Intellectual Property (IP) is at the center of many of the most vexing issues besetting Sino-US relations these days. Forced technology transfers, rampant copyright infringement, and difficulty protecting trade secrets are all major concerns foreign businesses face in China on a daily basis. However, as maturing Chinese companies have started to clamor for better IP protections of their now valuable copyrights, trademarks, and patents, the impetus behind improved IP enforcement has grown. This heightened demand from companies for IP protection dovetails nicely with the efforts of the US and other nations pushing China to make good on promises of more effective enforcement, and near the top of any shortlist for improved IP protections is trademarks. Recent cases involving Michael Jordan and Bruce Lee illustrate the growing sensitivity and nuanced treatment trademarks are garnering in China.
Protections and Holes in China’s Trademark Laws
Like many of the laws of the People’s Republic of China, trademark law does not have a particularly long history, initially promulgated only in 1982 during the early years of reform and opening (alongside much of the remaining Chinese civil code). As with many of the laws enacted after Deng Xiaoping began steering China away from the revolutionary vigor of the Mao Era, China’s trademark regime is more akin to that found in Europe and Japan as opposed to that found in the US.
Trademark policy in China differs from US policy in several ways. While today US trademark law is by and large driven by Federal statutes, much of its development can be traced to cases reflecting the US’s burgeoning economy in the early 20th century. As such, American trademark laws include specific requirements for actually using registered marks in commerce. In the US, the business must show actual use of the trademark in commerce after an allotted period of time after registering it, or they lose the rights to the mark, while filers in China can register any mark they think may be valuable. This system naturally lends itself to squatting, and the issue has plagued China for some time now, perhaps best illustrated by Apple’s US$60 million payout in 2012 to secure the trademark for iPad in the China market from a company that had registered the valuable trademark before it.
Recent amendments to China’s trademark regime do however correct for egregious squatting and provide increased rights for foreign entities to protect their otherwise legitimate marks in the China market. New language added to China’s trademark law, effective as of 2019, establishes stronger defensive measures against trademark applications filed without intention of use.
However, not all intrepid trademark filers simply squat on their marks waiting for foreign entities to buy them out. Some companies actually capitalize on them, and when such use potentially infringes on the interests of foreign entities, litigation is bound to follow. Two cases in recent years illustrate this point.
Jordan vs. Qiaodan
After meandering unsuccessfully through lower courts for years, efforts by Michael Jordan to stake claim to his own name in China finally found some success in March 2020. While Jordan’s dispute was with the Qiaodan Sportswear Company, the case brought by Jordan, which eventually found its way to the Supreme People’s Court of China, was actually against the China National Intellectual Property Administration, naming Qiaodan Sportswear as a third party. The Supreme People’s Court ruled that Jordan had a name right in 乔丹 (Qiáodān) – the transliteration of ‘Jordan’ in Chinese – effectively depriving Qiaodan Sportswear from the ability to use many of its long-held trademarks. Specifically, the court held “Natural persons have name rights in accordance with the law. Willfully using the name of another who holds prior name rights to register a trademark without permission . . . violates the Trademark Law.”
Qiaodan Sportswear trademarked the term ‘Qiaodan’ decades ago during Michael Jordan’s heyday, long before the NBA had established a strong presence in the Chinese market. Now, the company is a powerhouse in China’s sportswear sector in China, though it remains relatively unknown in foreign markets. Profiting from Jordan’s unparalleled fame was essential for many of the company’s early successes, and they have been since reluctant to acknowledge the misappropriation of the basketball star’s name. Among other things, the sportswear business argued that ‘Qiaodan’ was merely the transliteration of ‘Jordan,’ a common surname in English speaking nations, and thus the term did not inherently refer to Michael Jordan. Their argument proved unconvincing, however, no doubt in part due to a litany of other Michael Jordan related terms the company registered throughout the years, including the number 23 (Michael Jordan’s number during the height of his career), as well as the names of Jordan’s two sons.
Jordan’s victory was only a partial though, as a concurrent claim to withdraw a logo using his likeness was dismissed. Qiaodan Sportswear successfully managed to protect its rights to a crucial trademarked image of a basketball player mid-flight. In certain ways reminiscent of the image used on many of Nike’s Air Jordan basketball shoes (from which Michael Jordan earns considerable royalties), the image is nonetheless distinct from that used by Nike.
