"...the promotion of famous Chinese brands of merchandise using what appear to be prohibited forms of financial support, ..."
So it appears to be a prohibited form of financial support, but the USTR is not totally sure about it? First China was encouraged to protect well-known marks, and now that they do...? What is happening?
The USTR alleges that China subsidises Chinese "famous brands" by
- including cash grant rewards for exporting;
- preferential loans for exporters;
- research and development funding to develop new products for export;
- and payments to lower the cost of export credit insurance.
Hui Boyang, deputy director of the quality management department of the General Administration of Quality Supervision, Inspection and Quarantine, denies the claim. Read the Xinhua article by editor Sun here. Stan Abrams of China Hearsay has a nice blog 'There Are No Coincidences - trade edition', about the coincidence of the expiration of the textile deal between the U.S. and China and this new allegation.
What are famous brands or well-known marks?
Intellectual Property Rights has two pillars
- Copyrights regulated by the Berne Convention, which come into existence without any formalities at the moment of creation of a work;
- Industrial rights (also called "registered rights"), regulated by the Paris Convention for the Protection of Industrial Property, and which, generally, need to be registered before they are protected.
Well-Known Mark Exception To Second Pillar (the European Community has another exception, the unregistered Community Design right)
However, article 6bis Paris Convention prescribes to its members "to refuse or to cancel the registration, and to prohibit the use, of a trademark which constitutes a reproduction, an imitation, or a translation, liable to create confusion, of a mark considered by the competent authority of the country of registration or use to be well known in that country as being already the mark of a person entitled to the benefits of this Convention and used for identical or similar goods." So this means that marks that are well-known in a country are protected, whether they are registrated or not. Registration of these well-known marks has its advantage, as we will see below.
In December 2008 I mentioned that I would come back to Brad Luo and Shubha Ghosh's paper 'Protection and Enforcement of Well-Known Mark Rights in China: History, Theory and Future' (74 pages PDF) after finishing reading it. As I already expected it is a great paper.
Article 13 Trademark Law 2001 PR of China stipulates:
Where a trademark in respect of which the application for registration is filed for use for identical or similar goods is a reproduction, imitation or translation of another person's trademark not registered in China and likely to cause confusion, it shall be rejected for registration and prohibited from use.
Where a trademark in respect of which the application for registration is filed fdr use for non-identical or dissimilar goods is a reproduction, imitation or translation of the well-known mark of another person that has been registered in China, misleads the pub1ic and is likely to create prejudice to the interests of the well-known mark registrant, it shall be rejected for registration and prohibited from use.
Take note that transliteration is not mentioned as ground for to oppose registration or prohibit use of a mark.
Messrs Luo and Ghosh explain the advantage of registering your mark as a well-known mark in China: "the owner of the mark can exclude others from registering or using the mark, may it be reproduction, copying or translation, in goods of all types, similar or dissimilar, identical or non-identical. If a mark is unregistered and has been deemed as well-known in china, the owner can still avail itself of the accompanying protection by preventing the use or registration in similar or identical categories of goods. Notably, the 2001 CTL gives equal treatment and protection to owners of service marks and trademarks. Furthermore, the owner of a registered mark has the right to oppose the unauthorized registration and use of the mark by its agent or representative, thus enjoying an added protection for the owner where the agency relationship goes sour."
I could add that it is always good to have a mark registered in a country, including China, so that this factor may be taken into account when you want your mark be recognised as a well-known mark in another country. See in the joint recommendation below how this works:
The Standing Committe on the Law of Trademarks, Industrial Designs and Geographical Indications (SCT) has adopted a joint recommendation pages 1-12 (pdf) concerning provisions on the protection of well-known marks (June 7-11, 1999), which on its turn was adopted at a joint session of the Assembly of the Paris Union for the Protection of Industrial Property and the General Assembly of the World Intellectual Property Organization (WIPO) (September 20-29, 1999). The provisions on the protection of well-known marks do apply to conflicting marks, business identifiers and domain names, but not to geographical indicatitions nor appellations of origin.The International Bureau of the World Intellectual Property Organisation (WIPO) made some explanatory notes pages 13-20 (pdf) about the joint recommendation. the SCT has agreed that the notes will not be submitted for adoption by the Assembly of the Paris Union and the WIPO General Assembly. In cases of conflicts between the provisions and the notes, the provisions would prevail (paragraph 17 document SCT/2/5).