The recent trademark disputes of international brands, such as Apple and Hermes, to some extent, indicate that 2012 will be a significant year for the development of intellectual property rights in China.

However, they also show that transnational brands need to learn some quick lessons since Chinese corporations have learnt how to play the business games by international rules.

Take the French luxury brand Hermes for example. According to media reports, a court in Beijing has ruled that it does not own the registered trademark in Chinese, which was obtained by a local clothing company in Guangdong province in 1995. The French brand may face an awkward situation when it tries to expand in China in the future. Actually, it was in 2009 that Hermes first requested the trademark appeal board of the State Administration for Industry and Commerce in China repeal the Chinese-language trademark.

According to Article 13 of the Trademark Law of the People's Republic of China, only if the registered trademark is proven to copy, imitate, or translate a "well-known trademark" that is not yet registered in China, and similar or the same goods are produced under the two trademarks, will the original registered trademark be prohibited from use or repealed. Therefore, the main argument Hermes used in its appeal was that it is a well-known brand in China.

However, this is hard to prove, and moreover, in Article 14, there are four elements that constitute a well-known trademark in China: popularity, length of time the trademark has been in use, the length of time the trademark has been used in advertising, and whether the records show the trademark has been protected before.

For Hermes, most of the evidence it submitted was post-1995, when the Chinese trademark was already legally registered, and the records and media material it collected only show its popularity in the Hong Kong market, therefore, it can not prove that the trademark is well-known among mainland customers.

Transnational brands are usually very knowledgeable about intellectual property rights. In 1977, for instance, Hermes had already registered its English trademark in China, five years earlier than the official establishment of the Trademark Law. However, it didn't register its Chinese trademark at the same time, and it took over 20 years for Hermes to realize this would be a problem for its development in the mainland.

Such negligence is partly because the luxury market in China only began to boom fairly recently and partly because Hermes didn't pay enough attention to the Chinese market and have a localized strategy. For a well-established company like Hermes, it is hard to understand how it could have made such a mistake.

As China is already becoming one of the largest markets in the world, transnational companies should learn about China's culture, customers and market. For those renowned luxury brands, it is not enough to have a global strategy based on a registered Western trademark, it is also necessary to have a localized strategy with trademarks registered in China.

Hermes will face its challenge after the court decision. If they don't buy the Chinese trademark, it may confuse customers, however, as Hermes is becoming more well-known in China, it will be expensive to buy the Chinese trademark.

This is not the only recent trademark case, nor a phenomenon unique to China, so instead of blaming those who registered the trademark ahead of them, international brands should be more careful about managing their "assets" in China. It seems that Chinese companies, who used to suffer from the tough intellectual property rights overseas, have learned their lessons and become smarter. Transnational brands need to be more rigorous when considering their future strategies in China.

The author is executive director of Legal Experiential Education Center, Shanghai Jiao Tong University.