Brands from luxury leader Burberry to Pfizer and its erectile
dysfunction drug Viagra have been caught up in trademark battles in
China. Even Apple had to pay $60 million to a company called
Proview International in 2012 for the right to use the iPad
trademark in China.
Here's a few takeaways on what Western brands have been getting
wrong.
Filing first is important. With a few
exceptions, China's trademark system generally gives priority to
whoever filed for the trademark first. In the U.S., by contrast,
the system favors the person who uses the mark in business first.
It's basic, but it's proved a headache for brands that assume they
should have the rights in China because they're famous
elsewhere.
"Look at some of the sums involved – we're talking about
$1,000 to file an application in China, more or less -- it's an
obvious thing to do when you look at the potential downside risk,"
said Edward Chatterton, a partner in the DLA Piper China
practice.
If you launch a legal challenge, don't delay.
Other celebs, including past NBA stars Allen Iverson and Yao Ming,
have successfully fought cases involving naming rights in China. So
why not Mr. Jordan? They logged their legal challenges relatively
quickly; he didn't. Qiaodan Sports was established in 2000. Mr.
Jordan filed his case in 2012.
"It gave the opponent time to establish a brand, to invest
heavily in advertising, to establish a large network of about 6,000
retail stores," Mr. Chatterton said. "Courts generally do not like
to disrupt the existing market order." And today, he added, "when
you say 'Qiaodan' people will think of the sports store as much as
they think of the basketball star."
![]()
You need a Chinese brand name, and don't forget to
register it. Pfizer's Viagra didn't register a Chinese
name early enough. It wound up losing a long legal standoff with a
local company that had laid claim to the Chinese name that
everybody was already using for Viagra. A delay in registering a
Chinese name also led to troubles for Hermes, which tried
unsuccessfully in court to tackle a local brand with a similar
moniker in Chinese.
"If you are selling products in China, or planning to do so,
there's almost certainly going to be a Chinese version of your
name, and if you don't come up with it, someone else will," said
Matthew Dresden, an attorney at China-focused firm Harris Moure.
"The question is, A, do you want to pick your name or want someone
else to pick it? And B, do you want to own it or do you want
someone else to own it?"
Ignore the rules at your own risk In April, a
court in Guangzhou ordered New Balance's affiliate in China to pay
nearly $16 million in compensation to a Chinese shoe manufacturer
who had registered a trademark for the Chinese brand name it was
using, "Xin Bai Lun."
New Balance had unsuccessfully challenged the Xin Bai Lun mark
before, and it "knew very well that others had registered it
previously, but it kept on operating under that particular mark,"
said Alan Chiu, a partner at Hogan Lovells who specializes in IP
litigation and enforcement in Greater China. "That's why the court
concluded that New Balance committed malicious trademark
infringement and ordered such a high amount of damages, taking into
account the extensive sales of New Balance shoes in China."
It's another reminder, he said, of why brands need a
comprehensive China IP strategy before even entering the
country.
