Insights / August 11th, 2014

Overseas trade marks - a painful follow-up

Recently we highlighted the risks that Australian businesses face if they don’t seek adequate trade mark protection in overseas jurisdictions at an early stage.

The Penfolds saga in China continues to be a painful reminder of the commercial damage that can result from inadequate trade mark protection, not to mention distraction to staff and legal costs. As reported by Angus Grigg in his Australian Financial Review article on 6 August 2014, InterContinental Hotels in China have withdrawn Penfolds Wines from their wine lists because InterContinental does not wish to become involved in potential trade mark infringement litigation. InterContinental has 214 hotels across China and Mr Grigg quoted an industry source that estimated the Penfolds withdrawal could be worth around 5,000 cases annually to Penfolds or 5% of its total shipments to China. If InterContinental has withdrawn Penfolds from its wine lists, it may be that others will follow suit.

Penfolds won the first round of litigation with the two Chinese trade mark squatters but is now locked in an appeal process in China. Trade mark infringement litigation is best avoided if possible. In many countries, including China and India, the litigation process for companies trying to claim back their brands is very protracted and uncertain. What is crystal clear though is the monetary and commercial costs and the frustration flowing from the problem.

Overlooking upfront protection or seeking to save a few dollars initially by not adequately protecting trade marks can result in a very negative outcome.

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