China's trademark squatters cause major headaches for foreign firms


At, an interesting piece on the hassles created for foreign firms by China's trademark 'squatters,' who register trademarks within China for world-known brands, and basically hold those marks ransom until the brand owner pays them off for rights to use the mark within China.

The CNN piece focuses on the headaches suffered by Australian wine firm Penfolds, and that story was first covered in Australian Financial Review:

Treasury Wine Estates failed to register the Chinese name for Penfolds and is now locked in a protracted legal battle with a notorious trademark squatter in an effort regain ownership of the iconic name.

An investigation by The Australian Financial Review has found that a rival wine company has registered three variations of Penfolds' Chinese name, Ben Fu. This potentially leaves Treasury open to a hefty fine for trademark infringement and could also allow the rival to sell wine using the Chinese name for Penfolds.

"Treasury has little choice but to buy back the name at a hefty price or relaunch the brand in China," said wine consultant Andy Tan from Mad Wines. "Actually the Chinese company has done nothing wrong. In China the first person to register the name has the right to use it."

Electronics giant Apple, electric car maker Tesla and French winemaker Castel have all suffered similar problems in China, due to its so called "first to file" rule.

New Chinese trademark laws which came into effect on May 1, should make this more difficult, but previous judgements have not been favourable for ­foreign companies. Last August a ­Chinese court ordered Castel to pay Yuan33.73 million ($A5.8 million) for trademark infringement, after a rival wine company registered its Chinese name in 2000. Castel is appealing the judgement, but it has abandoned its well-known Chinese name and relaunched the brand.

Penfolds is up against the same trademark squatter, who won the record judgement against Castel.

Read the full Financial Review story here.

"Ben Fu" is a transliteration that means "chasing prosperity."