The Yunghe soybean milk trademark will return to its Taiwanese company in Hong Kong this month following a seven-month battle over Yunghe's intellectual property rights (IPR).

In February 2009, Yunghe received news from its lawyers at the law firm Unilaten that its trademark had been preemptively registered in Hong Kong by an individual from the mainland surnamed Zheng. The trademark was already in the posting period of the process, the company was told.

Yunghe astonished

"We were astonished. That means we could not sell products again in Hong Kong if Zheng succeeded," said Ma Qun, the legal manager of Yunghe.

Originated in Taiwan, Yunghe soybean milk is the authorized trademark of Yunghe International Development Co Ltd on the mainland and was prized as a Top China Brand in 2005.

Yunghe, the first brand of Chinese-style fast food, now has more then 380 outlets on the mainland and is planning to increase the number to 1,000 in the next three years.

Ma said copycats began to emerge as the company increased in size and grew its reputation, which led Yunghe to tighten supervision of its trademark.

Yunghe has registered its trademark successfully in dozens of countries and regions overseas.

"The company regarded the case in Hong Kong as a milestone event on its IPR protection journey," Ma said.

"We paid a lot of attention to this case. We haven't opened an outlet in Hong Kong, but it is a key area we'd like to be in the future," he said.

Lawyers from Unitalen told authorities that Zheng was a shareholder of a former partner and had anticipated the negotiation of a franchise.

Yunghe collected the old contracts containing Zheng's personal signature, as well as industrial and commercial documents about Zheng's company.

The documents were given to the Intellectual Protection Department of Hong Kong within three months.

Then, at the suggestion of Unitalen lawyers, Yunghe submitted a new application for trademark registration.

In September, the Intellectual Protection Department of Hong Kong announced that Zheng failed to submit objections before the deadline, and ruled that Yunghe would get back its trademark.

"That smoothes our road to Hong Kong," Ma said, adding that the company is promoting soybean milk sales, but has not yet scheduled the opening of outlets.

Liang Jiequan, an attorney for Yunghe in the case, said the Yunghe trademark battle should be remembered as a classic case for companies concerned about IPR issues.

"Companies known to the public, especially those that have developed overseas markets, should entrust legal experts to monitor trademark posts all over the world," Liang said.

"Once they find some infringing behaviors, objections should be presented to local authorities as soon as possible," she said.

In the case of Yunghe, the company had already obtained a trademark registration in Hong Kong, but it was under a catering service category -- not a product category. This left an opening for a preemptive registration application under the "soybean milk" category.

IPR awareness

Ma acknowledged the company initially lacked enough awareness about IPR protection.

Hiring an experienced law firm can help untangle complicated rules from region to region and also free up a company's time and energy to focus on other business issues, Ma said.

Liang warned that franchising also creates trademark risks, adding that most of the infringement cases she handles involve local franchisers, agents and others.

"Some overseas merchants, especially those who are seeking exclusive agent rights, might infringe on the trademarks or prevent others from franchising the products in their country if they are rejected by the trademark holders," Liang said.

Liang said franchise contracts should state clearly that the franchiser or other partners are not authorized to register the brands.

Liang also recommended that companies register marks under the international Madrid System before entering the international marketplace to avoid a possible loss of intellectual property assets.

The Madrid System is the primary system for facilitating the registration of trademarks in multiple jurisdictions around the world.

The system provides a centrally administered system for obtaining a bundle of trademark registrations in separate jurisdictions.

Registration through the Madrid System does not create an "international" registration; rather, it creates national rights, which can be administered centrally.

Applicants generally will receive a certificate within six months after sending an application to the China Trademark Bureau.

"That's definitely a way to save time and money," Liang said.

(Source: China Daily)

2013-07-17