Trademarks Block Chinese Exports

Zippo Lawsuit Decision Bans Copycat Lighters Imported From China

Jul 23, 2007 Daniel Workman

As a defense against low-cost manufactured goods from China, trademark lawsuits are proving to be a more effective international trade strategy than high tariffs.

Zippo Manufacturing has been making its distinctive flip-top lighters with rounded edges since 1942. The U.S. Patent and Trademark Office approved a trademark for Zippo’s lighter design in 2002.

China accounts for over three-quarters of the lighters produced around the world. Increasingly, Chinese companies are turning to global trade law firms to defend against expensive lawsuits. These legal actions are initiated by foreign firms that accuse Chinese enterprises of infringing on intellectual property rights under patents and trademarks.

Court of International Trade

Often Chinese lighter makers face sanctions from foreign countries that want to protect their domestic lighter businesses. For example, the European Union has already enacted anti-dumping measures against cheap Chinese lighters.

Frustrated by a lack of adequate tariff protection, some international trade consultants say that lawsuits are the most effective way to block unfair competition from low-cost imports and to legally enforce international trade compliance.

Section 337 Lawsuit

Section 337 of the Tariff Act of 1930 is an American law that forbids the import and sales of products where those goods infringe upon a registered U.S. trademark. In June 2006, Pennsylvania-based Zippo filed a formal complaint with the U.S. International Trade Commission citing a violation of Section 337. Zippo accused a group of mostly Chinese-based companies of importing counterfeit lighters.

An international trade attorney for Wenzhou Star, one of the defending Chinese firms, explains that Zippo’s trademark description of their lighter’s rounded edges, corners and curved body with a slightly arched flip-top just happens to mirror the design of most Chinese-made lighters.

The Chinese legal attorney further argues that Zippo is trying to trademark functional elements of a lighter’s design. Unlike the court of international trade, China has traditionally frowned upon using functional elements such as shape in applying product copyrights.

One international trade consultant proposes that the rounded-edge design reduces friction with clothing when a lighter in carried in a pocket. Thus the rounded-edge is merely functional, just as the design of four wheels on a car is a functional requirement for smooth, safe driving. Hence both functional designs should be exempted from international trade patents and trademarks.

Zippo Wins Decision: Chinese Copycat Lighters Banned

The U.S. International Trade Commission decided that the functional design argument was not strong enough for the Chinese-made lighters. In July 2007, Zippo won a legal order that requires U.S. custom officials to block the import of what are now considered counterfeit lighters from China. Also to be excluded are any lighters that copy the Zippo-trademarked design, and not just the firms named as defendants in the Section 337 lawsuit.

China’s Lesson Learned

For their part, Chinese firms have learned how severely Section 337 investigations can impact the products that China exports.

With international trade law firms charging some US$700 per hour, complex international trade administration procedures and severe penalties, China’s Ministry of of Commerce now offers more robust training to help Chinese businesses respond more effectively to Section 337 lawsuits.

Sources for this Article

This article presents independent insights from data presented in the articles ‘Chinese lighter producers accused of violating Section 337’ (China Daily – July 11, 2006) ‘Zippo wins order to block import of knock-off lighters’ (Toronto Star – July 19, 2007).

The copyright of the article Trademarks Block Chinese Exports in International Trade is owned by Daniel Workman. Permission to republish Trademarks Block Chinese Exports in print or online must be granted by the author in writing.

Zippo metal flip-top lighter