Trade mark piracy and hostage taking – 2 December 2013
‘Trade Mark piracy’ (or counterfeiting) refers to the unauthorised use of another’s trade mark. Another nefarious practice involves pre-emptively registering another’s trade mark and demanding a ransom to transfer the registration to the ‘real’ owner of the trade mark. The trade mark is effectively held hostage. Trade mark systems in many countries give little weight to the ‘real’ owner’s prior use of and reputation in the trade mark in their own country.
Trade Mark piracy and ‘hostage’ situations can occur anywhere, but tend to be most common in Asia – possibly because Asia is home to so many manufacturers.
In particular, if you currently or will in future manufacture in China, protecting your trade mark in China is strongly recommended. China grants trade mark rights on a first-to-file basis. The owner of a Chinese trade mark can prevent export of trade marked goods (e.g. shipping to Australia), as well as being able to stop local sales in China. The ‘real’ owner has limited recourse and will incur significant expense to get a mark back, if this is even possible.
The worst ‘hostage’ situation can be between the brand owner and its manufacturing partner (or potential partner). If the partner or potential partner registers the trade mark, it may then use this leverage to insist the Australian company signs or maintains a manufacturing agreement, rather than switching manufacturers. You would not normally know about the registration until it is far too late.
For this reason, applying to register a trade mark before discussions commence with Asian manufacturing partners is very cost-effective insurance – less than the cost of your plane ticket. For new trade marks, making an application in Australia gives you six months to decide on whether, and in which other countries, the mark needs to be protected (more on international trade mark protection). If the trade mark is already protected in Australia, applications in China and/or other countries should be made before discussions commence.