I think it is a good news to HKSME which wants to expend their brand name in China. Even HK$500,000 is little money to promote brand name in China. (As our last dairy stated, JDB has spend 12 billion on their brand name building), However, it is also an incentive to HKSME and HK advertisement & PR agents.   

I think if HKSME wants to expend or build up their brand name in China. They need following steps: 

1) Trademark or patent registration in China 

2) To build up the sales channel 

3) To proceed promotional campaign

By the way, HK$500,000 is maximum and support half of the promotional campaign. That means HKSME need to prepare another HK$500,000 or even more for promotional campaign and more fund for operation budget such as building up sales channel, etc. 

There are 2 difficulty for building up brand name in China. One difficulty is to handle the imitators. Another difficulty is to handle large size of map. Actually, Trademark or patent registration in China is 90% successful to protect their brand name. Surely, there are some small imitators may take risk to do the one-time copying. However, at that time, that means the brand name is famous enough. 

Some may misunderstand that patent applications take few days only. Actually, it needs around few years.  

Even size of China Shenzhen region is many times of HK region. Therefore, it is another challenge to a company for how to make promotional campaign to contact their target customers.

Check out details here.

Recently, when I was eating in Chinese restaurant and a waiter gave me a Herbal Tea printed in red and called "加多寶“ (JDB Herbal Tea), it made me curious what was the story behind this red package renamed. Actually, JDB Herbal Tea was called Wong Lo Kat Herbal Tea before. Since in my childhood, it had many advertisements covering all printing and TV advertisement. It was famous in HK in a period then suddenly disappeared in HK supermarkets and convenience stores. However, it has silently covering all restaurants and supermarkets in China. From historical record, the JDB group had purchased the trademark of "Wong Lo Kat" since 1990. Around 20 years, It had over 100 billion revenue in 2008 and it had 150 billions revenue in 2010. The trademark of "Wong Lo Kat" was worth 22 billions in 2006. There were some other similar drink brands from HK to enter China market but they had no such bright result. This legend was ended in 2011 when guang yao group (廣藥集團) had no more authority of this trademark to JDB group. 

We are not commenting from the legal aspect. However, from the economic side, we can find some implications: 

1) Trademark can be cost unbelievable worth or cost nothing. Around 1990, guang yao group (廣藥集團), JDB group and everybody believe "Wong Lo Kat" worth 600K only. However, it is worth 22 billion in 2006. Surely, nobody knows how much it costs after 2020.   

2) JDB Group CEO is smart and brave to buy the trademark of Wong Lo Kat Herbal Tea and promote it to number one drinks in China. However, can he makes another legend by JDB Herbel Tea name? With the old and same equation of Herbal Tea and heavy promotional strategy, some still guess their sales revenue will decrease from 150 billions to 100 billions. There are some critical points to be considered. 

a) JDB Group is still holding the trademark of "Wong Lo Kat" in HK. Even "Wong Lo Kat" faded out in HK market. However, if they keep same name selling in HK market. It makes inland customers confused. The worst situation, when a customer is confused by both name, they will choose the third brand in market. Even the HK market is small, however, it affects those inland customers who always travel between HK and Guang Dong region. 

b)  The sales channel is critical to market share in China. Actually, guang yao group (廣藥集團) has more than thousand medical retail store. Furthermore, it has signed contract with another group for nearly 13K retail selling points in China. That's why they have confidence to collect the trademark of "Wong Lo Kat Herbal Tea" back. With the free rider on strong promotional strategy many years, they only provide enough selling point, then customer will pick them up. Therefore, they spent 7 millions promotional budget only in 2012.

