Tripped Up By Trademarks: Apple Loses out on rights over "IPHONE" in China

10/05/2016 12:39 | Updated 10 May 2016

In the latest of a series of setbacks for Apple in China, a Beijing court has ruled against the global tech corporation in a trade mark battle with a Chinese company over the word "IPHONE", proving that even brand giants can be tripped up by trademarks.

Brand protection is a key consideration for today's successful businesses, and Apple is one example of a company that builds heavily on the value of its brand. From the launch of the first Macintosh computer in 1984, through the first generation iPod in 2001 and up to their most recent computers, phones and tablets, Apple's business has been founded on its marriage of technology with modern, distinctive branding. Apple is often held up as an example of branding done well, but even giants like Apple can still face problems.

One such issue has been in the news recently after Apple lost a trade mark dispute in China against Xintong Tiandi Technology (Xintong), a Chinese manufacturer of predominantly leather goods including handbags, wallets and mobile phone cases. A number of Xintong's goods were branded with the name "IPHONE", which Xintong trademarked in China in 2010 in respect of leather products.

Apple had filed a Chinese trademark bid for the "IPHONE" name for electronic goods in 2002, but this was not approved until 2013. In the meantime, Apple iPhones were launched for sale in China in 2009 and, in 2012, Apple lodged an action against Xintong with the Chinese trade mark authority to try and secure Apple's rights to the "IPHONE" name. This action related specifically to the use of this mark in respect of leather goods and accessories (i.e. phone covers and cases), and Apple's right to use the mark in relation to its mobile devices was not under threat. Apple also filed a related lawsuit in a lower Beijing court.

Unfortunately for Apple, both of these actions failed based largely on the fact that Apple had not been the first to register the "IPHONE" mark in China in respect of leather goods.

Apple then appealed to the Beijing Municipal High People's Court (BMHPC), however that appeal also failed. In its ruling, the BMHPC noted that, for this action to succeed, Apple had to prove that they had a well-known brand presence in China before Xintong had filed its trademark application in 2007, and on the facts of the case Apple had failed to prove this. This is partly due to the fact that Apple's iPhone was not released for sale in China until 2009 despite being launched elsewhere in 2007, which indicates that having a globally famous brand is not enough to win this sort of trade mark dispute in China unless that fame is also recognised and reflected within China's borders.

Apple reportedly intends to request a retrial with the Supreme People's Court in an effort to protect its trade mark rights in China in relation to leather phone accessories. This isn't the first time Apple has faced trade mark issues in China; when it launched the iPad in 2012 it faced opposition to the name and, later that year, ultimately paid $60m to settle a dispute with Proview International and allow Apple to use the iPad name in China. Apple has also faced other issues in China recently, including rights issues around the content of its iTunes and iBooks stores and falls in revenue in the Chinese market, once the company's strongest growth area.

This case is noteworthy for any business that relies on the value of its brand, especially those that trade internationally. Trade mark issues are not something many would expect to affect Apple, but this case demonstrates that even one of the biggest brands in the world can be plagued by competing trade mark registrations. The global intellectual property landscape can be tricky to navigate and protection for trade mark - and other intellectual property rights like patents, copyright and designs - can vary significantly between different countries.

Businesses that are considering launching new products or entering new markets should take expert advice on brand protection before doing so to ensure that they are in the best position to secure their brand going forwards. If Apple had registered "IPHONE" in China when they first announced the device in 2007, they may have found it easier to avoid this issue 9 years later.

Wayne Beynon is an IP lawyer at Cardiff and London based law firm Capital Law: