New Types of Trademarks: Advantage & Disadvantage

Subject: Law
Pages: 22
Words: 6114
Reading time:
23 min
Study level: College

International Rules about the Trademark


Business world has increasingly become competitive as new firms get into the market with products that are already in existence. According to Howell (2012, p. 42), the end of the Second World War saw the world being turned into a small global village where trade is not limited within the borders of a country. It also saw an emergent of various firms in various industries as they struggle to acquire the world market. This expansion of the world market has been enhanced by the improved technology. The emerging technologies have helped in turning the world into a small global market where one firm can easily move with its goods from one market to the other. Technology has enhanced movement of goods and people a great deal. It is now possible to move from Europe to United States in a matter of hours thanks to the invention of planes. Good can also move faster from one continent to the other either through sea or air transport depending on the nature of the product. Communication has also been enhanced with this development of technology. Phones have enabled business units to communicate in real time, a factor that has enhanced international business. Other new forms of communication such as video conferencing have also been of great importance. The emergence of the social media has been seen as a major boost for international trade.

It comes out clearly that international trade is destined to improve as time goes by and as new technologies are realized. According to Devonshire-Ellis (2011, p. 34), this massive development of trade comes with some responsibilities. This scholar says that no business unit can manage to operate in a lawless environment. One of the major factors in the external environment of a business is law. This law helps business units know what is considered legal among the possible actions they can take in the market. This law also explains to business units how they are protected during their operations in the market. As Genzberger (1995, p. 71) says, a company is an independent entity from the owner with the capacity to enter into business contracts through its agents. A business unit can only exist as an entity when there is a clear law on how it should operate in the market and its relationship with other firms. Defining this relationship is important in ensuring that a firm does not infringe on other firms rights. It also protects the firm from infringement of its rights by other firms in the market. One of the most important properties of a firm that would be important to protect is the trademark and other patent issues that it uses in the market to identify its products and brand. This research will focus on trademark issues by comparing how brands and individual products are protected in the market focusing on the Chinese market and other international markets.

Trademark Protection

It does not matter whether a firm is operating within the borders of a country or internationally. One of the biggest challenges that firms face in the market today is the infringement of trademark and other issues related to the patent. As was mentioned previously, technology has played a major role in enhancing trade in the market. According to Kumar (1994, p. 55), one of the areas where technology has been of great help is in the production of goods and in service delivery. Using large machines and computers has made it possible to produce standardized high quality products at a very short time. However, this has come with some consequences to business units. This scholar says that rogue businesspersons have been taking advantage of this fact in order to earn what they have not worked for at all.

It takes a lot of time to develop a brand and make it popular in the market. It also takes a lot of resources and time to develop a new product that has never been in existence in the market before. However, there are some unethical businesses persons who lack creativity that can enable them come up with their own ideas in the market, develop their own unique products, and brand. Such businesspersons prefer copying other successful brands and generating a lot of income in what they never spent time and resources to develop. For this reason, firms always want to protect their brand name and their designs from infringement by other players who have specialized in copycats. It is only through this that such firms are able to generate income out of their hard work and investment they put together in order to produce a brand or a new product in the market.

The process of protecting a brand, design or any other unique feature in a product is always done through registering of the trademark or taking a patent. This is a process, which involves going to the government agency responsible for this registration, and giving all the information that is relevant. Such information that would be needed include the brand name, the brand logo and all the colors that come with it, the brand image and any other relevant issue about the brand. When it comes to taking patent for a given product, then it would be important to give such information as the features that make product unique from others, and specific aspects of the product that one would want to protect from a possible imitation. The process of protecting a brand or a product through patent and trademarks takes different approaches in different countries.

According to Wei (2000, p. 44), it is believed that the first people to come up with trademarks were the blacksmiths who were interested in making their swords unique in the market. Swords were becoming very important weapons before the gun and other explosives were invented. The blacksmiths had a huge market from the state soldiers to individuals. To attract more customers, they preferred using trademark as a way of making their names be known in the market based on the quality of sword they deliver. Today, trademark is very important to any business unit, which feels that in one way or the other its products can be infringed against by rogue traders in the market. It would be interesting to know how trademark operates in China, which is the world’s largest market and considered having the highest number of counterfeit products in the world.

