[Exclusive] Targeting Chicken, Bread, and Gochujang... Chinese Trademark Brokers Swallowing K-Brands (Comprehensive)

Exclusive 'Trademark Business' with Only Korean Trademarks... Over 1,100 K-Brands Monopolized
Blocking Entry into China... Legal Disputes Costing Tens of Millions
Kyochon Chicken Sanctioned for 'Gyochun'... CJ's 'Haechandle' Catching 'Hochandle'

Image of bnc Chicken trademark registered by a Chinese trademark broker. Photo by Lee Seon-ae lsa@

The bhc Chicken logo before the change.

[Asia Economy Reporter Lee Seon-ae] "When we conducted market research ahead of entering China, we found that our brand's trademarks had already been registered in bulk. Recovering the trademark rights would require not only time but also tens of millions of won in costs, so we effectively gave up on entering the Chinese market. Chinese trademark brokers contact companies demanding money and tell them to reclaim their trademark rights, but since the Chinese characters of the preemptive trademarks differ, making winning lawsuits difficult, some companies pay the demanded settlement fees to retrieve their trademarks." - Executive A of a food service company

Products and brands of domestic food and dining companies such as chicken, bread, and gochujang are becoming prey to Chinese trademark brokers. When attempting to apply for and register trademarks ahead of entering China, many trademarks imitating the products and brands have already been registered, causing disruptions in business development. These brokers preemptively register brands across various product categories to obstruct market entry and continuously cause damage by demanding high settlement fees and usage royalties.

◆ Trademark Registration Targeting bhc, CJ, Ottogi, and More = According to the Chinese Trademark Office and related industries on the 8th, a Chinese trademark broker named Mr. K registered the trademark "BNC CHICKEN." This was intended to obstruct the Chinese business of bhc Chicken, the second-largest chicken franchise in Korea. Mr. K registered the trademark under service industries providing food and beverages. Although bhc Chicken has since changed its logo, comparing it to the previous logo, the only difference is the English letters 'n' and 'h,' making the two trademarks appear very similar at a glance. If BNC Chicken operates as a counterfeit bhc Chicken in China, bhc Chicken could face unwanted disputes. Previously, Sulbing suffered trademark infringement from a counterfeit "Sulbing" in China, but ironically, the counterfeit reported the genuine company, leading to legal disputes and a loss, forcing Sulbing to withdraw from the Chinese market. However, a bhc Chicken representative stated there is no significant concern. The representative said, "We currently hold trademark rights in Chinese characters, and even if similar brands like BNC appear, customers can sufficiently distinguish them, so we are not overly worried about entering China."

Mr. K holds trademark rights for numerous domestic food and dining companies. It is estimated that he has applied for about 400 trademarks, with around 100 already registered. He preemptively registered trademarks in bulk, focusing on companies with high potential for entering China or actively expanding their business. Many of the targeted companies are food and dining businesses. Besides BHC (bhc Chicken, Class 43), Mr. K targeted Danal (Dalkom Coffee, Class 40), Kyochon F&B (Kyochon Chicken, Class 40), GN Food (Goobne Chicken, Class 40), Eongteori (Eongteori Saenggogi, Class 43), Haengbokhan Gui Sesang (Yeontabal, Class 43), as well as large corporations like CJ CheilJedang (Haechandle, Class 31), Ottogi (Ottogi, Class 31), CJ Foodville (Tous Les Jours, Class 40), Harim (Harim, Class 29), Pulmuone (Pulmuone, Class 30), and Sempio (Sempio, Class 31).

Harim and Pulmuone applied for trademarks using their Korean brand names in Classes 29 (frozen, dried, and cooked fruits and vegetables, dairy products, eggs, etc.) and 30 (coffee, tea, bread, pastries and confectionery, vinegar, sauces, etc.). Dining brands like Eongteori Saenggogi and Yeontabal applied under Class 43.

The problem is that while this is an obvious "being robbed in broad daylight" situation, smaller companies find it harder to respond. Most companies only become aware of such trademark registrations late during market research for entering China or after the government (Korean Intellectual Property Office) identifies and notifies them.

Pulmuone image registered by a Chinese trademark broker. Photo by Lee Seon-ae lsa@

In China, even foreign brands are subject to a first-to-file system, meaning whoever applies for a trademark first within China gains priority, making it difficult to reclaim trademark rights. Before trademark registration, one can file an opposition with Chinese authorities, and after registration, one must file for invalidation to nullify the registered trademark. These processes cost at least tens of millions of won and do not guarantee victory.

An official from a food service company said, "We were contacted by a Chinese trademark broker just three months after starting our business, and around that time, the trademark was applied for in China. We engaged in legal disputes to reclaim the trademark, but it was futile, so we had to enter China with a different trademark and logo."

