Clifford Chance

Manolo Blahnik, the eponymous brand established in London, has won a trade mark case concerning the use of the name 'Manolo Blahnik' for footwear in China. The landmark ruling, handed down by the Supreme People's Court of China in June 2022, marks the end of a 22-year legal battle between Manolo Blahnik and a third party in China, and provides practical lessons for luxury brands considering entry to the Chinese market.

First to file trade mark system

In China, trade marks have been historically based on a "first to file" system. In practice, the system can lead to bad faith trade mark applications being made by third parties who attempt to register trade marks to obtain rights to a certain brand, with the intention of profiting from the registration when the bona fide brand attempts to expand in to the Chinese market. As demonstrated by the facts of the ongoing proceedings, this can be a serious issue for brands in all sectors looking to operating in the Chinese market in situations where third parties have been "first to file" the trade mark at the CTMO and therefore block applications from genuine brand owners. At present, the only way for a brand to overcome this obstacle is to initiate a trade mark opposition (during the 3-month opposition period) or invalidation case (after the trade mark is registered).

Trade mark invalidation

For a bona-fide brand owner to succeed in a trade mark invalidation case in China based on a prior right (this could be a trade mark, or right of the name), the brand owner needs to file an invalidation application within 5 years after the adverse party's trade mark is registered and must prove that:

• the adverse party's trade mark is similar or refers to the brand owner's trade mark or name;
• the brand owner had applied for its mark for the same or similar goods/services prior to the date of application of the adverse party's trade mark; or in the case of an unregistered mark, the brand owner's mark had been used on the same or similar goods/services and developed a certain reputation prior to the date of application of the adverse party's trade mark; and
• the use of the adverse party's trade mark is likely to cause consumer confusion.

It would appear that to try and invalidate the "MANOLO & BLAHNIK" mark, the Manolo Blahnik team argued that:

• the "MANOLO & BLAHNIK" mark misled consumers and caused an unhealthy social impact;
• the "MANOLO & BLAHNIK" mark infringed Manolo Blahnik's well-known trade marks;
• the "MANOLO & BLAHNIK" mark infringed Manolo Blahnik's unregistered trade mark and right of name; and
• the registration of the "MANOLO & BLAHNIK" mark was obtained by fraudulent or otherwise improper means.

To date, the full text of the judgment is not available online.

How else can bad faith trade mark registrations impact brands?

Bad faith trade mark registrations can also cause issues for brand owners transporting products in and out of China. If a third-party lodges its bad faith registration with Customs in China, there is a risk that Customs could seize the legitimate brand owner's labelled products (or product parts, if bearing the brand name which is same or similar to the bad faith registration) at the border, on the basis they are infringing the bad faith registration. This could cause serious practical issues for businesses and means brands doing any sort of manufacturing in China, even if not actively selling into the market, should consider trade mark protection early.  

How does the ruling impact brand owners?

The ruling signifies that Manolo Blahnik will now be able to operate in China and will have authority to enforce brand rights in the Chinese market. To date, fans of Manolo Blahnik based in China would have to travel to Manolo Blahnik stores in neighbouring locations, such as Japan, Malaysia, and Singapore, to purchase Manolo Blahnik shoes. The advantages of entry to the Chinese luxury market are clear – a 2021 report released by Tencent and Boston Consulting Group (the "Luxury Report"), forecast that the size of the luxury market would be 630 billion Chinese Yuan (approximately GBP 77 billion) by the end of 2022.

The Luxury Report stated that 21 per cent of global consumer spending on luxury goods is derived from China and predicted that China is forecasted to be the world's largest luxury market by 2025. This favourable ruling, paired with current consumer trends and brand-friendly intellectual property legislation, is a highly encouraging indicator for international luxury brands looking to expand their operations to the Chinese market. Post 2019, a number of high-profile brands have also received favourable trade mark related decisions in the Chinese courts, namely:

Brands that have been involved in trade mark litigation prior to the 2019 amendments to the Chinese trade mark laws could consider revisiting the issue with the courts. The decision is an indicator that the courts may now take a more sympathetic view to bona fide brand owners hoping to engage with the lucrative Chinese market.

Despite the encouraging trend, brands hoping to operate in China should endeavour to file trade mark applications as early as possible to avoid the risk of lengthy proceedings delaying entry to such a lucrative market.

The 22 year legal battle of Manolo Blahnik – the timeline

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