Great article over at Slate, entitled, Female Weightlifters, Spanish Basketball Stars, and Kim Jong-il: The strange world of Chinese sneaker endorsements. It is on the strange and evolving world of athletic shoes and endorsements in China and it concludes by saying that “for Nike and Adidas, those may be lessons their Chinese competitors are learning all too well,” but I think this article has much to teach about China, China business, and, of course, the shoes.
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 a total of 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/additional classes
She went on to say that if you do not choose a Chinese mark, someone else will choose it and she 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 trademark, one should consider the following:
- Marketing Objectives
- 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 trade-names and 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 brand, product name(s) and/or logos are valuable to them they really have no choice but to do what it takes to protect them. If you are doing business in China or with China, you have no real choice but to register your trademarks in China.
Last week I attended the United State’s Patent and Trademark Office‘s two-day conference on “Protecting Your Intellectual Property In China and The Global Marketplace.” China Law Blog’s own Steve Dickinson was asked to speak there on how to protect your trademarks and trade secrets while doing business in China, but work commitments prevented him from doing so. Too bad, as it turned out to be quite a good conference.
I do not generally like lawyer conferences and I like China conferences even less. They often get repetitive and a certain “we great lawyers are all in this against the Chinese” mentality often pervades. I swear if I hear one more American speaker start or conclude a lecture by talking about China’s phenomenal growth and how it is a nation of both great risks and great rewards or one more Chinese speaker spew out statistics for twenty straight minutes, I will ….
But there was surprisingly little of that at this conference and there were a decent number of speakers worth writing home about — or at least blogging about — and that is exactly what I will be doing over the next week. I am going to lead with my favorite speaker of the conference, Kevin R. Brown, Nike’s Director of Global Brand Protection. I knew I was going to like Mr. Brown’s speech from the get go when he started out by saying his bias is to always see the glass as half full, as I have that same predilection. I ended up agreeing with nearly everything he said, and found many corollaries to an article I wrote a long time ago called “Four Essential Principles for Emerging Market Success.”
Mr. Brown candidly admitted that Nike’s first four years trying to protect Nike’s IP in China were hell, but he said that after he sought help from a Chinese national at Nike around six years ago, things got decidedly better. He emphasized that if you do things the right way in China, you can achieve success in protecting your IP there.
Brown then put up a PowerPoint slide that asked the question, “How do I swim in this river?” He answered it by saying:
- Learn the system
- Be the system
- Out-system the system
My admittedly personalized and overly interpretive view on what Mr. Brown is saying here (and please remember I am a lawyer, not a Zen master) is as follows:
- China is not the United States.
- Do not expect China to be the United States.
- Get used to China not being the United States.
- China not being the United States does not make it bad, just different.
- You can do things the U.S. way in China and fail, or you can work within the system for success.
- Learn all you can about the Chinese system.
- Work within the Chinese system.
Mr. Brown then talked about the need for humility. He put up a PowerPoint image saying “It is honorable in China to downplay your leverage and work within the system” and “This is not something that comes naturally to most companies.” He talked about how Nike does not play up its role as a big company.
He then flashed the following sentence/image:
The Role of Green Tea
Mr. Brown talked about how he gets things done in China by drinking green tea and chatting with government officials. He then said if you are not willing to drink green tea, send someone from your company who is.
He then gave concrete examples of instances where the Chinese government had worked with Nike to eradicate counterfeiting operations, including in one case going onto a Chinese naval base to shut down an operation led by the officers and their wives. The lead officer involved in the counterfeiting soon thereafter took “early retirement.”
Mr. Brown put up an image showing the following fake Nike seizures by the Chinese government in 2006:
- 1,049,000 pairs of shoes
- 371,460 pieces of apparel
- 98,672 sports bags/backpacks
- 354,427 pairs of socks
Mr. Brown then extolled the virtues of working with Chinese customs and talked of Nike’s successes by doing so. If you register your trademark in China, alert Chinese customs to that registration and provide customs with information on your product, Chinese customs will contact you if it sees possible counterfeits of your product going in or out of China. Mr. Brown then mentioned that in Canada neither the importation nor the exportation of counterfeit product is illegal; only the sale of such products is.
Mr. Brown talked about how most of the Chinese governmental officials with whom he deals genuinely want to do a good job. He said giving them recognition for a job well done — and not seeking to bribe them — is the best strategy. “Face” is of greater importance to a Chinese government official than money.
In my next post, I will give my own views on Mr. Brown’s talk.
On a somewhat related note, Microsoft last week filed 26 piracy lawsuits in the United States. I mention this because I did not see a single article on these lawsuits mentioning how the United States government is not doing enough to stop piracy. The reason for this is that the prevailing view in the United States is that the company, not the government, is primarily charged with protecting its own IP. More companies need to take that same view regarding China. Waiting for the government to protect your company’s IP rights is not the way to go in either the United States or China.