As the November 11 (also called Double 11) Shopping Festival is approaching, the competition among the major e-commerce APPs is intensified. Having a good name will naturally help the APP get accepted and used by the App users. However, a good name carefully chosen may not be registered as a trademark because the same has already been registered by other parties or for other reasons. Thus in the case that the intended APP name is not registered as a trademark (“intended mark”) in respect of the corresponding Classes (normally involving the goods “Downloadable mobile application software” in Class 9 and the related goods/services as provided through the APP), what risks may the e-commerce operation face?
1.Whether the new sales can be launched on stock?
If an APP is to be put on stock in the App store or on the WeChat platform, its name shall meet the official naming and launching rules for the App store or the platform. The specific rules are as follows:
(1) Rules of App Store
When the APP developer intends to release a new APP in the APP store (“Intended APP“), the APP store may require that the name of the intended APP should be neither the same as the name of the already-released APP in the APP store (“existing APP“), nor infringing upon the third parties’ trademark rights. In accordance with such requirements, the APP store will generally handle the duplication of APP name issue based on the following principles:
- There are no registered trademarks for both the intended and the existing APP developers: In the case that neither the developer of the Intended APP nor that of the existing APP has provided proof of their trademark ownership, the principle of “first come, first served” is generally followed, but still with differences varying in different APP stores. Some APP stores prohibit the Intended APP from being similar to the name of the existing APP, such as Huawei APP Store, while some APP stores only prohibit the use of identical rather than highly similar names by the Intended APPs.
- There is no registered trademark for the existing APP developer, while the developer of the Intended APP can provide the trademark ownership documents: Generally speaking, if the name of the intended APP is identical with that of the existing APP, unless the developer of the intended APP can provide the trademark ownership documents which indicate their legal rights to use the trademark as their APP name, the same must be changed before the APP is finally released online. In other words, if the name of the intended APP has already been used but not yet registered by the existing APP, unless the developer of the intended APP can provide the trademark ownership documents which prove the to-be-used name is identical with the registered trademark, the intended APP may not be released online.
- There is a registered trademark for the Existing APP developer: Under such a circumstance, for protection of the registered trademark, the APP store will prohibit other APPs from using the identical or similar names as the existing APP.
According to the Trademark Law, identical trademarks can coexist for registrations on dissimilar goods/services, for example, identical trademarks respectively covering financial management services and travelling agency services can be registered by different entities, and can be even registered by another party over the goods “downloadable mobile phone software applications”. However, we have not seen detailed regulations on such circumstances from those APP stores.
(2) Rules of WeChat platform
The naming rules of WeChat Mini Programs or Official Accounts are similar to those of the aforementioned of the APP stores. In general, the WeChat Account can be named based on self-selected words or trademarks while cannot infringe upon the exclusive rights of the registered trademarks of the third parties. If the applied name of the WeChat Account contains a trademark, the “Trademark Registration Certificate” or the “Trademark Authorization Letter” of the registered trademark should be provided. If it is named based on self-selected words, it shall not be the same as the name of the existing account, otherwise the account name will not be approved for registration.
It should be noted that for the WeChat Accounts named based on self-selected words (i.e. the name has not been approved for registration as a trademark) and that based on trademark, the protection intensity from the platform is quite different. If the Account operator does not obtain the trademark rights of the account name, it may not be able to complain about delisting the accounts with similar names in the same business filed. However, if the operator obtains the registered trademark rights of a specific name, the platform would restrict any account applied with similar names that may cause confusion, misidentification, association or influence, and the aforesaid restriction is not limited to the specific types of goods/services covered by such a registered trademark, even including the account applied in totally different business filed.
Summary: According to the above rules for APP stores and Platforms, if the existing APP/Official Account/Mini Program has already used a certain name, or the APP store/platform has found an identical trademark registered by the third parties, then without obtaining the trademark right or legal authorization of the intended trademark, the identical or similar name will not pass the examination and cannot be released online.
2.There is a risk that the products will be delisted (took out of stock), which will affect the business stability
If a third party (“existing trademark owner“) has registered a relevant trademark in the relevant Class, it may file a complaint with the APP store or platform. If the name of the APP/Account/Program is regarded as an infringement upon the prior trademark rights, measures such as taking products offline or even freezing the developer’s account may be taken.
As far as the handling procedures of the APP store are concerned, after receiving an infringement complaint from the existing trademark owner, it will generally perform the “notification-counter notification”process before finally determining the infringement issue and taking the delisting measures. The specific process is as follows:
As indicated in the chart above, the APP store generally requires the respondent to submit written counter-notification and initial proof of non-infringement within a certain period of time (usually three to five working days, depending on the notification from the platform)after receiving the filed infringement complaint materials from the complainant, such as the trademark registration certificate of the respondent as the trademark owner, and the trademark authorization letter of the respondent as the authorized trademark user. If the respondent fails to provide a valid counter-notification within the time limit, or the content of the counter-notification cannot preliminarily prove its APP name does not constitute infringement, the APP store will generally make a decision to delist/remove it.
Summary: According to the above APP store delisting rules, if the existing APP has not completed the trademark registration procedure or obtained legal authorization of its name in advance, it may not be able to submit qualified counter-notification materials in a limited time, and thus may face the risk of being forced to delist.
