Partial Use of Composite Trademarks: How to Avoid Infringement

By Cher Yang

Composite trademarks (i.e., marks composed of words, devices, and other distinctive elements) are exceedingly common in the catering, retail, and franchise industries. However, the multi-element nature of their structure also gives rise to a recurring enforcement challenge:

When an alleged infringer uses only a portion of a registered composite trademark, does such use constitute trademark infringement?

A judgment from the Shaanxi Higher People's Court provides instructive guidance on how Chinese judicial practice addresses the issues of partial use of composite marks and the determination of their "dominant part."

I. The Core Legal Question

In many infringement disputes involving composite marks, defendants do not copy the entire registered mark. Instead, they extract a word element, a stylized character component, or a prominent design feature, and combine it with their own additional graphics or wording.

This raises a fundamental issue in trademark comparison methodology: Should similarity be assessed strictly based on an overall visual comparison of the two marks? Or can infringement be found where only a dominant element of the registered mark is replicated?

Chinese judicial practice has increasingly adopted a nuanced approach that combines both perspectives.

II. Background of the Dispute

The plaintiff in this case is a well-known domestic catering chain enterprise, Shanghai Hongqi Yonghe Catering Management Co., Ltd. (hereinafter referred to as "Yonghe Soy Milk Company"). Yonghe Soy Milk Company lawfully obtained, through assignment, the exclusive right to use the composite trademark at issue, which consists of a device and text, within Class 43 in China, and has the right to initiate enforcement actions in its own name. This composite trademark comprises three elements: the words "Yonghe Soy Milk" (永和豆浆), "YONHO," and a "scarecrow device."

The defendant in this case is Shenmu City Tianxia Yonghe Soy Milk Shop (hereinafter referred to as "Tianxia Yonghe Shop"), a small, individually-owned restaurant. On its store signage, interior decoration, tableware, etc., the defendant used a mark consisting of the words "Yonghe Soy Milk" (永和豆浆), "YONGHE FAST FOOD," and an abstract design formed from the characters "Yonghe" (永和).

The plaintiff argued that the "Yonghe Soy Milk" (永和豆浆) text portion used by the defendant was identical to the text portion of its registered trademark, which possesses primary distinctive function, and this would easily lead consumers to mistakenly believe there is a connection between the two, thus constituting trademark infringement.

In the first instance, the court held that within the plaintiff's composite mark, the characters "Yonghe" (永和) are part of numerous registered trademarks and not exclusive to the plaintiff, and "Soy Milk" (豆浆) is a generic term. Therefore, the distinctive part of the mark should be the "scarecrow" device. The marks used by the defendant, "Yonghe Soy Milk + YONGHE FAST FOOD" and the abstract design formed by "Yonghe" (永和), would not cause the public to confuse them with the plaintiff's registered trademark. Furthermore, the plaintiff obtained its exclusive right in 2016, whereas the defendant's business registration date was 2012. Consequently, the first instance court dismissed the plaintiff's claims.

The plaintiff, dissatisfied with the first instance judgment, appealed to the Shaanxi Higher People's Court.

III. The Appellate Court’s Approach: The “Dominant Element” Doctrine

The second instance court pointed out that the infringement analysis for composite trademarks cannot mechanically apply the principle of "overall appearance comparison." Instead, it should follow the principles set forth in Article 57 of the Trademark Law and Article 10 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Disputes over Trademarks, requiring further analysis of:

1. Whether the used element constitutes the main or distinctive part of the registered composite mark;

2. Whether that element can independently perform the function of identifying the source of goods or services;

3. Whether such use is sufficient to cause a likelihood of confusion among the relevant public.

IV. Identifying the “Dominant Part” of a Composite Mark

Determining whether a component qualifies as the dominant part requires a comprehensive assessment based on the specific circumstances of the case, typically involving two levels::

1. Structural Prominence Within the Mark

Courts examine: 

In practice, textual elements are often easier for consumers to remember and refer to orally, thus making them more likely to become the core identifying part of a trademark.

2. Market Recognition Through Use

Even if a composite mark contains multiple elements, extensive commercial use may cause consumers to associate a specific component with the brand owner.

Relevant factors include:

V. Confusion Analysis: Beyond Formal Differences

The appellate court concluded that although the defendant’s overall sign differed visually from the composite mark, its prominent use of the distinctive textual element created a high likelihood of confusion.

Key considerations included:

A trademark identifier itself does not inherently possess the basic function of identifying the source of goods or services; this function is achieved through long-term use by the rights holder, creating an association in the minds of the relevant public between the mark and the provider of the goods or services.

In this case, upon review, the second instance court found that Yonghe Soy Milk Company had achieved significant fame through years of national franchise operations. 

Furthermore, based on the general attention level of the relevant public, consumers would pay more attention to the textual identifier "Yonghe Soy Milk" (永和豆浆) within the composite mark at issue. Therefore, given the high frequency of use of this textual part, it should constitute the dominant part of the trademark. 

Regarding the defendant's defense that "Yonghe Soy Milk" (永和豆浆) is a generic term or descriptive phrase, the court found insufficient evidence and did not support it.

Ultimately, the court found that Tianxia Yonghe Shop committed trademark infringement and ordered it to cease infringement and pay damages.

VI. Doctrinal Significance

1. Rejection of Pure “Overall Comparison” Formalism

Chinese trademark judicial practice has consistently emphasized "overall observation and comprehensive judgment." This case further clarifies that "overall observation" does not mean ignoring the core elements within a composite mark.

When a particular element holds a dominant position in consumer perception, its replication may still constitute similarity, even if the overall design differs.

2. Preventing Strategic Fragmentation

If infringement were only found upon a high degree of overall similarity, composite marks could easily be "split" for use to evade legal responsibility, for example: Deleting the graphic part, adding other decorative elements, adjusting the layout structure while retaining the commercially most valuable core text.

The rule for determining the "dominant part" effectively prevents such circumvention.

3. Balancing Against Overreach

Simultaneously, the decision does not imply that every element of a composite mark enjoys standalone protection.

Courts remain cautious to ensure that:

The analysis therefore requires careful evidence regarding distinctiveness and consumer perception.

VII. Practical Implications for Brand Owners

1. Registration Strategy

Brand owners should consider:

This reduces reliance on dominant-part arguments during enforcement.

2. Evidence Preservation

During enforcement, one should fully prepare evidence of reputation, including advertising and promotional materials, proof of long-term trademark use, etc. In the absence of such evidence, a court may find it difficult to deem an element as the dominant part.

3. Risk Assessment for New Entrants

Businesses adopting signage or branding that includes wording identical to part of a well-known composite mark face significant risk — even if the overall visual presentation differs.

Formal variation does not eliminate liability where confusion is likely.

VIII. Broader Trend in Chinese Trademark Jurisprudence

This case aligns with a broader development in Chinese trademark enforcement:

As China’s service sector continues to expand, particularly in franchising and chain operations, disputes over partial use of brand elements are likely to increase.

Conclusion

The infringement analysis of composite trademarks in China is not confined to a rigid overall comparison test. Where a defendant extracts and prominently uses the dominant, distinctive element of a composite mark, infringement may be found if confusion is likely.

The protection of a composite trademark requires not only a well-planned registration strategy upfront but also relies on sufficient evidence of subsequent use for support.

For competitors, replicating the core, commercially most valuable elements of a composite mark may incur liability for infringement, even without completely copying the overall structure.