Article,
Protecting Your Magazine Brands in China
MPA, (-oa-)
Abstract
Stories of trademark counterfeiting and infringement in China are
hardly news. Counterfeit handbags, footwear, even medicines make
it clear that magazine advertisers have a problem. But should magazine
publishers worry about protecting their branded titles in China?
Yes, and here’s why. Mark Kitto was a successful foreign magazine
publisher in China, the force behind That’s Magazines and a stable
of profitable city guides including That’s Shanghai magazine. Then,
in 2005, Kitto’s Chinese partner, China Intercontinental Press -
which owned the government licenses needed to publish – pushed him
out. After a legal battle, Chinese trademark authorities took away
the registered trademark for the magazine titles Kitto had built.
China Intercontinental Press, Kitto’s former partner, is the new owner
of the That’s family of trademarks, and has even added new titles,
including That’s China magazine - without paying Kitto a dime. Kitto,
no longer a magazine publisher, is on tour promoting a book about
his experiences in China’s turbulent publishing business.
Although Kitto reportedly lost his trademarks for failing to comply
with Chinese licensing law, his experience illustrates the importance
of trademark rights in China for international publishers. Unless
they take steps to protect magazine titles in China, magazine publishers
could find themselves at a serious disadvantage with infringers and
trademark “squatters,” contract manufacturers, and even prospective
joint venture partners.
Fortunately, there are some steps that publishers can take to improve
their trademark rights in China. Although these steps are not always
easy or foolproof, they can improve the legal position of publishers
in three ways– keeping the China market open for their international
brand, managing the risk of trademark infringement by contract manufacturers,
and safeguarding their brand in joint ventures with Chinese magazine
publishers.
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Protecting Your Magazine Brand
Chinese magazine publishers have plenty of incentive to increase newsstand
appeal by appropriating an international magazine brand. Amidst what
the China Periodicals Association calls a “severe shortage of highly
qualified creative talents,” there is a serious over-supply of Chinese
magazine titles – now over 9,500. Analysts estimate that no more
than five to 10 percent are profitable. Except for a handful enjoying
substantial advertising revenues, Chinese magazine publishers depend
on circulation revenues at low cover prices, but circulation has
been stagnant for nearly 20 years, according to CPA. In addition
to garden-variety trademark infringement, some international publishers
have found their titles and cover designs counterfeited in China.
For U.S. publishers to protect their brands, they must take a crucial
first step – registering magazine titles and other key trademarks
with the China Trade Mark Office (CTMO). The importance of registering
trademarks in China cannot be overstated. A magazine title may be
a household name back home, but it is not legally protected in China
unless it is registered as a trademark or found to be famous there
– the latter a difficult legal hurdle.
The time to register magazine titles and other trademarks in China
is as soon as possible, and long before you are doing business or
considering a joint venture there. First to file, first in right
is the fundamental trademark rule in China, and magazine publishers
can register titles as trademarks even before using them in China.
Publishers that wait too long to register their own trademarks are
at risk of being beaten to registration by Chinese companies – and
being blocked from using their own trademarks in the China market.
As in other countries, the magazine title and publishing company name
should be registered with the CTMO, along with logos and cover designs.
Transliterations of the magazine title and publisher’s name in simplified
Chinese characters should also be registered with the CTMO. These
transliterated brands, as well as the sound of the original, Latin-alphabet
brand, should be carefully assessed from a Chinese perspective to
make sure they are consistent with marketing considerations and do
not have unfavorable connotations. In addition, all these trademarks
should be registered in the neighboring Chinese territory of Hong
Kong, which has a separate Intellectual Property Department under
China’s framework of “one country, two systems.”
To provide adequate protection and freedom to expand into ancillary
products and services, publishers should at a minimum register magazine
trademarks for magazines, books, and other publications, as well
as for branded promotional merchandise. Publishers should also register
magazine trademarks for related media services, including advertising
sales, editorial preparation, and online information services. The
latter is particularly important because online readership significantly
supplements stagnant print circulation in China, and was estimated
by CPA to comprise 28 percent of the total China publishing market
last year.
