Starbucks protects its trade mark!

In December, Starbucks sued the coffee shop chain Shanghai Xingbake for trademark infringement. Starbucks uses its American logo and name on storefronts, but its customers know the coffee company as Xingbake. "Xing" is pronounced shin and means "star" in Chinese, while bake is pronounced bah-kuh, which is the phonetic rendering of "bucks." In China, the first to register a copyright has traditionally prevailed in courts. After pressure from foreign companies, however, China passed a "well-known mark" exception to protect global brands. The law, however, doesn't give absolute criteria for what should be considered a well-known mark. And even if the Starbucks name is considered well-known, Xingbake is not. The Chinese system is consistent with the rest of the world. Perhaps an even bigger issue for Starbucks and other global brands in China is trade dress, or the visual appearance of a product or its packaging.

In China, it's not unusual for a company to imitate the look and feel of a global company's logo or the format of its stores, without recourse. Kentucky Fried Chicken has a Taiwanese competitor whose logo is so similar it includes an Asian-looking Colonel Sanders, minus the eyeglasses and beard. Such off-brands tend to operate city-by-city, making it hard and costly to keep track.

It's an important test case for China in which it could be demonstrated that the road is one of safety and preservation, and one of predictability, for companies that are coming into China for the first time. Companies must consider legal challenges and the fees that come with it, when they want to do business in China. The costs that come with should be considered before you enter China.



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