High street brands from John Lewis to Dixons have had the rights to their names in China snapped up without their consent by trademark “squatters”, potentially putting at risk plans to expand into the world’s most exciting consumer market.
An investigation by The Daily Telegraph revealed that very few British companies own the Chinese rights to their names, posing a potential hurdle to attempts to expand their business in the country.
Out of dozens of companies checked on China’s national trademark database, only a handful appear to have registered their brand.
Unlike in the UK, China’s trademarks operate on a “first-to-register” basis: whoever registers the brand first has the rights to it.
Lawyers claim that subsequent attempts to win back a brand name through the Chinese courts only have a slim chance of success and companies can end up paying to regain the rights.
Many brands, including Dixons, John Lewis, Waitrose, Asda and Sainsbury’s are registered to Chinese businesses and individuals, some of whom may be “squatters”, registering the brand in order to hold companies to ransom.
Dixons declined to comment. Sainsbury’s also declined to comment on third parties registering its trademark, but added that the supermarket itself began registering its trademarks in China several years ago to support its growth plans.
A spokesman for the John Lewis Partnership said the business constantly keeps its trademark and brand protection strategies under review.
“It is certainly a problem if somebody’s warehousing or sitting on marks that are well known in the UK,” said Paul Jordan, partner in the brands group at the law firm Bristows.
He added that if companies could not demonstrate that they had a sufficient global reputation in China to supersede the third-party trademark, or prove the trademark had not been used, then companies would either have to consider using a different name in China or pay to regain their rights to the name.
“What’s happened in that scenario is that, unfortunately, quite often a business has to open up their chequebook,” he said.
Dan Harris, a lawyer at Harris & Moure, an American firm specialising in China, said many companies would be forced to make do. “The cheapest and easiest thing to do [if your brand has been hijacked] is to set up in China under a new brand.”
Other companies face the prospect of sharing their brand, and possibly even their logo, with a Chinese firm that has registered it in a different category.
Topshop, for example, has been registered in China for a line of stereo equipment, cameras, lenses and glassware. The retailer owns the rights to its name for fashion purposes. Another Chinese business is making underwear under the label of Theo Fennell, the jewellers.