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Strengthening the Offshore Supply Chain
To take advantage of lower costs, many publishers have branded books
and other merchandise manufactured for export under contract in China.
For example, U.K. book publisher Penguin relies on China for up to
70 percent of its 56 million Dorling Kindersley books a year. Consequently,
contract manufacturers in China have high-quality graphics of international
magazine brands, and may be tempted to supplement revenues by selling
production overruns, factory seconds, and even knock-offs into the
local market – which often become parallel imports.
Magazine publishers can manage this risk by strengthening supply chain
security and administration of manufacturing contracts. In all cases,
publishers should conduct due diligence on contract manufacturers
and brokers. Because a contract claim can be easier to win in China
than a trademark infringement claim, manufacturing agreements should
limit production, prohibit over-production, require detailed production,
inventory and shipping records, and permit the publisher to make
onsite inspections. These agreements should also recognize the publisher’s
ownership of trademark rights in China and require assistance against
infringements. If a broker or other intermediary is used to engage
contract manufacturers – a common practice –then the magazine should
have the right to approve the manufacturer and to enforce these requirements
directly against the manufacturer.
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Enhancing Your Position in a Joint Venture
Even if a publisher does not have a branded Chinese publication, chances
are good that it has thought about a publishing joint venture in
China. If so, particular care should be taken to safeguard trademark
rights in magazine titles.
For Chinese magazine publishers, a joint venture with a foreign magazine
is an attractive way to increase newsstand appeal – by using an international
brand - and replace dwindling government subsidies with private investment.
Chinese publishers also have considerable leverage in a publishing
joint venture with an international publisher. Under Chinese law,
foreign magazine publishers need government-licensed Chinese partners
to publish magazines and conduct other activities in China, and are
subject to burdensome restrictions on media ownership, editorial
content creation, and other activities.
The principal leverage of an international publisher is its checkbook
– that is, the investment it is willing to make in the joint venture
– and the appeal and market recognition of its magazine title and
other trademarks. To enhance and safeguard the value of its trademark,
international publishers should make sure that magazine trademarks
are registered in China with the CTMO – and that the Chinese publisher
has not registered them first.
International publishers should also be prepared to safeguard their
trademarks during negotiations of the joint venture agreements. The
Chinese government has the right to approve the terms of joint venture
agreements in the highly regulated media sector, but international
publishers should seek to include key provisions governing trademarks.
The joint venture agreements should make clear that the international
publisher is the sole owner of all rights in the magazine title and
other trademarks and reserves the right to use them in China. It
should also acknowledge that the international publisher’s trademarks
are famous in China. The agreement should provide that the joint
venture’s use of the magazine trademarks is under a limited license
from the international publisher and subject to strict conditions,
including fields of use, quality control, and territorial restrictions.
Requiring the joint venture to pay a trademark licensing royalty
can also help set the measure of damages in the event that the joint
venture breaches the contract or infringes magazine trademarks.
The joint venture agreements should also provide a clear understanding
of what will happen if the relationship goes sour. Breach of contract
or trademark infringement by the joint venture or the Chinese publisher
should entitle the international publisher to terminate the trademark
license and require them to stop using the magazine trademarks immediately.
To reduce uncertainty and the risk of local protectionism in Chinese
courts, the joint venture agreements should provide that contract
disputes are to be resolved by a recognized arbitration agency with
a reputation for fairness with non-Chinese companies.
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Shoud You Register Your Trademark in China?
The answer is yes if:
Your magazine or its online edition is available in China.
Your books and other branded merchandise are made in China.
Your brand is being infringed there.
You are considering entering the China market.
Conclusion
In China, as in other emerging markets, there is no “silver bullet”
for protecting your magazine trademarks in all circumstances. But
there are several steps – trademark registration, oversight of branded
merchandise supply chains, and careful attention to joint ventures–
that can help improve the chances of protecting your magazine title
and other trademarks in China. They require planning and commitment,
but they hold the promise of keeping the China market open for future
expansion into the world’s largest single market.
Mark Traphagen is the founder of Traphegen Law PLLC, in Washington,
DC. He specializes in copyright, trademark, domain names, geographical
indications, unfair competition, and related areas of law.