3.There is a high risk of facing infringement disputes and high monetary compensation
In recent years, there are many lawsuits against the APP names that are claimed as identical or similar with the trademark registered by other parties in respect of the goods “downloadable mobile application software”.
The direct use of the intended trademark in business without registering the same would very likely cause infringement disputes, which may lead to investigations, penalty, cessation of use, and even infringement lawsuits resulting in large sum of compenstation calculated based on reference to the damages suffered by the infringed party, the gains obtained by the infringing party, or several times of the licensee fee. Besides the heavy litigation burden, the potential prohibition of use and high money compensation, the business stability will also be substantially affected, which makes it difficult to establish the brand reputation. For example, Hangzhou M Wedding Service Co., Ltd. sued Beijing M Technology Co., Ltd. successively before Beijing Chaoyang District People’s Court and Beijing Intellectual Property Court based on a registered trademark in respect of the services “chaperoning, dating services, dating services, etc.” in Class 45 to require M Technology Co. to stop using the downloading services of the corresponding applications and claimed for compensation of RMB11, 000,000.
4.Lacking of legal basis of trademark right, which makes it difficult to safeguard rights
If the APP/Account name has been put into actual use without registering as a trademark, there lies a risk that a large number of third parties may copy or imitate the same to produce malicious copycat products to cause misidentification in market and seize market share. Moreover, if there are quality problems of the third-parties’ products, the negative impacts and comments will also occur. However, in the case where a registered trademark is not obtained, it would be quite difficult to safeguard the true owner’s legal rights. For example, if other developers in the APP store subsequently release APPs with similar names, it may be difficult to require the APP store to remove the similar products in accordance with the existing rules of the APP store without obtaining registration of the intended trademark. Although some corresponding legal measures can be taken, since the true owner does not have any prior rights, the thresholds for opposition, invalidation, and civil litigation to be supported by the authorities and the courts will correspondingly raise, and will make these legal procedures more difficult. Even if the true owner’s claim is supported in official procedures, it cannot be completely excluded the counterparties’ use of the trademark which is same or highly similar to the intended trademark in practice. In the entire process, without trademark right, more time and money costs would be correspondingly required. At that time, if the prior user of this trademark wants to solve the trademark conflict by negotiating with the other party, transferring the trademark, etc., they may be charged a huge transferring fee by the other party because of the high reputation built up by the intended trademark, which would put their own business development into a dilemma, that is to say, a certain market has been formed around the relevant trademark industry thus the existing achievements in the market cannot be easily abandoned, while the transferring fee of the trademark is too high to pay. For example, in the case of a well-known milk tea brand, due to lacking of awareness of trademark protection, the well-known milk tea brand, which had already taken the first step in branding and commercialization, hadnot registered their trademark in advance. With the expanding of business scope and reputation, more and more counterfeit shops appeared. However, since the founder did not own the relevant trademark rights, he was unable to defend his rights and was finally forced to change the brand name.
5.Affecting the financing and listing process
The development of the e-commerce APP will inevitably be accompanied by the need for financing, and the investors will often pay attention to the registration of trademarks in core business and products for the listing APP. If the business product uses certain name but has not obtained a registered trademark in the business-related field, in the process of due diligence, investors will generally focus on the same and make corresponding requirements based on the specific situation, such as requiring the financiers to obtain the intended trademark as a delivery condition, or as a matter that must be rectified after the delivery; otherwise it may trigger liability for breach of contract. In the subsequent process of going for IPO, failing to obtain the trademark rights of the names and graphics used by developer within their business scope may bring negative impacts to a greater extent. For example, for domestic A-share listings, per Article 30 of PRC Administrative Measures for Initial Public Offering and Listing of Shares: An issuer shall not be involved in any of the following circumstances where its sustained profitability is negatively affected: (5) it takes risks of negative change in obtaining or utilizing such important assets and technologies as trademarks, patents, exclusive technologies and franchises. Therefore, if the trademark ownership of the core business or the exclusive use authorization is not legally obtained, an obstacle for the listing will be formed.
Based on the above, it is the best strategy that the trademark registrations go first, and then comes the APP innovation.
 Article 4.2 of the “Huawei App Store Review Guidelines” stipulates that green and safe content can provide users with better services. You need to understand and strictly follow the following requirements: Apps must not be the same or similar to other developer apps in respect of appearance, name, theme, etc.
 For example, Z Jinxing Co., Ltd. has registered the trademark “CTF” in Class 42 which does not cover the service “organization of competitions [education or entertainment]” in Subclass 4102, while the WeChat platform has rejected an account application for “CTF” operated by a developer in computer information security competition industry. (Source: WeChat open community:
 Based on our past experience, most popular App stores (including Huawei App Store, Tencent App Treasure, 360 Assistant, APPLE APP store, etc.) will perform the “notification-counter notification” process. However, after reviewing the infringement notice internally, Baidu Mobile Assistant may first remove the involved app and then notify its developer. If the developer issues a qualified non-infringement counter-notification, Baidu Mobile Assistant will restore the removed APP, and the processing time for the resumption would take about 3 working days.
For example, Huawei APP store would normally give 3-5 working days for the respondent (which may be shortened to 24 hours under special circumstances), Tencent App Treasure would normally give 3-5 working days for the respondent as well, while the APPLE APP store normally gives a longer period for the respondent.