Penfolds Takes On Trademark Squatters In China

Australian winemaker Penfolds realized that its Chinese name has been held hostage by trademark squatters when it tried to register it in China. (Penfolds)

Australian winemaker Penfolds realized that its Chinese name has been held hostage by trademark squatters when it tried to register it in China. (Penfolds)

When Australian winemaker Treasury Wine Estates tried to register its Penfolds wine’s Chinese name Ben Fu (奔福) in China, it experienced a common headache for foreign brands in the country: the court said the trademark was already taken. And, like many brands facing the issue, the company is fighting back—although it might not get the outcome it hopes for.

A Treasury Wine Estates spokesperson told wine news site Decanter China that Treasury “is confident it is the lawful owner of the trademark for Ben Fu in China.” Although the firm already filed an initial legal challenge that was successful, the defendant has appealed the court’s decision. “This appeal is still pending and it will take time for the Chinese legal system to process this matter. We remain totally committed to protecting our flagship Penfolds brand.”

Treasury’s director of corporate affairs Roger Sharp has confirmed the defendant to be Li Daozhi, whom the Australian Financial Review described Li as a “notorious trademark squatter.” He is the same person who was also prominently known for winemaker Castel’s similar trademark woes when he bought the trademark for its Chinese name and began selling wine with it—and even sponsored the French Olympic fencing team with the brand. The South China Morning Post says that Li is a Spanish citizen of Chinese origin, and he and Li Shen, another Chinese resident of Spain, jointly hold different rights to Penfolds’ Chinese name.

While Treasury has successfully registered the right to use the English name “Penfolds” in China, it is unable to sell its wines under their Chinese name. That right goes to Li Shen, who holds the rights to sell rice wine, whiskeys, grape wine, and other alcoholic beverages other than beer under the Ben Fu name. The Australian Financial Review mentions that it is speculated Li Shen might be a relative of Li Daozhi, who holds the rights for Ben Fu to be used for restaurants, bars, and guesthouses.

The two Li’s trademarks were registered in March and are set to expire in a decade. Records show that the Chinese characters Ben Fu appear in more than 70 registered trademarks, and at least four explicitly use Penfolds’ brand name and logo to sell marketing services, beverages, and bedding. It is not reported why Treasury did not go after Li Shen or any of the other holders of the Ben Fu name.

Trademark squatters race to register trademarks before the real brands do, and China’s “first to file” rule means that squatters have legal right to the names. In addition to winemakers such as Penfolds and Castel, this has caused similar problems for other brands such as Apple and electric carmaker Tesla. However, unlike Treasury, Castel chose to give up its established trademark and decided to rebrand in China instead.

“Treasury has little choice but to buy back the name at a hefty price or re-launch the brand in China,” wine consultant Andy Tan from Shanghai wine boutique Madwines China told Australian Financial Review. “Actually, the Chinese company has done nothing wrong. In China, the first person to register the name has the right to use it.”

There may be some hope for Penfolds, however. On May 1 this year, the Chinese government introduced a new law to circumvent these squatters—the real owners can oust the squatters if they have evidence that the existing trademark was registered in bad faith.

 

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