What Are the Problems for Global Brands on Trademark Protection in China?

By Zhang Yazhou, Partner of Unitelen Law Firm,[Trademark]

Dominic Murphy , a trademark a t torney at Withers & Rogers L L P published an article named Enforcing Trade Mark Rights in China is Still A Challenge. He stated his opinion at the beginning of this article, saying: “One year on since new trade mark laws took effect in China and there is little evidence to show, it is becoming any easier for global brands to enforce their r ights in the country. ” Then an example of the French wine company, Castel, being hit with a 5 million USD fine for trademark infringement, was given to support his statement.

The verdict of New Balance case was not delivered yet when Mr.

Murphy wrote the article above, if he knew the compensation of the New Balance case reached 98 million RMB (15 million USD), he would have more emotional thoughts.

Besides the two cases above, other trademark disputes which global brands encountered in China, such as TESLA and iPad, show that their trademark right situation in China is hazardous.

Because though these global brands perform well on their business expansion in China, they are always embarrassed by their trademarks, which in turn influence their marketperformance to some extent.

Why did this happen? Is the IP protection in China slip backwards? For global brands, is this the best or the worst era? As an IP practitioner who witness the protection, we try to trace the origins. It is hard to believe that these cases could happen on global brands, since as the origin of IP, the IP protection framework of western countries seems almost flawless in many people’s minds. Like Mr. Murphy said in his article, the trademark protection system in China does make global brands meet pitfalls.

However, if we have a second thought and probe in to the problem in a neutral position, we can get a different answer. In fact, many global brands should have self-examination on their trademark protection in China.

The first and foremost reflection is localization, i.e. their Chinese names. Many disputes occurred related to this factor. Normally, most of the global brands have Chinese names, which are used in the Chinese media reports and meet the needs of Chinese customs in information receiving.

For example, BENZ, STARBUCKS, SAMSUNG and LOUISVUITTON all have their Chinese names accordingly. You may say that IBM works well without any Chinese name, but after all it is a minority.

Localization of global brands can be achieved through two approaches, firstly, global brands choose Chinese names on their initiatives to meet the needs of promotion in the Chinese market; secondly, the Chinese media give a particular Chinese name to a global brand in reports, other media follow the suit afterwards.

In the course of time, the public had accepted the particular Chinese name to refer to a certain global brand. If the global brand applies trademark for the particular Chinese name given by the media, it can be protected as an IP asset. Actually, most of the disputes occur in the second situation. Take the Wei Ge case as an example, which had attracted much attention years ago. The drug giant Pfizer sold its antiimpotence drug Viagra in China, the Chinese mass media used “Wei Ge” (伟哥), which sounds similar to Viagra in Chinese and literally translated as “great man”, to refer to Viagra. However, Pfizer refused to use this particular Chinese name “Wei Ge” g i ven by the media. Then a Chinese company registered “Wei Ge” trademark for its own anti-impotence drug.

Pfizer field objection over the trademark registration of “Wei Ge” of the Chinese company, but failed in the end. Afterwards, “Wan Ai Ke” (万艾可) is used as Viagra’s official Chinese name. “Suo Ai” (索爱), the Chinese trademark of Sony Ericsson also encountered the same problem.

In fact, most of the trademark disputes occur due to the second situation, mainly because many global brands have doubts on the particular Chinese name given by others through long time use. There are several reasons, normally global brands wish to use the Chinese names given by themselves, while in the second situation, they are more likely tobe forced to accept the particular Chinese name. It is easy t o accept if the particular name is appropriate, however, if the name cannot convey the connotation of the brand and sometimes even contains negative meanings, naturally the global brands would refuse to use it . Under such circumstance, global brands might miss the legal protection opportunity to a particular Chinese name given by others.

Therefore, it will be placed in an awkward position if the particular Chinese name is registered by others. What more unfortunate is, even though the global brand does not approve or is even reluctant to use a particular Chinese name given by others, it uses the name in its business events, which has brought potential troubles in the IP protection in the future.

We can’t force the global brands to accept the particular Chinese name given by others, however, from their frequent occurred trademark disputes, appa rently they do need to reflect and improve in some aspects. For example , ( 1 ) if a global brand does not approve a particular Chinese name given by others at the very start, it needs to take active interference accordingly, promptly promotes the name chosen by themselves and uses it along with the brand.

Meanwhile, it is needed to make clarification to the public, states the difference between the particular name given by others and the name they had chosen.

After a while, the particular name given by others will be replaced by the name they had choosen.

Under such circumstance, if the public have already knew the difference, there is no value of the particular name even it is registered by others. (2)To avoid unnecessary disputes, once the global brand notices a particular Chinese name given by others, it can register the name promptly though it does not acknowledge the name. This can prevent others from using the particular Chinese name. The global brand can have a second thought on whether it will use the name or not in future.

(3) If the global brand does not take the two actions above, at least i t should avoid having connections with the particular Chinese name regist e red by others in their business events, especially reminds the marketing and planning departments of the company, to prevent legal disputes. (4) If the particular Chinese name is registered by others, the global brand can pay to get the trademark right. For example, Apple Inc. purchased the iPhone trademark from Hanwang Technology at a price of 3.65 millions USD. However, global brand should not make the same mistake that Apple Inc. had made over the iPad trademark. (5) If the above-mentions methods do not work well, the global brands should change the Chinese names.

I f keeping use the particular Chinese name given by others, it will end in a failure. (6) Though many global brands monitor the the trademark protection status of their target markets, there is still one aspect they might miss, which is how the local media and the public use their own language to refer to the global brands. Now the importance of the information on this aspect become prominent.

Observing from an opposite angle, what the global brands have experienced during their markets expansion in other countries have reference significance to the Chinese brands on their way of going global.
(Translated by Emily Tan)

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