A cautionary tale
We recently helped a young luxury fashion business appoint a distributor for its products in China. The business was started a few years ago and has done fantastically well:
- its products are sold in leading department stores in the UK, the US and elsewhere
- leading fashion and lifestyle magazines such as Vogue have featured their products
- their products have been showcased at leading international fashion shows
- orders and enquiries have been received from lots of countries.
The business was approached last year by a leading fashion distributor who wanted to act as the exclusive distributor for the brand in China. Despite plenty of overseas orders, the business had not sold anything to date in China. So this was a great opportunity to get into the huge and growing market for luxury goods in China.
One of the first recommendations we made was to get the brand registered as a trademark in China. Why? Registering a trademark in a country is the best way to ensure that no one else can trade under your brand in that jurisdiction.
It then transpired that someone else had already submitted an application to register the brand as a trademark in 2008. The implications of this were severe:
- someone else would be entitled to trade under our client’s brand in China
- worse still, our client would be prevented from trading under its brand in China
We have been working with a Chinese trademark agent to lodge an objection to the registration of this trademark. Our client’s brand is unique, there is no evidence that the person who has filed the trademark is using it: it simply looks like they have registered the trademark in the hope that our client will buy them off. However, for our objection to be successful we have to demonstrate that the brand was known in China before the application to register the trademark was made in 2008.
It hasn’t been easy to provide clear evidence of this: no direct sales have been made into China, people from China may have seen the products at fashion shows, read about them in Vogue or even looked at the client’s website but we had no documents to prove this. The objection process might take a year and there is no guarantee that our objection will be successful.
What you should do
If you own a brand and want to expand internationally you need to protect that brand in all the jurisdictions you want to trade in. If you don’t, all the hard work and money you have spent on building up that brand in your home market might count for nothing if you try and sell abroad. Some things to think about:
- the bigger your brand is the more protection it needs: the more recognised your brand becomes, the more valuable it becomes and the more likely it is that someone will try and exploit it
- register your trademark: think about registering your brand as a trademark in every new jurisdiction you trade in. Although individual applications are unlikely to be expensive, the overall cost of lots of applications may be unaffordable. If this, is the case prioritise which applications to make. There is also an international protocol (known as the Madrid Protocol) which makes it easier to register trademarks in multiple jurisdictions
- keep careful records: if you get enquiries from overseas from potential customers or suppliers, keep a record. These records will be invaluable if someone tries to register your brand as a trademark in these jurisdictions
- keep your eyes open: if you’ve got the money you can pay trademark agents to keep a watch to see if anyone else is using your brand or has registered a trademark you are interested in. If you can’t afford to pay someone to do this for you then do it yourself: the trademark registries for many countries have the ability to search on line for free
- think about a European trademark: if you are likely to trade in more than one European country it might be worth getting a community trademark (CTM). A CTM will give you protection across the whole of the EU. This is likely to be cheaper and easier than registering you trademarks separately in each EU state. One issue with this is that if an objection to the registration of your trademark is successful in one country the whole application will fail
- pay your renewal fees: if you do register a trademark, make sure you pay renewal fees!