A common theme in the age of the Internet is a concept known as cybersquatting (or domain squatting). Simply put, cybersquatting entails the registration of a domain name in bad faith, i.e., registering a domain name of a trademark with the intent to later sell the domain to the company or person with rights to the trademark. In the world of wine, a concept known as brand squatting is very similar.
Recently, Château Listran, a winery in the Médoc region of France, changed its brand name from Listran to L’Estran. This alteration in name, while similar to the original, was not performed voluntarily. In fact, the French winery was forced to change its brand name because a third party in China pre-registered the name Listran. According to Céline Baillet, a European trademark attorney, “These and other problems with trademark law are usual in China . . . . In China, the person who registered is right, no matter if a trademark already exists abroad and is known on international markets. So, more and more foreign trademarks are prevented from being sold in China. Then, the original trademark owner is required to take over the rights because otherwise he has no choice but to change his name.” Trademark Law in China Leads to Name Change of Château Listran. This means that whoever is first to register a trademark in China establishes the right to a mark in China regardless of whether or not another party has previously used the mark in commerce. To make matters worse, importers in China will not distribute wine whose brand is registered to another party in China, thus blocking the wine from being sold on the Chinese market. See Bordeaux Chateau Changes Name to Bypass Chinese Trademark ‘Squatters.’
“Tak[ing] over” rights can be expensive, though. Generally, this entails litigation and other legal costs. Alternatively, the rights to the trademark can be rebought, but as a rule in China, this generally costs between 8,000 and 30,000 euro (and can be even more costly for internationally-known names). See Trademark Law in China Leads to Name Change of Château Listran. Registering a trademark for ten years, however, can cost around 1,000 euro. Id. As a result, many victims of brand squatting—including Château Listran—choose to register an alternative trademark as opposed to diving into what can be a costly legal battle.
Is there hope for change in China’s trademark registration? Some point to the recent victory of Château Ausone in May 2013. The winery was able to annul a third party registration of its name. See Chateau Ausone Wins Trademark Case in China. Others, however, are not so lucky. See, e.g., Kasite Trademark Sours for French Vintner Caste.
For more information on wine or alcohol law, international trade, or trademark, please contact Lindsey Zahn.
DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.