c) The cost of JDB group is heavy when the cost of guang yao group (廣藥集團) is little. Compared to 7 millions promotional budget, JDB group has already spent 12 billions (50% increase compared with last year) to build up their new own brand drink. It does not include other costs such as renew packing, stocks replacing, etc. JDB group has fixed factories for Herbal Tea production while guang yao group (廣藥集團) is contract working with different factories for production. JDB group needs large amount of sales to keep their factory for running. Therefore, they need customers replace JDB Herbal Tea instead of "Wong Lo Kat Herbal Tea shortly. Otherwise, it will make their annul revenue decrease much continuously. 

d) Some believe it is lose-lose situation. When guang yao group (廣藥集團) suddenly diversify its business to drink industry. Actually, guang yao group (廣藥集團) has no production lines but give authority to more than 4 factories for production. It means the quality and taste is a little different. In worst situation, guang yao group (廣藥集團) will make Wong Lo Kat Herbal Tea become no more welcomed by Chinese. and JDB group is also been kicked out from the market. Surely, Guang yao group (廣藥集團) will think it is win-lose situation, Guang yao group (廣藥集團) give up the choice to arise the trademark fee but choose to add this 150 billion side revenue to their 450 billion core business revenue. Compared to JDB group's core business is Herbal Tea, Guang yao group (廣藥集團) still wins in case they get 1% market share only.

The story is totally different in case JDB group keep "Wong Lo Kat" trademark but Guang yao group (廣藥集團) starts their own brand name Herbal Tea. Therefore, we can see the value of trademark is hard to measure.

Related news in Chinese:

news reference 1: http://big5.ce.cn/gate/big5/district.ce.cn/newarea/roll/201207/17/t20120717_23497293.shtml

news reference 2: http://www.singtao.com/yesterday/chi/0821eo02.html

news reference 3: http://big5.jrj.com.cn/gate/big5/finance.jrj.com.cn/industry/2012/09/04031314342020.shtml

history record reference: http://zh.wikipedia.org/zh-hk/王老吉涼茶

China trademark "Only if you are interested" 非誠勿擾

Jiangsu Broadcasting Corp was recently sued over a trademark used for one of its most poplar TV shows. Jin Ahuan, an e-business worker, said he registered the trademark 非誠勿擾 - or "only if you are interested" - for matchmaking and marriage services in 2010.

In the same year, Jiangsu TV started a dating game show with the same name, which Jin said infringed his trademark right. But attorneys for the defendant said the two marks "belong to different categories and look different".

As a matter of fact, the movie 非誠勿擾 (translated as If You Are The One in IMDB) was shown in China and all over the world in 2008! The story was about match making that a Chinese man and woman trying to find the right person. So who is infringing whom?

The problem of trademark protection in China

Everybody read about Apple settles iPad trademark case in China with payment of USD60 million to Proview. If you missed this news, you can check this out in New York Times.

This is only a reflection to what is happening in China related to 'well known' foreign trademarks. As we wrote earlier, we are getting cases related to trademark squatting in China. Individual, not a business, registers hundreds of foreign trademarks waiting to sell it. The iPad cases just proved that it can be a good business. Recent cases also demonstrated that posting a registered mark for sales is not a good reason for 'applicant with bad intention', the real trademark owner still have a hard time to fight back. All these combined, actually let the Chinese 'seller' set a higher price to sell the registered marks.

The bad things is, trademark squatting is spreading to Hong Kong. What we can tell is, if you value a name or symbol that your business had been using for a long time, and you have intention to coming to China or Hong Kong, do the mark registration ASAP.

Of course, we do trademark too.

Trademark registrations in China

The latest number of trademarks applications reached 10,000,346 in China as of 29 March 2012. The cumulated number of trademarks granted was 6,892,999.

The annual number of applications reached 1.41 million in the year 2011, a growth of 32% over 2010.

This is a big number, but how many of them are squatters?

Trademark squatting in China

We are surprised by the depth of trademark squatting until we see one.

We came across a case whereby a trademark registered in Australia for the sales of fashion clothing. The lawful owner then applied for registration of the same mark worldwide. But the registration of the mark failed in China, as it was already registered. We were then asked to provide our opinion on the subject.

