Posted: July 22nd, 2013
By: Rex Li*
In 2012, Michael Jordan filed a lawsuit against a Chinese sports wear company, Qiaodan Sports Company Ltd. (“Qiaodan Sports”), for misusing his name as its trademark. The case was finally heard on April 27, 2013 in Shanghai Number Two Intermediate People’s Court. The trademark in dispute, Qiaodan (乔丹), is the Chinese translation of “Michael Jordan.”
Before being tried in Shanghai, this case was dismissed by a court in Beijing. The Beijing court accepted Qiaodan Sports’ argument that “Jordan” is a commonly used English name, so using its Chinese version, “Qiaodan,” does not infringe Michael Jordan’s right specifically.
At trial, Michael Jordan claimed that Qiaodan Sports misled consumers by using his name and his Chicago Bulls jersey number, 23. He requested an order of injunction and compensation of 1.14 million RMB (about $183,000).
Qiaodan Sports, in addition to its prior argument, asserted that they intended “Qiaodan” to mean “the grass and woods in the South” in Chinese, rather than “Michael Jordan.” This argument makes sense because Qiaodan Sports is headquartered in Fujian, a province in the south of China. However, it cannot explain why Qiaodan Sports also registered trademarks for the names of Michael Jordan’s two sons.
The real difficulty for Michael Jordan is not Qiaodan Sports’ interesting arguments, but the statute of limitations and the scope of Chinese law. Michael Jordan may fail to bring a timely lawsuit. Pursuant to the General Principles of Civil Law of China, Article 135, the statute of limitations for this case is two years. It runs “when the entitled person knows or should know that his rights have been infringed upon.” However, the trademark has been used by Qiaodan Sports since 2000. It is difficult to prove whether Michael Jordan had or should have had knowledge of this use during the past twelve years.
Moreover, Chinese civil law may not provide remedies to Michael Jordan. The General Principle of Civil Law of China, according to Article 8, only protects “foreigners and stateless persons within the People’s Republic of China.” Not having resided in China, Michael Jordan is not likely to be deemed “within” China under this provision.
This case is still in pending after the parties presented their arguments. In addition to the original claims, Qiaodan Sports has countersued Michael Jordan for damaging its reputation for $8 million in damages. The Quanzhou Court of Fujian Province accepted the company’s complaint on April 2, 2013.
While the Michael Jordan case involves disputes over legally registered trademarks, the bigger trademark problem in China is counterfeit trademarks. A lawyer can easily find potential international cases just by walking down the streets. He may walk into a nice sports wear shop selling shoes labeled “abidas” or drink a cup of coffee in “Sunbucks”.
Due to a lack of deterrence and difficulty in enforcement, counterfeit trademarks are everywhere in China. The Chinese Criminal Law provides weak deterrence to trademark crimes. Pursuant to Article 213-15 of the Criminal Law, the person misusing a trademark may be sentenced to fixed-term imprisonment (three to five years), or an uncertain fine. In contrast, a person committing theft can be subjected to life imprisonment. But trademark misuse is more likely than theft to cause huge financial loss. This disproportion of punishment to damage reduces the deterrence to trademark misuse.
On the other hand, even though the law is well designed, its enforcement is not easy in a country with 1,344,130,000 people. There are too many counterfeit trademarks to regulate. No matter how hard the government tries to eliminate them, counterfeit trademarks will regenerate. The government can shut down the “Sunbucks”, but “Sonbucks” and “Moonbucks” will soon show up on the same block.
Considering the weakness of legal regulation in China, foreign companies need to be mindful when they decide to enter this attractive market. Hiring Chinese lawyers to make the most of current Chinese legal system is necessary. On the other hand, to substantially improve the investment environment, the Chinese legislature still has a long way to go.
* Rex Li is a second-year law school student at Wake Forest University School of Law and is the Vice President of OUTLaw. He earned a Bachelor of Law in Shanghai University of Political Science and Law in China. Graduating in 2015, Mr. Li plans to practice international law. He is specifically interested in international transactions and trademark.