A patent attorney explained, "There should be legal grounds to prevent domestic trademarks from being registered in China, but Chinese trademark law does not provide such grounds. Even if you file an opposition, winning is difficult."

Image of Ottogi trademark registered by a Chinese trademark broker. Photo by Lee Seon-ae lsa@

◆ CJ and Kyochon Chicken Blocking 'Hochandle' and 'Gyochun' = Some companies have protected their trademarks by responding quickly on their own. CJ CheilJedang identified Mr. K's 2015 trademark application for "Haechandle" and filed an opposition. They later reclaimed the trademark and even registered the Chinese character version "Hochandle" used by Mr. K, thus resolving the counterfeit trademark issue. The legal team detected and responded before the government became aware. CJ CheilJedang explained, "We operate in China and conduct regular market research, allowing us to detect and respond early."

However, an industry insider noted, "CJ is large and has a system to detect issues before the government does, but for most companies, detection is difficult, and the government informs them late. Legal remedies require time and money, so companies must be cautious themselves."

Ottogi's trademark registration is in Class 31 (unprocessed agricultural, aquaculture, horticultural, and forestry products; fruits; vegetables; animal feed and beverages; malt, etc.), so there is no disruption to its Chinese business. An Ottogi representative said, "We mainly export ramen to China and have pre-registered all related trademarks, so there is no disruption to our Chinese business." However, if Ottogi expands into products covered by Class 31, exports to China could face difficulties.

Image of Tous Les Jours registered by a Chinese trademark broker. Photo by Lee Seon-ae lsa@

Trademark registrations for Tous Les Jours and Kyochon Chicken fall under food processing industries, so their franchise businesses are unaffected. Notably, Kyochon Chicken successfully took down counterfeit signs related to the rampant "Gyochun Chicken" counterfeits in China. A Kyochon Chicken representative said, "Understanding the importance of trademark rights, we registered trademarks in over 130 countries early on, enabling us to enter China." Kyochon Chicken entered China in May 2009 and currently operates four stores stably.

As K-brand popularity rises riding the Korean Wave, damage caused by people who register only Korean trademarks and engage in "trademark business" is increasing annually. The number of Korean trademarks harmed by Chinese trademark brokers surged from 406 cases in 2016 to 588 in 2017, and 1,142 in 2018. Last year, about 700 Korean trademarks were reportedly affected. Trademark brokers who have unlawfully preempted three or more Korean trademarks monopolize English and Chinese trademarks of popular domestic trademarks. About 20 active brokers dominate approximately 1,100 trademark rights.

CJ CheilJedang, upon discovering that a Chinese trademark broker had filed a trademark application for the Haechandle brand, filed an opposition and won, subsequently completing the trademark registration for Hochandle as well. The photo shows the Hochandle trademark registered by CJ CheilJedang with the Chinese Trademark Office. Photo by Lee Seon-ae lsa@

◆ Securing Trademark and Design Rights is the Best Strategy = Experts point out that to avoid trademark disputes, the only solution is to secure rights such as trademarks or design rights for products from the preparation stage of overseas expansion. A Korean Intellectual Property Office official said, "To prevent unauthorized trademark preemption by brokers or local buyers, interest in intellectual property rights is essential. We continue efforts to support overseas application costs and assist in dispute resolution when unauthorized preemption occurs to protect Korean companies' trademarks."

However, there is good news. Recently, through the "Joint Response Support Project for Intellectual Property Disputes," introduced to prevent damage from overseas trademark brokers, 53 companies have reclaimed their brand names in China.

The 53 victorious companies are domestic SMEs in four industries?franchise, dolls, clothing, and cosmetics?that suffered from Chinese trademark brokers. After in-depth analysis of the large number of trademarks preemptively registered by the brokers, they focused on proving the brokers' malicious intent by submitting joint petitions and requesting consolidated hearings, winning all 53 trademark disputes.

Photo of a Chinese trademark broker filing a trademark for CJ CheilJedang's Haechandle brand, a domestic food company. Photo by Lee Seon-ae lsa@

The Korean Intellectual Property Office analyzed that in the past, it was difficult to invalidate trademarks preemptively registered by brokers because Korean companies had relatively low recognition in China. However, by utilizing Chinese trademark authorities' policies to eradicate brokers, this result was achieved. One victorious food service company said, "We initially thought winning would be difficult because the Chinese characters of the preemptive trademarks differed and almost gave up, but by jointly responding with other similarly affected companies, we clearly proved the brokers' intentional copying and plagiarism, enabling us to win."

The Korean Intellectual Property Office supports Chinese brand naming by reviewing factors such as the company's image pronunciation, Chinese meaning, and compatibility with the company's image to prevent unfair use by local trademark brokers. It also encourages K-brand trademark applications through overseas application cost support projects for affected companies.