Burberry Appeals China Leather Goods Trademark Restriction

Burberry Group Plc, the U.K.’s largest luxury-goods maker, said it is appealing a decision by Chinese regulators to restrict the company’s trademark on its hallmark checkered pattern for leather goods.

The Chinese regulator’s decision won’t take effect and there will be no change to Burberry’s use of its trademark for leather or other products before a decision on the appeal, the company said today in an e-mailed statement.

Companies from Apple Inc. to Danone have fought legal battles over brand rights in China. Apple paid $60 million last year to settle a two-year-old dispute regarding the iPad trademark in the Asian nation with Proview International Holdings Ltd., which had applied to Chinese customs to block local shipments of the U.S. company’s tablets.

“In China, its been very difficult traditionally for major companies to protect their brand,” said Corbett Wall, a Shanghai-based managing partner of +CW Associates, a retail consultancy in China. “The whole idea of intellectual property is still at its beginning stages.”

Burberry is “confident that our appeal will be successful,” the company said in its statement. The China Trade Mark Office restriction is related to its “Check” trademark, which relates only to leather goods, it said.

Three calls to the information office of the Trademark Office of the State Administration for Industry & Commerce weren’t answered.

Michael Jordan

Burberry’s Asia unit won a court case in Hong Kong in 2010 against Polo Santa Roberta Ltd., a maker of leather bags and belts, over three check pattern designs registered between April 2006 and January 2008.

Danone, the world’s largest yogurt maker, lost a Chinese appeals court ruling in May 2009 in a dispute with Hangzhou Wahaha Group Co. over ownership of the Wahaha trademark. Paris-based Danone had accused Hangzhou Wahaha of violating a joint venture agreement by making products under the brand name outside of their partnership. A Chinese court had refused to reverse a 2007 ruling that gave Hangzhou Wahaha control over the trademark, the Chinese company said at the time.

Former National Basketball Association star Michael Jordan sued Chinese sportswear company Qiaodan Sports Co. in February last year for using his Chinese name and jersey number 23 without permission. Qiaodan in April denied the unauthorized use of Jordan’s name and said it sued him for damages.

Wall, the consultant, said he advises every foreign company looking to come to China to develop their trademarks before starting business on the mainland.

Operational Challenges

International brands have faced other operational difficulties in the country. China’s government this year has investigated foreign brands from baby-food companies to drug makers. Qualcomm Inc., the world’s largest maker of chips for smartphones, said this week China’s National Development and Reform Commission began an investigation related to an anti-monopoly law.

China has become increasingly important to global luxury brands, and Burberry gets about 39 percent of annual revenue from the Asia Pacific region, data compiled by Bloomberg show. Chinese consumers were the world’s biggest buyers of luxury goods in 2012, accounting for 27 percent of industry sales, according to consultant McKinsey & Co.

In August, the Chinese government fined six dairy companies including Danone for fixing the prices of infant formula products, and five Shanghai-based gold retailers and a local trade association for manipulating jewelry prices.

Infant Formula

The August fine over baby-formula price fixing, a combined 669 million yuan ($110 million) for dairy companies also including Mead Johnson Nutrition Co., was a record for violating anti-monopoly laws.

Another high-profile probe into a foreign company this year centered around London-based GlaxoSmithKline Plc. Four senior executives from the company were detained in July on suspicion of economic crimes.

China’s state-controlled media have accused Starbucks Corp. of charging too much for coffee and said Samsung Electronics Co.’s smartphones don’t work properly.

— With assistance by Penny Peng, and Liza Lin

(Updates with comment from analyst in fourth paragraph.)
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