Nike vs China Trademark Laws

TOM HUDSON: With one of the world’s fastest-growing economies, China
figures to be Nike’s playground for several years to come, lots of years in
fact. The sports apparel giant hopes to sell $4 billion worth of shoes,
clothes and sports gear in China by 2015. But in tonight’s “Beyond the
Scoreboard,” Rick Horrow says to do so, Nike (NYSE:NKE) will have to beat
China’s lax trademark laws.

RICK HORROW, CEO, HORROW SPORTS VENTURES: Registering a trademark in
China is relatively cheap and easy and it favors those who register first,
regardless of their intention to use it. This has created headaches for
Nike (NYSE:NKE), which currently is fighting battles on behalf of two of
its highest profile endorsers, Michael Jordan and Jeremy Lin. This is not
just fun and games; millions of dollars are at stake, as is shareholder
value as well.

Qiaodan Sports claims to own the exclusive right to Jordan’s
Chinese name and sells branded merchandise in 5,700 Chinese stores. The
company posted $270 million in revenue in the first half of last year.
Meanwhile, Wuxi Risheng sports utility registered Lin’s name as a
trademark in July 2010, a year-and-a-half before he burst onto the scene
with the Knicks. They paid $700 for the trademark and could sell it back
to Lin and Nike (NYSE:NKE) for millions. China allows this trademark
squatting to happen. Unless and until the system is overhauled, athletes
will continue to have difficulty controlling their image and companies and
their shareholders will lose. Given the country’s burgeoning economy, this
could be a huge lost opportunity for shareholders, retailers and investors.
I’m Rick Horrow.

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