THE ASIA PAC DIGITAL MARKETING& TLD STRATEGY CONGRESS:

PROTECTING BRAND NAMES IN CHINA

BY DAVID L. KREIDER, ESQ.15 MAY, HONG KONG

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TRAPS FOR THE UNWARY

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CHINA TRADEMARK LAWThe Trademark Law of the People’s Republic of China provides in Article 11 paragraph 1:

“None of the following marks may be registered as trademarks:

1. where the mark bears only the generic name, design, or model number of the goods concerned;

2. where it just directly indicates the quality, principal raw materials, function, use, weight, quantity or other features of the goods; and3. where distinctive characteristics are lacking.”

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ORION’S “HEY, POTATO” SNACKSOrion filed the cheerful name “ 呀，土豆” for trademark registration of potato slices and French fried goods in 2005 and 2006.

The China Trademark Office refused both registrations.

In 2010, Orion submitted another application that was refused.

Orion then sought review by the Trademark Review and Adjudication Board (“TRAB”), which directed that the registration be permitted.

What was the problem?

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“DISTINCTIVENESS”In “ 呀，土豆” , the word “ 土豆”， meaning potato, directly indicates the main raw material of the product.

“ 呀 !” is an exclamation or interjection and acquires very weak distinctiveness.

In this case, on an overall impression, the brand name “ 呀，土豆” just directly indicates the main raw material of the product. The mark lacks “distinctiveness” under Article 11, paragraph 1.

It seems clear that the mark can imply or suggest, so long as it does not directly indicate the raw materials used or other features of the products, without other distinctive features.

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A FEW FAVORITES,THAT GOT IT RIGHT!

可口可樂 “delicious” “enjoyment”

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PROCTER & GAMBLE

宝 洁 “precious” “cleanliness”

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MICROSOFT’S BING SEARCH ENGINEIn late 2009, Bing decided to have a Chinese name to show that they valued the Chinese market and to help localize their brand.

When pronounced in Chinese, Bing is very negative and has the same sound as 毛病 , which means a fault, mistake, or defect, as well as 病毒 , meaning a virus.

The English name sounds Chinese to begin with, and if not translated carefully, it could have many poor connotations.

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MICROSOFT’S SOLUTIONThe Chinese name chosen by Microsoft, “ 必应” has an agreeable connotation in Chinese. “ 必” means will, definitely, without fail, and “ 应” means respond or comply.

The two characters together express the meaning that the search engine will generate a response without fail.

“ 必应” is part of “ 有求必应” , a familiar Chinese phrase, meaning “your every request will be satisfied”.

“ 必赢” which means “must win for certain”, sounds similar to “ 必应” , but which is pronounced with a different tone, would have been a well chosen alternative.

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OTHERS LEARNED HARD LESSONS

星巴克

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SHANGHAI “STARBUCKS” COFFEE SHOP

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STARBUCKS COFFEE1. The English language Starbucks name and marks first

registered in China in 1996. More than 30 related products were registered in 1997.

2. The registration process for the Chinese name was not commenced in P.R. China until 1998.

3. The Company advertised and opened stores with the English and Chinese names in Beijing in January 1999, but did not register the names in China until 28 December 1999.

4. While its Chinese TM was pending approval, the Defendants registered Starbuck’s Chinese name as their own corporate name. On March 9, 2000, Shanghai Xing Bake Coffee, Ltd. was incorporated.

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THE STORY ENDS WELL …The Shanghai Intermediate People’s Court held that the pre-registration of corporate name constituted subjective bad faith and unfair competition. The Supreme People’s Court later affirmed.

The President of the Defendant company had acknowledged to a major Chinese newspaper in 2003 that the trademark and name 星巴克 was “very famous and successful”, so he decided to race Starbucks to register the corporate name in China.

The Court found that the graphic elements used by the Defendant had generated confusion with the “STARBUCKS” mark and other registered trademarks.

Arguably, only the hubris of the Defendant’s President resulted in Starbuck’s legal victory.

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LESSONS TO BE LEARNEDChina is a “first to register, first to be served” jurisdiction.

Register your trademarks in both English and Chinese and do it early if you think you may ever want to sell into the Chinese market.

The trademark registration regimes in the mainland of China, Taiwan, Hong Kong and Macau are independent of each other.

A trademark owner needs to register the mark in each jurisdiction throughout the Greater China area.

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RATHER LESS LUCKY THAN STARBUCKS ….

伟哥

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PFIZER’S VIAGRAU.S. TM applied for on 12 April 1996. Registration issued on 2 June 1998. Yet by early 1996, Viagra was being widely discussed by name in the global press.

On 24 October 1996, Pfizer filed an application for Viagra in English to the CTMO. It did not file a Chinese transliteration until May of 1997. Pfizer’s first attempted transliteration was rejected as being too crude and suggestive.

Soon after Viagra was launched in the US and Europe in 1998, it found its way into the China market where the press called it “ 伟哥” , which became a generic term for such products in China.

Pfizer had lost control over the Chinese-language name for its brand in China.

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PFIZER’S LEGAL WOESThe transliterated name for Viagra in China was considered “gentle and humorous” and “witty and inspired”, and quickly obtained wide acceptance by the Chinese.

The Chinese-language trademark finally issued to Pfizer, “ 万艾可” , has little or no meaning and has been termed “dull and uninspired”, and as sounding somewhat “academic”. The name never caught on with Chinese consumers.

The first competing application for “ 伟哥” was filed in China on 20 May 1998. Pfizer filed its application for “ 万艾可” in China on 20 August 1998. The competitor was issued the registration for “ 伟哥” on 21 June 2002.

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PFIZER’S LEGAL WOES (2)Under the “well known marks doctrine”, Pfizer was unable to prove that 伟哥 was identified with Pfizer in China; that Pfizer had spent resources to promote awareness of 伟哥 , and that 伟哥 was owned by Pfizer in China.

In fact, Pfizer had never sought to promote 伟哥 as its own brand in China.

Pfizer lost its legal battles, and the Chinese market for Viagra was lost to counterfeiters, who knew that only the lawful owner of the mark could possibly take action to stop them.

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LESSONS LEARNEDChinese consumers will always refer to the product by a Chinese name. If the brand owner does not create a Chinese-language name for the English-language trademark, Chinese consumers or the news media will.

The foreign-language name may gain little recognition in China if it is not used in combination with the Chinese trademark.

Firms can capitalize on the localization of their brand names by adopting Chinese-language names that are more meaningful, positive, witty and erudite to Chinese ears than the original names. Chinese cultural attitudes and language should be given serious consideration when formulating transliterations.

Even if companies register trademarks in key Western markets, it may be necessary to keep the English name of the trademark out of the media until a Chinese trademark has been issued in China.

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CONCLUSIONOwners of global brands should obtain a Chinese-language trademark registration in China no later than when the brand owner launches its trademark in the West.

Obtaining a Chinese-language trademark before the English-language mark becomes public, and the Chinese media subject it to transliteration, should allow the brand owner to establish its own Chinese-language transliteration for its English-language trademark, thereby allowing greater control over how the brand is presented in China.

A brand owner who uses this approach based on Paris priority might be successful, if the brand owner is careful to keep all information about the English-language brand name confidential until the CTMO approves both the English and Chinese-language trademark registrations.

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THANK YOU.

DAVID L. KREIDER, INTERNATIONAL ARBITRATOREmail: arbitrator@davidkreider.comWebsite: www.davidkreider.com