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Reputation alone does not secure trade mark

By Western Morning News  |  Posted: December 06, 2012

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In Tang Dynasty China, the Emperor heaped riches and titles on the family of his favourite concubine, and parents wasted no time in grooming their daughters for the imperial harem. Cue the 21st century; the phenomenal international success of piano prodigy Lang Lang has inspired over 35 million children to learn classical piano in China – the "Lang Lang effect".

The Chinese have always been quick to recognise when a new profit making strategy presents itself. One such strategy was revealed in the high-profile IPAD trade mark case brought against Apple.

The Chinese electronics group Proview registered (in good faith) the trade mark "IPAD" in China. In 2009 they were approached by an unknown SPV company that purchased the registration from them for £35,000. It then transpired that the company was part of Apple, Inc, acquiring IP rights on its behalf. In 2010 Apple announced the launch of the iPad, having satisfied itself that all the necessary rights had been brought under control – or so it thought. In fact, the company in Proview's group that actually owned the registration was not a party to the transfer agreement. Therefore the mark had not been effectively acquired by Apple. Proview ended up with a legitimate infringement case against Apple and its distributors in China for using the IPAD trade mark.

Proview was granted an injunction preventing Apple's main local chain store from selling iPad products. It then took on the US giant in the Chinese courts and in a separate US bad faith case over Apple's ploy in using the SPV to negotiate the deal. The case settled earlier this year: Apple paid US$60 million to Proview.

The media impact of this case in China has been huge. In the history of China's chequered relationship with IP, infringement cases have almost always been brought by a Western brand-owner against a Chinese counterfeiter. This was a case brought by a Chinese company against one of the biggest Western brands. It is too early to tell whether the landmark case will unleash an onslaught of opportunistic trade mark applications.

In any event, if you are a business trading internationally, prompt action is crucial to secure trade mark rights in China. Unlike in the US and EU, China's trade mark laws do not recognise unregistered trade mark rights based on long-use or reputation; trade mark application is on a "first-come-first-served" basis and once completed, the grounds to challenge a registration is limited.

However, do not be surprised if your trade mark has already been "hijacked" by your distributor, reseller, manufacturer or a totally unknown entity. It is a complex problem with no simple answer, and a bespoke approach has to be taken for each case.

This is perhaps the price that has to be paid when trading with a culture and business practices that are sometimes at odds with what we are familiar with. It will take more than Lang Lang's nimble fingers to work our way through.

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