Prophylactic Filing and Baidu’s Victory Over Condom Trademark Squatter

April 10, 2012

How’s that for a headline? You knew that a case involving a trademark squatter was going to get my attention, and one involving not just Baidu, one of the China’s most famous companies, but also a condom brand, is simply irresistible.

There are some lessons to be learned here and some fun facts about Baidu’s trademark strategy and approach to IP protection. So let’s have a look at the facts of this case to start things off. The case involved a Shenzhen health care products company called Yelaixiang, which had filed the “百度” (Baidu) trademark in 2005 and received approval in 2008. (Almost three years! Another reminder of the problem of long queues at the Trademark Office, which they have already cut down on substantially.)

Is Yelaixiang a trademark squatter? Yes, although some specifics are necessary here. They filed in 2005, long after Baidu was a famous company. Some of Baidu’s trademark filings go back to 2001. I think it would be difficult to argue that Yelaixiang was not aware of Baidu’s brand when it filed for protection in 2005 — I call that bad faith and trademark squatting. Assuming all this can be proven, of course.

All right, the next bit of relevant information here requires us to talk about product classification. Remember that when you file for trademark protection, you have to specify which products or services you wish to protect. You cannot simply go to the Trademark Office and ask for protection on everything. Moreover, trademark infringement and the question of similar marks involves specified products or services. For example, although I may not be able to register the trademark “Apple” in Class 9 for computers, it’s possible I can do so for the same mark in Class 2 under paint products (that’s a guess – I have no idea if that’s available).

That means that just because Baidu is a famous company that started filing marks in 2001, Baidu’s trademark coverage may not have been sufficient to deal with the Yelaixiang mark. Since I know you guys have better things to do, I took a quick look through the Trademark Office database and found the relevant information.

Yelaixiang’s 2008 registration was in Class 10 (medical products) and specified condoms. By the way, I did a quick search under Yelaixiang’s name in the database. They have a huge number of marks registered, including some relevant generic terms such as “DICK,” “SHAFT,” and “STRETCH” for some reason, and although I did not look at all of the marks, I did notice that they also have registered “阿里巴巴” (e-commerce company Alibaba’s name in Chinese), also in Class 10 specifying condoms. Apparently there are others (h/t @JoeXu).

So what about Baidu’s trademark coverage? This was rather interesting. For one of China’s most famous brands, you would expect Baidu to have extensive coverage, and indeed they do. My cursory look at their trademarks show that they have filed in every single Class.

Some examples:

Class 42: software development

Class 9: computers (also, I was amused to see, “floppy disks”)

Class 38: mobile/telecom services

No surprises there, right? Baidu is an Internet company, so mobile services, software, and computers, that all makes sense. But wait, there are more. Remember, Baidu has marks registered in all Classes, so some of them are bound to be totally unrelated to their core business.

Behold:

Class 1: insecticide

Class 2: paint, food coloring

Class3: toothpaste, soap, shampoo, animal makeup (I’m not kidding – “动物化妆品”)

You might be wondering, why the hell would Baidu file under animal makeup and food coloring? No, they aren’t crazy. For each single trademark application, the applicant may specify up to ten goods/services. More than ten triggers additional fees. So if you’re going to file for protection of one or two products, you might as well choose some others and get your money’s worth. Free IPRs!!!

So that registration in Class 2 for food coloring seems a bit weird until you realize that the application also included beverages. (I left that out on purpose to illustrate this point. Most, if not all, of the filings included ten products/services.) Baidu probably isn’t worried about Baidu-brand food coloring, but an unauthorized Baidu-brand Cola would probably make Robin Li unhappy.

Another way to look at Baidu’s filing strategy is to look at the mark in terms of what they actually might use (e.g. mobile services, software development) for their core business versus what they will probably never use (e.g. insecticide, toothpaste). We can call the first category “offensive filing” and the second one “defensive filing,” the latter because it is only meant to stop use by third parties and has nothing to do with actual use of the mark. Because defensive filing is done to anticipate the nefarious scheming of would-be squatters and infringers, it can also be referred to as “prophylactic filing” (I was legally obligated to get that in sometime during this post).

Now that we have that out of the way, there is one remaining piece of the puzzle: Baidu’s filing in Class 10, the same class under which Yelaixiang filed. I do confess that I originally went to Class 5, pharmaceuticals, to search for contraceptives. After searching through “personal sexual lubricants,” “Herbs (Smoking –) for medical purposes,” “cocaine,” and “vulnerary sponges,” I realized that condoms were nowhere to be found. Only later did I discover that they were in Class 10.

I then found Baidu’s Class 10 filing, and unfortunately they had not specified “condoms,” going instead with items like medical and dental equipment, baby bottles, and surgical sutures. But don’t be critical of Baidu’s IP team on this point. This registration was approved in 2010, so even if they had tried to include “condoms,” the earlier Yelaixian registration would have blocked it.

