Chivas Regal falls victim to bad-faith trademark filer

March 22, 2012 | BY

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Beijing Intermediate People's Court has rejected Chivas Regal's trademark infringement lawsuit against clothing company Chivas Regal 88. Along with the high-profile problems of Apple and Hermes, the case highlights the weaknesses in China's Trademark Law.

The PRC Trademark Law (中华人民共和国商标法) has come under fire again this year as the Court ruled against the Chivas Brothers, owned by Pernod Ricard, claiming insufficient evidence that a businessman only known as Wen, infringed upon its trademark.

Wen registered Chivas Regal 88 in 2003 as a trademark for garments, shoes, and hats. At the time, the Trademark Office rejected complaints filed by the whiskey distiller.

At present the Trademark Law does not make filing in bad faith a reason to invalidate trademark registrations. “This is one of the big loopholes,” said Howard Tsang, partner and head of Wilkinson & Grist's Beijing office. Tsang argued that the forthcoming amendments to the law should close this loophole, making it easier to oppose or cancel a mark.

Four years later in 2007, Chivas applied to the Trademark Review and Appeal Board (TRAB) to review the legitimacy of Wen's mark. The TRAB ruled against Chivas, citing that Wen did not violate China's Trademark Law because Chivas Regal 88 is used on products in a different class. It is unclear why Chivas waited so long to bring the case before the TRAB.

One possible solution available to Chivas was to register their brand across multiple classes. However, this is not only costly, but also can prove futile, as an unused trademark is at risk of a cancellation action. BMW, Porsche and Ferrari combat this problem by selling products across multiple classes. Their shops occupy malls across China selling products ranging from t-shirts to USB memory sticks. “There is a limit as to how extensive the business scope of a company can be though,” said Tsang.

Chivas argued copyright infringement of the Chivas Regal trademark, including its graphic design, that Wen's mark infringed upon their well-known brand and that the company already used Chivas Regal on clothing. But the Beijing Court denied the lawsuit on all counts last month.

The Court's decision is an important reminder that well-known status is recognised on a case-by-case basis. While well-known status usually helps protect foreign brand owners, in this case it failed Chivas. Arguing copyright infringement is also another route brand owner's can take. “The problem is that unless they are stylised, word marks do not attract copyright protection. There are other difficulties as well, such as proof of ownership and validity period,” said Tsang.

Insufficient evidence was the Court's main finding, as Chivas could not prove the brand was well-known when Wen registered his mark. The company also could not prove its design was completed and unveiled before Wen's registration. The argument that Chivas was already using the mark on clothing did not hold up either as it was only used on uniforms, not clothing for commercial sale.

The Chivas case is one of several issues brand owner's face when doing business in China. “International brands should voice their concern to the Chinese government to change the law,” said Tsang. It is unreasonable for the government not to take it seriously, as bad faith alone is sufficient to transform this problem. With Apple, Hermes and now Chivas all facing problems with their trademarks in China, only time will tell if these international companies can pressure the government into changing a law that many believe fails to protect brand owners.

By David Tring

Chivas Regal falls victim to bad-faith trademark filer

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Chivas Regal falls victim to bad-faith trademark filer

Further reading:

This premium content is reserved for China Law & Practice Subscribers.

This premium content is reserved for
China Law & Practice Subscribers.