Monday, 13th January, 2020

Pirates sour Christmas vintage

Hundreds of New Zealand vineyards and wineries entered the Christmas season with some distressing news—a pirate had filed trade mark applications for their names in China.

A few days before the holiday season started, owners of New Zealand wine brands found out that a Chinese company had filed hundreds of trade mark applications in China in a single day. These applications were for trade marks owned and used by New Zealand wine brands. If the Chinese company successfully registered the trade marks, they would be considered the legal owners of those brands in China.

Fortunately, this story has a happy end for most. The newly implemented anti-pirating trade mark law in China seems to be working for legitimate trade mark owners. The majority of the trade mark applications have been refused registration by the China Trade Mark Office.

This cautionary yuletide tale could have turned out differently…so pay heed!

Pirates of the intellectual property world

Far from their swashbuckling namesake, pirates in the world of intellectual property (IP) aren’t always easy to spot. Whether for trade marks, patents, or registered designs, an IP ‘pirate’ is a person or business who obtains IP rights they do not own. Sometimes known as ‘squatters’, these entities are manipulating the system. One of the easiest ways to spot an IP pirate is the number of IP applications they file. There aren’t many companies that would file nearly 500 trade mark applications in a single day.

China is a strong-hold for IP pirates, where it is the first person who files a trade mark application that is considered the trade mark’s owner. This is regardless of how long you may have used the trade mark in China.

Pirates have power. If they can get a trade mark application underway before the true brand owner does, they stand to make money. Typically, they will either threaten to sue the true owner for trade mark infringement (unless the true owner pays), or they will offer to sell the trade mark registration to the true owner for an exorbitant sum.

Battling the pirates with intent to use requirements

As of 1 November 2019, trade mark applications in China face an additional examination hurdle. They can be refused registration if the trade mark owner does not have an intention to use the trade mark. This requirement is an effort by the Chinese government to combat IP pirates. Under the legislative change, trade marks can now be refused registration by a trade marks examiner on the grounds ‘bad faith trade mark applications filed without intent to use shall be refused’.

This requirement is coupled with a new requirement for trade mark agents. That requirement is that they will not accept instructions from a client if the agent knows the client is filing the application in bad faith.

The new approach is still in its early stages, but for New Zealand’s wine industry, it has brought hope in the New Year. The industry returned from holidays to the news that the majority of the pirate’s applications have been refused registration under these new laws.

Navigating the waters of trade mark use internationally

While the story in this instance has ended well for most, it is a sombre reminder of the dangers that can arise when you start using your brand around the world.

Whether for wine, or any other goods or services, making sure you have reliable trade mark protection is vital, especially in China. Not only are trade marks assets that increase the value of your business, but not having trade mark protection can stop you entering a market—or worse, get you sued for infringement once you have already entered.

As in the era of the original Scottish pirates, some countries are safer than others. Talk with your IP advisor before entering a new market. Find out what potential risks exist, and plan ahead.

Forewarned is forearmed after all.