Expanding business to the Chinese market: Should I Register my Trade Mark in China?

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05/04/2018

gigCMO partnered with Dolleymores to expand the way we help the businesses grow.

Dolleymores have over 40 years of IP experience and associates in the US, Japan, Asia and beyond. Their comprehensive range of specialist IP services works with start-ups and SMEs, and national and international brands. Their attorneys are specialists in sectors of Construction, Defence, Fast moving consumer goods, and Personality and image rights. They are considered experts in patents, trade marks, designs, copyright and IP strategy.

Vicki Bennett, an experienced UK and European Trade Mark Attorney and a partner at Dolleymores, shared a great article on their blog on matters of registering a trademark in China, which you can also read below.

And, if you are interested in how to expand your business to the Chinese market, or want to know how to reach China with your digital marketing efforts, make sure you contact Vincenzo Brugaletta, one of gigCMO’s Chief Marketing Officers. Vincenzo’s extensive experience, as well as gigCMO’s partnership with Digital Retex/Tencent will help you meet your China market goals.

Should I Register my Trade Mark in China?

This is a question we often get asked. In essence, if you have an interest in China, or may have your goods manufactured there in the future, then the answer is ‘YES’.

There has been an increase in trade mark filings in China, unfortunately not always by the legitimate trade mark owner.

Unlike the UK, where trade mark proprietors are given a level of protection through the portal of unregistered rights, the Trade Marks Office and Courts in China give hardly any weight to prior use of a trade mark by the legitimate owner.

The practice in China is that the first to file the application and obtain a registration is the party that has the rights in the trade mark. Those rights can be used to stop the legitimate owner protecting and using their trade mark. Where the owner of the Chinese trade mark registration records their rights with the General Administration for Customs of China (GACC), they can also prevent, or delay, the export of the legitimate owner’s goods that have been manufactured there.

This is becoming an increasing problem to legitimate owners, because through use of the internet and global tourism, many Chinese nationals come across trade marks overseas and then look to protect and use those trade marks in China, either to imitate the original brand or sell the registration to the legitimate owner for an over inflated price, or because they realise that local consumers are attracted by the foreign feel of a trade mark.

It is extremely difficult, or more to the point near on impossible, as well as expensive, to have a Chinese trade mark registration removed on the basis of having used the mark in China prior to the unauthorised application being filed, or holding a legitimate trade mark registration in another territory. The burden of proof to evidence those earlier rights is an extremely hard bar to reach and we understand that there are many horror stories where legitimate owners have had to rebrand because they cannot get an unauthorised trade mark registration removed.

In the unfortunate circumstance of a third party registering your trade mark in China before you, but you only propose to manufacture your product there and then immediately export it, so it does not reach the Chinese market, then there might be a slight reprieve. This type of use is referred to as “OEM use” (use by Original Equipment Manufacturer) and might not be deemed as trade mark infringement. Whether an infringement has occurred or not will be decided by the Courts or the relevant authority on a case by case basis.

In general, in order to find that there is no infringement where products are manufactured for export only, that type of use is subject to the following conditions:-

1. The OEM was authorised to manufacture the products by a foreign trade mark owner with valid prior trade mark rights in the country of destination.

2. The OEM had exercised a reasonable duty of care in verifying the trade mark rights of the foreign purchaser.

3. The products made in China are intended solely for export and are not sold in China.

In the situation where goods are seized because the proprietor of the Chinese trade mark registration has recorded their rights with the GACC, the exported goods would be stopped at the border of China.

To then have those good released you may have to either defend your position against a lawsuit, or go through the procedure of demonstrating to the GACC that the goods are not infringing the registered trade mark. The whole procedure of having your seized goods released is very time consuming as well as costly.

Therefore, to avoid any of the scenarios above, it is recommended that trade mark owners with an interest in using their trade mark in China, or arranging for goods to be manufactured there is to file a trade mark application sooner rather than later.

A benefit of filing and obtaining a trade mark registration in China is that the legitimate owner can file details of the registration with the GACC, who will then take the initiative to seize any goods that are due to be exported, where those goods may be counterfeit copies of legitimate trade mark owners’ goods.

Further, once a trade mark is registered in China, then the trade mark owner is permitted to use the  symbol. Please also bear in mind that the cost of filing and obtaining a trade mark registration is far cheaper than having to either buy back a registration from a trade mark squatter, defend an infringement action at the border, or look to have a registration removed.

If you would like further advice in respect of protecting your brand in China or other territories, please contact the trade mark team at Dolleymores.