China is Australia’s largest trading partner. As trade with China grows, more and more Australian businesses are including China in their business strategies. An important issue for any business to consider at the outset when developing a business strategy, is protection of their brand. A significant aspect of such protection, which many businesses overlook, is the protection of Chinese (Mandarin or Cantonese) language trade marks.

Chinese consumers often refer to a brand by a Chinese name. A Chinese name might be marketed by a company, and will be either a name which the company itself has chosen or one that is commonly used by Chinese consumers. As such, Chinese language versions of a trade mark are equally, if not more so, important than the English language version. This is especially pertinent in China, where English is not the primary language and many people are unfamiliar with the Latin alphabet.

Chinese language versions of a trade mark can be a translation of the English word/s into Chinese characters or a mark which represents the values and image of a company. The Chinese language mark can also be protected by registering a transliteration of the Chinese character mark. A transliteration is the phonetic equivalent of the Chinese character mark written in the Latin alphabet. Two important things to note are:

  1. the meaning of a Chinese language mark will not always correspond with the meaning of the English language version. Therefore, it would be wise for businesses to choose their own Chinese language trade marks which convey positive connotations and the image that it wishes to project; and
  2. registration of the Chinese language mark, will not necessarily preclude a third party from using the transliteration as a trade mark. Hence, registration of both the Chinese character mark and the transliteration would provide the broadest protection.

Whilst registration of trade marks in China can sometimes be an expensive and lengthy process, the benefits of trade mark registration far outweigh the possible consequences of not having a registered trade mark. China is a first to file jurisdiction, meaning that the first person to register a trade mark, not the first user, owns that trade mark. Accordingly, unless bad faith can be shown or that there are sufficient rights in a well-known trade mark, it can be difficult to enforce an unregistered trade mark. The consequences of not having a valid trade mark registration include: costly litigation trying to recover a mark, having to pay extortionate amounts of money to have the rights transferred, or ultimately having to abandon a brand and remarketing in that territory.

BEN FU trade mark in China

In 2014, Treasury Wine Estates’ (TWE) top-selling Penfolds brand was removed from all Intercontinental Hotels in China, due to the possibility that those selling the wine could be liable for damages. It was estimated that the Intercontinental contract was worth around 5 per cent of the Penfolds business in China. TWE had been involved in a dispute since 2011 with a notorious squatter, Mr. Li Daozhi who had registered three versions of the Chinese language version of the Penfold’s name, “BEN FU”, which translates to “chasing prosperity. Consequently, TWE could not use the “BEN FU” mark in China, despite having traded there for over twenty-five years and acquiring a substantial reputation in the BEN FU mark.

Fortunately for TWE, in 2017, the Beijing High People’s Court cancelled Mr. Li’s registration for BEN FU which it held to be invalid for failure to make genuine use of the trade mark for wine goods. This meant that TWE could assert its ownership over the BEN FU mark, however, this was only possible after over five years of protracted legal proceedings.

Southcorp Brands Pty Ltd v Australia Rush Rich Winery Pty Ltd [2019] FCA 720 (3 May 2019)

By contrast, today the BEN FU trade mark is effectively being enforced in Australia and China as evidenced by infringement actions against an exporter of counterfeit bottles of wine into China last year.

In 2019, Southcorp Brands Pty Ltd (SBPL), a subsidiary of TWE, was successful in an infringement action against Australia Rush Rich Winery Pty Ltd (ARRW) for using trade marks which infringed its trade mark nos. 37674 PENFOLDS, no. 1762333 BEN FU, and no. 1762317 奔富 for wine goods. Justice Beach found that ARRW had infringed each of SBPL’s trade marks by using the following marks in relation to wine:

  1. 奔富 ;
  2. 奔富酒园;
  3. 奔富酒庄;
  4. 澳大利亚奔富酒庄; and/or
  5. 澳洲大利亚奔富 酒庄

Firstly, Justice Beach found that ARRW’s marks were substantially identical or deceptively similar to SBPL’s 奔富 trade mark on the basis that each of ARRW’s marks contained the Chinese characters 奔富 (pronounced BEN FU), and that the additional elements were entirely descriptive translating to “winery”, “wine park” or “Australia. On this basis, the “ordinary signification”, pronunciation and transliteration of ARRW’s marks would be used and understood by Mandarin or Cantonese speakers as referring to Penfold’s1. Secondly, Justice Beach stated that many of the same points were applicable to the BEN FU trade mark since ARRW’s marks were essentially a “wholesale aural reproduction of the whole of the BEN FU TM”2. Thirdly, each of the impugned trade marks were also substantially identical or deceptively similar to the PENFOLDS trade mark because consumers who are wine-drinking Mandarin or Cantonse speakers, who have an imperfect recollection of the PENFOLDS trade mark, are likely to be deceived or confused.3

Justice Beach also found that ARRW was seeking to misappropriate SBPL’s reputation and deceive and confuse consumers. Summary judgment was given on the basis that ARRW had no reasonable prospects of success and it was ordered to, amongst other things, pay damages of $351,916.75 plus interest, and not use its marks or any similar marks to SBPL.

TWE was also successful in a corresponding infringement action against ARRW in China, where the Shanghai Pudong Court awarded TWE $426,000 in damages.

Conclusion

Chinese language trade marks and transliterated marks, can provide an effective method of trade mark protection and enforcement. Any business that is considering expanding operations internationally, whether via exporting or manufacturing, should also consider a proactive trade mark strategy to secure its brand in China and abroad. As shown above, the risk of not acting early in this regard, means that businesses could forego a useful and valuable tool to market and protect their brand. Alternatively, a business may face lengthy and expensive litigation to challenge the validity of a registration or oppose an application.