Chinese Way of Protecting Sound, Smell, and other Shapes

As was mentioned above, China is the largest market in the world. With a population of over 1.3 billion people, this country has over one fourth of the total world population. This makes this country attractive for business in two fronts. The expansive population means that the country has enough labor force to work in various fields in the production process. In fact Zaichkowsky (2006, p. 90) says that a number of firms in the United States and Europe have considered relocating their production plants to China because of the expansive labor force. Given this fact, it means that the cost of labor in this country is relatively low as opposed to the developed countries. Such firms as Apple moved their production plants from their home country in the United States to China. Another factor that makes this large population attractive is the market size they form. This large population makes a huge market for the products manufactured locally and those that come from abroad.

However, it is in this country where there have been claims that counterfeiting is at its highest. China is fast overtaking the west in their export to the developing countries, especially in Africa and other developing nations in Asia. The highest percentages of the products they take to these countries are counterfeit products. It is hurting that these rogue traders use the brand name, their logo, and design to deliver their products into the world and local market. For instance, the electronics from the United States, Japan, and South Korea among other nations have suffered counterfeiting from Chinese products. In the developing countries, a number of Chinese products find their way but using the names of renown brands. Nokia and Samsung have suffered a great deal from this counterfeiting (Jomis 1992, p. 70). Although it is not common in developed countries like United States and Europe, counterfeit products from China are sold in the developing countries s though they were original goods. In fact, they offer serious competition to the original owners of the brands and products by offering lower prices. They copy they shape, color, design, but generally, their products are always of poor quality as compared to the original products. This makes customers dissatisfied with the brand. This means that their actions injure the original owners of these brands and products.

The biggest question has been how these firms manage to counterfeit products and brands in the international market with such impunity while there are laws that should protect firms. It is interesting to know how these firms manage to operate without being countered by the law. However, a keen analysis of the Chinese way of protecting sound, smell, shape, design or any other issue related to trademark would reveal the loophole that these unscrupulous businesspersons have been exploiting over the years. According to Zimmerman (2010, p. 107), registering a patent or a trademark is not a universal process. The way it is done in the United Kingdom or in the United States is different from the way it is done in China. However, it is important to understand that the intent is always to protect brands of businesses in the market and other intellectual property rights from possible abuse.

How Patent are Registered in China

According to the law guiding protection of patents, any product that is not registered in China for patent or brand protection will not receive any within this country. According to Horn (1987, p. 77), this means that when Nokia has not taken a patent to protect its brand and all its products in China, then any businessperson can use the brand, logo, or the design in this country and the act would be considered legal. This has been the main loophole that unscrupulous businesspersons have exploited to reap benefits in what they have not worked for in any way. The law of trademark also is also based on first come first serve basis. This means that if an individual presents the name Samsung with all the details of the original Samsung Company such as the logo, designs of the products, their shapes and such other related details, the individual will receive patent protection within this country. It may not matter if Samsung is registered in the United States, United Kingdom, South Korea, or any other country across the world (Hiebert 1994, p. 89). This means that when the original Samsung Company makes a decision to enter this market, then its name, products and its very existence will be infringing into the rights of a dubious businessperson who rushed to register this name in China. A good example is on car model below.

Imposter Telsa Model Registered in China
Figure 1: Imposter Telsa Model Registered in China
The Real Telsa Model
Figure 2: The Real Telsa Model

The two figures above is a clear demonstration of how far the counterfeit producers are willing to go in order to earn incomes that they did not work for. The above two models of a Telsa car share a lot in common, a fact that the imposter is interested in benefiting from the good name this firm has developed in the market. The two figures below of the brand logo eliminates any doubt about the ill motives of this imposter.

The Imposter’s Brand Logo
Figure 3: The Imposter’s Brand Logo
The Real Tesla Brand Logo
Figure 4: The Real Tesla Brand Logo

This is a clear demonstration that the imposter was interested in making his product to be mistaken for the original product. It is very unfortunate that the policies of registering a brand in China allow this broad daylight theft to take place. According to the reports by Roberts (2007, p. 23), the Chinese imposter who went ahead and registered this brand name of Telsa did not have the capacity to build the car. When Telsa tried to make an entry into the Chinese market, it was stopped after it was realized that there was another brand existing with the same name and with logo that is almost similar to that of China. The body that is responsible for registering trademarks in mainland China is China Trademark Office. Any appeals regarding unfair registration or such other related issues are taken care of by Trademark Review and Adjudication Board Campbell (2007, p. 36). The appeals can also be presented to the law courts within this country. The principal laws guiding this adjudication are the Unfair Competition Law and Trademark Law. However, no common law exists to protect unregistered trademarks in this country.

