Lianliankan Goes With Royalty Free Trademark Strategy

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Famous Chinese brand owner, Lianliankan held a one yuan trademark authorization press conference in Beijing on September 20.

During the conference, the company announced that all companies using the trademark “Lianliankan” in the current online game market only need to pay one yuan for brand authorization. (China Daily)

I don’t have further details on this case. Just saw the news blurb and wanted to make a quick comment. You might have read that excerpt and wondered why this company bothered doing this in the first place. If you think about it, they’re actually losing money on the whole program, once you factor in transaction costs.

Think about it this way. You have this trademark that is being infringed upon by a bunch of folks in the marketplace. You either don’t have a budget for proper enforcement (e.g. court or administrative action), or your case against many of them is a toss up. What to do?

One strategy is to send tough Cease & Desist Letters to the infringers and hope that some of them will be scared enough to stop using the mark. It’s possible, but many infringers are not scared away with a C&D Letter, particularly if they are already invested in the name.

Another strategy, not mutually exclusive, is to contact infringers and negotiate license fees with them. However, if your case is poor, no one is going to bother paying you a decent royalty for use. Waste of money. Moreover, in this instance, many of the infringers are small game companies with no cash, and therefore not likely to make a deal.

But there is another option: the free royalty (in this case, 1 RMB). Sign some of these guys up essentially for free. You don’t get revenue, but no one was likely to pay you anyway. The 1 RMB doesn’t matter, the benefit is the agreement that these guys are using the mark with the authorization of the trademark owner.

Get it? Now you have these folks on record acknowledging your ownership of the mark. Bingo. You might be able to renegotiate in the future, and either way, you can now definitely control the way they use the mark.

If I’m an infringer, I might not be too worried about a future enforcement action. However, if I just sign up and pay 1 RMB, I have zero worries. Why not go for the license?

Doing all of this with a PR splash, complete with press conference, is brilliant. Show your company off not only as an innovative Chinese company that has its own IP, but also a harmonious firm that is willing to make reasonable accomodation with others in the market.

Smart. Cheap. Effective. I don’t know how many infringers will ultimately sign up, but I like the strategy.

One response on “Lianliankan Goes With Royalty Free Trademark Strategy

  1. Nancy

    Smart option, but i doubt how many companies will act this way. Most of my clients choose to tolerate the infringers, once the C&D letter failed to get any response. Somestimes it is just not worthwhile to enforce one’s IP right through court or administrative actions, especially in view of the poor chance of success.