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Protecting trade marks in China

By Sarah Chatterley.

Most businesses are aware today that when reviewing opportunities for doing business in China, either by selling their goods and services there, by manufacturing goods there for export, or by employing a Chinese manufacturer, their intellectual property will be exposed to an ever-changing legal environment. 

The trade mark registration and enforcement system is still challenging to navigate, so brand owners should take all available opportunities to maximise the protection of their IP rights against would-be competitors and IPR pirates.

Not only does trade mark infringement cause loss of sales and resultant financial loss to the owner of a trade mark, but the reputation of a brand can be badly damaged by the poor quality of inferior counterfeits sold at a fraction of the original retail price of the genuine product. This is also true for a service provider who finds their mark is being used in a competing business by an infringer delivering a poor level of service. Such a scenario is even more damaging if the goods involved are food, beverages or pharmaceuticals, since inferior counterfeits sold under the brand may even be harmful to health.

Consumers in China have developed certain expectations in relation to product quality, as well as a level of brand consciousness which is on a par with, or exceeds, their Western counterparts. As a result it is now extremely important to protect the image of your products and services by registering your trade mark in China. Here is what you should consider next:

  • Identify the trade marks which are relevant to your business activities and register them in China to secure the exclusive rights. China is obliged to ensure that applicable Chinese laws comply with international treaties.
  • In addition to registering the trade mark which is used in international markets (usually in Roman characters), it is a very good idea to register an appropriate Chinese translation.

There are different approaches to this:

  • Translate the meaning of the trade mark directly to the Chinese equivalent.
  • Make a phonetic transcription, preferably with a positive Chinese connotation, for example, Coca Cola translates to words meaning roughly “delicious and joyful”.
  • Rebrand especially for the Chinese market with a distinctive Chinese mark.

Going to such lengths is often not even considered when entering a new market with a different language, but such an approach can positively influence the image of the trade mark, especially when a smart and elegant translation is created to specifically appeal to the Chinese client.  Moreover, most Chinese consumers, and business managers too, do not speak English. Chinese consumers often find that a Chinese translation of a foreign trade mark is much easier to pronounce and remember. An additional point in favour of a Chinese mark is that your registration in Chinese will prevent a hijack of the Chinese version of a mark registered in Roman text.

It may be more problematic than usual to register a mark in China, but this does not mean you should not do it. In fact, brand protection is becoming more and more important in the fight against the illegal use of your intellectual property, which could severely damage your reputation and income. If possible, find funds in your budget before you intend to enter the Chinese market in order to limit the risk of your trade mark being hijacked. Even if you only manufacture products in China for export, you should still register your trade mark there.

China applies a “first-to-file” system, so the owner of the trade mark in China shall be the first legal person or entity to file the application. Once it is registered the trade mark owner enjoys exclusive use rights for the mark in relation to the goods or services covered, and can use the registration to prevent illegal use. (China generally does not recognise unregistered trade mark rights). 

In many cases the original or “rightful” owner of a trade mark has found upon entering into the Chinese market themselves, that "their" trade mark has already been registered by another entity in China. Whist there is an appeal system for such a scenario, through which it may be possible for the original ownder of a trade mark to reclaim their rights, success is not guaranteed and the process may be costly.

A registration can be obtained via the national route or the International system (Madrid Protocol) (and sometimes using both systems would be advisable). There are pros and cons for each of these methods, so please consult us for more information about what would be most suitable for your business' needs.

This news item may contain information of general interest about current legal issues, but does not contain legal advice.