CHINA INTELLECTUAL PROPERTY LAW NEWSLETTER
Vol. 4 , No. 2 - February 26, 2003
TOPICS THIS ISSUE:
- Trademark Infringement Caused Major Setback to Business
- Chinese Court Ruled in Favor of Nike in Trademark Case
- China to Rid Schools of Pirated Textbooks
- Anger Over Change of Name of a Popular Beer in Taiwan
- New Trademark Design for Coca Cola In China
- Chinese Economist Xiao Zhuoji Urges Firms to Establish Brand Names
Trademark Infringement Caused Major Setback to Business
Taisun Food Company, a major Taiwanese food manufacturer began its operation in China in 1997 with US$20 million in investment capital. Like many Taiwanese companies in the past, the director of the company Mr. Yang Huizong initially thought that with strong ancestral links and a common dialect, the Taisun Group's new food venture in Zhangzhou city, across the Taiwan Strait in China's southeastern Fujian province to be somewhat easy.
As a wholly-owned enterprise it would also be free of the tangles of a joint venture partnership that so often mar the day-to-day management of a foreign venture in China.
However, little did they realize that when the company launched its products in the markets such as mixed congee, honey aloe and pearl strawberry drinks, it discovered that a local Fujian manufacturer had pirated Taisun's brand and logo. The pirates used the same logo, the same products and basically just changed the name of the company. This came as a disaster for the company and caused a major setback to its business.
Taisun took the local Fujian group to the provincial court and finally won its case in the Supreme Court in Beijing.
According to Yang, although the company won the case in the end, their confidence was severely affected and their market was destroyed by the Fujian enterprise. Taisun's 100-strong sales force, which was to sell its canned goods throughout China, pulled back its operations amid weak turnover, focusing on the eastern province of Zhejiang and southeastern provinces of Guangdong and Fujian instead. It also reconfigured its strategy by investing more in the research and development of new products.
(Source: Agence France Presse)
Chinese Court Ruled in Favor of Nike in Trademark Case
Nike, the US sports clothing company, has won a controversial court order in China recently to prevent a Spanish company from manufacturing and exporting clothing from the mainland using the "Nike" name.
In the evidence presented before the court, Cidesport, the Spanish company, owns the right to use the Nike name in Spain and had been planning to sell the goods made in China solely in its home country. However, the court ruled that the simple manufacturing of the goods in China had breached Nike's trademark registered in China. This court decision will now restrict the Spanish company's commercial options by preventing it from manufacturing in China.
The Spanish company argued that, as its products were not sold in China, it did not infringe Nike's registered trademark in China. Cidesport had commissioned a factory in eastern China to manufacture a male ski jacket, affixed with the Nike label and Nike packaging.
According to Tao Xinliang of Shanghai University, the protection of the brand (in China) covers not only final consumption, but also the manufacturing of it.
It was reported that Cidesport had confirmed its right to use the name Nike on apparel in Spain in 1999 after a lengthy court battle with the much larger US company.
Despite the unusual circumstances, the decision reflects the growing propensity of Chinese courts to uphold the intellectual property rights of foreign brands.
Often, multinationals are reluctant to sue because court rulings are difficult to enforce and the penalties imposed on copycats are relatively small.
According to the lawyer advising Nike, the company found about 300 shipments ready for export in China that it considered were illegally using the trademark. If the Spanish company loses the appeal, those shipments will be impounded by Chinese customs, and maybe destroyed. The lawyer also said that this is a very controversial issue internationally because in Holland, there was an identical case that Nike lost.
(Source: Financial Times (London))
China to Rid Schools of Pirated Textbooks
The state media reported recently that China will rid schools of fake textbooks after it was found that the rampant piracy problem in the country has now spread to educational institutions. In fact, last year, in northwest China's Xinjiang region alone, it was reported that the authorities discovered 3.56 million pirated textbooks and reference materials in primary and high schools.
In recent years, schools have been reported to be buying counterfeit books for students as a way of saving money. Parents are criticizing the practice by the schools because many of the characters and words found in these books are incorrect.
The national picture was also bleak with the State Press and Publication Administration seizing 10.24 million fake books between August and October of 2002. According to incomplete official statistics report, more than 160 million illegal books and 430 million illegal audio-visual publications were seized between 1994 and 2002, including 18 million sex books.
