"iPhone" or "i-phone"? Protection for Famous Marks in China

Authored by B. Brett Heavner

Trademarks are incredibly valuable assets for multinational corporations like Apple Computer ("Apple"). Although Apple’s iPhone has become a famous mark worldwide, lately a trademark issue might block its entry into one of the world’s biggest markets - China. A Chinese company’s prior registration of the "i-phone" mark in connection with mobile phones has created a big challenge for Apple’s new business plan.

Apple applied to register the "iPhone" mark in China back in late 2002, which nonetheless only covered computer hardware and software. Two years later, Hanwang Technology Co. ("Hanwang") applied to register the "i-phone" mark in connection with phone equipment, including mobile handsets. Because China’s trademark law system is based on registration rather than use, Hanwang‘s prior trademark registration on mobile phones will prevent Apple from using and registering the "iPhone" mark to market its handset products in China.

There are two options for Apple - 1. Obtain a co-existence agreement or license from Hanwang; 2. Petition to cancel Hanwang’s registration. The first option depends on how the negotiations with Hanwang will go, and the second option might work if Apple’s "iPhone" mark was declared as a famous mark prior to Hanwang’s registration.

In the U.S., Section 43 (c) of the Lanham Act was added in 1995 to extend the protection for famous marks against dilution. In determining whether a mark is famous, U.S. courts may consider factors like the duration and the geographical area of the use of the mark. Once a famous mark is determined, be it registered or not, it will be protected from dilution even if the mark is used on dissimilar or non-competitive goods. Dilution occurs when the use of a famous mark lessens the mark’s capacity to identify and distinguish its goods or services. 15 U.S.C. § 1127.

However, the dilution doctrine is not completely adopted in China. Although Article 13 of China’s Trademark Law bars third-party’s use or registration of a famous mark on identical or similar goods, it nevertheless requires the famous mark to be registered in order to prevent third-party’s use or registration of the mark on "dissimilar or non-competing" goods. Under China’s Provisions on the Recognition and Protection of Famous Trademarks, a famous mark status has to be first requested and declared either by the Trademark Office, Trademark Review and Adjudication Board ("TRAB") or the People’s Courts in order to obtain the Article 13 protection. This declaration is valid for three years and may be renewed.

Smuggled iPhones are already extremely popular among wealthy Chinese and, according to some estimates, there are already over one million iPhones in China. It’s true that Apple may not have foreseen the expansion of its product lines to mobile phones when the "iPhone" mark on computers was registered back in 2002. However, if Apple was aware of the protection of famous marks in China, it could have requested the registered "iPhone" mark to be declared as a famous mark, which would extend the protection to dissimilar goods (i.e. mobile phones) and block Hanwang’s registration. This omission unfortunately leads to the significant obstacle for Apple’s entry to the China market today. Accordingly, owners of global brands should keep this in mind and consider seeking protection for their famous marks in any country where unauthorized third-party use of the marks would be seen as a problem.

Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes and is not intended to constitute legal advice. This memorandum may be considered advertising under applicable state laws.