A lack of trademark law in China is preventing international brands' expansion in the country, as the use of their names and logos have already been registered by local companies or individuals. Italian label Dsquared2 recently won a lawsuit against a Chinese company called Nuohe, which had registered the trademark "Dsquared" in China and actually sold products under the Dsquared2 brand. Nuohe's trademark registration had earlier led to the distributor of the Italian label facing a fine of over $60,000 in Nanjing from local authorities. While the latest lawsuit was a victory for Dsquared2, Nuohe still owns the trademark for over 200 other foreign brands in China, such as Costume National, Iceberg and Dior Homme.
Auto maker Lexus and French fashion house Hermes have also faced similar situations in China before and dealt with the problem by paying the trademark holders, who first registered the trademarks, since Chinese law does not adopt the principle of trademark rights being acquired when a business begins using it.
Recent developments however indicate some changes in Chinese authorities' attitude towards trademark protection. China's State Administration for Industry and Commerce announced last September that the amended trademark law to be implemented in May will tackle the problem of people registering existing trademarks of other companies for financial gain.
The high court in Beijing ruled in December that Sichuan Sufubi Auction should not be granted the use of "Sufubi" as a trademark, since they were the same Chinese characters as Sotheby's Chinese name. Still, it is difficult for brands less famous in China, such as J.Crew and Dries Van Noten, to prove to the court that their trademarks are well-known and that the registers have not acted in good faith when applying for the rights to the trademark in China.