Can intellectual property rights be effectively protected at all in the PR of China? Reports about "copying" the Transrapid maglev train recently triggered a vehement debate in Germany. Our article from the Hong Kong office approaches the question from a trademark perspective and shows that what is crucial – (also) in China – is to have the correct protective strategy.
In January of this year Shanghai No. 2 Intermediate People's Court allowed an action by Starbucks Corporation against Shanghai Xingbake Café Co. Ltd. for an injunction to prohibit the use of the name "Xingbake" and for payment of damages. The background to this dispute was as follows: Starbucks Corp. had its name and its logo registered as a trademark in the PR of China in 1996. Starbucks, however, has a reputation in the PR of China, particularly under the Chinese transcription "Xingbake", whereby "Xing" is the Chinese word for "star" and "Ba Ke" sounds like "bucks" in "Starbucks. However, it was not until December 1999 or February 2000 that Starbucks Corp. filed an application for the trademark "Xingbake" in the PR of China.
The company name "Xingbake", which the defendant had applied to have registered in October 1999 already, was registered in March 2000. The defendant then opened several cafés in Shanghai under this name and used a round green and white logo, which was similar to the Starbucks logo.
The core of the court's argument was that both "Starbucks" and the Chinese translation "Xingbake" are trademarks having a reputation, which are both owned by Starbucks. Furthermore, the court appears to assume that when a right to a name is obtained by registering a company name it is not the time when the application was filed that is relevant rather it is the time of registration. The defendant has filed an appeal against the judgment. It remains to be seen how the next instance will decide.
However, the judgment by the Shanghai court is pleasing in that it strengthens the status of trademarks having a reputation in the PR of China. The signal given by this judgment is particularly interesting. It is often pointed out that civil proceedings before the Chinese courts are problematic - to phrase it cautiously - and that foreign parties are, as a general rule, cheated. Since the introduction at the Chinese courts in larger towns of specialist divisions, which solely handle cases concerning intellectual property rights, the quality of the judgments has improved considerably in this area.
The Starbucks judgment shows how important it is to also develop a Chinese name in addition to the usual trademark applications and to register the Chinese name as a trademark, for Chinese consumers usually use the product's or manufacturer's Chinese name, not its Romanic name. Applications for trademarks have to be filed in good time, also in the PR of China. Otherwise, as in the Starbucks case, there is a risk that the name will be registered by a third party either as a trademark or otherwise. If one's own trademark is then not recognised by the Chinese courts as a trademark having a reputation the chances of regaining the trademark in China are low.
An appropriate IP strategy is absolutely imperative for success on the Chinese market. Our offices in Beijing, Shanghai and Hong Kong would be pleased to help you develop such a strategy.
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