The Road to Protection in China Just Became A Bit Clearer

Ashley PendletonBest Practices

Earlier this month, the Supreme People’s Court, China’s highest appellate court, affirmed a 2017 ruling that ordered “Uncle Martian” to destroy all infringing product, pay $300,000 in damages, and stop using a “UM” design that mimicked, and therefore infringed upon, Under Armour’s “UA” logo. Separately, in April, the Supreme People’s Court decided that the Chinese company Qiaodan may continue to use the Romanized name and silhouette of Michael Jordan; however, the company can no longer use the two elements in conjunction with one another.

Under Armour Prevails 

Appearing in April 2016, Uncle Martian is a Chinese brand launched by Ting Fei Long Sporting Goods. Under Armour sued for and won a permanent injunction on what it deemed an infringing logo, blocking the company’s commercial launch for the duration of the case. Further, the Chinese company was ordered to release a statement that would “eliminate the adverse effect of Uncle Martian’s infringement,” according to a statement released by Under Armour’s counsel. 

In June 2017, the People’s Higher Court of Fujian Province ruled that Uncle Martian must destroy its products, stop using the infringing “UM” logo, and pay $300,000 in damages. Uncle Martian immediately appealed. However, the Supreme People’s Court agreed with the lower courts, and affirmed not only the damages, but the order to destroy all of its products, and to stop using the infringing “UM” logo. The ruling in the Under Armour case may be contrasted with another high-profile branding case in China involving athletic apparel.

Comparison to Qiaodan/Jordan Case in China

After an eight year battle, the Supreme People’s Court ruled in April that Chinese company Qiaodan no longer had the right to use its logo (the silhouette of Michael Jordan) and the Romanized form of its name “Qiaodan” together, meaning that while the company’s logo and Romanized version of its name cannot be used in conjunction with one another, they can still be used separately. 

In the early 2000s, a low-cost sportswear company in the Chinese province of Fujian became known as Qiaodan Sports. Qiaodan (a transliteration of Jordan) began registering hundreds of trademarks related to Michael Jordan, including his name in Chinese and Romanized characters, as well as his silhouette. Jordan however did not sue for illegal use of his name and likeness until 2012, after Qiaodan went public, and has since faced an uphill battle. Although his team has won some battles in this great war, the delay in filing suit has negatively impacted his legal position. One should note that the wins Jordan secured are due to the fact that the trademarks in question are recent filings by the Chinese company. Qiaodan has been using most of its marks for decades; therefore, the statute of limitations to bring suit against potentially infringing marks has passed, and Qiaodan has priority over the elements and their use in China. 

Conversely, Under Armour noticed the impact that Uncle Martian’s product line would have on its brand immediately. Within months of Uncle Martian announcing a product line, Under Armour sued for a permanent injunction of the line and infringement of the “UA” logo. By acting quickly, Under Armour was able to protect the integrity of its brand. 

Investment in International Trademark Protection Can Pay Off

The cases taken together highlight exactly how easy it is to lose branding rights in the Chinese market if one does not act preemptively. Unlike the US and international markets, China is a “First to File” jurisdiction. This means that regardless of use, whoever files for protection in China first will usually gain the right to exploit the property. Further, China’s statute of limitations for trademark infringement claims is five years. 

Many US-based companies and creatives are only familiar with the priority rules in the US, based on first use in commerce. Consequently, these brand owners are often disturbed to find that by the time they decide to enter the Chinese market and pursue protection for their brand, it is already registered. Consequently, a brand owner should file for protection in China as soon as it is financially feasible to prevent squatters or infringers from winning a race to the Chinese trademark register.  

So what does this mean in a world ravaged by Covid-19?

Covid-19 has caused the transition from brick and mortar flagship stores to digital marketing and sales to go into hyper-speed. More and more people are becoming accustomed to fulfilling their consumer needs via the web, including through online businesses located abroad. Chinese sites and products are gaining popularity with the American public and vice versa. To protect themselves properly, a brand owner must now anticipate all the ways in which they will want to market a product or line. This includes identifying whether the brand name has a different spelling in another language, as with the Jordan/Qiaodan case, or the ways in which a logo can be so distinctive it immediately calls to mind your brand and nothing else, as with the Under Armour logo. A brand owner must then file for protection on these elements as soon as legally possible, in every jurisdiction where they may anticipate having a footprint. While such investments in international trademarks can be daunting, the price of losing control of a brand and trying to go after squatters after the fact is much greater.

Ashley Pendleton

Ashley Pendleton

Joining Ziliak Law as an associate in the summer of 2020, Ashley also brought significant insight and experience in the area of Intellectual Property. Read more
Ashley Pendleton

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