Introduction
When the "name" and "substance" of a century-old brand are separated, and trademark rights and shop name rights belong to different parties, a battle over brand ownership is inevitable. A judgment in the Guangzhou "Lian Xiang Lou" trademark dispute has brought to light a long-overlooked deep conflict in the protection of China’s time-honored brands: Does owning the right to use a trademark qualify one to claim to be a "China Time-Honored Brand"?
I. Case Overview: A Dispute Over "Genuine or Fake Time-Honored Brand"
Guangzhou Lian Xiang Lou Co., Ltd. (hereinafter “Lian Xiang Lou Company”) sued Guangzhou Lian Lou Catering Service Co., Ltd. and Guangzhou Bai Lian Catering Service Co., Ltd. for unfair competition. The defendants were found guilty of false advertising for claiming to be a “China Time-Honored Brand,” “Century Classic,” and “Founded in 1889” in their restaurants, and were ordered to pay 2 million yuan in economic losses plus 100,000 yuan in reasonable legal costs.
The uniqueness of this case lies in this: an enterprise with the right to use the “Lian Xiang Lou” trademark was sued by the enterprise that owns the “Lian Xiang Lou” shop name rights.
Curiously, the defendants were not counterfeiters. They had obtained legitimate authorization from the trademark owner to use the “Lian Xiang Lou” trademark for catering and teahouse services. However, the court ruled that trademark licensing does not equal shop name licensing, nor does it entitle the user to claim another’s century-old history.
II. Historical Background: Rights Division During SOE Reform
To understand this case, we must return to the state-owned enterprise reform more than a decade ago.
Founded in 1909, Lian Xiang Lou is a “China Time-Honored Brand” recognized by the Ministry of Commerce. During the reform, rights to the century-old brand were split: shop name rights went to the restructured Lian Xiang Lou Company, while trademark ownership was transferred and licensed to another entity — Guangzhou Time-Honored Brands Investment Holdings Co., Ltd.
The trademark owner then granted non-exclusive licenses to Lian Lou and Bai Lian companies to use the “Lian Xiang Lou” trademark for restaurants. These companies paid royalties and gained the right to display the mark on store signs, menus, and promotional materials.
The crux of the problem: they could use the three characters “Lian Xiang Lou” as a trademark, but could not claim to be a “China Time-Honored Brand” or emphasize “century-old history.” The “China Time-Honored Brand” title belongs to Lian Xiang Lou Company, which also carries the century-old goodwill.
The court held that the defendants’ advertising misled consumers into believing they were the century-old Lian Xiang Lou Company, constituting false commercial advertising under Article 8 of the Anti-Unfair Competition Law.
III. Legal Focus: Boundaries Between Trademark and Shop Name Rights
The core legal dispute is: Can trademark use rights and shop name rights be exercised separately? What are the limits of trademark licensing?
1. Different Nature of Rights
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Trademark rights: Exclusive rights obtained through registration, whose core function is to identify the source of goods or services; transferable and licensable.
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Shop name rights: The distinctive part of an enterprise name, carrying business goodwill, historical inheritance, and consumer recognition; protected under the Anti-Unfair Competition Law.
2. Judicial Findings
The court clearly ruled that Lian Xiang Lou Company enjoys lawful rights in the “Lian Xiang Lou” shop name under Article 6 of the Anti-Unfair Competition Law. Even with a non-exclusive trademark license, the defendants may not use statements implying a century-old history without shop name authorization.
This judgment established an important rule: trademark licensing is limited to use of the mark itself and does not extend to the historical goodwill attached to the shop name. Historical heritage cannot be “rented out” with the trademark, nor can time-honored status be “borrowed.”
3. Unfair Competition Perspective
The defendants’ conduct amounted to “free-riding” — taking advantage of Lian Xiang Lou Company’s historical reputation to gain a competitive edge, diluting the brand’s value and harming consumers’ right to know and choose.
IV. Industry Dilemma: Common Challenges in Protecting Time-Honored Brands
The “Lian Xiang Lou” case is not isolated. In recent years, IP disputes involving time-honored brands have surged due to deep historical and practical causes:
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Historical policy factors: System transitions such as public-private partnerships and SOE reform caused conflicts between original inheritors and state-owned entities. Intangible assets like trademarks, shop names, and patents were split, laying hidden dangers for future disputes.
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Bad-faith registration and imitation: Driven by commercial interests, malicious squatting and imitation persist. Some enterprises squat on time-honored trademarks or license them to “legitimately” use the marks and dilute brand value.
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Non-standard transactions: Unclear rights boundaries and ambiguous licensing terms lead to overuse and blurred lines between trademarks and shop names, triggering lawsuits.
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Disconnection between operation and protection: Some time-honored enterprises neglect IP management, allowing irreversible brand confusion before taking action.
As IP scholars note: “The fundamental goal of IP protection should support the long-term development of century-old brands and sustain their vitality, not serve as a tool for short-term licensing profits.”
V. Solutions: Protecting Century-Old Brands
Addressing the complex dilemma requires coordination among legal, administrative, and market parties:
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Improve top-level design: Enact a special Regulations on the Protection of Time-Honored Brands to clarify standards, ownership, and infringement rules, and establish special IP protection.
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Promote rights integration: Encourage mergers, restructuring, and share swaps to unify trademarks and shop names under one owner, eliminating “name‑substance separation.”
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Regulate licensing: Clearly prohibit licensees from using “China Time-Honored Brand” or “century-old history” in trademark licenses.
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Strengthen brand management: Establish IP strategy systems, register defensive trademarks, monitor infringement, and standardize authorization chains.
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Balance history and law: Adjudicate strictly according to law while fully considering historical causes to achieve balanced interests.
Conclusion: Let Time-Honored Brands Maintain Consistency Between Name and Substance
