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International Trademark Nightmare

C.F. Martin executives got an unwelcome surprise when they arrived in Shanghai for Music China this past October: Another C.F. Martin had set up shop in the trade show hall.

The exhibit bore the Martin & Co. logo, down to the tag line "Est. 1833," and featured dead ringers of several best-selling Martin guitars. And yet the company had no relation to C.F. Martin.

"Like many other American companies, C.F. Martin & Co. Inc. has become the victim of unauthorized registration of its traditional trademark and of counterfeiting of its products in the People's Republic of China," said a statement C.F. Martin released after the international trade show.

But according to Ron Bienstock, a leading music industry attorney and partner with Bienstock & Michael, the Martin double was within its legal rights — at least in China.

Brand Hijacking
Unlike the United States, which has a priority trademark filing system, China has a first-to-file trademark system (i.e. first come, first served). In this case, another company acquired the Martin trademark in China by filing for it before the Nazareth, Pa.-based guitar maker.

Attendees at Music China claimed the alternate Martin booth was run by Gomans Ltd. of Hong Kong. That said, a Gomans representative denied having registered the Martin Guitar trademark in question. It's still unclear who the principles are that filed it.

Bienstock stressed that this wasn't counterfeiting. He called it "five steps more destructive, potentially" and likened it to a company's brand being hijacked.

"I want to be clear that this is bigger than [counterfeiting]," Bienstock said.

"Counterfeit is a company making exact copied product. This is corporate identity theft at the highest level in the music instrument business.

"Some might say, 'Knockoffs? We've always had that problem.' No. That's not exactly the issue now. This issue is we're going to have other brands being registered in China in this method. That's not the way it was. Some companies were counterfeiting before, but these are not counterfeits in China because they're made under the Chinese registration."

C.F. Martin's statement added that the company's legal counsel has filed a petition with the China Patent & Trademark Office to cancel the other trademark. Still, Bienstock said that China's trademark process is "pro-indigenous, protective from outside companies."

"On our national level, this is really very difficult," Bienstock explained. "We have a very reluctant set of legislators who don't want to press China too hard, considering that we've just borrowed trillions of dollars from them.

"So, they don't want to press them for [intellectual property] recognition. But in a world where we make products there and all we have is our brand, if they already have the manufacturing, then if they register the brand in China, they own the brand, too."

Get an IP Portfolio
Bienstock said he believes this trend could ultimately cost companies with half domestic, half foreign business as much as a 30-percent drop in sales.

The bottom line: U.S. manufacturers and suppliers, if they haven't already, need to get their trademarks filed in foreign countries with first-to-file systems as soon as possible.

"An intellectual property portfolio is essential for a branding world," Bienstock said. "We need to own these marks. We need to protect these marks. If this is not accomplished in a cohesive plan, music instrument companies have to find new brands and marks and looks." MI