We search a few Chinese web sites and found that the goods were sold in www.taobao.com (something like eBay) That is, they are being sold on a small scale in China and the manufacturer does not have a presence in China

When the "lawful" owner of this mark wanted to apply it in China, it was rejected as the same mark was registered a few years back. When we were asked to provide opinion on the subject, apart from the normal thing, we also found out that the Chinese trademark owner was an individual instead of a company that also applied another 50 trademarks under the same class 25. Some succeed and some failed.

This person had yet to apply any mark for Chinese products, what an individual with international prospective.

What it takes for his attention to apply for a mark registration? All these marks are national or international brand that have yet to have a presence in China. So that good citizen of China is creating brand awareness before their lawful owner.

We were thinking should we start an anti-squatting action to call each lawful owner to instruct us to get back the trademark from these Chinese squatters. To be or not to be, that is a problem when we have spare resource. Advert time: For those foreign trade mark agent or trade mark owner, you can have us to do some search, may be something interesting may pop up.

McDonald's blocks the yellow ‘’W’’ on red!!

"You use 'M' as your company trade mark so that I would be banned to use 'W'? Your 'M' trade mark represents a door, whereas our 'W' represents a container. There is no relationship with McDonald's," a spokesman of 'WONDERFUL萬德福' said.

'WONDERFUL萬德福' is a company involved in producing different kinds of foods and related services in China, uses a yellow 'W' on red as its trade mark. In 2003, WONDERFUL's trademark registration was objected by McDonald’s. The outcome was that WONDERFUL was revoked with the registration in the restaurant category.

However, McDonald’s does not satisfy the result and further pursue for the removal of the 'W' mark completely.

The legal process is now being handled in Beijing's court. http://hk.news.yahoo.com/紅底黃字w商標-麥當勞要封殺-213301877.html

China prepare to put in more effort to protect IP rights of foreign enterprise

In a news announcement made on 8th November 2010, Chinese authority reinstate it's effort to protect IP rights of foreign enterprises.

A meeting was held in Chongqing City (重庆) on 7th November 2010 on the subject matter. The head of State Intellectual Property Office said that 100 or more policy had been rolled out annually in the last 5 years.

It was felt that China has developed leading edge technology in some of the fields, including energy, high speed train and information technology, as a nation, China should have interest in protecting itself in the IP area.

I hope foreign enterprises really had felt the effect in the past 5 years and give hope in the coming years. However, it is still not an easy task to deal with local authority, including the court and custom office with issues related to IP, not to mention when you have to deal with local administrative officials if there is a factory making infringement goods.

The Chinese news announcement can be found here.

China “National” Products – with or without

Do you love your country? This is a question always asked by the authority. How do you define a “patriot”? How about consuming the national brands of products? Well, the names of national brands of products in China usually start with “Kuo” which means “country” or “national” …

“Bank of China” (中國銀行), “Petro China Company” (中國石油天然氣股份有限公司), “National Wine: Gui Zhou Moutai” (國酒貴州茅台), “Chung Hwa Pencils” (中華牌鉛筆) … wait a second, are they really produced by the country?

Some Chinese parents have a preference to name their children starting with “Kuo” (國) (pronounced in Putonghua) or “Kwok” (國) (pronounced in Cantonese) as their first name, it means “country” or “national”. They would usually add another preferred element/meaning as the second name after “Kuo” or “Kwok”, e.g. Kuo-Ming (means “clever”) for boys, Kuo-Mei (means “beautiful”) for girls … wait a minute, are they “made in China”?!

You may consider the above ridiculous, however, it may become necessary after an official notice about products containing the name or trademark as “China”, “country” etc. has been published at the PRC’s Trademark Office, the State Administration for Industry and Commerce (CTMO) on 28 July 2010.

This notice is composed of 3 major parts:

(1) Compliance of Laws/Regulations (法律依據);

(2) Review of trademarks containing the word of “China” (含「中國」字樣商標的審查審理標准); and

(3) Review of trademarks containing the first word of “country” (首字為「國」字商標的審查審理標准).

