by Lisa Murray
Australia is sending its first ever intellectual property counsellor to Beijing this month as Canberra steps up support for businesses expanding into China by helping them to protect their trademarks.
The United States, Britain and Japan have all had IP counsellors based in China for at least the past five years and Australia is catching up now that its trade relationship with China is changing.
Previously dominated by trade in bulk commodities such as iron ore and coal, the relationship is broadening to cover more food, beverages and services as companies look to benefit from the free trade agreement which came into force last year.
The new IP counsellor, David Bennett, will move to Beijing this month and begin working out of the Australian embassy next year. He says companies even thinking about breaking into the Chinese market need to register their trademarks as early as possible.
"A lot of businesses were having issues that stem from a lack of understanding of the Chinese IP system," he told The Australian Financial Review.
China's first-to-file laws make trademark squatting a common practice. Mr Bennett said the "classic problem" encountered by firms was someone pre-empting their move into China and registering their trademark either to force the business to buy it from them or use the Chinese company as a distributor.
"A business might take their products to an international trade show and someone will say they're going to do pretty well and it's not very hard to do a trademark check and see if they've registered the IP or not," said Mr Bennett.
Among the Australian companies caught out is Treasury Wine Estates, after a rival wine company registered variations of Penfolds' Chinese name, Ben Fu.
A prolonged legal battle is playing out in the Chinese courts with a key decision expected any day.
"If you look at the Penfolds case where they lost control of that mark, that case would have cost millions of dollars and is still ongoing," said Mr Bennett. "Spending $500 or $1000 upfront is like a form of insurance."
Trademark registrations are valid for 10 years but must be renewed. Trademarks can also be removed from the register for non-use.
Melbourne-based start-up Farmer Brown, which was hoping to export Australian dairy products to the Chinese market, had its flying cow logo stolen. This happened very early in the process after a rival Chinese business heard about the new venture.
Weet-Bix, meanwhile, has had its own trademark dispute in China and will be rebadged as Nutri-Brex to differentiate itself from close competitor Weet-a-Bix, owned by Chinese state-controlled company Bright Foods.
Mr Bennett said one of his key messages to companies will be that systems in China are greatly improved and there are now a lot of ways you can enforce your IP.
"One of the things I'm finding with my role is that a lot of Australian businesses have an image of IP in China that's out of date," he said.
"[Their view is that] Chinese steal everything and have no respect for IP, which might have been the case 15 years ago but is not the case now. As China's economy changes and they have much the same innovation focus as we do in Australia, IP is essential to that."
He points to the recent legal victory of family-run engineering business Lucal Mills, which discovered its portable sawmills were being manufactured in China. It managed to stop the offending company from copying its mills.
Just last week, Michael Jordan also notched up a win in his long-running battle with a Chinese sportswear company over the use of his Chinese name "Qiaodan".
The company's main logo bears a strong resemblance to the Air Jordan image used on Nike products and a court ruled it must stop using the two Chinese characters for "Qiaodan". However it has been a difficult struggle. Qiaodan Sports has more than 6000 stores across China and has won cases against Jordan in the lower courts.
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