An amendment was done on Trademark Law on 27 October 2001 to recognize ‘well-known products’ that are not registered in this country. This law was meant to protect internationally known brands and products from any form of infringement. This was after a massive international pressure over the rate at which Chinese nationals were producing counterfeit products of other nation around the world and benefiting from the law of this land. However, this new amendment stated that this protection would only be applicable if the product is well known in the Chinese market, and the period under which it has been in operations (Auberry 2002, p. 74). This means that this new law still has loopholes because the measure of how well a product is known in China is subject to a debate. This explains why trademark piracy has remained rampant in this country despite some of the measures that the government is seen to make in order to win this war.

There has been a clear lapse in the current laws in China on how to protect sound and smell. Although the law recognizes shapes and colors, protection of unique sounds or smell is still a challenge. For instance, Nokia has a unique sound for its phones and so does Samsung. Law from usage protects these sounds by any other entity without express permission from this firm. Although the law is underway to protect sounds, the current laws offer none, if not insufficient laws to protect sound. It is even worse when it comes to smell. According to Tao (2008, p. 51), this country does not consider a smell as something that a patent can be acquired for in order to protect it. They consider smell as being ambiguous when it comes to patenting because it would be challenging to separate the new unique smell for which a patent would be taken and the massive current variety of smells. However, shape is recognized under designs and the protection procedure takes the form described above. According to Tubela (2003, p. 69), there is a rising need to protect sound and smell alongside the brand and designs. This is because competition has gotten so high that it becomes necessary to use every mechanism for a firm to make it unique in the market.

It is possible to patent a given sound. This will involve proving that the sound does not exist and that it is unique. In the same way music is protected by copyright, sound can easily be protected. When it comes to protecting smell, Yu (2010, p. 18) says that there may be a challenge. This scholar absolves for not having a clear mechanism for protecting smell as a patent. This scholar says that in the current market, there are numerous smells and unless a specific machine is used to identify and categorize these smells, it might be practically impossible to develop effective laws to this effect. Montgomery (2010, p. 26) agrees with this fact by saying that some firms interested in quick gains would move to register some of the already existing smells and claim ownership to them. This would affect normal operations of businesses, especially in the hospitality industry. This can bring anarchy in the country because even individual families in the country who may try using the smell in any way would be liable for having infringed into the rights of a given firm. If patent on smell is to be implemented, the process of developing governing laws should take time and various factors should be taken into consideration, especially the impact it would have on the hospitality sector and on the families of this country.

Disadvantages of this Strategy

The strategy used in China is probably the worst in the world in terms of protecting the intellectual rights of a businessperson. According to Muved (2001, p. 48), the world has been reduced into a global village and for this reason; there is need for countries to promote fair trade. This means that no country should allow its nationals to practice unfair business ethics within its borders because this will hurt the prosperity of another business. Governments, through the relevant agencies, should make a concerted effort to ensure that there is fair trade and that the law protects issues of trademark and patent rights. However, the laws that are currently used in China clearly demonstrate that this government is not concerned with protecting rights of business units of firms that are from other countries. The following are some of the disadvantages of this strategy.

  • It allows massive loopholes for unscrupulous businesses to benefit from the creativity and investment of other firms.
  • The main factor negatively affects creativity and innovation within a given industry.
  • It has deterred various firms such as Telsa Motors from entering the Chinese market.
  • Various businesses such as Nokia and Samsung have suffered a damaged image in the market because fake products are in the market using their brand.
  • This strategy used in China encourages unfair competition in the market, the very vice this law claims to fight.
  • This strategy is unfair to international trade because China is assuming that once a trademark is not registered in China, then it does not exist. This is going against the spirit of globalization.
  • This strategy has enabled this firm to sell its fake products even to countries away from China, especially the developing countries. This has affected operations of firms whose trademarks have been infringed.
  • The law, which states that the first person to present a trademark to the board will get the registration, is the worst strategy that can be used in protecting trademark. The board should take some time to search and determine whether this trademark is used in other parts of the world.
  • This strategy kills small-scale entrepreneurship because these entrepreneurs may not have the capacity to move with speed to register their business. The law should allow avenues through which such registrations can be annulled when it is confirmed that the originality is questionable.

