November 8, 2018
The hijacking of Chinese brands becoming more and more common - and this has taken place in Finland, too. Jani Kaulo, Partner, Head of Asian Market at Kolster, tells the story in The Economist.
The reputation of Chinese companies as hijackers of foreign brands is justifiable, even though a definite change has taken place over the past years: IP infringements are no longer as unidirectional as they used to be. Chinese brand holders are now more commonly the victims of trademark hijacks, or squatting as we may also call it, in Europe.
“The world has changed, and examples of hijacks of Chinese brands in Europe are mushrooming,” says Jani Kaulo.
In an early October issue of The Economist, Kaulo mentions the Chinese company, Tianjin Wanda Tyre Group, as an example. They manufacture motor vehicle tyres that are also imported to Finland. Kaulo has himself handled a dispute where a Finnish company, aware of the Chinese company and its most important brand, registered the tyre trademark WANDA for itself in the entire European Union.
“A Finnish company selling motor industry products online ordered Wanda tyres from China and resold them in Finland. The company marketed them as tyres of the Tianjin Wanda company, and the Wanda logo was displayed in the sales brochures. Later, the company asked the tyre manufacturer to grant exclusive sale rights to Finland,” Kaulo explains the early phases of events.
The series of events started in 2010. The Chinese did not grant exclusive sales rights to the Finnish company, because there were a few other retailers of the same tyres in Finland, and some had been selling these tyres longer than the company requesting the exclusive rights.
“Next, the Finnish company seeking exclusive rights applied for an EU trademark for the tyres and got it registered. Getting the EUTM registration was possible for the Finnish company, because the Chinese had not applied for a trademark registration for their tyres in Europe - although they had been selling their products in Europe for years.”
After this, the company approached other Finnish companies selling Wanda tyres, claimed that they are infringing its EU trademark and forbid them to sell Wanda tyres under the threat of compensation for damage.
When the companies received the warning letter from the company applying for the EU trademark, some of the Finnish companies selling the same tyres got scared and stopped retailing. However, one of the companies was tougher and did not swallow the sales ban and claim for compensation. When it contacted Kolster, Jani Kaulo started to familiarize himself with the case, and contacted the Chinese manufacturer of Wanda tyres.
Kolster started to cooperate with the Chinese and tried to invalidate the EU trademark registration by the Finnish company.
“In the opinion of the Chinese, the registration has been applied for in bad faith to begin with, because the registrants were aware of the Chinese Wanda trademark at the time of filing the application. The Chinese invoked the so-called agency clause, according to which a retailer has no right to register the trademark of the items it is selling in its own name. Invoking the clause was not, however, enough because unfortunately we did not succeed in getting all the material of the use of the trademark that we would have needed to win the case.”
Finally, the EU trademark office took the view that the Finnish company had not acted in bad faith. It was enough that the Finnish company had an earlier Finnish trademark registration for motor vehicles and their parts from 2006. The company was considered to have been acting with commercial logic when seeking for a wider protection for its trademark in all of Europe.
Justice did not win, say the Chinese.
“In their view, this was a trademark hijack, pure and simple - but there were reasons for losing the case. The process would have required much more devotion from the Chinese than what they were willing to give.”
According to Jani Kaulo, the decision by the EU trademark office is questionable, to say the least.
The EU trademark officials did not take into consideration the fact that the Finnish company applied for an EU trademark registration shortly after the Chinese company had denied the exclusive sales rights from it.”
In addition, the interpretation of the EU trademark officials of commercial logic can be easily questioned.
If the case had been just about an expansion of a Finnish trademark right to the European Union, why did the Finnish company apply for an EU trademark registration for tyres only, but not motor vehicles, that is, its main products.
Kaulo explains to The Economist that the Chinese have in their hands a big global problem, if they do not take their intellectual property, or IP, rights seriously.
“Europeans are interested in Chinese brands. If protection is not seen to, there will always be those taking advance of the situation. Some of the hijackers are Chinese individuals living in Europe, but not all. We Finns can do it, too,” says Kaulo
Over the past couple of years, cherishing IP rights has gained more ground in China. One of the incentives is the trademark disputes of the type of the Finnish case, which the Chinese lost.
“The protection of Chinese-language trademarks is currently weak in Europe. However, Chinese companies have begun to realise the importance of protecting brands and trademarks in business, and due to the trade war with the United States, they are eagerly seeking new markets in Europe.”
Kolster has helped Chinese companies in IP matters for years. The Kolster China Desk™ services, headed by Jani Kaulo, help Finnish companies trying to get to China and Chinese companies looking to enter the European market.
For example, this autumn in the China Trademark Festival in Tangshan, China, Kolster held a EU trademark clinic for the members of the China Trademark Association. Kolster was also the first foreign company to take home an award from this major international event, in recognition of its long-term work in the trademark field.
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