This summer in China, H.J. Heinz Company prevailed in a trademark infringement suit against a local educational services company, Dongguan Heng Shi Education Information Ltd. Dongguan Heng Shi operated multiple branches across Guangzhou, China, using logos featuring the “Heinz” and “Heng Shi” marks in both its offices and advertising materials. “Heng Shi” is the Chinese transliteration (or Chinese equivalent, based on a similarity of pronunciation) for “Heinz,” and H.J. Heinz – showing great foresight – had already obtained registrations for both “Heinz” and “Heng Shi” in China, dating as far back as 1998. While H.J. Heinz’s registrations in China covered a broad range of goods, from “seasonings” to “food for babies” to “clothing,” the company had not obtained a registration for educational services. Nonetheless, the court found that (1) H.J. Heinz’s marks were “well-known trademarks” and that (2) the defendant both infringed the plaintiff’s marks and engaged in unfair competition.
In China, only well-known marks are granted the special treatment known as “cross-class protection,” which allows the owner of a well-known mark to enjoin another’s use of the mark in a category in which the well-known mark is not registered. American companies, however, would be well-advised not to rely on the well-known marks argument in Chinese courts, since “well-known” status is difficult to prove and has historically been granted mainly to Chinese companies. This is at least partially because many Chinese citizens do not recognize English marks. Further compounding the obstacles foreign companies face when attempting to prove “well-known” status is the fact that the status is determined on a case-by-case basis, with each determination binding only on the immediate case at bar. Perhaps the best-known precautionary tale is the case involving Pfizer’s eleven-year, multimillion dollar lawsuit against a Chinese pharmaceutical company, Guangzhou Wellman Corp., which had registered the transliteration for Viagra (“Weige”) before Pfizer had attempted to do the same. In 2009, Pfizer lost at the Supreme People’s Court, the court of last resort in China, having not been able to prove that the English “Viagra” mark was entitled to well-known status or that the company was entitled to the transliterated “Weige” mark, a term originally coined by the Chinese media.
To protect themselves from trademark “copycats,” companies considering expanding their business to China should register a Chinese translation or transliteration for their English marks as soon as possible. Careful control of how the Chinese reference a company’s product may very well determine who ultimately owns a Chinese equivalent to an English mark. Since China is a first-to-file rather than a first-to-use jurisdiction, early filing of a Chinese mark would make for the most strategic course of action. Finally, even large multinational companies should not allow China’s special protection for “well-known” marks to lull them into a false sense of security, because the without the registration of a Chinese mark, their brands may not be as “well-known” as they think.