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Previously seen primarily as a low-cost manufacturing base, China has become an increasingly important consumer market for brands around the world. However the country’s reputation for enforcing intellectual property rights has been repeatedly questioned, although recent cases suggest this may be changing.
In December 2016, basketball star Michael Jordan won the rights to the Chinese translation of his surname following a four year battle with Chinese sportswear manufacturer, Qiaodan Sports. Jordan’s surname, which translates as “乔丹”, was registered as a trade mark by Qiaodan Sports in 2007 and has been used across a wide range of sports merchandise. Jordan sued the Chinese company in 2012, claiming that the use of his name was misleading to Chinese consumers.
The trade mark registration had initially been upheld before China’s highest court overturned those decisions last month. The Supreme People’s Court of China found that “乔丹” had become the customary way of referring to Michael Jordan in China; that although the trademark “乔丹” had built up significant public awareness, the public may still be misled into thinking that Michael Jordan was associated with the owner of the trade mark; and that the applicant registered the trade mark with the intent of capitalising on the fame of Michael Jordan.
This decision sets a significant precedent that intellectual property rights will be enforced in China. However, it is still only a small victory for Jordan, as Qiaodan Sports are still able to use the Romanised spelling of Jordan, “Qiaodan”. Qiaodan Sports also have numerous other trade marks relating to Jordan and Air Jordan which they succeeded in filing before Jordan or Nike and which have gone past the five-year invalidation period.
The issue of “trade mark squatters”, whereby a company or individual registers your trade mark in a country before you are ready to expand into one of those markets, is prevalent in countries where a first-to-file system operates, such as China.
Australian wine brand, Treasury Wine Estates, successfully won a case this month in China against a trade mark squatter who had registered the “Ben Fu” trademark, a Chinese translation of its flagship Penfolds brand. The High People’s Court in China found that the trade mark should be cancelled because the registered holder failed to show genuine use of the trade mark for wine or related activities.
This case demonstrates a shift in attitudes in the Chinese courts, particularly when we consider that wine brand Castel lost their trade mark case against the same trade mark squatter in 2013, which suggests that changes in 2014 to strengthen trade mark law in line with international standards are having an effect.
UK businesses can learn from these cases. Firstly, both of these cases were influenced by the reputation that preceded Jordan and Pentland in China. Jordan written as “乔丹” had been in the news since the 1980s and Pentland had been known as “Ben Fu” in China for over 20 years. Their prior reputation went in their favour and new market entrants are highly unlikely to be afforded the same level of protection. It therefore makes it even more important for new entrants to the market to file their trade marks in China at the earliest possible stage.
China’s first-to-file system means that if you wait to establish a brand in Europe or the US before entering the Chinese market, your brand may have been registered by a third party, preventing you from entering the market. It is therefore advisable for businesses to use the “priority period” after you register a trade mark in one territory, say the UK or EU, to file your trade mark in China if this is going to be a key market.
Once you have registered your trade marks, the outcome of these cases demonstrates that it is increasingly possible to enforce your intellectual property in the Chinese courts.
If you would like advice on seeking trade mark protection in China, please get in touch with one of our attorneys who will be happy to advise you.