Commentators have pointed out the similarities of the mark to an iconic image of Michael Jordan flying through the air, ball in hand, headed towards the hoop. However, the 90s were awash in iconic images of Michael Jordan flying through the air. The trademark is typically rendered as either a red silhouette on a white background or the inverse. Some thereby reason that this is no more than an image of a generic basketball player – perhaps inspired by Michael Jordan, but lacking features distinctive enough to be certain. Besides, Michael Jordan already has an interest in Nike’s trademarked Air Jordan image, and forestalling one man from claiming rights in all silhouettes of jumping male athletes would seem to be a reasonable enough judgement.
Perhaps most importantly, the ruling seems to be finding effective enforcement in China, at least in terms of litigation. In August of 2020, a case brought by Qiaodan Sportswear to enjoin the sale of Air Jordan branded items on Amazon.com in China was rejected by a lower court that affirmed Qiaodan Sportswear has no rights in the term ‘Qiáodān.’ Since the ruling, Qiaodan Sportswear has removed the ‘Qiaodan’ term from its logo on its website, and most references to the term now come in the form of ‘qiaodan.com,’ governed by separate laws in both the US and China.
Bruce Lee vs. Steamed Buns
The loss of Michael Jordan’s claim against Qiaodan Sportswear for the supposed rip-off jump-man image serves to set a precedent in another prominent case still making its way through the Chinese legal system. In late 2019, the Bruce Lee Company and Shannon Lee (Bruce Lee’s daughter) filed suit against the Guangzhou-based 真功夫 (‘Zhēngōngfū,’ or simply ‘Kungfu’ as the company brands itself in English), one of China’s largest fast food chains. The chain’s name ‘Zhengongfu’ is a play on words, meaning both “real kungfu” and “skilled steaming,” marketing itself as a healthier alternative to deep fried fast food. While the chain’s Chinese name makes a weak connection to the world of martial arts, the logo identifying its stores across China is more problematic.
The logo image appears to be little more than an artistic stylization of a frame lifted directly from the Bruce Lee movie “Game of Death,” complete with the iconic yellow and black tracksuit and facial details with more than a passing resemblance to the martial artist movie star. While the silhouetted nature of the jumping basketball player used by Qiaodan Sportswear may have partially stymied Michael Jordan’s efforts earlier this year, the image used by Zhengongfu is not nearly so ambiguous and would seem at first glance to be a straightforward case. Specifically, the case alleges violation of Article 100 of the General Principles of the Civil Law of the People’s Republic of China: “Citizens shall enjoy the right of portrait. The use of a citizen’s portrait for profits without his consent shall be prohibited.” Of course, there are plenty of wrinkles to iron out, like the fact that Bruce Lee is deceased can be overcome by other relevant laws provided an immediate family member is involved.
The claim brought by the Bruce Lee Company was for CN￥210 million (approximately US$31 million). While not a small sum, it is well within the means of a national fast food chain that successfully operates over 600 storefronts across China and East Asia. More disconcerting to Zhengongfu is the Bruce Lee Company’s demand to publicly advertise that it has nothing to do with Bruce Lee for 90 days. Rumors tracing back from before the case was filed last December suggested that Zhengongfu was in negotiations with the Bruce Lee Company, and the dispute was nearly resolved. Evidently, a settlement has not come to pass. However, it is entirely possible that the Bruce Lee Company may simply be using the case as leverage to extract a better deal out of Zhengongfu.
Ultimately, evidence suggests that the Bruce Lee Company will not be selling steamed bums in mainland China anytime soon, and the logical move would be to come to some sort of licensing agreement with Zhengongfu for its continued use of Bruce Lee’s likeness (otherwise, Zhengongfu could always try approaching Donnie Yen and simply touch up the facial features a bit, why settle for the student when you can get the [actor playing] the master).
A Maturing IP Regime
Both the Michael Jordan Bruce Lee cases represent China’s maturing IP regime. In both instances, large Chinese companies have invested millions of RMB in building their brands, despite the fact that their brands hinge on the likeness of international superstars. In the Jordan case, the Supreme People’s Court offered a nuanced judgement that appears to legitimately protect the reasonable interests of both parties, instead of simply offering a knee-jerk reaction of ‘Qiaodan Sportswear registered the trademark first, so Qiaodan Sportswear wins.’ Although the Lee case has yet to be decided, the Bruce Lee Company has already secured opinions from China’s Trademark Office validating its rights in the name and likeness of Bruce Lee. While these high profile cases may be wins for IP enforcement in China, the question remains as to whether small or medium sized companies can also find effective relief in China when their legitimate trademarks are violated, be they domestic firms or foreign entities.