High quote blocking Hisense-BSH dispute
By Jiang Jingjing (China Business Weekly)
Updated: 2004-09-20 14:50

Domestic home appliance giant Hisense Group has vowed to regain its trademark which has been registered by the world famous Bosch-Siemens Household Co Ltd (BSH) in Germany, but said the quote BSH claims -- over 10 million euros -- is "ridiculous."

Zhu Shuqin, Hisense spokeswoman, said last week the dispute has not so far had an impact on its business in Europe, thanks to the complete sales network that it has established in the region.

"The local retailers have done a great job to promote the new trademark," Zhu said.

Hisense air-conditioners compete with other brands of household electrical appliance in a shopping market in Beijing. Zhu Shuqin, Hisense's spokeswoman, said the fact Bosch-Siemens Household Co Ltd has registered her company's trademark in the European Union market so far has not affected its business in Europe, due mainly to the complete sales network it has established in the region. [photocome]

"We will regain our trademark, which was originated by our firm. And we have to get back what belongs to us," she added.

Hisense Vice-President Guo Qingcun said the firm has negotiated with BSH since last spring in order to obtain the trademark in Germany, which will naturally extend to the whole European market, but the German firm asked for a huge sum for the trademark, which Hisense believes costs at most tens of thousand of euros.

"The quote sets up a big obstacle for further negotiations," Guo said.

Qingdao-based Hisense had a more than one-year dispute with BSH over the ownership of the trademark, "HiSense" -- only the uppercase "S" differentiates it from "Hisense."

BSH registered the trademark in Germany in 1999, selling its high-end dish washers, refrigerators and other kitchen appliances.

When Hisense then decided to register its trademark, the firm found it was already owned by BSH.

Hisense believes BSH maliciously registered a similar trademark, aiming to prevent Hisense's products from entering Germany and other European Union (EU) countries.

Hisense has temporarily started using a new trademark, "Hsense" in the market.

The firm's spokeswoman said it will carry out further negotiations with BSH, and if necessary, they may rely on government-sponsored talks.

Siemens, which has a 50-per-cent stake in BSH, last week denied that there was any malicious intent behind the registration.

The "Hi" series are the brands for BSH's high-end products, and "HiSense" is one of them, according to Siemens.

Siemens China spokeswoman Wang Junyan said: "The trademark is ours, and we have spent a great amount of money on it. We are just asking for a reasonable price if Hisense wants to buy it."

She said the price consists of three parts -- the registration cost of "HiSense," the promotional expenses of the brand on the German and EU market and the potential cost on registering a new trademark.

However, intellectual property experts say it is evident BSH has violated the principle of honesty.

"Being the world's leading home appliance manufacturer, and having a presence in China, BSH must be aware of the existence of Hisense. BSH should have avoided registering a similar trademark throughout the world," said Tao Xinliang, professor with the College of Intellectual Property Rights at Shanghai University.

"BSH also violated the Paris Convention for the Protection of Industrial Property," Tao said.

He further explained that Hisense gained "the famous Chinese trademark" in January 1999, and that under the global property rights framework, it is also protected worldwide.

"BSH's decision to sell the trademark at a high price also indicates the malicious intent of the registration," Tao said.

But the Siemens spokeswoman contended: "We highly respect Hisense's decision (of buying the trademark). They (Hisense) said they want to buy... and we will sell at a proper price."

Both parties declined to reveal their baseline on the possible deal, saying this is confidential.

Hisense started selling products under the trademark of "Hisense" on overseas markets in the early 1990s. In the first half of this year, the company's export volume hit US$300 million, up 40.67 per cent, making the firm the fastest growing home appliance exporter in China.

"The overseas market is very important for Hisense, and we are definitely not going to abandon it," Guo said.

Tao suggest four solutions for the dispute, but none of them is pleasant for Hisense.

First, Hisense takes out a lawsuit. However, it is difficult to win any overseas lawsuit due to local protection, adding that BSH registered the trademark in 1999, which means BSH is the legal owner of "HiSense."

The second way out would be that, after negotiations and bargaining, Hisense purchases the trademark back from BSH, but the price would not be low.

Hisense may register "Hsense," in the EU market, which is also hard, since "Hsense" would cause confusion with the existing "HiSense" that BSH has registered.

The fourth solution would be registering a totally new trademark, which indicates all efforts that Hisense has done to promote its brand in the EU market have been wasted.

This is not the only such incident of its kind.

In June, 13 famous cosmetics brands on the Chinese mainland were maliciously registered in Hong Kong by Chong Sang (HK) Co Ltd, a small Hong Kong trading company.

In June, Xiamen-based Firefly Lighting Co Ltd found its trademark "Firefly" had been registered by German lighting giant, Osram Ltd, which is owned by Siemens.

Apart from this, well-known Chinese brands, like "Hero" for fountain pens, "red star" for rice wine, and "white rabbit" for candy, are maliciously registered in Japan, the United States, New Zealand, Indonesia and the European market.

Tao pointed out that the Hisense case has set off an alarm among domestic manufacturers on the protection of property rights. Such malicious registration not only aims at taking advantage of the brands to sell products, but also blocks a famous brand from entering a certain market.

He said domestic firms need to develop a long-term strategy on trademark registration: predicting the potential markets for the company, and make input for necessary trademark registrations.

Hisense was established in 1994, and serves more than 100 countries, with a product line of televisions, set-top boxes, mobile phones, air-conditioning systems and refrigerators.

Last year, its revenues hit 22.1 billion yuan (US$2.67 billion).

BSH is a joint venture between Robert Bosch Co Ltd and Siemens AG. Its annual sales are 6 billion euros (US$7.2 billion) on average.

Close