Brand protection in China

Arriving in China and finding carbon copies of your products for sale under your brand may not be the welcome you were hoping for, but it’s more common than you think. Fortunately, China’s Intellectual Property law has come a long way and continues to develop to provide effective legal protections to combat brand infringement. However, such protections are not automatically granted. A company must undergo appropriate channels in order to have their IP rights recognized and enforced. Given the prevalence of counterfeiting and piracy in the country, it is crucial for brands to register their IP rights in China, irrespective of whether or not they intend to conduct any business there.

Register as soon as possible

China’s trademark law operates on a first-to-file principle, meaning that the first one to file for trademark registration is afforded the exclusive rights to it. This has led to many brands rushing to register their trademarks in the Chinese market to avoid being a victim of “trademark squatting”. This is a common practice in which persons actively attempt to register trademarks of existing brands for financial gain. This has resulted in many companies having to pay an exorbitant amount to trademark squatters in order to purchase their own trademark.

However, China enacted a new Trademark Law in November 2019 which prevents registration of trademark in the absence of an intention to use such a mark. This aims to directly tackle the issue of trademark squatting, allowing provisions to legally regain the ownership of a trademark.

Although this is a testament to China’s ongoing improvements of its Intellectual Property laws, it is still recommended to register trademarks at the earliest convenience as trademark squatting has not been fully eliminated. Going through the legal procedures to fight against a trademark squatter can be a lengthy and a challenging process, hence a company should register a trademark at earliest possibility to avoid dealing with such a burden.

What is a trademark?

The global definition of trademark is relatively broad:

A sign identifying a specific or primary use of a certain service or goods, enabling prospective customers to distinguish between goods and services of another company. The mark may be composed of words, letters, numerals, devices, colour combinations, three dimensional letters or a combination of all of these elements.

The China Trademark Office establishes the following requirements for trademark registration in China:

  • The mark must be available: it cannot clash with any prior right, which includes other intellectual property that may not be formally registered but is well-known. It is recommended that you perform a comprehensive search through the official trademark database to check for all prior registered trademarks.
  • The mark must be distinctive: it should be distinguishable from the producer of other goods and services.
  • The mark cannot be functional: it cannot be registered if the nature of the good and service exists to achieve a technical effect.
  • The mark must be legal: it must not be discriminatory or be similar to the name or a flag of an international organisation.

Where can I register

Please note that a trademark that you would have to register your trademark in accordance with the jurisdictions you seen protection in. A trademark registered in mainland China will only cover mainland China, and you would need to register separately for additional protection in HK, Taiwan and Macau.

Register in both English and Chinese

Many Chinese find it difficult to recognize and pronounce non-Chinese marks and consequently, will develop their own version of the mark which may or may not be pleasing to the company’s image. This can be demonstrated by a US retailer, Best Buy, which withdrew from the Chinese market in 2011 due its lack of success in the market. One contributing factor for its failure maybe its Chinese brand name, Baisimai, which translates into “thinking 100 times before buying”.

To avoid unflattering interpretations of the foreign marks, companies should seek local advice from Chinese-speaking consultants who can help develop a Chinese mark through a range of recognized methods, including transliteration, phonetics, or conceptualisation.

Protection

Registering a trademark in China does not necessarily preclude others from using your brand. It is important to remain alert for any infringement. You may seek assistance from a third party which specialized in brand monitoring or may have a team which regularly carries out comprehensive inspections possible infringements.

Enforcement

Upon identifying a brand infringement, you may seek enforcement of your trademarks through two possible routes:

  • Administrative: This is suggested as the first step as it does not require the parties to go to court, thus saving time and money. If the infringer is held to be liable, they will be required to pay a fine, along with any profits they earned from infringing the brand.
  • Judicial: this route is similar to the western system whereby the parties will litigate in court with the remedies being damages and injunctions. This is a comparatively lengthier process than the administrative route, thus is suggested as a last resort.

China presents a market too lucrative for brands to ignore, however, it is important to be alert for any infringement of a brand’s IP rights. Turning a blind eye to such activities can lead to damage to brand credibility, which is something you would want to avoid at all costs.