Now we can get back to the actual dispute. Baidu filed an administrative action in 2010, which the media is referring to as an “appeal.” I’m going to assume that since the mark was already registered, this was actually a cancellation request with the Trademark Review and Adjudication Board (TRAB) asserting a bad-faith registration. The only criticism I can lay at the feet of Baidu here is that they did not knock this mark out during the publication period (i.e. filing an opposition instead of a cancellation), but I guess better late than never. I expect they now have a top-notch trademark watch service working for them to avoid a repeat of that mistake.

Well, Baidu lost in front of the TRAB and they appealed to the Intermediate Court in Beijing. Since it was an administrative appeal, that meant that it was Baidu vs. TRAB, and Yelaixiang was not formally a party to the dispute.

Baidu won the appeal, which means that the Trademark Office will revoke the trademark. Although the case was not a determination of infringement, I would expect that Yelaixiang would also stop using the mark on condoms. If they don’t stop using it, Baidu would have a solid infringement case, using their existing Class 10 registration and famous brand status.

Right then. One final point. I’ve been talking about several other trademark squatting cases recently, with some famous foreign brands like Hermès and Chivas Regal ending up on the losing side. Why did Baidu win when some of these others didn’t? There are various reasons why those cases were flawed, but what it comes down to is evidence.

Baidu is a mega-brand here in China, and it must have been extremely easy for them to produce sufficient evidence as to their well-known status prior to 2005. In addition to its trademarks, essentially all of Baidu’s advertising and publicity activity takes place in China, and none of it is that old. Another advantage Baidu has over foreign brands is that as a domestic firm, they are eligible to be included on a variety of “Famous Trademark” lists that are generated by several different government agencies, different provinces, etc. Suffice it to say that Baidu’s evidentiary hurdle, in terms of gathering information, was a relatively low one.

3 thoughts on “Prophylactic Filing and Baidu’s Victory Over Condom Trademark Squatter

  1. Quigley

    Great post. I noticed that the Yelaixiang is actually using the marks “DICK”, “SHAFT”, and “STRETCH” on its products http://www.ylx.cn/cn/products_show.asp?MenuId=265#

    I am interested in your comments that Yelaixiang is a trademark squatter and that it applied for the marks in bad faith. In particular, Yelaixiang appears to be a legitimate company with the earliest of its 168 trademark applications dating back to 2002. Ok, one of the early applications was for NIKE (which like baidu also appears to have been successfully cancelled), but still the company is a legitimate company that intended to use the applied for marks in commerce.

    To me squat ala “trademark squatter” indicates a lack of intent to use, which is not the case here.

    In terms of bad faith, I don’t think that Baidu or Nike ever intended to use these names on condoms or other items within subclass 1006, and I don’t see why you think Yelaixiang applied for the marks in bad faith. Baidu applying for marks in Class 10, such as surguical sutures, dental equipment, etc. does actually appear to be squatting as I imagine Baidu had no attempt to use or license its trademark for these categories. Therefore, I imagine Baidu’s marks in Class 10 are or likely will be highly vulnerable to non-use cancellation (after three years).

    Both the baidu and nike marks are not particularly fanciful, and actually sound like reasonable and rather descriptive names for prophylactics. If you hear these names and like them, and reasonably have no belief that the given company plans to sell competitive products, given that China follows the first-to-file trademark principle, why not try to register these names. If the registrations are successful, you should be entitled to use them. Given that both Baidu and Nike appears to have failed to oppose the marks during the preliminary publication, I am not clear why CTMO/TRAB/Courts would have allowed the marks to be cancelled afterwards for bad faith.

    1. Stan Post author

      Good points. I suppose the classic trademark and cybersquatters are those who register famous brands with no intent to use but simply want to extort money from the assignments. I’ve been lumping in anyone who pre-emptively files a famous brand for whatever reason. If I try to make a distinction between a traditional squatter and guys like this (or, e.g., Qiaodan), I’m going to end up confusing all my readers though!

      Why do I say bad faith in this case? Because it seems like they filed Baidu and several other famous marks (like Alibaba and other China Net firm names) at a time when they definitely knew/should have known of these marks. They were obviously doing so to benefit from the fame of the marks, in this case via commercial use. Just because they are a legitimate company engaged in commerce is not a defense. Also, while you’re right about NIKE, I’d say that “Baidu” is a fanciful word. I don’t think these guys just happened to come up with Baidu and Alibaba on their own.

      1. Quigley

        Thanks for your response. I hadn’t realized that Baidu is rather fanciful, but several of my Chinese friends agree that it is not at all common. (I mistakenly thought that like the 十度 outside Beijing, baidu was also common.)

        Your comments re bad faith persuaded me. My thinking was that if the Chinese company heard a name or expression that sounded good and suitable for their business purposes it would be reasonable for them to try and register that name/expression as a trademark for their products.

        But, as you point out, the issue in this and many similar cases, is that the company heard of a company or product, which it almost certainly knew had a legally registered trademark on different goods, and then it registered that company’s trademark for its own goods seeking to gain a financial advantage based on the reputation of the other company/mark. That does sound like bad faith, even in the case where the mark may not yet be famous in China or included on one of the sundry lists of famous marks in China.