Once a brand has established itself in its home market, it is natural to expand elsewhere, leveraging the reputation and consumer attention it has built. We have witnessed the rapid growth of many brands that have gone abroad.
So what obstacles do brands typically encounter when expanding overseas?
A rapidly growing brand often borrows a lot from its birth process, but there can be a misconception that a company can simply follow an initial intellectual property blueprint that has been very successful since its inception. But unfortunately, the expansion of IP portfolio programs, especially in international markets, is not as simple as it first seems. Although a brand has a strong consumer base in its home market and has completed IP registrations, this can prevent the brand from entering the market as other companies or individuals may already own or register trademarks in the target jurisdiction. target jurisdiction. This is a real commercial conflict, or in the case of malicious imitation, also known as trademark squatting. In the process of entering a new market, a trademark owner may discover for the first time that so many competing or counterfeit products (or services) already exist in the target jurisdiction (collectively known as trademark infringement). Even big brands with industry experience are plagued by these two problems.
trademark squatting
Trademark squatting refers to the malicious registration of a trademark of a particular brand by someone other than the original brand owner. Trademark squatting typically occurs when a company has an established business reputation and a recognizable trademark in its home jurisdiction (such as the United States), but has not registered the trademark in other important markets such as China. Generally speaking, cybersquatters are non-practicing entities, i.e. not engaged in a specific trade or business whose sole purpose is to make money by selling the cybersquatted trademark to the highest bidder. It’s a pretty big industry in some countries, and they can find IPOs and upcoming brands and get registered first.
The fate of US electric car maker Tesla Motors is a well-known example. In 2006, many years before Tesla entered China, a Guangdong businessman named Zhan Baosheng first registered the “Tesla (Tesla)” trademark. Mr. Zhan launched the lawsuit after Tesla entered the Chinese market, demanding that Tesla close its showroom, stop all marketing activities in China, and pay 23.9 million yuan in damages. The two sides argued for several years, but Tesla eventually settled (according to its official statement) the trademark dispute “completely amicably.”
Trademark squatting is very common in many Asian markets. The first is China, which has a large number of registered trademarks; many of which are blatant imitations of international brands whose products can often be found online as knockoffs before they hit the market in Asia. The convenience brought by the Internet allows people to pay attention to the release of new brands in a timely manner, which helps to convey brand awareness and also contributes to the development of the trademark squatting industry. Some squatters use Hong Kong to set up intellectual property holding companies, known as “shadow companies,” to make them appear to be legitimate foreign intellectual property owners. Indonesia is another country where trademark squatting is prevalent, with local squatters often copying and registering trademarks of foreign brands. The Philippines and Thailand follow Indonesia in the severity of trademark squatting.
trademark infringement
In contrast to trademark squatting, trademark infringement is when someone registers the trademark of another person or entity to recklessly create counterfeit goods or to profit from the goodwill of the original trademark company in a jurisdiction.
South Korean tech giant Samsung encountered this problem when it announced a partnership with Supreme, a popular streetwear brand in China. What Samsung doesn’t understand is that China’s Supreme has been dealing with Supreme Italia, a competitor and alleged counterfeiter of the New York-based Supreme brand founded by James Jebbia. The incident caused an immediate stir when it was discovered that Samsung was working with the wrong entity. This led to the US company Supreme issuing a statement saying that Supreme had not cooperated with Samsung, and that “these cooperation acts and declarations are completely blatant fraudulent acts spread by a fake organization.”
For a brand just starting out, its founders’ attention is understandably drawn to other key issues, such as financing, product launches, marketing and promotions, creating different product lines, and hiring more staff, etc. . But the creation and protection of its intellectual property should be considered a priority. This lack of trademark scrutiny can have long-term adverse consequences, especially if a brand intends to expand into countries such as China and Indonesia (where there are significant percentages of trademark squatters and infringers). While both markets have mature and long-standing intellectual property frameworks, their trademark registration offices have been inundated with malicious trademark applications that take a significant amount of time to examine and reject.
So what to do to get off to a good start?
While we seem to be pessimistic about companies that don’t have the capital or manpower to solve these problems, there is a simple and cost-effective way to alleviate these problems, and that is to use the following online tools to brand in the market you want to expand into search.
- World Intellectual Property Organization (WIPO) – WIPO manages and operates the Global Brand Database (https://www3.wipo.int/branddb/en/), which allows individuals or entities to search for trademarks registered under the Madrid System, trademarks registered under the Lisbon System Registered appellation of origin, and emblem protected by Article 6 of the Paris Convention.
- European Union Intellectual Property Office (EUIPO) – The EUIPO operates eSearch plus (https://euipo.europa.eu/eSearch/) and TM View (https://www.tmdn.org/tmview/#/tmview) for these Database searches may be limited to EU countries, but since Europe is also an important market, it is prudent to conduct prior searches when expanding into the European market.
- United States Patent and Trademark Office (USPTO) – The USPTO has an electronic trademark search system (https://tmsearch.uspto.gov/bin/gate.exe?f=login&p_lang=english&p_d=trmk) when you want to enter the US market It is very user-friendly and valuable.
- China Trademark Office (CTMO) – Searching the CTMO database via link access is a bit tricky. However, through the above examples of trademark squatting and infringement, it is not difficult to find the importance of searching and registering trademarks in China.
- ASEAN Database – The Association of Southeast Asian Nations (ASEAN) has established a database at http://www.asean-tmview.org/tmview/welcome to make trademark searches easier. ASEAN TMview consists of trademark registries in Brunei, Cambodia, Indonesia, Laos, Myanmar, Malaysia, Philippines, Singapore, Thailand and Vietnam.
In addition to the above databases, you can also visit the trademark registry in the relevant jurisdiction to see if there is an online database available for searching.
Utilize information obtained from trademark searches
Once you have the information from your search, you can work with your legal team to develop a plan to protect your trademark and to deal with any intrusions of similar or identical trademarks. For those jurisdictions that plan to expand their brand in the future, pre-emptive filings are available to ensure that the trademark is protected in advance. In addition, if similar or identical trademarks are found during the search, a range of programmatic measures may be considered, such as filing an opposition, applying for cancellation of an existing trademark, entering into a coexistence agreement, or purchasing a trademark. Roth has decades of experience in addressing such issues through legal and practical strategies to restore intellectual property.
Taking a few small steps now can avoid many subsequent headaches, and your intellectual property will always be safe and secure.
What other issues does your brand need to prepare for?
Provide professional advice on common problems and difficulties that enterprises need to master and may face when entering China:
- How can I defend my brand against copycats? What should you do when someone rushes ahead of you to register a trademark?
- Copyright Customs Filing — A Collection of Saving Brands? In the absence of trademark rights, is copyright customs filing the last line of defense that can provide effective protection?
- Losing control of your brand? What are the risks of entering the Chinese market through a local distributor?
For further information, please contact:
Adelaide Yu, Principal, Rouse
ayu@rouse.co
