Chateau Lafite not famous enough in China?

Chateau Lafite Rothschild China trademark

Chateau Lafite Rothschild is one of the world’s iconic wine brands, famous for its history and high quality wines.  It is one of the world’s prestigious and well known brands. So far it has not been successful in establishing the power of its brand in an ongoing China trademark dispute.

Chateau Lafite Rothschild (“Chateau Lafite”) and Nanjing Golden Hope Wine Co Ltd (“Golden Hope”) have now been in legal dispute for more than 5 years over sound alike Chinese language trademarks.

Background

In 1996, Chateau Lafite registered the word mark “LAFITE” in Class 33 on “alcoholic beverages, except beer” (Chateau Lafite TM). In 2007, Golden Hope registered “拉菲庄园” (拉菲pronounced as ‘la fei’ in Chinese, 庄园 means “manor”) in Class 33 on goods including “wine”, “alcohol (beverages)” and “fruit extracts, alcoholic” etc. (Golden Hope TM).

In 2011, Chateau Lafite filed a cancellation application against the Golden Hope TM with the Trademark Review and Adjudication Board.

Trademark Review and Adjudication Board (“TRAB”)

Both Chateau Lafite and Golden Hope submitted evidence to support their arguments.

Chateau Lafite’s arguments included:

  • Chateau Lafite is a world famous prestigious wine supplier and it has been operating in China for many years. Both the Chateau Lafite TM and its Chinese translation “拉菲” (‘la fei’) should be recognized as well-known trademarks in China;
  • The Golden Hope TM is the translation of the Chateau Lafite TM, and copies and plagiarises “拉菲” (‘la fei’);
  • The Golden Hope TM, the Chateau Lafite TM and “拉菲” (‘la fei’) are similar trademarks on similar goods;
  • The registration of the Golden Hope TM has infringed Chateau Lafite’s prior name rights on “LAFITE” and “拉菲” (‘la fei’); and
  • Golden Hope registered the Golden Hope TM in bad faith.

Golden Hope defended as follows:

  • The Chinese translation of “LAFITE” is “拉斐” (‘la fei’) or “拉斐堡” (‘la fei bao’, 堡 (bao) means “castle”);
  • The Golden Hope TM is not similar to either of them; and
  • Chateau Lafite has no prior rights over “拉菲” (‘la fei’).

The TRAB ruled in favor of Chateau Lafite and canceled the registration of the Golden Hope TM.

Golden Hope appealed the TRAB decision at the Beijing No.1 Intermediate People’s Court (Intermediate Court).

Trial at first instance

Golden Hope and Chateau Lafite submitted more evidence.

The Intermediate Court held that:

  1. The prominent part of the Golden Hope TM “拉菲庄园” is “拉菲” (‘la fei’) because “庄园” (the Chinese for “manor”) is of little distinctiveness when used on wine.
  2. According to evidence furnished by Chateau Lafite, the products affixed with the Chateau Lafite TM have been sold in China since 1999.
  3. Before the registration of the Golden Hope TM, articles about Chateau Lafite and its products have been published on specialized journals in China. In these articles, “LAFITE” was translated into “拉斐” (‘la fei’), “拉斐特” (‘la fei te’) or “拉菲” (‘la fei’) which are all transliterations of “LAFITE” in Chinese.  (特 (te) here is presumably used for sound, the closing syllable in Lafite, although it does mean “special” in Chinese). Chateau Lafite itself also used “拉菲” (‘la fei’), the substance of the Golden Hope TM, in its marketing and promotion.
  4. The relevant public in China recognize that “LAFITE” may be referred to as “拉斐” (‘la fei’), “拉斐特” (‘la fei te’) or “拉菲” (‘la fei’) in Chinese.
  5. Golden Hope extensively used the Golden Hope TM in conjunction with “LAFEIMANOR” and indicated that its products were from France, which made it even harder for the relevant public to distinguish its products from those of Chateau Lafite.
  6. Golden Hope is a competitor of Chateau Lafite, and should know about the Chateau Lafite TM and the transliterations of “LAFITE”. Therefore, it should not have registered the Golden Hope TM in the first place. In addition, the evidence submitted by Golden Hope is insufficient to prove that the relevant public are able to distinguish the Golden Hope TM from the Chateau Lafite TM despite its use of the Golden Hope TM.

