Recent Trump win on China trademark raises ethics questions

Banners advertising the high-end toilets made by Shenzhen Trump Industrial Co. on display at the company’s offices in Shenzhen

President Donald Trump is poised to receive something this week that he has been trying to get from China for a decade: trademark rights to his own name. After suffering rejection after rejection in China’s courts, he saw his prospects change dramatically after starting his presidential campaign.

Trump’s late triumph in the fight to wrest back his brand for construction services could prove to be the first of many intellectual property victories in China during his presidency. Each win creates value for Trump’s business empire, and ethics questions about his administration.

At stake are 49 pending trademark applications — all made during his campaign — and 77 marks already registered under his own name, most of which will come up for renewal during his term. The construction-services case also raises the possibility that the president could claw back control of more than 225 Trump-related marks held or sought by others in China, for an array of things including Trump toilets, condoms, pacemakers and even a “Trump International Hotel.”

Ethics lawyers from across the political spectrum say the trademarks present conflicts of interest for Trump and may violate the emoluments clause of the U.S. Constitution, which bars public servants from accepting anything of value from foreign governments unless explicitly approved by Congress.

Countries could use Trump’s desire to consolidate control over his brand to extend — or withhold — favor, especially a nation such as China where the courts and bureaucracy are influenced by the ruling Communist Party and by design reflect the leadership’s political imperatives. While China recently has shown greater interest in protecting intellectual property rights in general, simply the possibility that it could use trademarks as leverage has drawn concern.

“There can be no question that it is a terrible idea for Donald Trump to be accepting the registration of these valuable property rights from China while he’s a sitting president of the United States,” said Norman Eisen, who served as chief White House ethics lawyer for President Barack Obama. “It’s fair to conclude that this is an effort to influence Mr. Trump that is relatively inexpensive for the Chinese, potentially very valuable to him, but it could be very costly for the United States.”

Richard Painter, chief White House ethics lawyer under President George W. Bush, called the situation “highly improper.” Since foreign governments know Trump cares deeply about his family’s business, Painter said, “they will give him what he wants and they will expect stuff in return.”

Eisen and Painter are involved in a lawsuit alleging that Trump’s foreign business ties violate the U.S. Constitution. Trump has dismissed the lawsuit as “totally without merit.”

The precise value of the trademarks is a matter of debate, but the billionaire president himself has said he considers the Trump brand to form a major part of his fortune, and he has long fought to protect his trademarks in China.

“I spent hundreds of thousands of dollars in legal fees to secure my own name and globally recognized brand from Chinese individuals who seek to trade off my reputation,” Trump wrote in 2011 to then-U.S. Commerce Secretary Gary Locke about a trademark dispute in Macau, an autonomous region of China.

In May 2009, he dispatched a team with 300 pounds of audiovisual evidence that Donald Trump was, in fact, famous. It didn’t work. Trump railed against the courts as “faithless, corrupt and tainted.”

“The Trump name resonates throughout the entire world,” Trump wrote. “According to their ignorant council of judges, it appears the only two places in the world I am not well known are” China and Macau.

As president, Trump’s elevated profile in China will likely make it easier to protect his brand, said Zhou Dandan, a lawyer with Unitalen Attorneys at Law in Beijing, which has worked for Trump since 2006. Trademark authorities will almost certainly reject new “Trump” applications from unrelated parties, she said, and may take back rights from existing “Trump” trademark holders.

That’s what happened in the case nearing completion this week.

Trump applied for rights to the Trump mark for construction services on Dec. 7, 2006, but a man named Dong Wei had filed a similar application about two weeks earlier. China works on a first-come-first-served basis for trademarks, and the Trademark Office rejected Trump’s application.

Trump appealed to the Trademark Review and Adjudication Board, then to the Beijing Intermediate People’s Court, and finally to the Beijing High People’s Court. He lost, lost and lost again.

Separately, he tried to invalidate Dong’s trademark, but failed, and failed again on appeal, according to Matthew Dresden, a China intellectual property attorney at Harris Bricken in Seattle, who has studied the case.

The last time courts ruled against Trump in the construction-services case was May 2015, the month before he declared his candidacy.

Then Trump’s lawyers made what Dresden described as “an odd choice.”

They simply went back to the Trademark Review and Adjudication Board, which had already rejected their case, and again asked them to invalidate Dong’s trademark, Dresden said.

This time it worked. On Sept. 6, 2016, the Trademark Office published its invalidation of Dong’s trademark for construction services. Dong could not be reached for comment.

That decision cleared the way for Trump’s own claim to move ahead. Trump’s mark was published in China’s Trademark Gazette on Nov. 13, less than a week after he won the presidential election. Interested parties have three months to object. If no one does, the trademark will be registered to Trump this week.

Why is Trump winning in China’s bureaucracy now, after years of failure? China’s State Administration for Industry and Commerce and its foreign ministry did not reply to requests for comment.

Alan Garten, chief legal officer of The Trump Organization, portrayed the company’s efforts to enforce its trademarks as part of a long-standing pattern of vigilance.

“The company has been zealously protecting its valuable brand internationally for more than 20 years,” he said in an email. He did not answer questions about the ethical dilemmas Trump’s China trademarks present for his presidency.

Some lawyers point to a general hardening in China’s stance on trademark squatting. In January, China’s Supreme People’s Court released a legal interpretation stipulating that names of “political, economic, cultural, religious, national and other public figures” should not be trademarked. That notice came after a December ruling that returned the Chinese version of Michael Jordan’s name from Qiaodan Sports Co. to the basketball star. In Chinese, Qiaodan sounds like Jordan.

Others say politics almost certainly played a role. By 2016, the nature of the dispute had changed. Chinese authorities were now ruling on case that pitted a guy from Liaoning province against a man running for president of the United States.

“Particularly something of this scale, where there are international repercussions for a given decision, it would be hard to imagine that the judges, the Trademark Office and/or the Trademark Review and Adjudication Board were acting without some kind of guidance,” said Dan Plane, a director at Simone IP Services, a Hong Kong intellectual property consultancy.

He added that the outcome of future cases could depend on Trump’s relationship with Beijing.

“If there’s a clear decision made by an angry Chinese government to stop giving broad protection to the Trump name in China, Trump’s ability to defend or enforce his name could be quite limited,” Plane said.

If Trump is able to seize broad control of his brand in China, it could be bad news for Shenzhen Trump Industrial Co., which makes high-end Trump-branded toilets. Zhong Jianwei, one of the founders, said the company will defend its brand if challenged by the U.S. president.

The company applied for its Trump mark in 2002. The Chinese name brings together ideas of innovation and popularity and has nothing to do with President Trump, said Zhong Jiye, another founder. And in English, the “U’’ makes a nice toilet-seat shape for their logo.

Trump toilets for the home can do pregnancy tests, while models for public use have disposable seat covers for improved hygiene. The company says sales were up more than 50 percent last year and an international expansion is in the works — perhaps under a different brand now that Trump is president.

People use Trump toilets some 100 million times a year, said Zhong Jiye.

Among them, he added, are customers at Zhongnanhai, the official residence of Chinese President Xi Jinping. Erika Kinetz, Shanghai, AP