Ironically, some “national” brands of products exist in the market for a long period of time, causing the consumers (local and overseas) to believe that they are really produced by the country! The best example is “National Wine: Gui Zhou Moutai” (國酒貴州茅台). It is usually served for overseas (especially from USA) presidents, ambassadors and senior officers in China since mid 1970’s.

With the enforcement of this new law/regulation, some existing “national” products which have been in the market for some time would be put in an embarrassing position. Hopefully the brand-building of these “national” products is blossoming in a mutual-beneficial way!

DAB Trademark – Class “25” & “Class 41”

Another Chinese New Year tradition in Hong Kong is, going to the “flower market”!

It usually starts 5 or 6 days before the Chinese New Year, ends on the dawn of the New Year Day. The flower-owners and other stall-owners would usually drop their prices towards the dawn on the last day with a view to get everything sold. They would even destroy the flowers, tangerines etc as “want money don’t want goods” is their collective goal!

There are several flower-markets (Causeway Bay, Mong Kok, Kwun Tong, Tsuen Wan etc) and the biggest one is Victoria Park in Causeway Bay where a few pan-democratic parties would normally make use of this good chance to promote their own political parties.

After the recent “5 District Resignation” which aims at witnessing their belief on “universal suffrage” by Civic Party (“CP”) and League of Social Democrats (“LSD”) (the two political parties in Hong Kong), supporters have different ideas to support such movement. They put forward a sale of their design of tee-shirts (2 different style) of which the profits will go to the funding of this new political campaign in a booth in Victoria Park. In one of the two tee-shirt design, there is a similar trademark (both form and color) of their competitor – Democratic Alliance for the Betterment and Progress of Hong Kong (“DAB”). This particular design is to put a mark that is similar to DAB’s trademark in the left-hand side, then following with a famous Chinese 4-word proverb whereas the last word means “shame” is missing. For the non-Chinese reader, that 4-words are always used together. Thus by quoting only three words, that implies “shameless”.

The idea is to use the DAB registered trademark and slightly modify it to make it looks different for the knowing, or if you really want to find out the different, but looks the same for the lay man. That is, the tee-shirt would implies that DAB is shameless. Subsequently, DAB was offended!

DAB has lodged a complaint as they are of the view that their trademark has been infringed. In the afternoon of 12 February 2010, the last second day of the flower-market, a few officers from Customs and Excise Department went to this booth to collect the unsold tee-shirts with a view to investigate the intellectual property infringement.

The “Trade Mark Record” as obtained from the Trade Marks Registry, Intellectual Property Department, shows that their registration number is 200102834, they registered for it in 1999 with the expiry date on 26 April 2016. They are registered as “Class 41” of which the specification reads: “arranging and conducting exhibitions, conferences, public meetings and group discussions for cultural and educational purposes; arranging and conducting lectures relating to culture and education; publication of books, magazines and printed matters; conducting and arranging conference, exhibitions, public meetings, group discussion and lectures relating to political affairs and elections, and the safeguard and maintenance of social and political stability in Hong Kong; all included in Class 41.”

Unfortunately, they have not registered for “Class 25”! If they do, they would have the exclusive right to use the mark for tee-shirts or other clothing. Without that, it can become a “passing off” case, they may consider to take civil proceedings. Infringement and passing off are different concepts in terms of intellectual protection and the whole case of Customs and Excise Department taking such a high profile action can be an interesting topics in the coming few weeks.

For further information, “Class 1” to “Class 34” are for “goods” while “Class 35” to “Class 45” are for “services”. Details can be found here.

Now it is time for me to make some purchases at the flower-market and check out other infringemnt cases! Well, as I am told that I look like Andy Lau, please do not ask for my autography or taking photos with me if his fans meet me there!

See you soon in the year of Tiger!