Lacoste loses its trade mark in China

December 10, 2012

Case of the Year: Lacoste v Jin Zhongneng

The result

Lacoste’s crocodile mark revoked for non-use

The impact

Bar raised on what counts as use of a trade mark

Trade mark squatters are a major problem for international brand owners in China. Lawyers have consistently advised clients of the need to register early and broadly to protect their mark, but the recent revocation of French clothing brand Lacoste's mark shows that active use and management of a mark is also needed, alongside registration.

Lacoste received protection for its crocodile logo and related marks in 2003 for class 16, which covers various paper goods. In 2007, Jin Zhongneng filed for revocation of the mark in class 16 due to three consecutive years of non-use. The Trademark Office revoked the mark in 2009. The Trademark Review and Adjudication Board (TRAB) reversed, finding that there was evidence of use.

On Jin's appeal to the Beijing No 1 Intermediate Court, Lacoste presented evidence of its use of the mark in clothing and magazines, as well as its own envelopes, packaging, and a self-published book about the history of the company. But the court ruled that these uses were insufficient even when they involved paper products, because the marks were used in promotional material and not within the class.

The court's revocation of Lacoste's mark based on non-use will be a concern for rights holders. Under the Trademark Law, use includes using the mark on goods, packages or containers of the goods or in trading documents, and the use of the trade mark in advertising, exhibition or any other business activities. Brandy Baker of Kangxin said that here, the court was very strict in what it would consider as evidence of use. This "could become a trend, making it more and more difficult for owners to keep broadly registered marks beyond the three-year time frame," she said.

George Chan of Rouse agrees, saying that this case demonstrates the unsustainability of unused defensive registrations. He also notes that the definition of what constitutes use of a mark is very fact-specific and fluid. However, a tougher definition of use may ultimately be good for rights holders.

"There are over five and a half million registered trade marks in China," Chan says. "Such a cluttered registry actually impedes the development of a knowledge and brand-based economy. If the court is applying a much more rigid view of use, this could be due to the fact there is a need to clear off this clutter. "

Good news elsewhere is that brand owners may not have to register their marks quite so early to guard against trade mark squatters, given the most recent draft amendment to China's Trademark Law.

One change in the 3rd Draft Amendment to the Trademark Law, which has been submitted to the Standing Committee of the People's Congress, deals with the issue of bad faith registrations. The draft adds language requiring that "the application for or use of a trade mark must follow the principle of honesty and credibility". Though interpretation of the meaning of "honesty and credibility" is needed, the fact that this issue has been raised is a sign that the Trademark Office is aware of the problem of squatters and is ready to give rights holders the tools they need to protect their brands.

Case details

Lacoste v Jin Zhongneng

Subject matter: Trade mark revocation due to non-use

Court: Beijing No. 1 Intermediate Court

Brand owner: Lacoste

Defendant: Jin Zhongneng

For brand owner: Wan Hui Da

This case was selected as one of Managing IP’s Cases of the Year for 2012.

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