As Australian brewers increasingly look towards growth markets in Asia, warnings have been issued about the risks of trade mark squatting.
Senior Associate at FB Rice Patent & Trade Mark Attorneys Lara Gun, affirmed that trade mark squatting is one of the greatest intellectual property risks Australian independent brewers face overseas.
Trade mark squatting is when a third party registers the trade mark of a legitimate owner with a view to extracting a financial sum in exchange for transfer of ownership and the threat of suing for infringement if the legitimate owner uses the mark upon products in that first-to-file country such as China. There are parties which trawl the Internet for new product names that are not registered in first-to-file countries and they will even register such marks in bulk.
“Squatting is a huge business in countries where rights are afforded to first-to-file not first-to-use,” Gun explained.
“If you don’t get your mark registered you will face the risk of someone else getting it.”
“If you’ve got $100,000 worth of beer arriving in a foreign country where another party has registered your mark, you could have that seized at the border and face an infringement action.”
“There’s just story after story of this happening to Western businesses,” she said.
For clients with an average-sized business, Gun said it could cost them up to US$50,000 to buy their trade mark back from a squatter.
In her presentation to the brewing industry at BrewCon last month, Gun said that in Australia, trade mark rights are derived from a first-to-use basis, not a first-to-register or first-to-file. This means that whereas in Australia evidence of prior use and reputation – common law rights – are recognised, rights based on use and reputation aren’t recognised by first-to-file countries like China, Vietnam and Thailand.
“Of the 5.75 million trademark applications filed in China last year, 30 per cent are thought to be fraudulent,” Gun said.
“The message I’m trying to get across to brewers is to register their marks and logos in Australia and overseas but also the transliteration and/or translation of their marks and logos into foreign words or characters in those overseas countries.”
Gun cited Treasury Wine Estates’ landmark case victory last year, against a Chinese individual who had registered the Chinese transliteration for Penfolds, Ben Fu, in 2009. The Beijing High People’s Court affirmed TWE’s lawful right to use and market the Ben Fu trade mark because the individual had failed to demonstrate any genuine use of the mark.
Gun also referenced Apple’s iPad trade mark dispute with a Chinese flatscreen contract manufacturer, which resulted in Apple paying US$60 million for iPad naming rights in 2012.
Gun said that there’s definitely an imperative for companies to register their trade marks, here in Australia and overseas. She reiterated that brewers have got to realise just how lucrative the overseas market is.
“Australian products are becoming more and more popular and there’s a massive demand in China for products that are clean, green and high quality.”
“Craft beer is certainly taking off in China, it’s an incredibly lucrative market for Aussie businesses.”
“If you want to go into the overseas markets you’ve got to have a trade mark strategy in place,” Gun said.
“I’ve had some clients, including in other industries, where they say I’m getting on a plane next week to a foreign country and I’m going to meet potential distributors.”
“You just don’t start thinking about your IP strategy then.”
The best way is to file an international application based on your Australian application, with the Madrid International Trademark System, of which Australia is a signatory. The Madrid Protocol simplifies the process for protecting trade marks in other member countries and is the most cost effective way to register your brand.
“To safely access overseas markets, it is necessary to ensure that you have the right to use your trademark in that country. What’s more, distributors in that market will most likely require evidence of an existing trademark registration before entering into any contractual arrangements with you,” Gun explained.
“Also, if you ever sell your business, the buyer is likely to require that as a condition of sale, your marks are registered overseas.”
“A trademark registration is therefore a valuable asset and a powerful tool for protecting your brand against infringers.”