Trademark Triumph in China?
By Tyler Seling
Walking down the street of New York City (or any major metropolitan city) can be eye opening for many people. For some, it is a dazzling display of commerce at its best, with all different types of street vendors offering a myriad of goods that kind-hearted, good-willed tourists purchase on their first trip the “Big Apple.” But to others, it is a dark world of knock-off hocking infringers, stealing business away from the major retailers.
Whether it is imitation Louis Viton handbags or fake Rolex watches, these imitations can be clearly defined as infringing upon the trademarks and copyrights of those brands. But a harder question arises when you leave New York or San Francisco, and go abroad where trademark laws may not match the protections offered in the United States. One particular example is China.
One particular reason Chinese trademark law differs from American trademark law is that the China uses a “first to file” system, which means that the party who first files for a trademark gets the registration.[1] This contrasts the U.S. system which is “first to use” – meaning that when filing for a trademark the filer must show that it’s either used or intends to use the mark in the future.[2] Company’s such as Pfizer and Apple have been impacted by this seemingly minute difference.
Pfizer spent several years fighting in Chinese courts over the use of the name “Viagra” because it was first registered by a Chinese company – it eventually lost.[3] Apple also spent time battling over the trademark for “iPad” before ultimately settling the case for $60 million.[4] The settlement was the result of a ruling by the Chinese courts that the trademark was purchased from the wrong company (Proview International in Taiwan), and that the first to file was Proview Technology in Shenzhen.[5]
While this trend may leave companies and investors skeptical about trademark protections in China, a recent case has led to hope that the differences between the American and Chinese systems can be reconciled. The Chinese Supreme Court has recently ruled that a domestic Chinese sportswear company, Qiaodan Sports Co., must stop using the Chinese characters for its name as it infringes on Michael Jordan’s rights to his Chinese name.[6]
Michael Jordan brought the suit in 2012, claiming that the use of his name infringed on his rights to control the use of his name, as it is similar to the name used on his Nike-produced brand.[7] Jordan appealed to China’s Supreme People’s Court after having lost in two lower courts,[8] and its decision overruled those two decisions determining that Qiaodan Sports had malicious intent.[9] But the decision did not completely prevent Quiaodan Sports from using the name – it did permit the use of the phonetic spelling of Jordan’s name using the English alphabet,[10] and that there was not sufficient evidence to show Chinese consumers associated the Romanized system of the Chinese language with Jordan’s name.[11]
Until this decision, inconsistent decisions from various administrative agencies and courts in China had left if unclear how completely names would be protected. [12] Some lawyers believe this case is important because it “establishes the scope of protection for personal names in trademark cases,” particularly for foreign celebrities who might want to challenge third parties that use the Chinese characters of their names.[13] Intellectual-property law research specialist Li Shunde explained that while this is only an individual case, its impact will still be extensive, and “that foreign companies should be able to see this very clearly and this will enhance their continued investment or commercial activities in China as well as improve their expectations and confidence in this regard.”[14]
It would seem that even the People’s Supreme Court understood the gravity of its decision as it aired the decision live in an online broadcast.[15] And New York Times author Sui-Lee Wee even went so far as to posit that this action could “reflect a renewed determination by Beijing to tackle the country’s rampant trademark infringement problem.”[16] This sentiment is shared with Scott Palmer, an intellectual property lawyer with Sheppard, Mullin, Richter & Hampton, who believes that the decision to televise the verdict live clearly demonstrates the Court’s view that it was a “landmark decision.”[17] Even the U.S. Chamber of Commerce believes that the ruling could “mark a step forward” for creating a better business environment in China.[18]
However, not all spectators have found this decision comforting. Matthew Dresden, a lawyer with Harris Moure in Seattle, believes that a few more decisions like this it might make it seem as though things are turning around, but right now this case seems like an anomaly.[19] He explained that “[t]he vast majority of decisions are still in favor of the trademark squatters, because the way you get trademark rights in China is by filing a trademark application, not by being famous.” [20]
But Michael Jordan himself was ultimately happy with the decision, stating that “Chinese consumers deserve to know that Qiadoan Sports and its products have no connection with [him].”[21] And that sentiment helps underscore one of the key purposes of trademark law – to protect consumers by enabling them to identify the source of a product.
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[1] Melanie Lee & Lee Chyen Yee, China’s Trademark System Baffles Foreign Firms, Reuters Business Travel (Feb. 17, 2012, 8:59am), http://www.reuters.com/article/uk-china-trademark-idUSLNE81G02520120217.
[2] Id.
[3] Id.
[4] Melanie Lee & Samuel Shen, Apple Pays $60 Million to Settle China iPad Trademark Dispute, Reuters Technology News (July 2, 2012, 2:01pm), http://www.reuters.com/article/us-apple-china-idUSBRE86104320120702.
[5] Lee & Yee, supra note 1.
[6] Agence France-Presse, Michael Jordan Wins Rights to His Chinese Name in Trademark Battle, The Guardian (Dec. 8, 2016, 9:24am), https://www.theguardian.com/world/2016/dec/08/michael-jordan-scores-partial-victory-china-trademark-case-qiaodan.
[7] Id.
[8] Id.
[9] Michael Jordan Wins China Trademark Infringement Case, RT (Dec. 8, 2016, 9:40am), https://www.rt.com/business/369591-michael-jordan-china-court/
[10] France-Presse, supra note 6.
[11] Sui-Lee Wee, Michael Jordan Owns Right to His Name in Chinese Characters, Too, Court Rules, The New York Times (Dec. 7, 2016), https://www.nytimes.com/2016/12/07/business/international/china-michael-jordan-trademark-lawsuit.html.
[12] Id.
[13] Id.
[14] Id. (quoting Li Shunde, a research specialist in intellectual-property law at the Chinese Academy of Social Sciences).
[15] Id.
[16] Id.
[17] Id.
[18] Id.
[19] Daniela Wei, Rachel Chang, & Alfred Cang, Michael Jordan Wins Rights to His Chinese Name in Court, Bloomberg News (Dec. 7, 2016, 10:36pm), https://www.bloomberg.com/news/articles/2016-12-08/michael-jordan-wins-rights-to-his-chinese-name-in-china-court-iwftaroy.
[20] Id.
[21] Id.