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Build your brand in the Asia-Pacific

Trademark owners are investing heavily in the growing economies of East Asia, Oceania and Greater China. Erica Poon provides a country-by-country guide.

A few years ago, the global financial crisis put a dent in the economies of the Asia-Pacific region. But it was just a minor one compared to the rest of the world. Asia has since bounced back and continued its trend of immense growth. “You can expect more companies to want to be here,” says Jennifer Fajelagutan, who established JDF Law in the Philippines, and is speaking in today’s session on East Asia and Oceania. “If they want to grow their business here, then filing trademarks is a must.”

Australia and Japan are at the more advanced end compared to the Philippines and Malaysia, but the latter two jurisdictions have made strides to catch up and are quickly becoming bigger IP players. While growth is common among Asian countries, different jurisdictions are moving at different paces, and two sessions today and on Wednesday will examine where each country is in the IP realm. Questions addressed will include: What were the biggest cases last year? And what implications do these have?

Reforms in Australia

The Australian government has published a draft set of reforms that will simplify and speed up trademark opposition procedures. The 102-page Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 was released on March 2, accompanied by a 118-page explanatory memorandum clarifying the proposed changes. Important changes to Australia’s Trade Marks Act 1995 include expediting opposition proceedings, eliminating unnecessary cases and tightening border control.

The bill attempts to make trademark applicants’ lives easier by proposing that opponents specify what grounds they want to use to oppose a mark. At present, a person who wants to oppose a mark can list out every ground in a notice of opposition. This makes it difficult for applicants to know which grounds the opponent intends to rely on before a court hearing. The bill also attempts to save opponents time and money by adding section 52A, which would require applicants to file a notice of intention to defend their application. Un-filed notices will lead to an application lapsing and would save the opponent from having to prepare a case that an applicant is not interested in.

Meanwhile, two cases last year clarified when a domain name can constitute trademark use.

Mantra Group Pty Ltd v. Tailly Pty Ltd

Mantra is the onsite letting agent for the Circle on Cavill apartment complex. It has three registered trademarks—one word mark, and two word and device marks. It also has management rights to Circle on Cavill. Tailly is an offsite letting agent for the same apartments. It registered the domain names circleoncavile.com.au, circileoncacillretail.com.au, and ecircleoncavill.com. It also used CIRCLE ON CAVILL on its banner, title and text of those websites, as well as in meta-tags to up its ranking on search engine results.

To find trademark infringement, the Court had to determine whether Tailly used Circle on Cavill as a trademark. The court found Tailly had frequently used the words on the banner of its websites and as a badge of origin to show a connection with the words. It concluded: “...[I]f the registered domain name [containing the words of a trademark] is linked to a website that contains advertising material that promotes goods or services in relation to which the trademark is registered, this combination of use could constitute use as a trademark... This is all the more so if the advertising material on the website also uses the words of the trademark to promote the goods or services concerned.”

The court found that Tailly infringed Mantra Group’s trademarks by owning domain names that were identical or deceptively similar to Mantra’s marks.


Sports Warehouse, Inc. v. Fry Consulting Pty Ltd

Another domain name dispute looked at the registrability of a trademark for an online business. US company Sports Warehouse sold tennis gear through its website, www.tennis-warehouse.com. Fry Consulting is an Australian wholesaler and registered the business name Tennis Warehouse and the domain name www.tenniswarehouse.com.au. It opposed Sports Warehouse’s application to register TENNIS WAREHOUSE.

The Registrar of Trade Marks and the appeal judge sided with Fry Consulting. While the court agreed that mere registration of a domain name does not constitute trademark use, it found Sport Warehouse’s evidence of trademark use insufficient to support a finding that its mark could distinguish its services from the lodgement date.

Faster examination in Malaysia

Malaysia has introduced expedited examination and e-filing while raising fees. The Trade Marks (Amendment) Regulations 2011 has replaced Trade Marks Regulations 1997 with effect from February 15 and a new regulation provides for the expedited examination of an application if it can meet at least one of the following criteria:

• it is of national or public interest;

• there are infringement proceedings or evidence showing potential infringement of the relevant trademark;

• the application for grant of the patent or registration of a trademark is necessary to obtain monetary benefits from the government or institutions recognized by the Registrar; and

• there are other reasonable grounds which support the request.

Progress in the Philippines

IP in the Philippines is governed by the IP Code, or Republic Act 8293. In 2009, the IPO issued a memorandum circular verifying rules on declarations of actual use. Commercial use now extends to use of the Internet, so websites where a product or service is used are sufficient to support a declaration of actual use. Failure to file a declaration of actual use will result in automatic cancellation of a mark or removal of a mark from the registry. “This makes it easier for trademark owners to justify use in the market,” says Fajelagutan, who adds that third-party websites are also sufficient.

Meanwhile, the IPO has tried to move IP matters online. It created an online trademark search in 2003 and a weekly e-Gazette in 2004 with all the marks published for opposition. The trademark search now contains 240,000 records. In 2007, trademark applications could be filed online, and the fees were reduced. “I’ve seen the IPO improve,” said Fajelagutan. “There is still a lot of room for improvement but I’d like to say that they are moving in the right direction.” The IPO has even said that it aims to be able to register marks in as little as five days.