The Difference between Protection through IP and Trademarks

According to Dinwoodie (2008, p. 56), there is a difference between rights protected though trademarks and that done through intellectual property rights. Some rights can only be protected using trademarks while others can be protected using intellectual property. Smith (1996, p. 112) explains, “Intellectual property rights are the rights given to people over the creations of their minds.” On the other hand, trademark is given on entities such as a firm over its brands or products it delivers in the market. This means that intellectual property rights protects the ideas of a person as an individual, while trademarks are always used when dealing with companies that are trying to protect their brands or unique products that they have developed. In China, there has been a big challenge in coming up with concrete laws regarding intellectual property rights. Others are using people ideas unfairly especially when the owner of the idea do not have an idea that this right should be protected. Wilson (2004, p. 91) observes that not everyone with a creative mind will know that the law can protect that creation of his mind. They therefore, expose such ideas to other people or entities they think can support them to make the idea a reality. However, what always happen is very different.

Such entities would move with speed, register such ideas, and develop them as if they are the owners. The owner of such idea would be left without anything despite his or her effort to generate the idea. This has discouraged creativity in this country. This is not the case in the United States and the United Kingdom. In these two countries, the law is clear on how such rights can be protected even if the individual do not register it with the relevant authority. As long as one can prove that he or she was the first initiator of the idea, there are provisions within the law that will protect the person, especially if the idea has been put into practice.

Advantages of this Strategy

It is clear from the above discussion that the strategy used in China to protect trademarks has very little to be proud of when compared to other strategies used in the other parts of the world, especially in the United States and other European nations. The best this strategy has done is to protect criminals who have specialized in copying the hard work done by others. However, the following are some of the few benefits that this strategy has.

  • One of the main advantages of this strategy is that it promotes formalization of business in China. Any small business will be registered in order to have its name and all its intellectual rights protected. This registration makes it possible for them to access loans that they can use to advance their operations.
  • This strategy promotes local growth of companies. It is a fact that this strategy is injurious to international business. However, from the national perspective, this strategy makes it possible for local growth of companies.
  • This strategy has also helped in increasing government revenues. Both local and international firms are under pressure to register their businesses in China to protect their brand. Some firms have even considered registering their businesses in China even if they are not planning to operate in this country just to ensure that their brand or other patented rights are not abused. This has increased income for the government.
  • The strategy has also created more job opportunities in this country. Because of the increased need for trademark registration, the government has been forced to employ more officers in this board. Other Chinese are employed as agents or lawyers to help in this registration process. This has increased the living standards of the Chinese.

However, it should be clear who the beneficiaries of this strategy are. The above advantages leave a lot to be desired. This is because those benefiting from this strategy are the Chinese and their government. Wilkof (2005, p. 28) says that in the current society, a government should find a way of existing with other countries in a mutual way. In one way or the other, the country would need the world, and the world would need the country. Inasmuch as a government would always be focused on how to make life better for its populace and for the government itself, ethics should not be lost in the process of acquiring this. Care should always be taken to ensure that the benefits that a country gets do not come at a cost to other countries. This is what the Chinese strategy of protecting intellectual rights has failed to observe. The strategy only focuses on how best its people would benefit.

As Shilling (2002, p. 81) cautions, gains from such unscrupulous businesses are short-lived because the more the world experiences technological advances, the more it is reduced into a small village. It will soon reach a time when China will realize that it cannot operate with its own laws that only protects its people. It will realize that the international law on business operations is to be observed by all for the interest of all.

Analysis of Trademark Rules in Other Countries and their Economic

Trademark rules have been observed in various countries around the world, and the United States and United Kingdom are some of the countries that have been serious when it comes to protecting trademark rights. According to Michaels (2010, p. 129), both the United Kingdom and the United States of America has one of the best policies when it comes to managing trademarks. This scholar says that trade rules in the United States were developed with the two main interests as follows.

