China Trademark Squatting

Interesting article in today’s Daily Telegraph, by the Telegraph’s Beijing correspondent, Malcolm Moore. The article is entitled, Asda in China? That’ll be Mr Liu in Shenzhen: The Chinese love for Western consumer brands is well known, and it is on UK companies that have had trouble with “trademark squatters” in China. The article focuses on British companies that have had “their” trademarks registered in China by Chinese individuals or companies. I am quoted fairly extensively in it.

Before I talk about the article itself, I want to first set out the basic trademark laws/rules for China:

  • China is a first to register country. What this means is that the first to register a trademark in a particular class generally gets it. England (and the United States), by contrast, is a first to use country. This means that the first to use a trademark generally gets it.
  • If someone in China registers “your” trademark in bad faith or if someone in China registers “your” trademark and your trademark is a well-known brand, you can go to the Trademark Review and Administrative Board (TRAB) or to a court to get the trademark revoked.
  • It is very difficult and expensive to prevail on a bad faith trademark claim.
  • It is very difficult and expensive to prevail on a well-known brand claim. If you do actually have a well-known brand, nobody else can use that brand in China in any class. What this means is that if you are Starbucks, nobody can legally use the Starbucks name on anything, be it coffee or t-shirts.
  • If you do not have a well-known brand and you register your brand as a trademark in the trademark class that includes coffee, everyone is pretty much free to use your brand as their own brand on t-shirts or computers, etc.

The article begins by discussing how a bunch of “High Street names are being registered by Chinese individuals in droves.”

Stalwarts of the retail industry such as Sainsbury’s and John Lewis have had their names registered in China, potentially posing problems should they ever choose to take their brands to the Asian powerhouse.

The Hangzhou Buluna Garment & Accessories company owns the “Sainsbury’s” name. When contacted the Hangzhou company declined to comment.

Sainsbury’s also kept quiet when asked about third parties registering its trademark, but did say that it began registering its trademarkets in China several years ago to support growth plans.

In the southern city of Shenzhen, a man named Liu Mingxi has the right to produce garments, shoes and belts under the “Asda” label until 2018.

John Lewis and Waitrose are registered to the Li Can International Investment company while Dixons, together with its Chinese name Di Ke Xun, is owned by the Shenzhen Basicom Electronics company, which makes 10m mobile phones a year. Dixons declined to comment, while John Lewis said the business constantly keeps its trademark and brand protection strategies under review.

Neither is fashion retailer TopShop immune. In July 2009, a man named Zhuo Hongxiang, who lives in a village in Fujian province, registered the Topshop trademark for selling stereo equipment, cameras, lenses and glassware. He owns the name until 2019.

TopShop insisted the registration of its trademark for cameras was not an issue and that it owns its name in China for fashion purposes. Arcadia, the group that owns TopShop, works with its local attorneys internationally to ensure it has appropriate protection.

The article then talks about how Hermes and Chivas failed to prove that they were well-known brands when someone else registered their names in China. Both Hermes and Chivas lost because they were not able to prove that their marks were famous in China when the Chinese companies/individuals secured them.

If you take away nothing else from this post, please take away that it is very difficult to show that your brand is a well-known mark in China and registering your trademark in China is nearly always going to be by far your cheapest and best approach. About all I can tell you is that the international trademark attorneys at my law firm have never once been so confident of a client’s having a well-known brand as to rely on that for not registering that brand as a trademark in China.

The article then quotes me on how it is that these British companies might have gotten themselves into trademark trouble in China:

“Too many companies were told not to bother registering their trademarks because China does not enforce its laws,” said Dan Harris, a lawyer at Harris Bricken, an American firm specializing in China. “Many others were told nothing at all.”

I then am quoted about how difficult it is to get “your” brand back from China once it has been “taken”:

In fact, China strictly enforces trademarks, in favor of whomever has registered them first. And Chinese courts look dimly on Western companies who complain their brand has been registered by another party in “bad faith”.  Mr Harris said: “The cheapest and easiest thing to do if your brand has been hijacked is to set up in China under a new brand.

“When you call up the Chinese party, they think they have won the lottery. They ask for a million dollars. We never call up, because if it comes from an American law firm the price is two million”.

The article concludes with a few somewhat humorous examples of Chinese trademark squatting:

Nor are companies the only victims. The Chinese and English names of ITV’s The X Factor and BBC’s Strictly Come Dancing are owned by Chinese individuals, as is the generic name “Savile Row”. In Guangzhou, someone owns the rights to “Justin Bieber” while a Shanghai company owns the rights to “Angry Birds”. A spokesman for the BBC said it was not aware of the Strictly registration.

Bottom Line: 
Way back in 2007, in China Trademarks — Do You Feel Lucky? Do You? we made clear the need to file your trademark in China at your earliest opportunity:

Our advice to all our clients is to register their trademarks in China before they go there. China is a first to register country and this means that whoever registers the trademark first gets it. Yes, there is an exception for famous trademarks, but unless you are Coca-Cola, it is lunacy to bank on a Chinese court holding your trademark is famous when just going ahead and registering it costs so little. Most firms charge less than $5,000 for this. So even if the Chinese Court rules your trademark is famous, you will almost certainly have spent well over $5,000 in making your case.

Nothing has changed…