China is simply a massive market growing at an astounding rate. The appetite for foreign brands and products is developing and evolving with every year.
For many companies China is still considered to be an untapped resource, offering huge potential sales and market share. However, these companies are also wary about doing business here for a number of very good reasons.
The possibility of trademark infringement is one very big reason.
Spot the Difference
Over the years, I’ve seen various trademark infringement cases in China. Some of these include:
- Joint Venture (JV) between a Chinese company and a ‘foreign company’ breaks down and the Chinese company walks away with all the trademarks. This was probably registered/owned by the Chinese JV party and only at the breakdown does it appear how important ownership of this is. Albeit an old story, Danone vs Wahaha stands as an amazing insight in to the complexities of trademark ownership and infringement in JV’s.
(See: Danone vs Wahaha)
- Trademark squatting – 3rd party companies/individuals that are keeping an eye out for products they think will enter the Chinese market and trademarking the names/possible names/future names/logos, etc and then using this to extort money.
(See: Reuters Article)
- Competing companies with similar logo colour schemes and sounding names, seemingly hijacking an established international brand to launch their own business.
(See: Starbucks vs XingBaKe)
- Traditional infringement claims – Companies identifying brands they feel infringe on their own trademark, but it is ruled this is not the case. China works on a first come, first served basis with regards to trademarks.
(See: Dell vs DeEr)
If you haven’t covered all your bases, you may find yourself in your own trademark infringement situation. The entity that owns the trademark can take you to court and attempt to stop you from selling that product/brand under that name in that location. If they are successful in their bid to stop you selling under that name, this will add weight to their case in other jurisdictions.
The following is a simplistic and very basic interpretation of what is going on with Apple’s trademark infringement case for the name “iPad” in China. The thoughts and views expressed here are my personal opinions.
What can we learn from the Apple vs Proview ongoing case?
Mmm... smells expensive.
In the early 2000’s Apple hired a company, Proview Taiwan, to purchase the trademarks for several product names in the Asia area, including in mainland China. I am told the agreement between Apple and Proview Taiwan for this work wasn’t well worded and contained some room for interpretation (some have called this sloppy legal work and poor due diligence).
Proview purchased the trademarks for iPad (amongst other names) on behalf of Apple, sold them to Apple and everyone moved on. Fast-forward a few years and pretty much out of the blue (although there has been rumours of this case for some time) an entity called Proview Shenzhen brings to light that they own the iPad trademark in mainland China and Apple is committing trademark infringement by selling iPad’s under that name. Proview Shenzhen takes Apple to court in Shenzhen and wins, paving the way for further trademark infringement cases against Apple all across the country.
Dave’s ayi turned up today with a brand new phone.
You most likely won’t find this on the shelves at your local Carphone Warehouse.
Apparently Nokia is being designed by Apple in California.
Enjoy the pics, comments welcome!
I was in Xiamen in Fujian province earlier in the year and took a walk along the pedestrian shopping street before enjoying a rare stroll along the nearby beach. I am usually too busy to enjoy the city whenever I go there so this was a treat.
Fake Body Shop in Fujian, China
However on my walk of I came across this little beauty. It’s clearly an unlicensed Body Shop store. The products within appeared genuine and from Hong Kong but all signage and interior design was a cheap and poor imitation mock up of the real thing.
The service staff were all happy to tell me the products came from Hong Kong and in my opinion they looked like they did. While that should be enough to convince me I was about to buy the real thing, I’ve been in China too long to take it at face value. The simple fact of the matter is, if it is not being sold in a licensed store, there is simply no way to be sure.
Mainland China is certainly no stranger to fake stores and products. We have the now infamous fake Apple Stores in Kunming, the fake Toni & Guy Store in Beijing, and believe me I’ve inadvertently cut myself shaving on my fair share of fake Gillette razor blades bought in local shops! Our own customers at Enter the Panda have come to us with real concerns about the IPR of their China-made products.
I was in Shanghai over the National Holiday and while I was there some friends suggested I check out the Shanghai International Carnival. After researching online (http://www.freij.com/news/ecs.aspx) and reading some press releases, I decided to give it a go. Happy Valley in Beijing and Shenzhen, though permanent fixtures, are good fun so logic dictates this carnival couldn’t be that bad.
Ah, logic, I remember you…
The well known cartoon duo "Tom and Garfield"
We found almost no signage from the subway station to the front gate. No people queuing outside for tickets. This should have been a clear indication to turn around and head somewhere else, but as we’d already made the journey, we thought ‘what the hell’ and went in anyway.
Spotted this on the train from TangGu/Tianjin to Beijing.
I should point out though, there are legitimate Chinese language versions of Nat Geo to be found all around China.
Nevertheless, I thought this was a pretty shameless attempt to cash in on an iconic brand and image that another mag has honed and used since 1888.
Paying 'homage' to National Geographic? Pretty sure there's another word for that...
We were walking back from a Summer trade show at the Exhibition Center in downtown Beijing, minutes away from any number of embassies.
Dave, who used to live on this street 9 years previous, was harping on about “the good old days”. This would have been endearing if he hadn’t spent the entire walk on the way to the trade show talking in the exact same manner.
Needless to say, I was no longer listening, and instead glancing the surrounding area for anything more interesting than a description of a jiaozi restaurant that sold Dave dumplings in 2002. Up ahead, a sign leaped out at me… “England Hair Design Salon”
On closer inspection, the interior and uniforms were not dissimilar to the few genuine Toni and Guy Studios that are in high-end venues within the city. On the glass window ran a ticker “www.toniguyhair.com”. A little bit of 3G later revealed it was a non-existent website.
It’s probably just as well this was a fake Toni & Guy, because I don’t think the franchise would appreciate their staff all sitting outside the salon, gambling and smoking.
Protecting your IPR with small and large factories alike is always an issue in China. You can be assured that most of these factories only do business with foreign entities and foreign markets but a sample of your product will more than likely end up in their showroom as an example of their work.
There are no strong legal frameworks as yet in China to protect your brand from being picked up by others and produced by the factory for sale in other territories and markets. We have all heard stories of similar SME produced products being sold under a different brand in another country unbeknownst to the original purchaser/customer. It is your brand, your design and it should remain in your hands which territories your designs and products go to. You need to stay in control of all relevant production documentation in order to prevent this.
A good working relationship with the production facility can help build trust and confidence. However there is still nothing stopping your product from ‘falling off the back of a truck’ or leaving through the back door. In this case, the saying ‘imitation is the best form of flattery’ is untrue. You want to be in control of your product and brand development and it’s no-one else’s place to take your designs.
As mentioned in previous articles there is no strong legal framework yet in China to protect you from copyright infringement, especially if it is a new market product. Getting components made in several different places and assembled in another is a solution many adopt but this can get very expensive.
An NDA doesn’t hold strong between an International client and a Chinese supplier but having one certainly doesn’t hurt. Having a 3rd party representing you on the ground in China looking out for your product and brand, applying pressure on the manufacturer and supplier to keep your product trade secrets under wraps can help eliminate and reduce the chances of copyright infringement.
For more information on protecting your brand and products, visit our official website for a free sourcing and IPR protection quote.