In edible oil, this 'Haitian' is not the same as that 'Haitian'; soy sauce terms like 'Yuanningzao' and 'Weijixian' are not exclusive to Haitian either. Haitian Flavoring has lost its trademark moat. Although Haitian Flavoring, with a market value of over 100 billion yuan, is already the absolute leader in the condiment industry, in the condiment field where the trend of market concentration towards the top has not yet ended, the cost Haitian pays for brand building is considerable—whether it is from top online variety shows like 'Qipa Shuo' and 'Tucao Dahui', or the卫视老牌音乐竞技 'Singer-Dangda Zhi Nian' that started this week, Haitian appears as a sponsor. But under the large expenditure of sales expenses doubling to 2 billion yuan in five years, not only has Haitian's revenue growth lagged behind the growth of sales expenses, but its 'Haitian' trademark 'loss' in the edible oil category and trademark conflicts with Jiajia and Chubang have undoubtedly undermined its brand-building project. -01- 'Haitian' Edible Oil: Making Wedding Dresses for Others Recently, Caijing.com found through Tianyancha that in a judgment published at the end of last year regarding Haitian Flavoring's dispute with the National Intellectual Property Administration over the rejection of its application for the renewal registration of the 'Haitian' trademark in Class 29, Group 2908, the Beijing Intellectual Property Court held that in the scope of trademarks in Class 29, Group 2908, i.e., edible oils and fats; edible sesame oil; edible corn oil; edible rapeseed oil; edible canola oil; edible sunflower seed oil; edible oil; edible palm kernel oil; culinary flaxseed oil; edible cocoa butter, the trademarks 'Haitian SEASKY and design', 'Haitian HAITIAN and design', and 'Haitian Haitian' applied by Jiangxi Qinglong Hi-Tech Oil Co., Ltd. in 1994/1996/1997 are still valid trademarks and constitute prior rights obstacles to Haitian Flavoring's trademark application in 2018. Therefore, Haitian Flavoring lost the case. This means that Haitian Flavoring is still unable to use its 'Haitian' trademark in the edible oil field, which will undoubtedly cause some consumers to misunderstand the 'Haitian' edible oil manufacturers already on the market. Caijing.com browsed the Tmall Haitian Edible Oil flagship store and found that this store, which actually sells products produced by Jiangxi Qinglong Hi-Tech Oil Co., Ltd., displays rapeseed oil, sunflower seed oil, corn germ oil, sesame oil, peanut blend oil, and camellia oil labeled with the Haitian trademark, all of which are on sale. Multiple reviews indicate that consumers mistakenly believed this 'Haitian' was the 'Haitian' under Haitian Flavoring. Image source: Screenshot of Haitian Edible Oil flagship store More notably, even though the trademark conflict remains unresolved, Haitian Flavoring and Jiangxi Qinglong Hi-Tech have already 'collided' in the sesame oil field. In Haitian Flavoring's Tmall flagship store, there is a sesame oil called Tianci Lianggu, priced at 19.9 yuan for 250ML, while Jiangxi Qinglong Hi-Tech also sells a product called Haitian Pure Sesame Oil online, with a promotional price of 17.8 yuan for 200ML. Image source: Screenshots of Haitian official flagship store and Haitian Edible Oil flagship store In this regard, Zhu Danpeng, an analyst at China Food Industry, told Caijing.com, 'Many enterprises lack the professional knowledge support for modern operations. For example, Haitian may have only thought about trademark protection in the soy sauce category in the past, but did not anticipate preparing in advance for future cross-category multi-category layout.' He also said, 'Since the lawsuit has been lost, Haitian and Qinglong Hi-Tech might consider negotiating a trademark transfer or establishing a joint venture to grow the edible oil business together.' -02- The Precarious 'Haitian Yuanningzao' If the 'loss' of the 'Haitian' trademark in the edible oil field only affects Haitian Flavoring's peripheral business maintenance, then in the main battlefield of soy sauce, the collision and similarity with core market competitors in trademarks and packaging will plant greater hidden dangers. Caijing.com found through Tianyancha that the second instance of the dispute between Haitian Flavoring and Jiajia Food over the validity of the trademark 'Haitian Laozihao Yuanningzao TIMEHADAYTOP and design' was concluded in October last year. The Beijing Higher People's Court upheld the first-instance judgment, which revoked the previous ruling by the Trademark Review and Adjudication Board (TRAB) that maintained the validity of 'Haitian Laozihao Yuanningzao TIMEHADAYTOP and design', and required the TRAB to re-adjudicate Jiajia's request for invalidation of Haitian's related trademark. Considering that the Administrative Procedure Law stipulates that if a court rules that the defendant must re-perform an administrative act, the defendant shall not make an administrative act basically the same as the original one based on the same facts and reasons. The result of this second instance means that Haitian Flavoring is highly likely to lose 'Haitian Laozihao Yuanningzao TIMEHADAYTOP and design'. Caijing.com sent an interview outline to Haitian Flavoring regarding the impact of this case on its soy sauce business, but did not receive a reply by the time of publication. However, Haitian seems to have started preparing alternatives. According to Caijing.com's search on the China Trademark Network, within 10 days after the judgment, Haitian re-applied for trademarks containing the term 'Yuanningzao'. Currently, the relevant trademarks are all awaiting substantive examination. 'As long as Yuanningzao is still legally held by Jiajia, the possibility of Haitian successfully including this term in its trademark application is very small,' Lin Jieying, a legal practitioner from Xiamen, analyzed to Caijing.com. According to the logic in the second-instance judgment of the Beijing Higher People's Court, first, compared with the multiple trademarks composed of 'Yuanningzao' held by Jiajia, the significant identifying part of Haitian's related trademark completely contains the constituent elements of the former, or is partially identical or highly similar. Indeed, it constitutes similar trademarks on the same or similar goods. Second, regarding Haitian's claim that the term 'Yuanningzao' used on soy sauce and other goods is weak or lacks distinctiveness, and is a generic name that directly describes the process characteristics of soy sauce and other goods, and should not restrict Haitian's legitimate use, the court tended to avoid this viewpoint procedurally. The court held that if the distinctiveness issue of the trademark is overemphasized and later applicants are allowed to add other constituent elements to the marks of prior registered trademarks, it would actually indirectly deny the validity of prior trademarks in the process of trademark similarity determination. This would blur the functional positioning of different legal provisions. Lin Jieying also told Caijing.com that the court's choice was to protect Jiajia's procedural interests. 