Hermès Loses Trademark Fight in China

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Earlier this week it was announced that Hermès, the iconic French purveyor of luxury goods, lost its battle against the Chinese Trademark Appeal Board over the Board’s refusal to cancel a trademark registered to a Chinese men’s apparel company that bears a striking resemblance to Hermès’ Chinese name. Hermès’ defeat is the latest case that highlights the legal issues that arise in jurisdictions that adopt a “first-to-file” regime, setting the stage for opportunistic trademark squatters.

When Hermès registered its mark in China in 1977, it did not apply to register its Simplified Chinese name. Fast forward almost twenty years later, in 1995, Guangdong-based fashion outlet Dafeng Garment Factory (Dafeng) registered a mark exceedingly similar to the Chinese name of Hermès, differing by just one stroke on the character “ma.” Hermès unsuccessfully filed opposition to the Dafeng’s application to register in 1997 and Dafeng’s mark was officially registered in 2001.

In 2009, Hermès once again appealed to the Board requesting the cancelation of Dafeng’s mark. Hermes argued that its moniker was globally recognized and associated with the Hermès brand and that Dafeng was unfairly profiting from the association. However, the Appeal Board was not persuaded by Hermès’ argument and ruled against the luxury powerhouse in May 2011. The Appeal Board reasoned that the evidence presented by Hermès, consisting of media reports that originated after Dafeng had already registered its mark in China, was insufficient to warrant cancellation of Dafeng’s mark. The Appeal Board further found no evidence that Dafeng obtained the mark by improper means.

Hermès’ Leo Lui, the head of the French luxury house in China, issued a statement yesterday during a luxury brands forum in Shanghai, reassuring that the company’s battle to protect its intellectual property in China is not over yet, stating, “[T]he case has not been resolved yet. We don’t know the outcome.” According to ShanghaiDaiy.com, Lui reassured that Hermès does not intend to change its Chinese name, adding that “[T]his only affects one product category—apparel. All the others are registered. There are always trademark issues in China.”

Hermès is just one of the growing number of companies that is currently involved in trademark related disputes in China. Others include Apple, currently embroiled in a legal battle over its right to the iPad brand in China, Michael Jordan who recently filed a lawsuit against a Chinese sportswear producer that registered and used his Chinese name on their products and Knicks star Jeremy Lin. The legal disputes stem from the fact that China is a first-to-file jurisdiction, meaning that simply being the first in time to register a mark is enough. Compare that to the regime implemented by the U.S., which requires a party filing to register a mark to show that the mark is in use or will be in use in the future.

The takeaway from this example is that companies must be diligent in registering their marks in China and in other Asian countries that have implemented similar intellectual property frameworks. From the very outset, companies should register marks in both the English and Chinese translation of the name in order to avoid the outcome that Hermès must now face.