Adjustment of Audi’s Trademark Licensing Structure in China: Leveraging Functional Stratification of Trademarks for Differentiated Product Positioning

Abstract

The proprietary rights to the Audi four-ring logo and the AUDI word mark remain with Audi AG, while its Chinese joint venture partners obtain trademark usage authorization. On October 26, Audi China announced that it had signed strategic agreements with FAW Group and SAIC Motor respectively, clarifying a dual-brand, dual-partner channel structure: the four-ring brand will be operated by FAW-Audi, and the AUDI word-mark brand will be operated by SAIC-Audi. From a trademark law perspective, this arrangement essentially reallocates trademark usage rights between the two Chinese joint venture entities, rather than splitting or assigning trademark ownership.

Main Text

According to public trademark records from the China National Intellectual Property Administration (CNIPA), the registrant of both the four-ring figurative mark and the AUDI word mark is Audi AG of Germany. No change of trademark owner is involved under these strategic agreements. Legally, this brand structure adjustment is implemented through trademark licensing arrangements: Audi AG grants FAW-Audi the right to use the four-ring mark, and SAIC-Audi the right to use the AUDI word mark.

The two sets of trademarks correspond to differentiated product tracks and market positioning. The four-ring figurative mark covers premium new energy vehicles and new-generation intelligent fuel vehicles, carrying the established premium brand goodwill accumulated by Audi over the years. The AUDI word mark is positioned to lead the segment of premium intelligent connected new energy vehicles for the Chinese market. This arrangement is more than a simple channel split. It fully harnesses multiple functions of trademarks, including source identification, quality assurance, goodwill transmission and market competition. Under the same trademark owner, distinct trademarks serve as carriers to separate product portfolios and implement tiered brand value operation, representing a typical application of the economic function of trademarks in the brand strategy of multinational automakers.

This structure of separate licensing and segmented operation for the four-ring mark and AUDI mark is a customized arrangement for the Chinese market, instead of a unified global brand rollout by Audi. Globally, Audi continues to adopt the four-ring logo as its core primary identifier for its electrification transition and has not implemented a dual-trademark split licensing model.

This scheme is introduced partly to adapt to the unique competitive landscape of China’s new energy vehicle market, where consumers hold differentiated brand expectations for traditional premium fuel vehicles and intelligent connected electric vehicles. It also addresses issues including product overlap and internal channel friction arising from the long-standing shared use of the four-ring mark by Audi’s two Chinese joint ventures with FAW and SAIC. By using trademark licensing as a tool and relying on the identification and goodwill-stratifying functions of trademarks, Audi draws clear positioning boundaries for the two product lines without transferring trademark ownership, offering a notable example of localized and refined trademark asset management.

It is worth noting that whether this licence constitutes a non-exclusive licence, a sole licence or an exclusive licence is governed by the internal commercial agreement between the parties. No relevant filing with CNIPA or official public disclosure is available at present. The type of licence directly defines the scope of rights and enforcement capacity of the licensee, as well as Audi’s room for subsequent adjustments. The binding terms shall ultimately be subject to the signed formal licence contract and CNIPA filing documents.

The public agreements specify that SAIC-Audi may continue selling vehicles bearing the four-ring mark until the end of 2027. This transitional period is designed to properly dispose of existing inventory of four-ring-badged vehicles developed under the prior cooperation framework. Without such a transition clause, continued sales of finished vehicles bearing the four-ring mark after the licensing adjustment would carry trademark infringement risks.

Official statements also confirm stable after-sales service for both four-ring-brand vehicles and new AUDI-brand vehicles sold by SAIC-Audi. A distinction must be drawn regarding the scope of use for different parties. As an authorized Audi partner, SAIC-Audi’s use of the four-ring mark in vehicle maintenance services is based on trademark licensing. Unauthorised third-party repair shops, by contrast, may only rely on the doctrine of nominative fair use.

In judicial practice, third-party auto repair enterprises may, in good faith and within necessary limits, use descriptive language to indicate that they can service Audi vehicles. They must not prominently display the four-ring figurative mark or AUDI word mark as their own service identifier; otherwise, such conduct will fall within the scope of trademark infringement. The reasoning in the case of Audi v. Beijing Zhonghanfangsheng for trademark infringement serves as a useful reference: where a repair shop uses a trademark prominently beyond permissible limits and is likely to cause public confusion, trademark infringement is established.

Audi’s so-called “brand separation” is a division of commercial positioning. Legally speaking, what is divided is trademark usage rights; trademark proprietary rights remain fully vested in Audi AG, and the two concepts must not be conflated.