Thursday, August 7, 2014

Australian Winemaker Battles Trade Mark Squatter Over Ben Fu Trademark

It’s common practice for businesses to register the foreign language equivalents of their brands in relevant countries, for a number of reasons; to build their brand using terms that are more familiar to the target market, to avoid conflicts when their original trade mark means something else in the country’s language, and to protect themselves from other entities that could register the local equivalent of their brand and either:

a. ) build a competing product out of it, or
b. ) hold the trade mark for ransom.

The latter seems to be the case when Australian winemaker Treasury Wine Estates (TWE), which owns several brands (including the famous ‘Penfolds' brand) tried to register a Chinese variation of the name – Ben Fu – only to find three versions of the name already registered by businessman Li Daozhi and another man named Li Shen.

The Australian Financial Review has reported that two versions of the Ben Fu name as it pertains to spirits and wine was registered to Li Shen until 2019 and 2014, respectively, while Li Daozhi owns the rights to the name in relation to hotels and restaurants until 2021.

A Chinese court has found for TWE, but both Li Daozhi and Li Shen have appealed against the ruling.

There’s very little doubt as to Li Daozhi’s motives for registering the marks. Mr Li has been accused of trade mark squatting in the past, and has a history of getting into legal disputes against wine companies. One of the more notable ones was against French wine producer Castel.

The Castel case was very recent, when the French company started using a Chinese transliteration of their name – Kasite – for a marketing campaign in China. Unfortunately, they failed to register the trade mark in the country. Mr Li registered the mark for himself. After a protracted trade mark battle, Castel was ordered to pay $5 million to Mr Li in 2013. Castel has since called for a retrial, and China’s Supreme People’s Court has scheduled another hearing at a later date.

Cases of trade mark squatting and the problems they bring are very common in China, and the painful learning experience of these companies serve as reminders to businesses to practice due diligence when building brands and securing trade mark.

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