To protect consumers in the market

One of the main reasons why the United States developed trademark rules was to protect its consumers from unscrupulous businesses persons. The government realized that some customers had developed brand loyalty for some of the products they considered as offering the desired level of value. For this reason, they would not spend much time window-shopping for the best brands. However, when some unscrupulous businesspersons realized that their products did not receive much attention as compared to that of their competitors, they opted to use some of the brands already popular in the market. They would use the name and the signs of these popular products to give their poor quality products an advantage by posing as the other preferred product. This resulted into serious complaints from consumers (Libdo 2008, p. 124). Their intent was to buy their preferred brand, but given that the law was unclear on handing brands, they were not protected from dubious business people.

The government got concerned and realized that it was necessary to develop laws that would govern trademarks in the market. This would help protect the consumer. Any consumer who planned to buy any brand would not be cheated to buy a counterfeit product. The law was very clear on issues concerning brands that may confuse consumer in any way when selecting the desired brand.

To protect businesses and innovations

Besides the complaints that were filed by consumers in the market, regarding presence of counterfeit products, the business fraternity also made a complaint into the issue of infringing into intellectual rights. Business society complained that they spend a lot of time and resources to build a name, but they do not get benefits from this effort because some individuals or business entities steal the name by posing as the real firm. This was denying them opportunity to expand. Some of these rogue businesspersons would use their reputable name to sell substandard products in the market. The customers would not realize that this was an act of a rival firm. Such customers would consider going for other brands because of loss of trust. Gielen (2011, p. 90) say that building trust with customer is one of the most challenging tasks firms face today. When other firms through posing as the real firm erode this, then it inhibits growth of firms in a country. In order to stop this, the government of the United States came up with laws on how to protect brands name and other brand attributes. Lanham Act of 1946 is widely known for having set clear policies on how to manage brand name and other brand attributes within this country. Before this Act, there were other laws that had been enacted as early as 1880s to protect use of business names.

There was a need to protect other intellectual rights such as protection on the design, shape, and other copyright issues. During the period of Baby Boomers, Gdlen (2011, p. 38) says that the United States experienced a massive development in various sectors of the economy. The industrial sector was expanding rapidly and this was largely attributed to innovative minds within this country. There was need to ensure that these innovation is promoted in order to promote growth of the economy. The government therefore, developed laws that would protect copyrights and other intellectual rights within this country. The body that was charged with this responsibility was the United States Patent and Trademark Office. This office was give administrative mandate over administrative duties concerning registration of trademark. According to McKee (2001, p. 79), the task of ensuring that trademarks and other patent issues are adhered with is left to the law enforcers. Any person or business unit that is operating in contravention of the law can be charged in any court of law in this country and appropriate penalties imposed. The United States have some of the most comprehensive checks on infringement of copyright. Borimi (2009, p. 62) says that this is one of the main reasons as to why massive innovation in the United States exists. The state is conscious of the creative minds of its people and is keen on protecting it.

Trademark Rules in United Kingdom

There has been an argument that the United Kingdom could be one of the earliest places where patent could have started (Pirkey 1994, p. 73). Before becoming the world power, it is said that the United Kingdom had developed in blacksmithing. The Great King Arthur- the king who was believed to have created the Kingdom of the Great Britain- is recoded to have presided over a country that had developed massively in blacksmithing. It was because of this industry that this kingdom was able to conquer other nations. Scholars have said that it was during this period that earliest attempts to make patents were made, especially on swords and other precious items. However, the need to developed trademark laws to protect business units in this country was started a little earlier as compared to that of the United States.

According to Bazerman (1999, p. 80), the government passed the Merchandise Marks Act in 1862 as recognition to protect official names of business units and discourage any form of fraud within the kingdom. The government would then pass Trade Marks Registration Act In 1875 as a way allowing firms to register officially their trademarks with the government. The body that was tasked with this responsibility was the United Kingdom Patent Office. Since then, there has been a series of revisions done on this Act in order to reflect the changing environmental issues. In the recent times, this country enacted Trade Marks Act 1994 in order to be in line with the European Trade Marks Directive, which had been established to regulate issues about trademark in the entire European region (Masterson 2004, p. 49). This scholar also reiterates that UK Intellectual Property Office has been radically altered in order to reflect on some of the concerns that had been raised over its operations.

