim to refine corporate name dispute adjudication

On 31 August 2023, the State Administration for Market Regulation (SAMR) released the Implementation Measures for Corporate Name Registration and Administration Regulations, providing details for implementation to its 2021 Regulation. Some of these measures refine the existing procedures for the adjudication of conflicts between identical or similar corporate names registered in the same industry. The measures will come into force on 1 October 2023.

Prohibited behaviours

Article 23 of the measures prohibits the following behaviours and actions:

• malicious hoarding of corporate names or “occupying naming resources” without intention to use, which harms public interest or disrupts public order;
• submitting false materials or using “other fraudulent methods” for self-declaration;
• intentionally applying for a corporate name that “closely resembles” a name that another party already owns and that has “generated certain influence”; and
• intentionally applying for a corporate name that is “prohibited by laws, administrative regulations, and these measures”.

The administration’s ex officio powers

The local Administration for Market Regulation (AMR) can correct a registered corporate name that does not comply with the relevant rules. The higher-level AMR also has the ex officio authority to correct corporate names that the lower AMR has registered but that fail to comply with the rules.

The List of Restricted and Prohibited Corporate Names

When corporate names enjoying a nationwide influence are copied and used by others without authorisation – which is likely to cause public confusion – the provincial-level AMR should promptly report to the SAMR, which will enter this name into the List of Restricted and Prohibited Corporate Names. Corporate names that appear on this list are protected against any future third-party attempt to register an identical name in the same industry.

Complaints to the AMR against infringing names

A prior corporate name owner is entitled to file a complaint with the local AMR’s corporate name registration authority against the user of an infringing corporate name.

Article 41 sets out the criteria for determining infringement that the authority should “comprehensively consider”:

• the disputing companies’ primary business activities;
• their corporate names’ distinctiveness and originality;
• the duration of use of these names and the extent of public awareness;
• commitments that the disputing company has made when it applied for the corporate name and its legal obligations;
• whether the disputed name causes confusion among the relevant public;
• whether the disputed name takes advantage of or damages the reputation of another; and
• “other factors” that the authority decides should be considered.

Procedures

The local AMR’s corporate name registration authority has three months to issue a decision on a dispute, which is subject to administrative reconsideration or court appeal.

If the local AMR decides that the name should be changed, the disputed enterprise should complete this change within 30 days from the date it receives this decision. Meanwhile, the disputed corporate name will be replaced immediately by the company’s registration number.

If this company fails to complete the required change within one month, the local AMR will add it to the List of Companies with Abnormal Operations. The enterprise can apply to be removed from this list after it makes the required name change.

Penalties

If the enterprise refuses to make the necessary correction, it may face a fine ranging from 10,000 to 100,000 yuan. In cases where the violation is particularly severe, the business licence may be revoked.

Further, if the registration and use of the infringing corporate name results in adverse social consequences, the local AMR may impose a fine with the same range.

Problems and welcome developments

The measures, which provide a clear framework for handling corporate name disputes and specify some punitive measures, are a welcome development. In particular, the ability to enter famous corporate names into a national list of "restricted and prohibited names" to prevent large-scale infringement should greatly reduce enforcement costs.

However, it is regrettable that the measures only address conflicts between corporate names and not disputes between prior trademarks and corporate names, which are prevalent.

A trademark owner that finds its trademark being used in another party’s corporate name may file a complaint with the AMR. However, within the AMR, corporate name registration and trademark administration are governed by separate departments. Due to the difficulty of coordinating their respective range of jurisdiction, trademark owners often have to initiate lengthy – and costly – civil litigation.

There is no doubt that if the SAMR could organise the coordination between its corporate name and trademark authorities in a specific regulation, the burden on trademark owners would be hugely alleviated when it comes to enforcement of their rights.