Originally posted 2014-01-21 17:10:02.

By Sindy Wenjin Ding | amdlawgroup.com

P90075966A big periodic victory belongs to Dsquared2. This well-known fashion brand successfully secured its legal distributorship in China after experiencing a really hard time fighting for the legitimate sources for distribution of its products. The court in Hangzhou, in the decision, gave a green light for this brand to sell its collections in China and ruled it is “legitimately allowed” to do so.

Fashion brand Dsquared2 is an international fashion house that was founded by twin brothers, Dean and Dan Caten. Dsquared2 is known for its strong voice on runway shows and its cool leisure designing clothes. The Catens opened their first Dsquared2 flagship in Milan Fashion District in June 2007, and it started to pioneer the Chinese Market since 2012.

The fact that astonished the Caten brothers was, Dsquared2’s fame in China was driven by a Chinese company for a long time. This company has trademarked the Dsquared label (without the 2 figure) and is selling counterfeits products under this label. The Caten brothers never thought about losing the ownership of their utmost trademark before it even set a foot in Chinese massive market.

Dsquared2 was held back by a cease and desist letter from the Chinese company right at the time it launched its very first store in Beijing. This company claimed that Dsquared2 infringed its intellectual property rights over this brand and its “legitimate” distributorship in China. The unexpected resistance, therefore, made the prospect of Dsquared2 aloof and extremely difficult in extending into the Chinese market. Before gaining the fair decision from the court, Dsquared2 even was forced to change its logo to “Caten” in order to keep selling the real products in China.

The victim of trademark squatting is definitely not just Dsquared2. Ironically enough, it has become an open secret in the field of trademark registration, especially in foreign jurisdictions. Trademark squatting is a practice known as “bad-faith trademark filling”. It happens when one party intentionally files a trademark application for a second party’s registered trademark in a country where the second party does not currently hold a trademark registration. Trademark squatters usually take advantage of the “first-to-file” trademark system in their own jurisdictions, and legally hold the ownership of the trademark in their countries until the real owner comes to purchase the ownership back, which is very different from the “first-to-use” based system. A bad-faith filer’s intent is usually to extort the real trademark owner and expect to make a fortune by transferring its possession of the brand.

For the fashion brands that have great potential and plan to march into the Chinese market, it can be a really fatiguing and unknown process to remove the bad-faith trademark squatting. Dsquared2 fought back its legal distributorship in China through a quite fine decision delivered by a Chinese court, which is vitally meaningful for other western brands to refer to. The decision itself is also a pioneering signal that Chinese court is evolving to fulfill the Revised PRC Trademark Law, which was passed by the Standing Committee of the National People’s Congress on August 30, 2013.

Generally speaking, the court judgment on this particular issue of trademark squatting tends to be more flexible and policy-oriented. Same philosophy reflects in the process of legislation. The newly revised PRC Trademark Law highlights its efforts on restraining trademark squatting, clearly prohibiting the dealers, distributors, agents, and those who have business contacts with the brand owners to register the same or similar trademark on same or similar goods. The most eye-catching point is that it introduces the principle on good faith (so called “honest and trustworthy principle”) for trademark use and registration. True trademark owners may use this principle as a safeguard against bad-faith registrations and further avoid unnecessary financial loss.

As for trademark owners themselves and their businesses, United States Patent and Trademark Office and other U.S. government agencies have already created some very useful tools to help protect innovation and product’s safety at home and abroad. The businesses can go to STOPFakes.gov website, and use a tool called “Country IPR Toolkits” to protect and enforce their intellectual property in 19 specific markets. At the same time, proactive legal actions are always encouraged for trademark owners, to register their marks in different jurisdictions, especially in countries where the new business might be expanded and developed.

Restraining trademark squatting needs both internal and external forces, which come from self-supervision of fashion brands and improvement of registration system in a global level.

Sources:

1. http://en.wikipedia.org/wiki/Dean_and_Dan_Caten

2. http://cn.tmagazine.com/fashion/20131101/tc01fashion/

3. Eight Key Points about the Third Amendment to the PRC Trademark Law: http://www.chinalawinsight.com/2013/09/articles/trademark/eight-key-points-about-the-third-amendment-to-the-prc-trademark-law/

4. LUISA ZARGANI: Dsquared 2 Secures China Rights, see WWD at http://www.wwd.com/business-news/legal/dsquared2-secures-china-rights-7345391?module=business-news-legal-page-1

5. Photo source: http://www.autoevolution.com/news-g-image/2011-life-ball-mini-by-dsquared2-previewed/51014.html

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