The importance of Chinese trade mark registration

08 08 2016

Trade mark registration and Brand protection should always be a top business priority and this is especially true for companies looking to expand their activities to China.

Why is early trade mark registration in China important?

China’s first-to-file trade mark system means that companies who are thinking of doing business in China need to be proactive in protecting their trade marks. As big name brands such as Apple, New Balance and Tesla have learned the hard way, the Chinese system means that trade mark squatting is common as it awards trade mark rights to the first party to apply, rather than first to use, which is the principal used in Australia, and most other jurisdictions. This means that even well-established brands with international trade mark registrations are not immune to finding themselves in trouble when they fail to register their trade marks in China in a timely manner or in the correct classes. Just last month, Apple lost its bid to oppose the use of “iPhone” on leather goods by a Chinese accessories brand after failing to register their “iPhone” mark in the class which covers leather goods, this is despite holding rights to the “iPhone” mark in other classes before the accessories company even filed their trade mark application.

What happens if another party registers my trade mark?

Where companies do find that their trade marks have already been registered by third parties in China, the outcomes are not ideal. Where the trade mark squatter has registered the trade mark purely for financial gain, the company may just find themselves having to purchase the rights to their Chinese trade marks. However, they could also find themselves infringing the rights of the Chinese trade mark holder or having their goods seized by Chinese Customs. This includes where companies are simply looking to manufacture their products in China; armed with Chinese trade mark rights, the holder would have every right to stop these products from leaving Chinese borders. This could happen even where the company has a significant international reputation. Earlier this year a Court in China handed down a decision ordering New Balance to pay Rmb5 million in damages (reduced from Rmb98 million) for using “XIN BAI LUN” (the Chinese translation/transliteration of ‘New Balance’) after it was registered by a Chinese businessman.

What should I do to ensure the protection of my brand?

Trade mark squatting in China is a common issue and affects brands with even just a tiny fraction of the reputation that companies such as Apple and New Balance have established. This means that all companies, regardless of size, who are looking at potential business dealings in China need to take adequate precautions and plan well-ahead to ensure the best and more cost-effective protection of their brand.

Key Takeaways

  • China adopts a first to register principal with trademarks, not first to use like Australia;
  • Trademark squatters could register your trademark and prevent the export of your goods manufactured in China; You should therefore look to register your trade marks in China as soon as you are looking to expand your business activities to China.

China Flag Image Attribution: By Drawn by User:SKopp, redrawn by User:Denelson83 and User:Zscout370Recode by cs:User:-xfi- (code), User:Shizhao (colors) [Public domain], via Wikimedia Commons

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