According to Sakulin (2011, p. 76), the United Kingdom’s laws on trademark protects a firm or an individual from infringement into a name, phrase, word, symbol, logo, design, sound, image, signature, shape, or a combination of these items. However, the United Kingdom- just as many other countries- do not register emblems, royal insignia, flags, and rings of Olympic Games or any other symbol that is directly related to a sovereign country. This is important to ensure that it does not act in a way that would be seen to demean a sovereign state. However, it is clear that this country has been keen on the registration of sound that is not appropriately captured in the trademark laws in China. However, it also comes out clearly, that the trademark laws in the United Kingdom are not very clear on how to protect smell. It is not mentioned in any of the Acts that govern the laws in this field.

A keen analysis into the trend taken by the United Kingdom and that of United States in protecting trademarks and other patent issues compare closely. The two countries clearly demonstrate concerns not only for its people but also for the international society. For instance, the United Kingdom enacted Trade Marks Act 1994 because there was another convention- European Trade Marks Directive- signed by European nations to govern trademarks in this region (Landes 2003, p. 68). The prompt move by this country to fine-tune its trademark laws in line with regional laws shows that this country has a global outlook when approaching the issue of trademarks. The same approach has been taken by the United States and many other nations around the world but not China.

Comparison between the Approach Taken By China and that of Other Countries

China is the second largest economy in the world after the United States, and it is one of the leading exporters in the world, especially to the developing nations. The government of this country has formulated laws that can help it operate in the international market. The government has come to realize that there is need to protect intellectual rights and trademarks as one of the ways of promoting trade. However, Hudis (2010, p. 58) says that there are glaring differences between the strategy used to administer trademarks in this country and that used in other countries such as the United States and United Kingdom.

One of the main difference that come out between the trademark rights protection used in China and that used in the United States and United Kingdom is that the two latter countries use common law in protecting these rights, while China does not. This means that in United States and United Kingdom, if one has been using a trademark for a given period or has an intellectual property right, the law will protect the right to the trademark or intellectual idea. However, this is not the case in China. When a trademark or intellectual property is not registered in China, then the law shall not protect it in any way, even if there is a way to prove that it has been in existence for some time. This makes firms and individuals more vulnerable to infringement of rights.

In the United States and the United Kingdom, there is a law that protects other international firms that originate from other foreign countries as long as they have well-known trademark in their respective countries, in their continent or globally. This means that it is not possible for an individual or an entity to register such a well-known brand like Samsung and claim ownership to it within these two countries. The body responsibly for this registration is bound by law to reject such actions. This is very different in China. In this country, there are firm operating under some of the globally known brands such as Samsung and Nokia. The government of China cannot claim that it is unaware of this fraud because most of these counterfeit products find their way to international markets, especially in Africa (Drahos 1999, p. 81). Government agencies would collect tax from these exports, meaning that the government is aware of what is going on. Another glaring anomaly was witnessed when the government went ahead to register Telsa China knowing very well that another firm exists with a similar brand.


It is clear from the above discussion that China has a lot to do in order to ensure that it protects trademarks and intellectual rights. This discussion has demonstrated that in various other nations, governments have moved with speed to ensure that brands and products that should be protected from infringements are given this protection by relevant authorities. The main reason of doing this is to protect the customer from counterfeit products and to protect the patent owners from unfair competition. Analysis of patent protection in the United States and United Kingdom also demonstrates that there is need to develop laws that will not only protect local firms, but also other firms from foreign countries. This means that it is the responsibility of the government to do this. However, the Chinese government has deliberately failed to do this. Any firm that is not legally registered in China cannot receive any form of protection from the laws of this country. Protecting trademarks should not be taking this approach. It is important that this country follows the trend that other countries are following. It should be conscious of the rights of those companies that do not operate in China. It should also observe common law when handling both local and international issues on trademark protection. It is through this that China will be considered as being fair in handling trademark protection issues. This will not only promote innovation locally, but also attract investors from foreign countries into China. This country will be viewed as being compliant to the international law on trademark and other intellectual patent issues.

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