Italian confectioner Ferrero maker recently won its five-year lawsuit against Chinese candy counterfeiter Montresor (Zhangjiagang) Foods for imitating Ferrero Rocher's signature gold-wrapped packaging.

It took five long years, but the long-running legal battle between Italian chocolatier Ferrero and Montresor has finally ended – with China's Supreme Court fining the Chinese company RMB500,000 ($71,000) in damages and ordering it to stop producing fake Ferrero Rochers in its well-known gold-wrapped packaging.

Lesson number one in Intellectual Property 101 – never, never forget to trademark your brand name – is one that Ferrero has learned the hard way. And it's just one example of how today's counterfeiters are getting smarter and bolder.

Ferrero had been selling its famous chocolates in China since 1982, marketing them under the Chinese characters for the word Jinsha. Unfortunately, while the company registered its name and its trademark graphic label (an oval shape with lace) with the Chinese Trademark Office, it somehow neglected to register Jinsha. The Chinese company Montresor (known as Zhangjiagang Dairy Factory One) saw the opening, started to produce Ferrero Rocher-like chocolates under the name Jinsha – and then boldly applied to trademark the name of the product it was counterfeiting in 1990.

But the chutzpah didn't end there. Montresor further sought to register a combo trademark (with both the Jinsha name and Ferrero's oval graphic), which the Chinese Trademark Office rejected. The Chinese firm went ahead and used it anyway; sold its fake chocolates in upscale stores in direct competition to Ferrero and even in duty-free shops in Chinese airports; and even won international awards for the fake chocolates.

Ferrero finally launched legal action against Montresor in 2003. It lost its first hearing, but then won at the Tianjian Appeal Court in January 2006. The ruling was quickly appealed and the April 2008 verdict by China's Supreme People's Court finally ended the five-year battle in favor of Ferrero.

An article by Dominique Patton in AP-Foodtechnology.com details the legal nuances. During the trial, lawyers for Montresor claimed that the Chinese firm actually used its own packaging desing, that there were already similar designs in the market before Ferrero even began to use its packaging, and that different kinds of chocolate packaging share a certain degree of similarity.

While Ferrero surveys showed that consumers were really confused by the presence of a similar Ferrero product and the tradedress seemed to be virtually identical, it couldn't sue the Chinese firm under trademark law since Montresor had previously trademarked the name. The sad irony – the owner of a valid trademark registration (Montresor) can sue for infringement without being required to offer proof of its trademark rights other than its registration certificate!

The result was that Ferrero had to prove in court that its product had suffered due to unfair competition (a much harder claim to prove than trademark infringement) and to confusion between the brands (another tough claim to prove exacerbated by the fact that the Chinese court could seek to protect domestic industry.)

So Ferrero won the case and all's well that ends well, right? Not so fast. For a company that's reported to have spent $1 million battling counterfeiters, its future in a country where the chocolate market is seeing double-digit growth remains unclear. According to a company statement, "It is already hard for Italian companies, and foreign ones in general, to get into China, overcome resistance, build up a commercial network…only to be faced with a strong and invisible enemy such as the counterfeiting industry."

So what can companies marketing in China take away from this story? Register a Chinese product name right away. According to a Chinese trademark expert: A non-Chinese trademark does not protect its equivalent in Chinese.