Trade mark infringement, copycatting, and bad faith application practices have become a prominent threat to businesses seeking to protect their brands. Whilst trade marks are designed to protect the intellectual property of businesses in relation to their commercial interests, the threat of infringement looms over even the smallest of businesses as globalisation and interconnectedness increases our exposure to international markets. Reputational and commercial damage arising from bad faith use of another’s trade mark has become a systemic issue in countries like China, where applicants have been found to register identical or similar trade marks for popular or highly reputed brands to abuse the reputation of those brands and divert sales to their own products.
It creates a challenging commercial environment for fledgling businesses that often cannot afford to take the hit. However, not all is lost. Belief in the Chinese trade mark system is slowly being restored.
After a lengthy battle in the Supreme People’s Court in China, the Australian winemakers Treasury Wine Estates (TWE) have secured a significant win against Rush Rich, a South Australian-based company that operates out of China and Australia.
East Bright Sunshine (EBS), a subsidiary of Rush Rich, were found to have acted in bad faith after registering 奔富酒园 (‘BENFU Winery’) in 2012. TWE gave evidence that they had previously been selling their branded ‘Penfolds’ wine under the mark 奔富 (pronounced ‘BEN FU’ in Mandarin) which amounts to approximate phonetic transliteration of ‘Penfolds’. EBS had also registered over 40 other trade marks containing the 奔富 characters.
At first appeal, the East Bright Sunshine’s registration of BEN FU was upheld, TWE subsequently appealing to the Supreme People’s Court.
On appeal, the Court determined that the test for invalidation (whether the registration was acquired by fraud or any other illicit means) depended on whether EBS obtained the registration by illicit means, such as registering many marks that exceed the business’ needs.
‘Ben Fu Winery’ was found to be an invalid registration operating in bad faith, failing to demonstrate any genuine use of the trade mark other than to utilise the reputation of Penfolds. This came off evidence that Rush Rich had made many other similar registrations for other luxury brands, including Bentley, which goes beyond the scope of ‘normal business activity’. Whilst the invalidation test does not (and in this case did not) necessarily focus on the purpose of the registration being to abuse the reputation of a well-known brand, it still sets an important precedent for the protection of trade marks against would-be copycats.
The court’s decision takes aim at the preferential treatment granted by the Chinese Intellectual Property Office to applicants who were ‘first to file’ rather than those who would seek to genuinely use the rights or who are the rightful owners of that business name, brand, or reputation.
This ruling is a welcome change and a wakeup call to businesses concerned about copycat or bad faith behaviour in the international market, inviting them to consider enforcement of their trade mark applications in China.
If you would like assistance with registering your trade mark in China or in other overseas markets, please contact our trade mark attorneys on 07 3369 2226 or email firstname.lastname@example.org.