May 2006
Why Ambassador, with this Chinese trade mark judgment, you are really spoiling us!
Chocolate manufacturers Ferrerro have reaped the rewards following a long drawn out trade mark battle in the Chinese Courts. Various of Ferrerro’s brand including Ferrerro Rocher and Mon Cheri have long been the victims of counterfeiting in Asia. Ferrerro has been the victim of a carefully planned infringement campaign in China over several years. The infringers, “Montresor” used an unusual strategy for infringers in Asia by aiming their products at the same market as Ferrero i.e. high end chocolates rather than putting infringements into the lower level local retail market. This meant that on occasion the infringements could actually be found for sale alongside Ferrero’s products.
Brief History of Facts and Filings:
- Early 1980s Ferrero begin importing into China under names “Ferrero Rocher” and “jinsha”
- 1986 Ferrero obtains registration for “Ferrero Rocher” with its famous graphics (a lacey oval) but fails to apply for “Jinsha”.
- 1990 Local Chinese company “Factory One” begins selling its chocolates with nut centres in gold foil wrapping in a similar style to Ferrero with a similar label and makes trade mark application for “Jinsha”
- Subsequently Factory One makes a trade mark application for Jinsha in combination with an oval graphic similar to that of Ferrero. This application was opposed by Ferrero. The Trademark Examination Board ruled that, although Factory One's trademark and Ferrero's trademark used different words, the graphics were very similar in features and visual effect and it turned down Factory One's application.
- Factory One continues to use the well known Ferrerro Rocher get up on its packaging. The Chinese company was extremely successful winning local awards and accolades.
- 2002, Factory One assigns the Jinsha trademark to its joint venture company Montresor
- Montresor began to market the product as “Jinsha Tresor Dore”,
- 2003 Montresor obtain registered trademark for Tresor Dore.
- 2003 onwards. Montresor continues to use elements of packaging and trade dress resembling Ferrero’s get up and branding.
Unfair competition
Ferrero was unable to rely on trade mark law as it had not registered the appropriate marks therefore it was forced to turn to the harder to prove and enforce law of unfair competition.
Under Chinese unfair competition law, where a company’s products are well known it is an offence to cause confusion between your product and theirs. In 2005 Ferrero therefore went to court accusing Montresor of having copied its trade dress amd get up resulting confusion amongst consumers. Unfortunately the court held against Ferrero since the court believed that Jinsha had actually become more famous than Ferrero Rocher. The presence of differing trade marks also assisted the consumer to differentiate between the two similar types of packaging.
A recent appeal of this case has seen the judgment fall in Ferrero’s favour however it remains to see whether the case is at a close however as it is rumoured that Montresor have still not paid the damages awarded by the court and it is also possible that infringements are still on the market.
BRIFFA Comment:
This story highlights the fact that it goes without saying that you should seek where you can to obtain trade mark protection not only for your main brand but also for the Chinese version of your brand.
It is a common misconception that companies manufacturing in China need to be more worried about counterfeiting than those merely importing goods into China. This is not necessarily the case since although there is the ideal opportunity for counterfeiting during the manufacturing process, the margins are not that great. Where a product is imported it is invariably more expensive on the Chinese market so a counterfeit version can also be sold for more.
Essentially these are the two main options for trade mark owners attempting to prevent counterfeiting in China.
- Administration Enforcement Agencies. Traditionally these agencies have been able to act more quickly, more cost effectively and with more positive results than the court system. One negative point is that although agency raids have an immediate visual impact the resulting fines are often considered to be low.
- The Chinese Court System. In the past some foreign companies have been of the opinion that the court system was slow, comparatively expensive and once a judgment was obtained it needed to be enforced whereas a raid was immediate.Recent cases in which foreign companies have seen success (such as the Starbucks case, see report elsewhere on this site) are likely to increase confidence in the court system however.
If you fear that you are suffering from infringements in China please do contact us and we can work with you and our associated offices throughout China.
Sarah Jeffery