Even Large U.S. Companies Struggle With China’s Trademark System

By Rob Abb *

Air Jordan logoSeveral prominent U.S. multinational corporations are struggling to navigate through China’s trademark system and, for some, the lack of brand protection is delaying entry into the Chinese market.  Even with the help of experienced (and expensive) law firms, more and more corporations are being denied trademarks and/or taking legal action to obtain their trademarks, many of which are held by local Chinese entrepreneurs.

For example, several well-known athletes have been forced to sue (or at least attempt to) others who have registered trademarks in their own names.  Even the greatest player to ever play in the NBA, Michael Jordan, does not own the trademark in his own, very popular, name.  As most people know (at least anyone who has ever watched ESPN), Jordan has established his name as a popular brand in the U.S. and all over the world.  From his “Air Jordan” Nike shoes to his quintessential #23 Bulls jersey, Jordan’s brand represents very valuable intellectual property.  Since he first appeared on Chinese TV in 1984 (at least), Jordan’s name has been translated as “Qiaodan” in Chinese and that is how he is known and referred to in China.  So, one might expect that the Chinese company Qiaodan Sports would be owned by (or at least affiliated in some way with) Jordan.  However, Qiaodan Sports is in no way affiliated with Jordan.  It has filed for over 100 trademark applications associated with Jordan’s brand, including his famous “Jumpman” logo (a registered Jordan brand U.S. trademark) and it uses a logo of Jordan dunking on all of its products.

Recently, in an attempt to stop Qiaodan from profiting from his likeness and to “preserve ownership of his name and protect Chinese consumers from being misled,” Jordan filed suit in a Chinese court on February 21, 2012.  In spite of a 2009 study that found that 90% of those surveyed believed Qiaodan Sports was Jordan’s brand, a Beijing court refused to accept Jordan’s claim, saying his surname “is neither distinctive nor unique.”  By rejecting the case, the court appears to have agreed with Qiaodan Sports’ assertion that “there are so many Jordans besides the basketball players” and “many other celebrities both in the U.S. and worldwide called Jordan.”

Similarly, Yao Ming, the first Chinese-born player to be a star in the NBA was forced to file a lawsuit against Wuhan Yunhe Sportswear for using his name as a brand, without his permission.  In an attempt to capitalize on the growing popularity of Jeremy Lin (a star guard for the New York  Knicks) before he has even played a full season of basketball, a Chinese company called Risheng will start selling basketballs under the “Lin Shuao Jeremy S.H.L.” trademark this month.  Is this starting to sound a little “Linsane” to you too?

The issue facing Jordan, Lin, Ming, and many multinational corporations is how to handle trademark squatters who, simply put, register as trademarks the brand, product or company name of others.  In China, the problem is exacerbated by agencies that “snatch up intellectual property with no related interest, strictly from the standpoint of owning IP as an investment.”  Even some of the most recognized and popular companies in the world, like Facebook and Apple, are having trouble.  After being hired by Facebook to investigate the possibility of re-entering China, a Chinese intellectual property consultant found “a myriad of violations on the “Facebook” name, in English and Chinese.”

Because intellectual property is becoming more and more of an international issue and trademark squatting is likely to disrupt the business of more and more countries, it is interesting to see how other countries are handling the issue.  Canada’s Supreme Court recently struck down its first to use system, finding it unconstitutional, and forcing the country to adopt an approach more like the Chinese use.

One of the key differences between the Chinese trademark system and the U.S. trademark system is that, while the U.S. employs a “first to use” system, China uses a “first to file” system, “meaning the party who files for registration first gets the trademark.”  Another issue facing multinational corporations trying to break into the Chinese market is that it may take years to resolve a trademark dispute if it is initially rejected.  With these kinds of hurdles, in addition to China’s political system, it is not surprising that a company like Facebook, designed to connect people and spread across the globe, has still not spread into China.

* Rob Abb is a third-year law student at Wake Forest University School of Law and is President of the International Law Society. He holds a Bachelor of Arts and Science in Political Science and Asian Studies from the University of Michigan. Upon graduation in 2012, Mr. Abb plans to practice international law. He is spending his last semester in Washington, D.C., interning at the Federal Communications Commission.