Luxury wine distributor secures major IP victory in China

22 Mar 2017 , 10:00am

Treasury Wine Estates (TWE), an Australian-based global wine distributor, secured a landmark victory in respect of the right to use the ‘Ben Fu’ trademark in China.

‘Ben Fu’ is a Chinese translation of TWE’s flagship brand “Penfolds” which has had a prominent presence in China for over 20 years; earning a notable reputation amongst Chinese consumers. It is quite typical of Western brands to use a Chinese translation of their brand name to make their brands more palatable for Chinese consumers who are unfamiliar with the Roman alphabet. In addition, the Chinese translation often strikes a chord with local consumers who are then able to form an association to the global brand.

Trademark squatting 

In 2009, an individual called Li Shen registered the “Ben Fu” trademark in China and the basis of TWE’s case fundamentally rested on China’s “first to file” trade mark registration system. The “first to file” system means that regardless of any prior rights owned in the mark, the first person to file the trademark in China has the right to use it. This had led to a phenomenon known as “trademark squatting”; whereby a third party other than the original user of the mark obtains a registered trademark. Trademark squatting is particularly prevalent in China and can be extremely costly; notably Castel Frères, the largest wine producer in France, was forced to rebrand its products last year after failing to win a nine-year trademark squatting case.

In TWE’s case, whilst Li Chen had registered the ‘Ben Fu’ mark before TWE, he had not used the mark. This principally differentiated this case from previous trademark squatting cases where “squatters” have been able to stake a legitimate claim by selling goods using the brand name. As a result, the Beijing high court ruled in TWE’s favour and cancelled the “Ben Fu” trademark held by Li Chen. TWE will now have the opportunity to apply to use this mark in China.

Protecting brand integrity 

TWE President and Managing Director – Asia and Europe, Robert Foye said: “Ben Fu is the most widely recognised wine brand in China – this is due to the fact that we have a long and strong history of actively marketing high quality Penfolds wine using this Chinese transliteration”.

Foye added: “Protecting the integrity of our historic wine brands against trademark piracy is critical. We have never wavered in our commitment to defend our position as the rightful owner of the Ben Fu trademark in China, and we are absolutely thrilled with this decision.”

Many companies do not take steps to protect their brand until it is too late. Trademarks protect the goodwill you have invested in your brand and it is important to make sure that only your company benefits from this. Clearly, TWE’s victory serves as an important lesson for brand owners, especially those with a global trademark portfolio, to ensure they have validly registered those trademarks in jurisdictions where they operate (or intend to operate). It is particularly important for luxury brands to be pre-emptive and invest significantly in the protection of their brand particularly in jurisdictions such as China which have seen a rise in trademark squatters. Ultimately, failing to register a trademark may not only be costly in terms of the litigation and time involved, but it may also adversely affect a brand’s value and reputation if it causes a substantial interruption to the brand’s entry into a lucrative marketplace. 

Mohit Pasricha is a solicitor in the London office of Mackrell Turner Garrett