From manufacturing to exports and domestic sales, China’s influence is global.
The issue of intellectual property rights in China affects brands of all sizes, and examples of intellectual property protection cases in China are interesting to follow.
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As a business, registering a trademark in China is just the beginning. Then comes enforcement. Online and offline, in the digital space and in courts.
Chinese courts see increasing litigation. International companies file lawsuits at Chinese courts to protect their intellectual property rights, and Chinese companies are doing the same.
More Chinese companies now sue foreign companies, although it is overwhelmingly the other way around. As Chinese companies realize the power of IP, more of them use it.
The increase of litigation by Chinese businesses is most likely due to Chinese companies owning more intellectual property rights, together with Chinese legislation aimed at protecting intellectual property.
A 2021 amendment to the Chinese Criminal Law determines that counterfeiters can face imprisonment and fines. Recent revisions in trademark, copyright and patent laws encourage businesses to turn to the courts.
Plaintiffs can now get rulings for increased actual damages as well as punitive damages in specific circumstances.
Looking at recent court judgments can offer insights into the current IP landscape in China.
In 2021, a court in China sentenced 69 defendants for the crime of counterfeiting trademarks and selling counterfeit goods.
The counterfeiters targeted international luxury brands with registered trademarks, including Chanel, Gucci, Dior, Fendi, and others. The court found that the defendants purchased genuine fashion and then imitated the items in mass production.
The criminal network involved designers, inspectors, salespeople and more. The defendants were sentenced to imprisonment and fines of up to 11.7 million RMB (~1.8 million USD).
Another series of cases involved counterfeit designer jewelry. Defendants were found guilty of manufacturing fake Cartier, Van Cleef, and other brands.
They then sold the goods through online stores on Taobao (Chinese online shopping platform) and direct social sales using WeChat (Chinese instant messaging, social media and mobile payment app).
The court found the defendants guilty of counterfeiting as well as harming the brand reputation and the interests of consumers.
From luxury goods to fine wine, China has become a major wine market that is also rife with counterfeiting.
Last year, Bordeaux collective brand won a victory against a counterfeiter in China. The defendant in the criminal case has counterfeited Bordeaux wines and showcased them at a wine fair in China.
Similarity of trademarks cases
Trademark law is based on distinctiveness. To protect trademarks and prevent consumer confusion, it does not allow similar trademarks in the same category of goods.
When businesses have disagreements regarding their trademarks, courts are called to make the decision. The issue of the likelihood of confusion takes priority, but there are also other factors to consider.
Courts also weigh issues such as the degree of the reputation of a trademark and coexisting agreements.
In a recent case, the Beijing High People’s Court made a final judgment in a trademark dispute between U.S. based John Deere and Shandong Kaisideer Agriculture Equipment Co., Ltd. after the Chinese company registered the trademark ZHONGCEDEER.
John Deere requested the invalidation of the trademark based on its registered trademarks “DEERE” and “JOHN DEERE” used for the same or similar goods. Kaisideer maintained the trademarks can coexist. The court decided to invalidate the Kaisideer trademark.
Another interesting case involved likelihood of confusion and coexistence of similar trademarks. Car manufacturer VOLVO applied for invalidation of the trademark VOVO. The Chinese courts discussed the similarity of trademarks.
But in this case, they also considered the popularity of the VOLVO trademark. The reason is that brand recognition and a high level of reputation can affect the likelihood of confusion.
The VOVO trademark was filed in a class unrelated to automobiles. The Beijing IP Court ruled that the high reputation vehicles will not be confused with other, unrelated, goods.
It also considered the difference in visual effect looking at the design of the trademark (VOVO) in comparison to the Volvo trademarks design: and
The Beijing High Court overturned the decision and ruled that there is a likelihood of confusion and invalidated the confusing trademark.
China’s Trademark Law says (Article 13) that if there is a well-known trademark that is not registered in China but using it may cause consumer confusion, then it cannot be registered.
Additionally, when a trademark is well-known, its reputation can extend protection to other categories of goods.
Two recent cases involved famous car manufacturers Rolls Royce and Volkswagen.
Rolls Royce objected to a trademark which was the transliteration of its name in Chinese, despite the fact it was registered in a class of goods unrelated to automobiles. The Beijing High Court maintained the invalidation of the trademark as requested by Rolls Royce.
