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Dsquared2 Secures China Rights

A court in Hangzhou has sentenced that the fashion company is “legitimately allowed” to distribute its collections in China.

Dean and Dan Caten

MILAN — Dsquared2 won its battle for China.

This story first appeared in the January 10, 2014 issue of WWD.  Subscribe Today.

The brand secured the rights to distribute its collections in the country as a court in Hangzhou ruled it is “legitimately allowed” to do so — despite the fact that another company has trademarked the Dsquared label (without the 2 figure) and is selling counterfeit products under that moniker.

The ruling is vital to the brand’s prospects in the gigantic consumer market and an important signal that Western brands can successfully argue their cases in the still-evolving Chinese legal system.

Dsquared2 was initially denied permission to trademark the brand in China in 2005 because the Nuohe group had registered the label three months earlier.

“We are facing a serial usurper,” Roberto Franco, chief financial officer of Dsquared2, told WWD. “This verdict marks an epochal turnaround because it says that Dsquared’s lettering and format is legitimate in China even if there is another brand registered under the same name.”

According to Franco, Nuohe has registered in China more than 200 brands, including such names as C’N’C’, Dior Homme and Iceberg. “After we had gone through all the possible administrative levels, in 2011 we decided to sue Nuohe for registration in bad faith and unfair competition and turned to the court of Hangzhou, which is known for its more modern views on intellectual property in China,” said Franco.

The executive said Nuohe has opened stores copying the brand’s products and lettering and the original Dsquared2 layout, including the wooden elements and lamps with antlers evocative of Dean and Dan Caten, the Canadian twins who founded the company in 1995.

“They even add the Caten names on the labels,” said Franco. “The limit was that the trademark office was merely looking at the registrations. This sentence now shows that a brand’s notoriety can help identify a company that is acting in a disingenuous way.”

Franco also credited Mario Boselli, head of the Italian Chamber of Fashion, for creating a link between the Italian and Chinese embassies, “activating the diplomatic channels, and allowing us to discuss this at a European level, working with the ministry of commerce in China, in promoting new laws on intellectual property.” The Hangzhou court’s decision allows Dsquared2 to keep the brand’s stores open and continue its retail expansion in China, which has been slowed down by the legal battle, said Franco.

There are now five stores in China, including two in Shanghai, one in Beijing, one in Nanjing and one in Hangzhou. In 2014, the company plans to open boutiques in Chongqing and Chengdu.

“Now we have new material to return to the trademark office. This is the first time that a Chinese court issues such a verdict,” said Franco, adding that the Nuohe group has appealed the sentence. “We are going to resist.”

Franco also said that Dsquared2 has been counting “on a very important support from the malls that know the true story and have supported us even if the brand’s situation was not clear. This has allowed us to choose the best locations and partners.” Asked if the brand has been entangled in other legal controversies, Franco said it has faced “similar issues” in South Korea and Thailand that were quickly resolved, “in less than 12 months.”