A decision by the Trademark Office of the State Administration for Industry and Commerce of the People’s Republic may result in the UK’s largest luxury-goods maker, Burberry, losing the exclusive rights to its iconic tartan, known as the ‘Haymarket Check’, in China. However, the brand is not out of moves yet.

The decision is the latest in a long-running legal battle between Burberry and a Chinese competitor, Polo Santa Roberta (PSR), which produces bags with a similar check. Burberry has successfully challenged the Chinese company for infringement of their trademark on several occasions, including in the Taiwan and Hong Kong courts where Burberry’s Asia unit was victorious in a 2010 case. In the latest round, the court’s decision was based on the lack of use – specifically, that Burberry had not used the ‘Haymarket’ tartan trademark in China for three years for leather goods.

The Scottish Register of Tartans specifically refers to the tan, black and red tartan at the center of this dispute as ‘Burberry’, adding “it has become so much part of the Burberry image that it has been trademarked and can now be regarded as a corporate tartan.” However this seems to have worked against the British brand with PSR’s lawyer, Tang Xiangyang, arguing at a press conference that Burberry’s use of the tartan was “monopolising part of Scotland’s cultural heritage”. PSR is now seeking £50 million ($82 million) in damages from Burberry.

In a statement, Burberry confirmed it still controls the pattern pending an appeal to China’s Trademark Review and Adjudication Board and promised to fight the decision, while also using the “strongest possible action” against those companies who use its trademarks “unlawfully”, explaining:  “Burberry is appealing against the recent decision by the China Trademark Office (CTMO) in relation to the Burberry Check trademark, which relates only to leather goods. In the interim, there is no change to Burberry’s use or enforcement of its trademark across leather or any other products and we are confident that our appeal will be successful. The Burberry Check remains a registered trademark exclusively owned by Burberry and no other parties can use the mark without Burberry’s proper authorisation. Burberry always takes the strongest possible action against those who use its trademarks unlawfully.”

Speaking to WTR, Chumeng (Jessica) Xu, a partner at Jun He Law Offices, expressed some surprise at the decision, noting: “It is a surprise that the famous mark of Burberry has been cancelled. Apparently, the CTMO determined that the usage of the grid design on bags and clothing is not acceptable usage in terms of the Trademark Law, which is perhaps less surprising considering CTMO’s cautious attitude towards this controversial topic.”

‘This controversial topic’ is product design in the fashion industry and Xu believes that various IP rights including copyright, trademark, and patents should be used in conjunction with anti-unfair competition law provisions to protect designs such as Burberry’s: “IP rights should be used together to fight against an imitator as one single right may not prove persuasive. Burberry has lost many battles in Hong Kong, Taiwan and other courts of PRC Mainland solely based on trademark rights.”

For Burberry the fight continues and its appeal affords another opportunity to submit use evidences. In aninterview with CNN, Ilya Kazi, a partner at Mathys & Squire, suggested that this could be critical:  “This may be nothing more sinister that Burberry didn’t get their evidence in the right form or time and their evidence didn’t convince the Chinese authorities. They are going to appeal and they may be able to supply better evidence. [Ultimately] the office has to look at what evidence it has, it can’t just say ‘well everyone knows it is Burberry, we will let you have it’. It is possible the other side just presented more convincing evidence.”

Gloria Q Wu of Kangxin Partners adds: “Since the requirement and standard of evidences differs from country to country, some types of evidences acceptable in Europe or US may not be considered valid in China. Thus, it is important to understand what types of evidences are needed in order to overcome the non-use cancellation case in China.”

China is one of Burberry’s key markets, with sales in its products soaring 20% last year and accounting for 14% of its overall sales revenue. The stakes, then, are high and – with the current position more ‘check’ than ‘checkmate’ for the British brand – Burberry will have the opportunity to make further moves as it seeks to retain protection for its tartan.

This blog was first published in World Trademark Review on 29 November 2013