Now that China is home to the second biggest economy in the world, few companies can resist its allure. In recent years alone, foreign businesses have been increasingly clambering over one another to get a foothold in what has become a rapidly expanding market.
In spite of the opportunities China presents, the Chinese commercial landscape is notoriously difficult to navigate for foreign entrants and poses a number of serious challenges — perhaps none so daunting as intellectual property protection. Foreign companies must develop a thorough understanding of China's trademark protection and enforcement regime, or alternatively seek outside counsel. Failure to do so can be an extremely risky proposition for any business.
To help you avoid potential obstacles, here are five things you need to know about trademark protection in China:
- China operates a "first to file" system for trademarks, so take steps to register any key trademarks and logos as soon as possible. Ideally, foreign companies should apply to register their trademarks — and prepare themselves to enforce their trademark rights — before entering the Chinese market.
- In China, the registration of a trademark in roman characters does not automatically protect the trademark against the use or registration of the same or similar trademark written in Chinese characters. Consider registering key trademarks in Chinese to: (a) pre-empt unwanted Chinese registrations and (b) prepare the way for sales in China at a future date.
- A strong track record of trademark activity in China can serve you well both defensively (such as non-use cancellations) and offensively (such as opposition or invalidations). To that end, ensure that you have a protocol in place to collect, store, and categorise branded material — including product packages, photos, product orders, sales contracts, relevant invoices, shipping documents, advertisements, product catalogues, magazines, newspapers, exhibition and expos, as well as any license agreements.
- China's trademark sub-classification system is uniquely complex. Although China adheres to the Nice Classification system, which consists of 45 classes and is widely used in many Western countries and regions, China further divides each class into subclasses based on similarity of function, raw materials, etc. It is critically important that foreign market entrants grasp the subclass system when filing Chinese trademark applications.
- Trademark piracy is prevalent in China, but with patience and determination it can be fought. Consider (a) due diligence on the applicant/registrant and the goods covered; (b) filing non-use cancellation if possible; (c) spending time to find evidence on prior use/reputation and any potential link between the squatter and the brand owner; and (d) potentially buying back the trademark under cover.
Similarly, it's important to note that China offers trademark holders a full suite of enforcement actions, including administrative raids, customs seizure, civil litigation actions, trade fair complaints, online take-downs and criminal prosecution.
In conclusion, with a burgeoning middle class with money to spend, China provides exciting opportunities for foreign companies looking to invest or distribute in the Far East. However, it's essential that such companies take adequate steps to first educate themselves on China's intellectual property regime, and solicit outside help as necessary.
About our IP practice in China
With offices in Beijing and Guangzhou, along with a far-reaching network of local counsel and private investigators, our team in China provides rapid, strategic advice for IP filing and prosecution work. We complement this with formidable strength in IP licensing, enforcement and litigation, so you can ensure your intangible assets remain fully protected in one of the world's fastest growing markets. Learn more about our IP practice in China.