Car manufacturer Volkswagen has been known in China as “Da Zhong.” According to the company’s website, the name roughly translates as a car for the masses. Every Volkswagen built in China has that name inscribed on it.
When Volkswagen found out another company registered this name in another class of goods, it requested the invalidation of the trademark.
The court ruled that since the mark is well-known, it may mislead consumers to believe that the businesses are associated. It granted the company cross-category protection.
Another case involving well-known trademarks involved Gillette, this time enabling a brand to register a potentially confusing trademark.
Gillette applied for trademark registration of MACH 3 application for shaving lotion.
However, a prior trademark, “Mach & device”, was already registered. The Beijing High Court relied on Gillette’s reputation for razors and allowed the registration of MACH 3, saying it is not likely to create confusion.
IPR protection of shape
Hennesy is a famous cognac producer.
The brand protects the shape of its wine bottles as a way to identify the source of goods.
Hennessy found that several producers were using bottles identical to the Hennessy Paradise Bottle. As part of its intellectual property strategy, Hennessy filed for protection of its intellectual property. The bottle gained protection from infringements.
Name intellectual property protection
Basketball is highly popular in China. A 2018 report by China’s Tencent, the tech and entertainment giant, put it in numbers.
According to the report, 625 million people call themselves basketball fans, out of which 143 million declare themselves “hardcore” fans. And with great popularity comes high name recognition. Followed by intellectual property issues.
The first American basketball player of Chinese or Taiwanese descent to have been drafted in the NBA is Jeremy Shu-How Lin.
Lin found that someone registered his name as a trademark in Class 25 (Clothing, footwear, headgear) without his authorization. Lin applied for the invalidation of the mark.
In court, he proved that at the time of registration, his name was already known in China. The trademark was invalidated and the decision was upheld by the Beijing High Court.
Another basketball player sought to protect his name. Michael Jordan has found out the transliteration of his name, Qiaodan, was registered in China.
By the time Michael Jordan took action, the name has been registered for more than the 5-year time limit for invalidation. As a result, it was now irrevocable.
Michael Jordan initiated legal proceedings. By the end of 2020, the court ruled in his favor. As for the trademarks that exceeded the 5-year time limit, the court had to find another solution.
It ordered that when using that name, Qiaodan must indicate that the goods are unrelated to Michael Jordan.
Stop exportation of infringing goods
In a recent case, the Supreme Court of China ruled regarding the exportation of counterfeit or infringing products from China.
The court held that a rights owner has the right to request customs to stop counterfeit or infringing products from leaving China to other markets, even if he has not sold those products in China.
Honda Motor Co. is a manufacturer with trademark registration in China.
It also recorded its HONDA trademark with China Customs for automobiles and parts. Therefore, when China Customs found motorcycle parts that were being exported from China under the mark HONDAKIT, it stopped the shipment.
In court, the manufacturer of the HONDAKIT claimed that he was shipping the parts to Myanmar where the exporting company registered the mark HONDAKIT.
The Supreme Court of China held that foreign registrations cannot protect against trademark registrations in China, and banned the exportation of parts.
Wiser online brand protection in China
Counterfeiting and other forms of trademark infringement have been exacerbated by the growth in e-commerce. China, in particular, has an enormous counterfeiting market.
As evident from recent cases in China courts, sometimes a lawsuit is the right brand protection strategy. But not always. Lawsuits are usually lengthy and expensive.
Online brand protection services can alert your business in time or provide online brand protection that often eliminates the need to file a lawsuit altogether.
Wiser Market is an online brand protection agency. We believe that being vigilant about IP protection means continuous monitoring of online channels and activity detection, followed by proactive enforcement to deter abusers and protect your brand and reputation.
We offer a digital brand protection strategy that includes 24/7/365 worldwide brand monitoring.
Our innovative system scans online channels, including Chinese websites, marketplaces, social commerce networks unique to China, and other platforms to detect IP infringements and enforce your IP rights.
Our team of experts has extensive knowledge and works closely with you to offer ways to protect your brand. Enforcement makes your trademark stronger and helps secure your brand and revenue in the booming online Chinese market.
With Wiser Market, your brand will have a comprehensive IP protection solution, allowing you to focus on growing your business.
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