McDonald's to sue mainland copycats

THE McDonald's group has started a war against copycats in China, targeting cake shops, food stalls and even karaoke bars which sport names and logos which bear remarkable similarity to the hamburger chain's name.

The action would mark the first attempt by overseas operators from the service sector to take legal action against infringement of China's Trademark Law, which was amended to include the service sector last July.

McDonald's registered the group's trademark with the Administration for Industry and Commerce (AIC) in China soon after, and plans to file a complaint with the AIC against its mainland counterfeiters.

Shops displaying names such as Mcdonald's and Modornal were set up by small enterprises in cities such as Xi'an, Shandong, Zhuhai, and Xiamen.

The shops copy the McDonald's style of decor and staff wear similar kinds of uniforms, though some of them might serve anything but hamburgers.

A Chinese law expert said McDonald's would have a strong case because the imitations were ''obvious'', although it might be time-consuming to proceed with the court cases.


Cui Xiaoguang, an attorney at the China Patent Agent (Hong Kong) Ltd (CPA), said McDonald's was a worldwide brand that had already gained special protection under the Paris Convention - a treaty to protect global brand names from copycats - which Beijing signed 10 years ago.

Following McDonald's lead, thousands of businesses selling services in China should be motivated to keep an eye on counterfeiters as they are now able to sue those exploiting their profits.

Counterfeiting appears in every corner of the market and is especially rampant in southern China where the economy has boomed in recent years.

More than 2,000 service sector firms - especially hotels and insurance firms - have rushed to protect their businesses by getting ''serviceMarks'', a trademark for a service registered through CPA, according to CPA general manager Zheng Songyu.


The company recorded about two-thirds of the ''serviceMark'' applicants were from Taiwan and Hong Kong, with others coming from the United States and Europe.

The range of services covered by the trademark law includes advertising, financial services, construction and repair, transportation and storage, material treatment, educational materials and entertainment.


Despite improved legislation to clamp down on piracy, eradicating copycats was proving difficult, Mr Zheng said.

The US administration, for example, has been putting heavy pressure on the mainland to be more committed, and claims piracy is costing US companies US$800 million a year.

Mr Cui recalled an uncomfortable incident which occurred last year.


''I was awoken in the middle of the night when three men claiming to be public security officials told me to open the door of my hotel room. They then messed my things up and went,'' said Mr Cui, adding he had a strong feeling the harassment was related to his investigation of an alleged piracy case.

Tom Hope, chairman of the Intellectual Property Rights (IPR) committee of the American Chamber of Commerce, has also called on the Chinese Government to increase manpower to check against counterfeiting.

He said although legislation on intellectual property had improved, ''things are far from perfect'', adding even court officials in some regions seemed to ignore the law.


Moreover, the huge cost of bringing a case to court had also made the fight against piracy difficult, and this was made worse by the absence of a legally defined minimum amount of compensation.

''It is usually [only] big businesses which can afford to pursue a case [through the court]. Legal proceedings take a long time, which in other words means a huge money cost,'' Mr Zheng said.

He said China had stepped up efforts to settle business disputes by setting up the Intellectual Property Trial Chambers in Beijing, Shanghai, Shenzhen and other locations in Guangdong province.

The efforts were seen as a reaction to Washington's decision to start an investigation by today into China's intellectual property rights situation under the Super 301 trade law, which could lead to sanctions.

An international conference will be held in Beijing on Saturday, to be attended by senior Beijing judicial officials, to discuss intellectual property rights in China.

Meanwhile, the Chinese Government has also approved a project to set up an institute next year in Beijing to train staff to enforce piracy laws in regional authorities.