(Source: Agence France Presse)
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Anger Over Change of Name of a Popular Beer in Taiwan
China has asked Taiwan Beer, a popular beer in Taiwan, to change its name when the drink is sold on the mainland. This caused a stir as a governing party lawmaker in Taiwan accused China of bullying Taiwan and he has urged the Taiwanese to stop consuming brew from the mainland.
The Chinese officials have cited a law banning the use of cities and provinces in trademarked names.
Some exceptions are made in China though, for example the well-known Tsingtao Beer, named after a northern city in China. However, this does not hold any bearing on Beijing when it comes to its decision on Taiwan Beer.
Instead, China has approved TTL Beer as its trademark. Wei Yao-hsiun, vice president of Taiwan Tobacco and Liquor, which markets Taiwan Beer, said that his company would appeal for the use of the original brand name. He noted that the drink is already registered as Taiwan Beer in the United States and the European Union.
According to a member of the ruling Democratic Progressive Party, Taiwan Beer has a 30-year history and the trademark must not be rejected as an unfair marketing scheme and rejecting the brand is ridiculous.
Officials in Taiwan also said that the ban on the trademark was a political move against Taiwan because China has allowed brands like Tsingtao and Nanjing Duck to be registered as trademarks.
Historically, Taiwan and China split amid civil war in 1949, but Beijing still insists that the island belongs to the mainland. Hence, Chinese leaders are highly sensitive about names and titles that give the impression that Taiwan is an independent country.
(Source: Associated Press Worldstream)
New Trademark Design for Coca Cola In China
Coca-Cola Company plans to replace its existing trademark with a newly designed one in China.
The Beijing Youth Daily reported that the new streamline Chinese logo would be part of the packing of Coca-Cola for the Chinese market with effect from February 20, 2003. The most obvious change in the new trademark is in its Chinese logo, which has been designed by the famous advertisement designer in Hong Kong called Chen Youshi. This is the first time for Coca-Cola Company to do a completely new design for the China market in 24 years.
China has become the sixth largest market for Coca-Cola. In China, Coca cola has built 24 bottling companies and 30 filling factories so far with a total investment of above US$1.1 billion.
(Source: SinoCast China Business Daily News)
Chinese Economist Xiao Zhuoji Urges Firms to Establish Brand Names
In China, some brand names have established and enjoyed some reputation in the domestic and overseas market within a certain period of time. But given that such reputation does not last long, brand named products fail to achieve stable development in the global market in the long term. Currently, this is a relatively prominent problem facing brand management in China. Xiao Zhuoji, a renowned economist in China, mentioned recently at an economic forum that in the twenty years since China was opened up to foreign trade and investment, a group of star companies have emerged. These companies enjoy some reputation in the international market. But as a matter of fact, there are only a few internationally renowned brand names that have a competitive edge in the international market. Some companies have grown at an extremely fast pace. They achieve an annual growth rate of over 30 per cent. Yet, they have only a small world market share. Many companies have made progress on the technology front. However, there are relatively few products that possess independent intellectual property right. Although many products are made in China, the core technology is imported from foreign countries.
Xiao Zhuoji believes that China should make efforts in four aspects in order to establish its own brand names. First, China needs to make preparations over a long period in order to create its own brand names. A brand name is by no means created over a short period of time. It takes ten to twenty years and even one to two hundred years to establish an internationally brand. As such, China should attach importance to accumulating knowledge, economic achievements, capabilities and social resources over a long period.
Second, to establish an international brand, it is necessary to manage properly the relationship between maximizing profit of a company and gaining as much reputation as the company can. To establish a brand, it is necessary to adhere to the principle of acting in good faith as much as possible. It is necessary to create an image in society, whereby the company is renowned for its integrity.
Third, to establish an international brand, it is necessary to capitalize on a variety of resources, in particular international resources, including international market resources, international capital resources and international natural resources. Besides, we cannot dispense with the need for capitalizing on international human resources.
Forth, to establish an international brand, it is necessary to bring in modern management experience. When bringing in modern management experiences from its foreign counterparts, China should take into account the practicability, sustainability and transferability of these experiences.
Xiao Zhuoji says some experience can be transferred to China. But it may not be possible to transfer some experience to China. There is no national boundary for engineering, technology and natural science. But management science is not only based on universally applicable principles but also has distinctive features. It needs to integrate with the social system and the situation in society.
(Source: Zhongguo Xinwen She News Agency)
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The China Intellectual Property Law Newsletter is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.