Accordingly, the Intermediate Court held that the registration of the Golden Hope TM misled and confused the relevant public regarding the source of the goods, and upheld the TRAB’s decision.

Appeal to Beijing High People’s Court (High Court)

Golden Hope further appealed to the Beijing High People’s Court (High Court). During the appeal, further evidence was submitted.

The High Court overruled the Intermediate Court’s judgment and restored the registration of the Golden Hope TM. The detailed reasons given by the High Court can be summarized as follows:

  1. When determining whether two marks are similar, in addition to judging only from the composition and the overall similarity, we also need to take into account the distinctiveness and popularity of the two marks, the relevance of the marks and the designated goods, and whether the co-existence of the two marks may mislead the relevant public.
  2. When determining whether a Chinese trademark and a foreign language trademark are similar, we need to take into account the recognition of the relevant public in China and whether the Chinese and the foreign words correspond with each other. To determine this, the registration date of the Golden Hope trademark is the key.
  3. The Golden Hope trademark is reputable in the market and recognized by the relevant public after being used for a long time, so we need to understand the spirit of the trademark law: coordinating the protection of prior trademark rights and the maintenance of the market order; fully respect the fact that the relevant public is able to distinguish the concerned trademarks; and maintain the existing and stable market order.
  4. In this case, the prominent part of the Golden Hope TM is “拉菲” (‘la fei’), and it is different from the Chateau Lafite TM in terms of font and pronunciation.
  5. Before the registration date of the Golden Hope TM, the Chateau Lafite TM and “拉菲” (‘la fei’) were only introduced on some specialized journals that have limited readers. Hence, it cannot be concluded that the Chateau Lafite TM was popular in China before the registration of the Golden Hope TM or that the relevant public recognized that “LAFITE” and “拉菲” (‘la fei’) correspond to each other.
  6. The Golden Hope TM has been registered and used for 10 years. A stable market order is already in place.

Application for review by the Supreme People’s Court of the PRC (China SC)

Chateau Lafite applied to the China SC for review. The China SC agreed to accept the case and the judgment issued by the High Court is suspended pending the review.

Commentary

It is difficult to reconcile the reasoning in the TRAB and the Intermediate court with the findings of the High Court and we look forward the resolution by the China SC.

This case is yet another example of how lack of attention to detail in entering the China market can have expensive consequences that may be difficult or impossible to rectify. Every product and service will be known by a Chinese name in China.  The only prudent and practical approach is to decide what it is going to be and to register it as a first step in engaging with China.

When a Chinese transliteration of a brand is used, it should be used consistently in all commercial endeavors. It may actually require more effort to achieve this than it does to manage the foreign brand in China. Many foreign trademarks can be transliterated into multiple Chinese versions, as seen in this case, and staff may not be fully aware of the ramifications of using the “wrong” transliteration. The only sound approach is to decide on the transliteration to be used and be vigilant in using it consistently in all commercial and marketing efforts. Unfortunately the evidence in this case revealed that Chateau Lafite had not been totally consistent in its use of Chinese transliterations of its brand.

The clarity of hindsight confirms that it would have been prudent for Chateau Lafite to register a Chinese language transliteration of its word mark at the same time it registered its foreign mark.  It should have registered “拉菲” (‘la fei’) or “拉斐” (‘la fei’) in the first place. If it had registered either one it would have been in a a better position to challenging any application for registration of a similar mark by Golden Hope.

Establishing the reputation of an unregistered mark in China is not easy. The rules for trademark review in China refer to the following as possible evidence to prove reputation: sales contracts; bills of lading; promotional materials; and exhibition brochures etc. In this case, Chateau Lafite furnished a lot of evidence, including an official letter issued by the economic director at the French Embassy in China. The evidence was not sufficient to persuade the High Court.

Take away points

  • China is a very aggressive trademark environment.
  • Foreign brands are attractive in China but every product and service gets known by a Chinese name.
  • Failure to register a Chinese version of a foreign brand is a very costly mistake as this case confirms.
  • This is not an isolated case and China trademarks are very important. If you need convincing, more articles here, here, here, and here!
  • Registration of your China trademarks is the only cost effective option.

© 2016 Graham Brown. All rights reserved.  The assistance of Zhao Wei in the preparation of this article is gratefully acknowledged.

Leave a Reply