As the world edges closer to the 2008 Olympics in Beijing, China has stepped up its enforcement of IP Rights. But as intelligent as its anti counterfeiting efforts have become, counterfeiters are still one step ahead, says TMDS’s Sylvia Lacroix

While China is making improvements to its IP enforcement system, fuelled by the need to relay confidence in the big brands sponsoring the forthcoming Olympic Games, it still has much work to do. Infringement, counterfeiting and piracy are not only still rife, they are also becoming increasingly harder to detect, as counterfeiters find ever more intelligent ways to sidestep the system or even remain oblivious to the illegality of their actions.

China’s trade in counterfeit and piracy, where companies produce the kind of fake designer gear that has long been ubiquitous, is well documented: Chinese counterfeit exports to the US accounted for 69% of total seizures in 2007, according to US customs, which valued the haul at US$64m – and that’s only what they catch. Counterfeit operations are secretive, resilient and geographically dispersed, making enforcement difficult and, some say, impossible. And, while government authorities are rightly concerned that the profits from counterfeit goods are going to organised crime, companies should also be assessing the extent to which counterfeiting is undermining their brand value in the territory. But, as TMDS’s Sylvia Lacroix is keen to point out, the threat doesn’t end there. The way in which Chinese firms are passing off Western brands is becoming ever more sophisticated, as infringers come up with increasingly creative ways of profiting from another brand’s well-earned reputation.

Emerging trends
In recent years, there has been a distinct rise in the practice of ‘brandjacking’, says Sylvia. This is the rather crude method of slapping luxury or popular brand names on products radically removed from their original marketplace. ‘At TMDS, our linguists are regularly seeing trademark applications linking well-established brands to lower-end products,’ she explains. ‘For example, Louis Vuitton appearing on toilet cleaner, Yahoo! on fax machines, and Yves Saint Laurent on air freshener and tooth polish.’

In such cases, it’s not out-and-out piracy or counterfeiting – it’s more audacious. These companies aren’t imitating existing branded products – they’re applying well-known brands to their own products. And, they’re trying to make them official by registering them as trademarks.

With over 600,000 new applications to examine in China every year, it’s perhaps unsurprising that questionable marks can often slip through the net.

‘We’re also regularly seeing examples of a second more sinister and calculated trend for phonetic infringement,’ she adds. ‘In this instance, infringers are escaping detection by exploiting the gap between what a word means literally and what a word evokes when pronounced.

‘China’s trademark examiners will usually spot obvious copycat attempts at registration,’ says Sylvia, ‘but it really depends on the examiner whether they will take into account transliterative or phonetic issues.’ And, with over 600,000 new applications to examine in China every year, it’s perhaps unsurprising that questionable marks can often slip through the net.

‘Recently, we discovered a company that was attempting to register the Chinese characters for “elegant tiger”. This may seem to have no significant meaning when translated into English, but when you say those Chinese characters out loud in their local vernacular form, they pronounce the word, “yahoo”,’ says Sylvia. ‘The mark appeared in our watch notices for China, meaning that it had been provisionally passed for registration. Imagine the impact on the brand owner if that mark hadn’t then been opposed and rejected? It’s not only that their reputation could have been affected, if they hadn’t challenged the registration in time, they could also have been blocked from using their own trademark in the territory.’

If brand owners don’t keep an eye on their trademark rights, there’s always a possibility that an ‘infringing’ mark could pass examination and be registered. ‘Brand owners need to take control of the situation by watching their marks and intercepting potential infringements before they become litigious,’ she says. ‘Otherwise, you are just putting your valuable assets into the hands of an individual trademark examiner and hoping for the best. They may spot the infringement, but what if they don’t? That’s why trademark watching services are so important.’

On your marks
Preventing infringements requires a systematic and comprehensive process of identification, as trademark offices often allow only three months for an opposition to be filed. Spotting potential infringements means having to scour trademark applications worldwide via the Internet, which few businesses have the time, expertise or patience to do.

‘But as time-consuming as it may be, trademark watching is highly necessary,’ emphasises Sylvia. ‘Watching services help detect conflicting trademark applications at time of publication, allowing clients to file timely opposition to third-party incursion, thereby protecting their rights. And while such services play an important role in allowing brand owners to protect their rights from infringement, dilution and passing off, they can also help them to uncover counterfeit goods, as they can often originate from the same source. ‘Counterfeiters are moving fast,’ says Sylvia. ‘Brand owners need to do likewise.’

For more information on how TMDS could help you to protect your trademark rights, please visit www.tmds.co.uk or email slacroix@cpaglobal.com.


This article was first published in IP Review, issue 22

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