Why Register a Trademark in China?

Trademark Registration in China

Why Register a Trademark in China?

China follows a “first-to-file” system rather than a “first-to-use” system. As a result, trademark rights are granted to individuals or entities that file a trademark first. In addition, because trademarks are territorial, China does not recognize trademarks registered in other jurisdictions. As a result, even though you may have significant brand value in the United States and the rest of the world, without a trademark registration in China, you are unprotected in the Chinese market.

Registering a trademark in China is important because it provides a legitimate record of ownership in a lawsuit or transaction in the second largest economy in the world. Many American companies are surprised to find that their trademarks have already been registered, and are therefore unavailable, when they launch in China. The importance of your company’s name has never been as critical as it is today.

New Balance is prime example of the complexities facing entities seeking to conduct business in China. Since 1995, when New Balance first launched its business in China, New Balance sought to protect their brand against counterfeit manufacturers, rogue suppliers selling shoes at deep discounts, and sought to prevent other businesses from using the New Balance Chinese name. While there are significant questions of theft and misappropriation of intellectual property in China, hope is not lost. In August 2017, New Balance won $1.5 million in damages, reportedly the largest amount of damages ever ordered in a trademark infringement case granted to a foreign business in China.

1. Avoiding Trademark Squatting

Trademark squatting occurs when third parties register a trademark to gain a benefit from the mark or from the mark’s foreign owner. This bad faith trademark registration is a common intellectual property rights issue that is especially rampant in China.

Even Donald Trump had a long-standing battle with a Chinese businessman, who registered the name “Trump” in China. As a result of the Chinese trademark, Donald Trump was prevented from using his own name for construction services. Similarly, the tech giant Apple had to settle a $60 million lawsuit with a Chinese firm, Proview, to use the name “iPad.”

In some cases, trademark squatters may seek to hold some companies for ransom by threatening to seize their goods for trademark infringement. Even if you are just manufacturing your product in China for sale elsewhere, failing to register your trademark puts you at great risk of losing your brand name in China.

2. Combatting Online Counterfeits

Registering your trademark in China also enables you to take down counterfeit products sold on Chinese sites. If you only have a trademark registration in the US or other foreign jurisdiction, you will not be able to submit takedown request in China. Without a Chinese trademark, the most popular e-commerce sites such as Taobao.com and 1688.com will not take action against any listings which potentially infringe on your trademark.

3. Seizing Counterfeit Products at Chinese Customs

Chinese Customs may protect your trademarks by seizing infringing products. Before seizure may occur, there must first be a valid Chinese trademark registration. After this step is completed, the trademark must also be registered with Chinese customs. As a result of this complete registration process, China seizes tens of thousands of goods a year destined for export out of China for trademark infringement.

How to Register a Trademark in China?

Registration can be obtained either by filing an application directly at the China Trade Mark Office (CTMO), or by filing an application through the World Intellectual Property Organization (WIPO). Trademark registration through WIPO must be based on currently registered marks in a country outside of China.

1. Choose the Right System to File

Foreign applicants without residency or place of business in China filing directly with the CTMO are required to submit trade mark applications to the CTMO through a register agent.

Direct registration with CTMO offers certain benefits over an application through WIPO. Direct registration gives a registrant more control as it allows the registrant to determine which classes to file and what types of products and services covered by the trademark. If you choose to file through WIPO, you can’t choose subclasses and instead, the examiner will decide what subclasses are covered by your mark.

2. Choose Product and Service Sub-classes

Although China uses the International Classification under the Nice Agreement, China further divides these classes into sub-classes. For example, general footwear and boots would fall in different subclasses, and the same trademark might be registered by different companies in each. It is important when registering a trade mark that the registration covers all products and services in each of the sub-classes containing products and services that may be relevant to your business.

3. Trademark Chinese Translation

Registration of a trade mark in roman characters does not automatically protect the trade mark against the use or registration of the same or similar trade mark in Chinese characters. As a result, it is advisable to register a Chinese version of a foreign trade mark to avoid miscommunication or attempts to register a similar or direct translation of your mark in Chinese characters.

Registering brand names as a trademark in Chinese characters is complex because often direct transliteration or translation does not make sense. For example, Ralph Lauren did not create a Chinese trademark when entering the Chinese market. As a result, the public created a Chinese name based on the logo. Ralph Lauren discovered that their brand was known in Chinese as “San Jiao Ma” (三脚马), which translates as “three legged horse.” The Chinese word for Coca-Cola means “delicious happiness.” This name is well-received but is not a direct transliteration.

Choosing a Chinese trade mark name is particularly important because the meaning, the pronunciation, or even look of the Chinese characters chosen can affect the brand’s reputation. Toyota in Chinese (丰田) means “thriving,” whereas Honda (本田) sounds like “deficit.” Some Chinese businessmen are thus reluctant to buy a Honda car due to the ominous name. For all the reasons listed above, foreign firms operating in China should ideally invest in finding the right brand name to register their trademark.

When to Register a Trademark in China?

Register now. You should expect the trademark process to take at least 18 months from the date of filing to preliminary approval and publication. This time period does not include the time necessary to create an application or the additional time necessary when there is opposition to registration. Even though you are not selling in China now, you should consider possible expansion plans at least two years in advance. Thinking ahead to prevent your business from falling on the wrong side of Chinese trademark law will better prepare your business for the world market.

References:

1. Matthew Dresden. “8 Reasons to Register Your Trademarks in China.

2. China IPR SME HelpDesk. “Guide to Trade Mark Protection China.

3. Srinivas Raman. “How to Protect Your Business from Trademark Squatters in China.

4. Shireen Smith. “Trademark protection in China.

 

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