Protecting Your Intellectual Property in China -- The Starbucks Perspective

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Posted by Dan on August 14, 2006 at 11:13 AM

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This is the third of my posts on the United State's Patent and Trademark Office's recently completed two-day conference on "Protecting Your Intellectual Property In China and The Global Marketplace" The first,"Nike On China IP Protection: Just Do It With Green Tea," was based on a speech by Kevin R. Brown, Nike's Director of Global Brand Protection. The second, "China: Counterfeiting And Piracy -- The Issue And The Challenge," recounted Timothy Trainer's speech on preventing piracy. This post focuses on the speech given by Kim Teraberry, Director and Corporate Counsel at Starbucks.

Full disclosure: I am a huge fan of Starbucks and have been a shareholder for so long I am not even sure since when.

Ms. Terrabary's speech focused on the efforts Starbucks has undertaken in China to protect its IP. Starbucks has 253 pending trademark applications and registrations in China. In 2002, it had 8 trademark disputes. In 2006 it has already had 85. Almost all of these disputes involve oppositions to rival trademarks, not lawsuits.

Ms. Teraberry wisely advised businesses in China to file their trademarks "early." She suggested companies look first to filing their core/house marks and then the marks needed to conduct their business. She also suggested businesses consider filing Chinese character versions of their core marks. She talked about the slew of defensive filings Starbucks has made in China, including the following:

Variations of word marks (roman alphabet)

Variations of Chinese character marks

Variations of design marks

Expanded classes

Nick names

She went on to say that if you do not choose a Chinese mark, someone else will and made clear that it is not wise to assume that your Roman script mark will protect you against a Chinese character version. She talked about how companies should consider registering both a translation of their foreign name and a transliteration (same sound, different or no meaning). She used Tai Shu (meaning "calm" or "relax") as an example of a transliteration for Starbucks brand name, TAZO.

According to Ms. Teraberry, in choosing a Chinese mark, one should consider the following:

Marketing Objectives
Connotation

Appearance

Sound
Multiple Dialects

Traditional and simplified characters

Trademark Clearance

I concur with Ms. Teraberry's advice, but would add that if a foreign company expects to do right by its trademarks in China, it must retain professionals fluent in both Chinese and English with familiarity with both cultures. Anyone can look up a word and translate it, but as Ms. Teraberry makes clear, that is not likely to be enough to protect your name and brands trademarks in China.

I am often asked by small companies if it is worth it to do all that is necessary to protect their name and brands in China. My response is that if their name and/or brands are their most valuable assets, then they really have no choice but to do what it takes to protect them.

See other posts in: Legal News

Comments

Thanks for sharing your impressions of the conference. I think one addition can be added to Ms. Teraberry's checklist for a Chinese mark:

Many Western companies used to start operating in China first, because of the business climate and rule of law. In Hong Kong, the spoken language is Cantonese, they use the traditional Chinese characters (as in Taiwan)and have very different pronunciation.

"Let's take Bloomberg as example. Peng Bo (??)in Cantonese pronounces roughly as Bon Bok, which is much closer to Bloomberg. They just kept the Chinese name although the pronunciation in Mandarin loses the orignial similarity. The first character is a very widespread surname in China, the second character means something wise, well-read, knowledgeable, erudite etc... In the end, you get something like Smart Joe's..." (I paraphrased Sir CH of http://www.mobimania.com words)

If you want to take advantage of the Cantonese speaking market of China too, which includes Hong Kong (6,8 million people)and Guangdong province (80 million people)you should the Cantonese pronunciation this into consideration aswell.

Cheers,
IP Dragon

Posted by: IP Dragon | August 14, 2006 1:56 PM

IP Dragon --

Thanks for checking in. You are absolutely right and Ms. Teraberry talked about this very thing. I mentioned it above where I talked about "Multiple Dialects." Ms. Teraberry actually talked about conducting a cost benefit analysis regarding various dialects, with the cost on one side and the number of potential consumers in the dialect on the other.

Posted by: China Law Blog | August 15, 2006 10:00 AM

Boy, this is an incredibly useful summary - something to print up and post on one's wall!

Thanks.

Posted by: other lisa | August 15, 2006 10:44 AM

Other Lisa --

Glad you liked it!

PS -- Who is the first Lisa?

Posted by: China Law Blog | August 15, 2006 10:46 AM

That's a semi-complicated story. I used to have a very good friend named Lisa who was sort of the first Lisa in that group of friends. Plus another list I'm on has a poster named Lisa who at one point was posting so much that when I'd chime in I'd call myself "Other Lisa" just to distinguish. You know there was a period in the States where just about every other girl was named "Lisa" - and of course there's Lisa Simpson...

Posted by: Other Lisa | August 16, 2006 9:24 AM

There is a nationwide crackdown currently in progress on large ticket knock-offs. Several stores were busted adjacent to the five-star White Swan Hotel only minutes before we passed by last weekend. Within an hour of the bust the shop girls were phoning potential customers and letting them know that the factories were already turning out more product.

It is like shoveling manure in a stall hoping to find a buried pony. Counterfeiting and trademark infrigement are the norm. The average Chinese, who has virtually no disposable income, does not see it as a problem.

Even faced with stiff prison sentences most shops are still operating amidst the raids.

You guys should be busy for a while to come.

Posted by: Lonnie | August 16, 2006 10:07 AM

Other Lisa -

Thanks for checking in and thanks for the explanation. If you read my comments on the cartoon post I did the other day, you might be able to guess that I am a Simpsons fan.

Posted by: China Law Blog | August 17, 2006 1:26 PM

Lonnie (OMB)--

Thanks for checking in. What do you meant by large ticket knock-offs? Appliances? Clothes? Actually, as a civil lawyer, I think our business increases as enforcement increases. Right now there are many out there who (wrongly!) think it is not worth doing anything because everything is such a mess.

Posted by: China Law Blog | August 17, 2006 1:29 PM

In my MBA business law class at Tsinghua this was a major topic of discussion. We looked at cases involving Garfield (the Cat) and Lego.

As for Cantonese, Vancouver even my MBA class, has numerous people who spoke Cantonese but not Mandarin. Also the sea-turtles (overseas Chinese) frequently speak Cantonese but don't know the written language as well. So issues of the traditional versus simplified characters are lost on them. These are smaller but affluent markets.

Me I usually know the Japanese pronounciation and usuage better than the Chinese, even my high school French rears its head when I studied subsequent languages. I was always sitting in a cab in Beijing staring at billboards trying to figure out Chinese by first translating it into Japanese than into English...

Posted by: Muskie | August 17, 2006 2:22 PM

Muskie --

Thanks for checking in. Certainly one should at least always consider a Mandarin trademark as well.

Posted by: China Law Blog | August 17, 2006 10:32 PM

Nice post. Thanks.

Posted by: michel | April 27, 2007 10:41 PM

Michel --

You are very welcome.

Posted by: China Law Blog | April 29, 2007 9:37 PM