Starbucks likely will face challenges protecting its brand in a country with a vastly different set of ideas about copyrights and trademarks...
Starbucks likely will face challenges protecting its brand in a country with a vastly different set of ideas about copyrights and trademarks.
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” — pronounced shin — means “star” in Chinese, while bake — pronounced bah-kuh — is the phonetic rendering of “bucks.”)
International-trade-law expert Steve Dickinson said the U.S. system of copyright registration — not that of China — is unusual compared with the rest of the world.
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, Dickinson said. And even if the Starbucks name is considered well-known, Xingbake is not.
“That doesn’t mean the Chinese system isn’t any good,” he said. “It means 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.
“In China, unless it’s a direct copy, they’ll pretty much let you go,” Dickinson said.
Starbucks Chairman Howard Schultz said trademark infringement is a concern for the company worldwide. In Russia, Starbucks has taken squatter Sergei Zujkov to court for holding the rights to the Russian trademark for Starbucks LLC.
While the case winds its way through court, Zujkov has offered to sell back the trademark to the company for $600,000, according to reports. For now, Starbucks’ only Russian cafe operates on U.S. embassy land.
In Japan, the brand Mount Rainier Espresso & Milk sells canned coffee in stores with a round green logo that’s suspiciously similar. In lieu of Starbucks’ green mermaid in the center, it carries a rendering of Mount Rainier.
Schultz said he was “cautiously optimistic” that his company will prevail in Chinese courts based on discussions with government officials and his own attorneys.
“I also think it’s an important test case for China,” he said, “where I believe they want to demonstrate that the road is one of safety and preservation — and one of predictability — for companies that are coming into China for the first time.”
Like it or not, U.S. companies must consider legal challenges — and the fees that come with it — a cost of doing business in China. “It’s not a lawless place,” Dickinson said.
“But if you don’t build the cost of taking them to court into your cost structure, you’ve made a mistake.”
Monica Soto Ouchi: 206-515-5632 or email@example.com