China Trademarks: The Dunhill Lessons

Last week, the Foshan Intermediate People’s Court awarded RMB 10 million (nearly $1.5 million) in damages to the well-known British luxury goods brand Alfred Dunhill, finding Chinese copycat brand Danhuoli liable for trademark infringement and unfair competition.

The press coverage (which apparently took its cue from the PR release) trumpeted the size of the award and the groundbreaking nature of the victory. To an observer unfamiliar with China trademark practice, both of these claims might seem odd in that the infringement was obvious, outrageous, and longstanding. The infringing company selected a name (“Danhuoli”) similar to Dunhill and then mimicked the elongated vertical lines and lower-case lettering of the Dunhill logo to create a copycat brand identity. And they were apparently successful at it, with more than 200 low-budget clothing stores (franchises, according to the South China Morning Post) in more than 61 cities across China. And just in case there was any doubt about their intent, the infringing company also created a Hong Kong parent company called Dunhill Group.

In the U.S. this kind of nonsense would last about as long as it took to file a TRO, but in China the road to enforcing trademark rights is long and frustrating. Chinese judges are reluctant to find trademark infringement unless the marks are identical, and even then it’s not guaranteed. Chinese judges are also reluctant to award high monetary damages because of the speculative nature of anything that can’t be proven with written evidence. So Dunhill is absolutely justified in feeling vindicated by the verdict.

But a landmark? I beg to differ. A landmark verdict is one that signals a change in the way cases are being decided. But this decision is no landmark, or if it is, it is too early to tell. Nor does this decision show that China is really serious about enforcing IP rights, because this decision is still the exception, not the rule. Check back in a year and let me know if every other decision since this one followed the same logic and came out in favor of the trademark owner.

Still, one detail about the Dunhill decision bears repeating: both companies had registered trademarks, but Dunhill’s was registered first (by decades). That fact alone signifies that Dunhill has had an active and forward-thinking trademark strategy for years. And they would never have emerged victorious in the latest dispute without superior trademark rights. See 8 Reasons to Register Your Trademarks in China.

A quick search of the CTMO database reveals that Danhuoli, whose entire business model is based on ripping off Dunhill’s trademark, is itself the subject of trademark squatting. It seems karmically appropriate.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.