Though trademark assignment seems simple, it is actually quite complicated. Even Apple Inc. (Apple) was trapped with their iPad trademark assignment. In December 2009, Apple’s shell company UK IP Application Development (IPAD) bought the registered trademark rights for the iPad in different countries, including Mainland China, from the Proview affiliate in Taiwan for 35,000 pounds. However, five months earlier in July, Apple bought the iPhone trademark from Hanwang Technology at a price of 3.65 million US dollars.
However Proview Shenzhen claimed that it owned the Chinese trademark rights to the iPad name which are different to those owned by its Taiwan subsidiary. Proview Taiwan had no rights to assign the Chinese trademark. Finally, Apple paid 60 million US dollars before using the iPad trademark. Apparently Apple's shell company either didn't know the right owner of the Chinese trademark for iPad before signing the trademark assignment agreement or failed to sign a proper trademark assignment agreement with the knowledge of the right owner — it did not include Proview Shenzhen in the agreement. According to China's Trademark Law, in trademark assignment, the assignor should assign all the trademarks that are identical with or similar to the assigned trademark on the same or similar goods to the assignee.
When a multinational company buys a trademark in China, everything goes smoothly until it is rejected by the Trademark Office at the assignment formality stage. Because the assignor has a similar trademark for the assigned trademark on similar goods. When a multinational company would like to get assignment for these similar trademarks according to the Trademark Law, they are asked to pay the additional assignment fees, though they would like to get them for free. The key is that the assignor and assignee do not reach a consensus in the agreement ahead of time, which leads to disputes in the end.
In this regard, one has to handle trademark assignment business cautiously to avoid minefields. But sometimes when one company is too cautious to get a trademark, it can make the simple procedure more complicated. This can be reflected in the “Pierre Cardin” trademark case. Pierre Cardin had started to bring fashion shows to China as early as 1979. Thereafter, the brand was tagged with a top class, luxurious and distinguished image. Unfortunately, the brand came to the world of being sold out.
At the end of August 2009, Shanghai Century Star Import & Export Corp (Shanghai Century Star) announced the assignment of acquisition agreement of Pierre Cardin. However, Shanghai Century Star soon learned that in early July of 2009, Pierre Cardin had already assigned its trademark registered in 4 classes including leatherware, knitwear, shoes, and gloves in China to Cardanro, a company in Wenzhou, Zhejiang Province, at a price of 37 million euros. What made Shanghai Century Star even more astonished was that Pierre Cardin had already received 33.3 million euros from Cardanro.
Chinese companies paid extremely high prices to buy the diminished brand, and Pierre Cardin seemed to start the sale skirmish intentionally. Under such circumstances, who was the real owner of Pierre Cardin? Actually Shanghai Century Star neither acquired Pierre Cardin in a whole, nor bought its shares, it was only assigned with Pierre Cardin’s trademark in Greater China including Mainland China, Taiwan, Hong Kong, Macao and Singapore. But Shanghai Century Star made the assignment of trademark as complicated as a company acquisition.
It had gone through a series of procedures and got approval from China’s National Development and Reform Commission, which are only needed in overseas acquisition. Moreover, it set up a subsidiary company in Paris to deal with the trademark assignment work. In fact the trademark assignment of Pierre Cardin could be even faster if Shanghai Century Star didn’t go through all of the unnecessary procedures.
Of course, the media may not report accurately. If Shanghai Century Star was intended to acquire Pierre Cardin, then it should ask Pierre Cardin to block any trademark assignments during negotiation, and it should confirm that Pierre Cardin was still the owner of the trademark while signing the agreement and forbid any behavior of trademark assignment and licensing to avoid purchasing a “shell” company without the target trademark.
(Translated by Emily Tan)
