Heineken in trademark dispute with Chinese sewing company

Global beer brewer Heineken has accused a Chinese sewing company of trademark infringement.

The Dutch company is claiming that Wujiang Xili Machinery Factory has been pirating its famous name and logo and demonstrated it at a trade fair in Shanghai last week.

Earlier this year, China’s State Administration for Industry and Commerce ruled that Wujiang Xili acted in “bad faith” in applying to register two Heineken names.

However, the company, which has fewer than 50 employees, successfully registered a third version, which the brewer has petitioned to have cancelled.

The case comes at a time when China’s trademark law is in the spotlight with significant changes recently given the green light.

Under the new laws, which will go into effect in May next year, courts can issue statutory damages of up to three million RMB ($490,000), for trademark infringement, six times the current maximum.

There are also rules preventing trademark agents – which must be used by foreign companies wishing to file Chinese applications – from acting in bad faith.

But the problem of trademark squatting, where local companies register trademarks similar to popular brands before the brand owner, is still prevalent.

Last month, US car manufacturing company Telsa Motors’ attempt to break into the Chinese market was met with opposition by a local businessman who already held a trademark for its name.

“The new trademark law has a provision that aims to shift the burden onto the applicant to show they acted in good faith. That is a positive step, and addresses one of the biggest problems in China right now,” said Luke Minford, chief executive of Rouse, who spent 14 years working on IP matters in China.

“The bad faith applicants that are currently getting away with this have no legitimate business interest and generally search and file multiple applications against well-known marks in the hope that they can extort money from the rights owner.”

However, Minford added it would be unfair to liken the case to other examples of trademark squatting in China including a case involving a company Proview Technology, which claimed it had rights to the ipad trademark in China.

Apple eventually agreed to pay Proview $60 million last year to settle the dispute.

“That is quite different (in my mind) from this case – a small infringer with a legitimate and unrelated business who has registered a mark very similar to Heineken’s,” Minford said.

Akash Sachdeva, partner at Edwards Wildman Palmer LLP in London, said the Heineken trademark would likely have been recognisable in the Chinese market for a number of years already.

“It’s a very well-known trademark and probably recognisable enough to be registered as a well-known mark,” Sachdeva said.

“I would imagine Heineken takes a view that piracy on its IP rights has very serious ramifications.

“They may be doing it [carrying out legal action] as more of a PR stunt to show the Chinese public and world that they are serious about protecting their rights.”

Heineken did not respond to requests for comment.