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A TRADEMARK WAR IN CHINA: THE CASE OF THE CASTEL GROUP

Reference No. 16/006C Publication Year 2016
Author(s) Amy Yip, Yuen Yiu Lee
Company The Castel Group
Industry Food and Beverage
Geographic setting China
Functional Area Strategy and General Management; Marketing

Synopsis

Trademarks and brand-names were important assets for all business enterprises today. As a baseline, a successful trademark denoted good product quality, superior market position and high customer recognition in the home country of the enterprise.  In addition, most successful enterprises, with their eyes set on the international market, needed a successful trademark to cash-in on the advantages of leveraging their home country success in foreign markets. This was especially true today for multinational enterprises, which most often wanted to ride on their success by expanding in China.

Unfortunately, not many of these enterprises realized the uniqueness and peculiarities of the trademark protection regime in China. They would be surprised to learn that trademark squatting, the act of maliciously registering the trademarks of others for profit, was much more common in China than it might have been expected. Moreover, when their trademark was squatted in China, they might not have as many options open to them for dealing with the situation. Globally, when faced with trademark squatting, enterprises often simply bought back their own trademark from the squatters, or rebranded their products with a new trademark, while some chose to take legal action to challenge the ‘rogue’ trademark that was registered in bad faith.

Learning Objective

The case introduced Castel Group and its trademark battle over the use of its heavily invested trademark Kasite in China. Students will be required to discuss what a company could do to protect its trademark when the company enters the overseas market, particularly Mainland China.

Suggested Questions:

1.         Discuss the importance of trademark protection when companies enter the overseas market with a different culture and legal system.    

2.         What foreign companies could do to protect their trademark when they enter the Chinese market?

 

This case was fully supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (UGC/IDS12/14).