'According to the general trademark invalidation process, a third party must first request the TRAB to determine invalidity, and if dissatisfied, file an administrative lawsuit. If still dissatisfied, appeal again. Therefore, the prior trademark owner has three opportunities for relief. If the second instance directly determines invalidity, it would be unfair to Jiajia,' Lin Jieying explained. But according to Haitian's position in the lawsuit, does Haitian have the opportunity to apply for invalidation of Jiajia's 'Yuanningzao' trademark on the grounds that it is a generic term in the industry? Lin Jieying said that if Haitian could obtain the invalidation of Jiajia's 'Yuanningzao' trademark before the case was decided, it would not have lost the second instance. But there is no 'if' in reality; Haitian still 'lost' the lawsuit. More notably, in the first-instance judgment, the court pointed out that before the application date of 'Haitian Laozihao Yuanningzao TIMEHADAYTOP and design', Jiajia had already continuously and extensively used the 'Yuanningzao' mark in market operations and had a certain reputation. 'As a peer operator, Haitian, when Jiajia's cited trademarks were legally registered earlier, added its own basic trademark to another's trademark and re-applied for registration, which is hardly considered good faith subjectively.' This directly points to Haitian's suspicion of 'malicious competition'. -03- 'Haitian Weijixian': Fishing in Troubled Waters Not only the overlap of 'Yuanningzao', but Haitian has again 'collided' with another important competitor in the soy sauce industry, Chubang under Zhongju High-Tech, in the use of the three characters 'Weijixian'. As shown in the figure below, Caijing.com found in an offline supermarket that Haitian's 750ML Teji Weijixian soy sauce, priced at 15.8 yuan, and Chubang's 750ML Teji Weijixian soy sauce, priced at 15.9 yuan, are extremely similar in bottle shape, packaging colors, and wording. Image source: Caijing.com photo taken at a supermarket in Beijing Caijing.com searched the China Trademark Network and found that the 'Chubang Weijixian' trademark was successfully registered by Chubang in September 2012, while Haitian Flavoring's 'Haitian Weijixian' trademark applied in February 2012 shows that the application was rejected and the trademark has lapsed. But as seen in offline supermarkets, Haitian still uses packaging with 'Haitian Weijixian' as the main component in sales. Caijing.com asked Haitian whether it is aware of the 'Chubang Weijixian' trademark and product packaging on the market, and whether the use of the term 'Haitian Weijixian' poses legal risks, but did not receive a reply by the time of publication. In this regard, Lin Jieying believes that Haitian's current practice seems to only use the registered trademark on the two characters 'Haitian', without including 'Weijixian'. That is, a way of combining 'Haitian Weijixian' that leans towards trademark use. As for whether it constitutes infringement, it depends on the specific judge's discretion. She analyzed to Caijing.com that if the judge believes that when comparing 'Haitian Weijixian' and 'Chubang Weijixian', 'from a distance, the characters Haitian and Chubang are also very similar, which can easily confuse consumers, then it may be judged as infringement.' -04- Conclusion The trademark entanglements among Haitian, Chubang, and Jiajia are just a microcosm of the current domestic soy sauce industry, where market concentration is far lower than abroad and competition is increasingly fierce. According to statistics from Huajin Securities Research Institute, in recent years in the soy sauce condiment field, Haitian's market share is 16%, ranking first. Chubang's share is about 4.2%, ranking third. Jiajia's soy sauce share is about 1.8%. At the same time, the CR5 concentration is far lower than that of South Korea and the United States. Therefore, against the backdrop of slowing industry revenue and total volume growth, there is significant room for industry consolidation, and it is moving towards brand enterprises. In other words, the competition among leading enterprises will be more intense. 'There is no obvious cycle in soy sauce condiments, and healthy soy sauce is a rigid consumer demand. Enterprises must not only find differentiated competitiveness but also match the core needs of the consumer side,' Zhu Danpeng said to Caijing.com. But from the current soy sauce products in supermarket circulation channels, the highly overlapping packaging terms will only make ordinary consumers more confused about the true meaning of so-called 'Yuanningzao' and 'Weijixian', and the value of the trademarks themselves will correspondingly decrease. This cognitive confusion is not conducive to the upgrading of the soy sauce industry. Indeed, whether it is Haitian's battle with Qinglong Hi-Tech and Jiajia over the trademark rights of 'Haitian' and 'Yuanningzao', or the legal dispute with Chubang over the trademark use of the term 'Weijixian', how to find a differentiated competitive outlet against the backdrop of product homogenization is the key to enterprises opening up new growth space under the expectation of slowing growth in the soy sauce industry. It is precisely for this reason that Haitian Flavoring, as the industry leader, should no longer be helpless in the face of the current misunderstanding of the 'Haitian' trademark in the edible oil field. It should quickly find more efficient measures to reduce the risk of the 'Haitian' trademark being consumed. In the fiercely competitive soy sauce field, it should also bear the responsibility of clarifying industry terminology and trademark usage norms, rather than actively or passively stirring into the 'muddy water'. Source: Caijing.com