Luxury shoe designer wins two-decades-long China dispute
Precedential judgment enables brand to use trademark in China | 'Landmark' case could transform rights of brands under country’s ‘first-to-file’ system | DLA Piper | Simmons & Simmons | Gowling WLG.
London-based shoe designer Manolo Blahnik has triumphed in a 22-year-long case, meaning the brand will now be able to use its name as a trademark in China.
The judgment, which concluded earlier in July in the Supreme People’s Court of China (SPC), was announced by the company today, Tuesday, July 19.
The case may signal a turning point for foreign brands who wish to sell directly to the Chinese market.
Kristina Blahnik, CEO of the company and niece of the Spanish founder, said (as reported by "Jing Daily"): “We think the outcome in this matter is a strong precedent that should give global luxury brands confidence that their IP rights will be respected in the Chinese market.
“This, in turn, will allow more luxury brands to meet the demand of ever more discerning Chinese consumers.”
A long-running dispute
A trademark application for the name ‘Manolo & Blahnik’ was filed in 1999 by Chinese businessman Fang Yuzhou for use in the sale of footwear and was granted by the China Trade Mark Office (CTMO) in 2000.
Manolo Blahnik, the luxury British brand made famous by the popular “Sex and the City” TV series, subsequently filed an opposition to the CTMO and embarked on an expensive and difficult legal dispute.
The company had several appeals dismissed because it could not prove it had a reputation in China before 2000, and because Yuzhou had established use of the trademark for his shoe label, in accordance with Chinese IP law.
Edward Chatterton, DLA Piper partner and co-head of the firm’s Intellectual Property and Technology practice in Asia, led the team representing Manolo Blahnik.
He said: “We are delighted to have been able to assist Manolo Blahnik in achieving this significant victory. This is a landmark ruling which could pave the way for other foreign companies that find themselves in similar situations.
"Due to improved trademark legislation in China in recent years, and a willingness from Chinese courts to protect the interests of brand owners, we expect to see more foreign companies succeed in resolving intellectual property disputes.”
China’s trademark legislation
George Chan, partner and head of Simmons & Simmons’ (Beijing) Intellectual Property Agency, told WIPR that since the offending trademark application was filed in 1999 and therefore subject to an earlier version of the trademark law, Manolo Blahnik could not benefit from some provisional safeguards that were introduced in the most recent changes to the legislation.
“These added provisions specifically address the issue of trademark squatting, such as rejecting or invalidating trademark applications and registrations based on the bad faith of the applicant, and it is possible that under the [updated legislation], Manolo Blahnik could have prevailed more easily.”
But he believes Manolo Blahnik’s persistence was “critical” to its success.
“It is not uncommon to see brand owners abandon the China market due to the misappropriation of their trademarks by squatters,” said Chan.
Prior use and reputation
Evidencing the need to demonstrate the prior use and established reputation of a brand in Chinese trademark law, Kristina Blahnik said: “We spent a lot of time and effort collating as much evidence as possible so that the Supreme Court could see the strength and international renown of Manolo Blahnik.”
Ivy Liang, legal director at Gowling WLG based in Guangzhou, told WIPR that the SPC “appears to have rejected Manolo Blahnik’s opposition based on the brand’s reputation in mainland China prior to the pirate IP filing date, but accepted the argument based on Manolo Blahnik’s (personal) name rights”.
“Based on that, my guess is that Manolo Blahnik should have further supplemented substantial evidence to show the influence of the prior use of his name in mainland China,” she added.
“That said, prior use indeed can be evidenced from outside of China as long as one can show that the prior use influence reaches China, but it takes a delicate preparation to collect evidence to support the ’influence’ (or ‘popularity’), which is key to the case.”
Helen Xia, partner and head of the Intellectual Property, Media and Technology (IPMT) practice at Hogan Lovells in Beijing, agreed with Liang's point, adding that the case shows the significant difficulties many fashion (and other) brands face in meeting the applicable evidence thresholds in trademark invalidation procedures in China.
“Particularly, proving that a foreign fashion brand already had a reputation in China before the trademark squatter filed his earlier bad faith application proves to be very challenging,” she told WIPR. “This was especially applicable in this case, since in the administrative appeal procedure, Mr Blahnik had confirmed that he did not use ‘Manolo Blahnik’ as a trademark before the filing date of the hijacked mark, i.e. 28 January 1999.
“The fact that he lost all previous proceedings, including oppositions and invalidations, is likely a sign that the evidence of prior use and prior reputation in the current case may not meet the customary evidence thresholds in trademark prosecution and administrative appeal proceedings applied by the lower courts.
“In addition, obtaining the recognition of a personal name right in a brand is often also an uphill battle for fashion brands.”
‘Ex-officio’ refusals
Chan added that, more recently, the China National Intellectual Property Administration (CNIPA) has adopted multiple approaches to identify malicious filings at the outset during the preliminary examination of trademark applications, which has led to what appears to be a trend in an increasing number of ex officio refusals of malicious filings.
“We are also seeing more successful trademark opposition and invalidation actions that are decided by the CNIPA based on the bad faith of the applicant,” he said.
“Nevertheless, malicious filings have been and continue to be a very serious problem in China, and we really need to see a greater commitment by the authorities to rein in this type of behaviour.”
Liang, though, believes this commitment from the Chinese government already exists. “This retrial victory shows a strong signal that China puts effort into the protection of intellectual property rights, whether owned by domestic or foreign right holders,” she said.
“Foreign businesses have 'lessons to learn' from this case, but the best practice remains for new entrants or potential entrants to file their trademarks in China as soon as possible, even before entering the Chinese market.”
Helen Xia agreed that the outcome in this case is particularly encouraging.
“It clearly shows that the Chinese IP system and courts have come a long way, and that persistence often pays off in China IP procedures,” she told WIPR.
First-to-file system
Yuzhou’s trademark registration was made possible by China’s ‘first-to-file’ trademark system, which means that any individual can register a trademark in the country, even if that mark is registered elsewhere by foreign entities.
The system has enabled ‘pirates’ to sell the trademarks of foreign businesses operating in mainland China, thus hindering their ability to trade in the Chinese market.
In particular, the luxury goods market in China has boomed over the past two decades, leaving the British-based Manolo Blahnik brand at a disadvantage by not being able to sell directly to, or within, the market.
It was only previously available to consumers in China via third-party e-commerce platforms such as Farfetch.
The case exemplifies how brands have faced difficulties in registering and protecting their trademarks within mainland China, such as basketball player Michael Jordan’s dispute with Chinese sportswear brand Qiaodan Sports.
In addition, IP crime has long stoked tension between China and its trade partners, especially the US.
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