Lessons from Donald Trump and Michael Jordan on the dos and don’ts of trademarks in China
Despite having no business interests in the country, Trump has registered more than 100 trademarks early and in a wide variety of fields, allowing him to avoid the kinds of problems that basketball player Michael Jordan and others have faced
Basketball star Michael Jordan is having trouble with it, as has Apple in the past. But Donald Trump has not.
Trademark and intellectual property protection in China has been a thorny issue for foreign companies and brands in recent years, and has particularly raised the hackles of US politicians, who have publicly berated China on the issue. Last month the US formally began an investigation into what it said was China’s theft of US intellectual property.
But as China begins a four-month campaign to protect the intellectual property rights of foreign businesses, hopes have been raised that foreign firms will get fair treatment when facing rights disputes.
In the meantime, lawyers said, companies can take measures of their own to give themselves as much protection as possible.
“The best way for a foreign firm to win or avoid a trademark dispute is to register its brands as soon as possible even before it has plans to enter the China market,” said Jiang Fengtao, partner at the Beijing-based Heng Du Law Firm.
In this they can follow the example of US President Donald Trump, who has quietly registered at least 123 trademarks under his name in China, where he does not have any business operations.
According to Chinese records, Trump has registered his brand under categories ranging from spas, massage services, hotels, finance and real estate companies to restaurants, bars and even social escorts.
Registering early and widely is, lawyers said, a textbook example of how a foreign firm can protect its brand in a country dubbed “a haven for trademark infringement” by Alan Garten, one of Trump’s lawyers.
“You have to register under as many categories as possible,” said Charles Feng, partner at law firm East & Concord partners. “This is a very unfortunate fact, but if you don’t do so, you might pay a bigger price later.”
Most companies would want to avoid disputes like the one that former Chicago Bulls basketball star Michael Jordan has been embroiled in for some five years.
In 2012, Jordan filed lawsuits against a Chinese sportswear company firm Qiaodan, whose name is pronounced “chee-ow-dan,” in Mandarin and is equivalent to the commonly used Chinese transliteration for Jordan.
Jordan finally won the rights to his own name transliterated into Chinese and written in Chinese characters in 2016, but the Chinese court which heard the case allowed Qiaodan to continue to use the name written in the Roman alphabet.
And in a final twist to the saga, Qiaodan sued Jordan in July, accusing him and his legal associates of defamation. A decision in that case is still pending.
There are plenty of other examples of the perils of Chinese trademarking for foreign firms.
Last year Apple lost a lawsuit against a Chinese leather craftsman who had registered “iPhone” as a trademark for goods including handbags and wallets.
In another high-profile case, there was victory for British carmaker Jaguar Land Rover after a decade-long dispute with Chinese carmaker Geely, which had registered the Chinese transliteration of Land Rover, or Luhu, hampering Jaguar’s attempt to use the name when it entered the China market. Jaguar finally won the rights to its Chinese name from Geely in 2015.
And sports shoe maker New Balance was awarded US$1.5 million in damages in August in case over the use of its “N” logo. A court in the eastern city of Suzhou ruled that three Chinese companies who made shoes under the brand name New Boom which featured the “N” logo had “acted in concert to infringe” the rights of the US firm.
China receives the most trademark applications globally, accounting for a third of all trademark filings, according to the State Administration for Industry and Commerce.
The major difference between China’s trademark law and that of the US is that China adopts a “first to file” criteria in registering a brand, while it is “first to use” for companies in the US.
This means a brand, even one as recognisable as iPhone, could lose a trademark dispute to a squatter only because the other party registered the brand earlier in China.
Under China’s current legal system, there are two parallel institutions that are critical for deciding companies’ trademark ownership: the Trademark Office and the China Trademark Review and Adjudication Board. The former mainly approves applications of companies to register brands, the latter works more as an advisory board that rules on trademark disputes.
An application for a trademark will be reviewed by the Trademark Office and then published on its website for a three-month consultation period, during which time objections may be filed. The trademark becomes valid if no objections are made in that time.
While objections can be filed even after the trademark becomes official, lawyers advise doing so during the three-month consultation window.
“You have to raise objections once you find out that someone else has applied to register your brand,” said East & Concord’s Feng.
When raising disputes to the two authorities, evidence of the actual and massive use of the brand in dispute in China by the plaintiff is crucial in most cases, said Liao Fei, partner at international law firm King & Wood Mallesons.
“You could not simply rely on a sole source for your brand to win the dispute,” said Liao. “There has to be lots of public evidence of the use of the brand by your company to prove the awareness of your brand.”
In Jaguar Land Rover’s case, court documents showed that the large number of reports in British newspapers mentioning the company’s Chinese name helped it win.
East & Concord’s Feng noted that there is a shift under way in how IP cases are handled that will make it less of a burden for those bringing a lawsuit.
“Previously, the cost of defending one’s brand was higher than that of infringing others’ trademarks, ” he said. “This situation is changing.”