“Substitute for XXX”, a smart idea or a stupid idea?

When you see “Substitute for LV” and “Substitute for SK-II”, do you instinctively imagine that the quality and grade of the product may reach the same level as “LV” and “SK-II”? The public may have a positive answer to this question, so some enterprises take advantage of those famous brands by using “Substitute for XXX” as their publicity core, and directly connect their products with those famous brands in the relevant industries, by which they could attract more customers and expand their market. More seriously is that some enterprises have applied for trademark registration with the phase “Substitute for XXX”.

From the perspective of commercial marketing, “Substitute for XXX” seems to be a smart idea, because the user has grasped the commercial reputation of famous brands for free, however, it is a stupid idea with many potential legal risks.

In terms of trademark registration, “Substitute for XXX” is usually rejected due to lack of distinctiveness. According to Article 11 of the “Trademark Law”, a trademark applied for registration shall have distinctive features. If the meaning of a trademark is to replace a substance, such as “Substitute for breast milk”, or to replace a brand, such as ” Substitute for LV” or ” Substitute for SK-II”, relevant public could not figure out the manufacture, which means such trademark does not play the function to distinguish the source of goods. In addition, it is difficult for ordinary consumers to identify it as a trademark, so the trademark is often rejected for lack of distinctiveness. If the substituted brand is a registered trademark, it will also be rejected on the ground that there is a prior similar trademark.

Whether it is risky to use “Substitute for XXX” for advertising without applying for a registered trademark? The answer is positive.

Article 28 of the “Advertising Law” stipulates that advertisements which deceive or mislead consumers with false or misleading contents shall constitute false advertising. If an enterprise could not prove its product could replace XXX, such advertisement may constitute false advertising. Take a typical case for example, in Zhu Shi Jian Jian Chu (2019) No.498 decision, the authority held that the party promoted with the statement that “Our products could completely replace the leading position in the industry of foreign brands such as Swagelok, Parker Lekory, Feitok, Siderford, Hamlet, Eaton, etc.”, however, it failed to provide any evidence to prove this statement.

Article 20 of the “Advertising Law” stipulates that publishing through mass media or public premises of advertisements of baby dairy products, beverages and other food asserted to be full or partial substitute for breast milk shall be prohibited. Therefore, an advertisement that express or imply its formula milk can replace breast milk may face the risk of punishment. In the Jin Ping Shi Jian Chu Zi (2019) No. 336 decision, an enterprise promoted its products with the statement as “Qi Guan, the leader and drafter of the standard for medical treatment via navel, which can replace transfusion perfectly, the authority made a punishment decision on the grounds that the party could not provide the legal and effective basis for the above advertising contents.

In the Hu Shi Jian Huang Chu Zi (2019) No. 012019001019 decision, the authority held that the party used statement as “Seamless underwear from Japan, …the latest bonding technique can replace dispensing” on its website on 1688 online business platform, however, it could not provide evidence to prove, which constituted false advertising.

In addition, using “Substitute for XXX” has the risk of being sued for civil infringement. In the case of (2021) Yue 1971 Min Chu No. 35261, the court held that the plaintiff and the defendant were competitors, and “XXX” was the plaintiff’s name which had a certain influence, when the defendant used “Substitute for XXX” in its advertisements, it may grab the plaintiff’s commercial opportunities and damage the plaintiff’s competitive advantage, therefore, the defendant constituted unfair competition.

To sum up, it is suggested that enterprises should be careful to use “Substitute for XXX” in commercial activities, because “Substitute for XXX” is full of risks. On the other hand, if an enterprise encounters competitors who have used such statement, it could take different actions to defend its own rights and interests.