By Hansen Tao
A recent decision involving the long-established brand “Wanshouzhai” (万寿斋) has attracted attention in China’s intellectual property community for an unusual reason: the party holding the registered trademark did not prevail, while the long-time operator without registration succeeded.
At first glance, this outcome appears counterintuitive. Trademark systems are often understood as favoring registration. In practice, however, the judgment illustrates an important principle of Chinese trademark law: registration does not automatically override long-standing commercial reality.
This case highlights how courts balance formal rights with historical use, market recognition, and fairness.
Background: A Brand Rooted in Local History
Evidence presented in the case showed that “Wanshouzhai” had been used continuously for traditional pastry and food services at a specific location in Shanghai since at least the late 1940s. Archival materials, business records, and succession documents demonstrated uninterrupted operation over several decades.
Through consistent use, the name became closely associated in the public mind with a particular shop, location, and service model. Over time, it evolved from a simple business name into a locally recognized commercial identifier.
Meanwhile, another party later obtained trademark registration for “Wanshouzhai” in Class 30 for packaged food products and sought to enforce it against the historic operator.
Prior Use as a Substantive Legal Right
Chinese trademark law recognizes the doctrine of prior use. Where a sign has been used continuously and has acquired market recognition before another party’s registration, courts may protect that earlier use under certain conditions.
In this case, the Shanghai Intellectual Property Court emphasized that prior use is not established through storytelling or brand nostalgia. It requires:
- clear historical documentation
proof of continuous business succession
stable consumer recognition
consistent commercial use
Only when these elements are present does prior use become legally meaningful.
The court found that “Wanshouzhai” met this threshold, constituting a “living commercial identity” rather than a dormant name.
Why No Trademark Infringement Was Found
Another key issue was whether the registered trademark holder’s rights were infringed.
Although both parties used the same name, their business models differed materially:
One operated physical food services with on-site preparation
The other focused on packaged food products
Under Chinese practice, goods and services are assessed substantively, not only by classification. The court concluded that ordinary consumers were unlikely to confuse freshly prepared restaurant services with packaged retail products, even under the same name.
As a result, the coexistence of both uses did not create actionable confusion.
Judicial Restraint and Policy Considerations
Perhaps the most significant aspect of the judgment lies in its broader regulatory philosophy.
The court adopted a restrained approach to trademark enforcement. It declined to allow registration to be used as a tool to eliminate long-established operators or rewrite market history.
This reflects a policy position increasingly visible in China’s IP jurisprudence: trademark law is designed to maintain market order, not to facilitate commercial “resetting” through formal rights alone.
The ruling reinforces that trademarks are instruments of fair competition, not mechanisms for monopolizing pre-existing goodwill created by others.
Practical Implications for Businesses
The case carries important lessons for several groups.
For brand owners in food and retail sectors, it shows that registration alone may not guarantee exclusivity where strong historical use exists.
For investors and acquirers targeting legacy brands, it highlights the need for thorough due diligence on prior use rights, which may be more valuable than registration.
For companies pursuing defensive trademark strategies, it underlines the risks of overlooking earlier commercial users in enforcement planning.
A Broader Message for International Companies
For foreign companies entering China, the decision provides a useful reminder that China’s trademark system is not purely formalistic. Courts actively consider business reality, consumer perception, and market stability.
Understanding local use patterns and historical commercial practices can be just as important as securing registrations.
Conclusion
The “Wanshouzhai” case demonstrates that in China, trademark protection is not built on registration alone. It rests on a combination of legal rights, commercial continuity, and public recognition.
By protecting long-standing use over later formal registration, the court reaffirmed a core principle: intellectual property law should reflect how brands actually live and function in the market.
Sustainable brand protection requires not only filings, but also genuine, consistent, and transparent market presence. Without that foundation, even registered rights may prove fragile.
Comment by Allasya
This case clearly demonstrates the balance in China’s trademark judicial practice between the "first-to-file" principle and the protection of “prior use”.
The court did not rigidly adhere to formal registration rights, but in line with the legislative intent of trademark law, placed emphasis on examining the historical continuity, market recognition, and actual use of the commercial identifier, affirming that the goodwill established over the long term deserves protection. This adjudicative approach highlights that the fundamental purpose of the trademark system is to prevent market confusion and uphold fair competition, rather than merely granting exclusive rights to the registrant.
The decision carries significant exemplary value, reminding market participants that the stability of trademark rights stems not only from registration certificates but is more deeply rooted in consistent and genuine commercial use as well as market recognition.
For rights holders, a well-developed brand protection strategy must incorporate due diligence on historical use and respect for prior rights.