BUSINESS Case of Daoxiangcun highlights IPR improvements, loopholes: analyst

BUSINESS

Case of Daoxiangcun highlights IPR improvements, loopholes: analyst

By Wang Chong, Qu Xiangyu | People's Daily app

09:10, October 15, 2018

A legal dispute between two Chinese companies over a trademark for traditional pastries has drawn wide domestic attention and shed light on both the improvements and loopholes in the country's intellectual property protection (IPR) laws and regulations.

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A store of Beijing Daoxiangcun Foodstuff Co in Beijing on Saturday (Photos: VCG)

Though China has intensified efforts in IPR in recent years and awareness has been rising, the case surrounding the use of the Daoxiangcun trademark, which resulted in two opposite rulings from two courts, shows that there is still much to improve in terms of laws and regulations as well as their implementation, a legal analyst noted.

The multi-year court fight between Beijing Daoxiangcun Foodstuff Co and Suzhou Daoxiangcun Food Industry Co gained renewed attention last week after a court in Suzhou, East China's Jiangsu Province, where Suzhou Daoxiangcun is based, ruled in favor of the latter, in stark contrast to an earlier ruling by a court in Beijing. 

In its decision released on Friday, the Suzhou Industrial Park People's Court ruled that Beijing Daoxiangcun had infringed Suzhou Daoxiangcun's registered trademarks, and it ordered the former to cease to use the trademark on its packages and pay 1.15 million ($166,228) in compensation to Suzhou Daoxiangcun.

Previously, the Beijing Intellectual Property Court ruled in favor of Beijing Daoxiangcun and ordered Suzhou Daoxiangcun to cease to use the Daoxiangcun trademark and pay the former 30 million yuan in compensation.

Daoxiangcun, which translates into rice village, refers to traditional Chinese pastries that were launched as many as 245 years ago. Over the years, the attack and defense maneuvers between the two pastry makers have never stopped. Founded in 1773, Suzhou Daoxiangcun registered the three Chinese characters as its trademark in 1983 listed in Class 30 "Cookies, Bread, Cake". Its Beijing competitor, who traces its history back to 1895, registered in 1997, but for dumplings and glutinous rice cakes. Before 2004, there was virtually no legal dispute, because the two companies, one located in South China while the other in the north, had little market convergence. The rivalry between the two Daoxiangcuns began to loom large in the year of 2004, when Suzhou Daoxiangcun marched into North China. The situation calmed down between 2003 and 2008, as Suzhou Daoxiangcun reached a consensus with its Beijing counterpart through trademark authorization. However, the dispute was twice reflamed in 2010 and 2014, when the trademarks of Beijing Daoxiangcun were finally registered at local authorities. The burgeoning e-commerce further escalated the conflict. With early entrance into Taobao and Jingdong, Suzhou Daoxiangcun once inundated search engines.

A source at Suzhou Daoxiangcun told the People’s Daily that the Suzhou verdict confirming the exclusive brand ownership of Suzhou Daoxiangcun to some extent improved the trademark registration and IPR protection in China. In recent years, with the emergence of e-commerce, free-riding time-honored brand has increasingly become a common practice among some small-&middle-size enterprises, which seriously disturbed market order. As a victim, Suzhou Daoxiangcun has launched more than 100 anti-counterfeiting campaigns against fake Daoxiangcun across the country, and will continue to do so in the near future.

The People’s Daily correspondent repeatedly tried to reach Beijing Daoxiangcun, but failed.

"Whether it's about IPR or commercial gains, there has been a significant rise in awareness among Chinese companies about protecting their brands in recent years," said Liu Yuanju, a research fellow at Shanghai Institute of Finance and Law. "Raising awareness is part of the country's effort to enhance IPR."

Liu told the Global Times that apart from the famous nature of the trademark, the different court rulings - a rare scenario in China - also drew broad attention to the case.

"There is a debate about how courts can rule on trademarks for something that has been around for hundreds of years and is part of the culture," Liu said, adding that there must be unified standards. "Without certain standards, the dispute just becomes a case... where no one is right or wrong."

More broadly, Liu said, the case points to loopholes in China's IPR laws and regulations, as well as their enforcement, which must be resolved.

Cover file photo: VCG 

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