Alibaba, the Chinese online shopping giant that has been deemed the PayPal, eBay and Amazon of China and that by all accounts has complete dominance in its home market, recently listed on the New York Stock Exchange. It was a huge event, with media coverage all around the world and it was soon declared the largest IPO in history. Which got me thinking about the trade mark implications. What are the consequences when a large single-country or even regional brand becomes a global brand almost overnight? For that is just what happened with Alibaba – for much of the world, for whom online shopping has for many years meant Amazon, the name Alibaba was a new one.
For one thing, Alibaba must be looking at global trade mark registration if it hasn't already done so. To achieve global trade mark coverage it will have various options available to it. It will, of course, be able to go the old-school route of filing separate applications in every country that it’s interested in. But it’s unlikely to do so, given the huge cost implications and administrative burden of having to deal separately with each Trade Mark Office. China is a member of the international registration system (aka the Madrid system), a system that makes trade mark registration and the management of trade marks far easier.
The newest superpower in online shopping, Alibaba will be able to get protection in any or all of the 91 countries that have signed up to the international registration system – a list that includes big hitters like the USA, Japan and Russia, as well as 17 African countries - by way of a single filing with the World Intellectual Property Organization (WIPO) in Geneva, in which it specifies all the member countries it wants to cover. It will also be able to designate the entire European Union in its international registration, which means that it won’t even have to file a separate EU (Community Trade Mark) application.
Alibaba will no doubt be setting its sights on obtaining trade mark registrations in Africa in particular its strong economic hubs and trade powerhouses. Alibaba will have lots of options in respect of obtaining trade mark protection in Africa: it can specify those African countries that belong to the international registration system; French-speaking Africa can be covered by way of a single Organisation Africaine de la Propriété Intellectuelle (OAPI) registration; and much of English-speaking Africa can be covered by way of an African Regional Intellectual Property Organization (ARIPO) registration.
Through an OAPI trade mark registration, Alibaba will be able to obtain registration in 17 French speaking African states including Congo and the Ivory Coast. It is not possible to obtain a registration in any of the individual member states and Alibaba must therefore apply by way of a single application at the central OAPI office situated in Cameroon.
ARIPO facilitates the central filing of patents, designs and trade marks for its 19 member states including Kenya, Ghana and Zimbabwe. Membership is open to states which are members of the United Nations Economic Commission for Africa (ECA) or of the African Union (AU). There has, however, been much discussion in respect of the effectiveness of the system for trade mark applications and this can be seen from the small number of trade marks, approximately 2000, that have been filed using the ARIPO system since 1997. It is therefore advisable for Alibaba to obtain individual trade mark protection in the countries of interest, where such country is party to ARIPO.
One country that Alibaba won’t be able to cover through any of these means is South Africa. That’s because South Africa isn’t a member of the international registration system or the ARIPO regional system. Nor is Africa’s other economic powerhouse, Nigeria. Which means that Alibaba will have to file national trade mark applications in these countries. It also means that any South African or Nigerian company that becomes a global brand like Alibaba will have to take the long route which includes individual trade mark applications or using alternative regional systems such as the CTM trade mark application, when it tries to protect its brand internationally.
Still on the issue of registration, Alibaba will need to consider whether it wishes to limit its coverage to the online retail services it offers, or whether it wants to extend it to some or all of the merchandise it sells. The legal question it will ask itself is this: are we using our trade mark in relation to goods as well as services? The more practical question it will ask itself is this: how would we feel about other companies using the trade mark Alibaba in relation to merchandise? From the onset, protecting one’s brand is essential and expansion into related goods and services must be taken into account when applying for a trade mark registration and when conducting the relevant trade mark searches.
The fact that the company has opted for a distinctive name rather than something descriptive like “Online Shopping World” will help it a great deal in its quest to get trade mark protection. Yet that's not to say that it won’t run into difficulties. That’s because other companies may have registered the name, or something similar, in various countries. Some such registrations might be open to attack on the grounds of bad faith. But other registrations might be perfectly legitimate - distinctive as the name is, it’s quite conceivable that others have adopted the name because of the literary significance of Ali Baba. Prior to applying for the registration of the ALIBABA trade mark in the various territories, it is important that the necessary searches be conducted. Trade marks are territorial and a third party may have already registered an identical mark in a country that Alibaba has no presence in just yet. In most instances Alibaba and/or any other company expanding into the global market will find difficulty overcoming a legitimate identical trade mark registration that has been used and/or become well-known in a specific territory.
Once it secures trade mark registration, Alibaba may qualify for greater rights than most trade mark owners have. Although the owner of every trade mark registration has the right to stop others causing consumer confusion through the use of a similar trade mark in relation to similar products, the owner of a trade mark registration with a reputation can, in certain circumstances, also stop third party-use that simply dilutes, harms, or rides on the back of the registered trade mark. With the total amount raised by the Alibaba IPO being an estimated 25 Billion Dollars, there is no doubt that the online giant will go on to become one of the most well-known online brands in the world.
Even without trade mark registrations, Alibaba will suddenly find itself in a fairly strong position. That’s because many countries, South Africa included, give special protection to ‘well-known marks’, in other words trade marks that aren’t registered but are famous, think McDonald’s and Starbucks - trade marks that have become distinctive and reached the height of trade mark power worldwide without having registered trade mark rights in every country. On top of that, in so-called ‘common law countries’ like South Africa, there is also protection against the wrong of ‘passing off’ – a company that has a trade mark that is unregistered but well-known can stop a competitor from causing consumer confusion and creating the impression that the trade marks are connected through the use of a similar trade mark.
So, Alibaba will be relying on the trade mark laws of countries and the protection afforded by the regional filing systems around the world in order to get the protection that its success entitles it to. Some may find this a bit odd – after all, isn’t China the country where locals steal the trade marks of Western companies with impunity? Not anymore, China has, over the years, improved its trade mark system significantly, especially on the issue of bad faith trade mark registrations. Which means that Western companies and non-Chinese residents now get pretty much the same level of protection in China that they get elsewhere. In agreeing to these improvements, the Chinese authorities were no doubt influenced by pressure placed on them by Western companies and governments. But there was considerable self-interest too – as China's economy has grown into one of the largest and most powerful in the world, Chinese companies have needed strong trade mark and intellectual property protection, as much as Western companies do. Over the years, China has witnessed a steady increase in trade mark applications by its residents and has experienced a significant boom in relation to patent filings. China has successfully managed to overcome the myth that intellectual property is not valued in China.
Technology companies, in particular internet companies like Google, Yahoo and Amazon tend to do well in the global brand value surveys that are published every year. It will be interesting to see where the new kid on the block, Alibaba, features in the next survey that comes out.