Double Standards for Chinese and Foreign Big Brands?

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Last updated at: (Beijing Time) Wednesday, September 25, 2002

Double Standards for Chinese and Foreign Big Brands?

Searching "famous brands" of soft drinks on the website of Beijing Trademark Association, you can only find familiar names as Yefeng, Jianlibao and Robust, but not the more popular Coca Cola and Pepsi-Cola. This may give headache to many transnational companies...

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Although foreign "big brands" have been suffering huge losses caused by trademark infringements, China is denying adoption of "double standards".

Searching "famous brands" of soft drinks on the website of Beijing Trademark Association, you can only find familiar names as Yefeng, Jianlibao and Robust, but not the more popular Coca Cola and Pepsi-Cola. This gives headache to many transnational companies and the "Wall Street Journal" even deemed it as a "discriminative trademark evaluation system".

These companies may feel a bit relieved when the "Regulation for the Implementation of the Trademark Law of the People's Republic of China" came into force on September 15, which made clearer the protection for famous brands.

Prior to this, these transnational corporations have been complaining that they can not find their names among the list of 293 big brands recognized by China. They believe that to become a famous name will bring better protection. They attributed infringements on their products, even the high cost of striking fake goods, to the trademark evaluation system of China.

In fact, the question is far from being so simple as they imagined.

Huge losses

Counterfeited goods are a big headache, as confronted by Panasonic. Two fake good producers registered a company in Hong Kong under the name of Hong Kong Panasonic Co., Ltd, and trusted an enterprise in Shunde for manufacture, then labeling its products with Panasonic trademark and dispatched to markets nationwide. In fact, the registered company had nothing to do with the renowned Panasonic Corporation.

"This created confusion", a Panasonic copyright chef complained, "customers cannot tell which is real product but take ours as fake", as this batch of fake goods were sold in more than 20 chain stores across the nation.

"We only strike fake goods when it affects our market share, i.e., we have to consider the cost", Panasonic said.

Another giant Sony met similar problems. A manager of Sony's China branch said that Sony mainly depends on its law department in Hong Kong to clamp down on fake goods, "the cost will be too high if we trust a lawyer's firm to do it".

"Facing a trivial infringement you don't know whether to fight it or not", Panasonic said, "they just like little wood-nibbling worms. Should you turn a blind eye to them, they may eat out a whole table before you come to find out". "But you can not simply deal with all fake goods under your brand, for the cost is too high and we don't have enough hands. What's worse, in China, even though you launch strikes it's hard for you to get compensation".

These companies are quite reasonable to complain. Statistics show the value of fake goods on Chinese markets reached 16 billion US dollars with some two fifth companies losing over 20 percent income due to fake goods. For example, P&G loses 150 million US dollars each year caused by counterfeiting.

"We hope that China's judicial departments will strike harder and impose more severe punishments", Sony said. While Panasonic raised three reasons for the situation. First, many Chinese enterprises don't respect intellectual property rights. Secondly, the punishment is very light, and the third is local protectionism.

Double Standard?

The fundamental difference between registered trademarks and recognized famous brands is that the latter can be protected across commodity categories, said Huo Aimin, a trademark agent with the China Council for the Promotion of International Trade. For example, in the Marlboro case, products as radio, shampoo and tissue paper under the brand of "Marlboro" were all regarded illegal since the brand was authorized as a famous cigarette make.

For transnational companies, things will go all smoothly once their brands get recognized as "famous" ones. "Then we will get the same national treatment with Haier," Panasonic said. But it will be too difficult to apply for recognition in a single dispute.

While the current 293 recognized famous brands have historical reasons, said Lu Pushun, secretary general of the China branch of the International Association for the Protection of Intellectual Property. In the past, many Chinese trademarks were registered by foreign countries and for protecting national brands China's provinces were asked to submit famous brand applications. But protection for foreign brands also began early, Lu added.

Although China didn't recognize foreign brands as famous ones, it will also give them protection in accordance with international practices, said professor Li Shunde with the center of intellectual property under Chinese Academy of Social Sciences. Here the international practice refers to the Paris Convention for the Protection of Industrial Property China joined in 1985 and the TRIPS treaty of World Trade Organization. As a WTO member, China is bound to abide by the two treaties so the "double standards" labeled by foreign companies don't exist, Li explained.

Now the State Administration For Industry and Commerce is discussing detailed rules for application from foreign companies, which is expected to be published in October, and the biggest possibility is to adopt international practices in recognition of famous brands.

By PD Online Staff Li Heng

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