In 2010, four Supreme Court trade mark cases were decided, and these addressed the standard applied to deciding whether there is likelihood of confusion. Until now there have been two views, known as the holistic test (considering the trademark as a whole) and the dominancy test (comparing the main features of the mark only). Fajelagutan says that recent cases such as Société de Produits Nestlé v. Martin Dy, Jr lean towards the dominancy test. In that case, the Court found that Martin Dy, Jr’s mark NANNY was confusingly similar to Nestlé’s mark NAN. The first three letters of NANNY are identical to the letters in NAN, and when pronounced, the two sounds are confusingly similar.

Case law in Japan

Several important cases came out of Japan in the past year, the first being Yakult’s successful registration of a 3D mark. It is only the second bottle, after Coca-Cola’s, to obtain a 3D mark in the country. A second case was whether parodies of trademarks constitute infringement. The IP High Court ruled in favour of an Okinawa citizen who created a SHI-SA mark resembling PUMA’s. The court found that the marks were not similar and that the SHI-SA mark owner’s marketing tactics did not confuse consumers.

Enforcing IP in the Greater China region

The People’s Republic of China, the world’s second largest economy, has made strides in the last year to strengthen IP enforcement. Last October, the government launched a campaign to crack down on counterfeiting in response to rising pressure from the US and the EU. Several trade groups estimated that legal producers lose billions of dollars in potential sales as a result of piracy in China.

In March, Chinese authorities arrested more than 3000 people for selling counterfeit goods as part of the government clampdown. The fakes included about 26,000 mobile phones with NOKIA and APPLE labels; fake LOUIS VUITTON bags and ROLEX watches; and counterfeit DVDs, clothes and car parts. Police also shut down 292 websites selling pirated products.

Meanwhile, an upcoming ruling will clarify landlord liability for secondary infringement. In this case, Hermès, Tommy Hilfiger, Hard Rock Café and Columbia Sportswear sued the Beijing Silk Market’s landlord, the Beijing Xiushui Haosen Clothing Market, for trademark infringement in 2009 and won. The landlord appealed. The Higher People’s Court opinion is expected to address how much knowledge of the counterfeiting activity the landlord needs to have to be liable for infringement. It may also shed light on secondary liability more generally, including regarding internet service providers and online marketplaces. The USTR placed the Silk Market on its Notorious Markets List earlier this year.

Wednesday’s Regional Update on China will review the latest developments in the PRC as well as the other jurisdictions in Greater China, and will include a vote on which jurisdiction is best. Panelists will judge how the jurisdictions are performing in terms of civil litigation, criminal enforcement, Customs and ADR.


Border control in Hong Kong

In Hong Kong, Customs last year took the first successful enforcement action in Asia against people sharing files using a so-called Topsite—a term for fast FTP servers using high-bandwidth internet connections that distribute pirated content. In June 2009 two men were arrested and four computers containing more than 3,400 copyright works were seized. Customs claimed that this action had dramatically reduced use of Topsites within the Hong Kong SAR.


New IP court in Taiwan

It has been nearly three years since Taiwan established an IP court, and it is regarded as being a success in handling trademark cases. However, there are still shortcomings. Several sitting and former judges indicate that the invalidation rate by the court may be too high. “This could be a serious problem,” says John Eastwood, a partner at Eiger Law in Taiwan.

The European Chamber of Commerce Taipei’s IPR Committee position paper issued last fall made it the number one issue for resolution by the Taiwan government. “Some people have been concerned that the fault may lie with the technical staff who may have been overworked or were examiners that TIPO had wanted to get rid of,” says Eastwood. “It’s nearly impossible to know.”


Working together

Despite each jurisdiction having its own IP environment and regime, the PRC, Hong Kong and Taiwan often overlap in IP matters, with many companies owning a trademark portfolio extending across all the territories. Eastwood says that often for example a client might have a head office in Taiwan and production facilities in the PRC. In such cases the cross-border nature of infringement must be dealt with in a unified way: “There is no such thing as dividing up and saying who will be in charge of China or who is in charge for Taiwan. Everyone has to work together.”

Last June, Taiwan and China signed the “Cross-Strait Agreement on Intellectual Property Rights Cooperation and Protection,” which promotes cooperation between the two jurisdictions through mutual recognition of priority rights for patents, trademarks and plant varieties, and the creation of a two-way communication platform to combat counterfeiting and piracy.


It pays to file early

If your ship wants to turn, it has to start now in order to be turned in half an hour’s time. That is the analogy Eastwood gives to filing in China. “Think about your future,” he says. A problem often arises for foreign companies when they start manufacturing in China for export and assume that they don’t need to register trademarks in the country as they are not selling locally. Then their licensee, distributor or local business fixer fills the gap and registers the mark itself (or gets a relative or business contact to do it). Suddenly the overseas company finds its exports blocked by China Customs (which, unusually, check outgoing goods for IP infringements as well as those entering the country) and faces an expensive legal process to try to win back its own brand.

Land Rover has become the latest foreign company to find itself in a battle over Chinese character marks. The British car maker has appealed a decision of China’s Trademark Review and Adjudication Board (TRAB) as part of a long-running battle with domestic rival Geely.

In 1999, Geely, which bought Swedish car maker Volvo in 2010, registered three trademarks for the phrase, or lu hu, in class 12, which covers cars, sports cars and motors. The phrase LU HU means CONTINENTAL TIGER in this case. One of these marks has been registered and two are under opposition. Land Rover claims to have been using the mark since the early 1990s and that Geely registered the mark despite knowing of that use. The two parties have reportedly been unable to agree on a price to transfer the trademark. Last July, the Trademark Review and Adjudication Board rejected Land Rover’s appeal to revoke Geely’s mark.

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