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China Trademark Law: Simple And Effective

Posted in Legal News

Earlier this year, I wrote an article for the Alaska Bar Magazine [link no longer exists] (I am an Alaska Bar member!) on China’s trademark laws, mostly extolling how necessary it is to secure such a trademark and how relatively simple it is. Nothing much in the article that we have not been saying here since our inception, but since it provides a nice summary in one place, I am running the whole thing below.

Members of the media love to write about China’s failure to protect foreign company intellectual property (IP), but those articles can be misleading. These articles often fail to state whether the foreign company actually registered its IP in China at all and they nearly always fail to distinguish between the various types of IP eligible for protection. Both of these shortcomings are meaningful.

China generally does not protect any IP unless it is registered in China. Though there are a few exceptions to this rule, the bottom line is that it will always be cheaper for a company to register its IP than to litigate, whether it comes within any exception or not.

The failure to distinguish among the various types of intellectual property leads companies to believe that enforcement of intellectual property in China is poor across the board, and that simply is not true. China’s patent law system is difficult and spotty, at best. Copyright protection in China–particularly of DVDs, CDs, and software–is downright terrible. But, its protection of trademarks is actually quite good and getting better all the time. China’s better courts (usually found in China’s more commercialized cities) are actually quite good in enforcing trademark rights. There is a widely believed theory that countries start enforcing IP rights when their more powerful domestic companies demand enforcement because they themselves have IP worthy of protection.

With respect to trademarks in China, that time has already arrived. As proof of this, I often talk about an incident in China involving watermelon and rumors of their having been tainted by AIDS. A group of watermelon farmers in Linquan county, (a county in Shandong Province known for the high quality of its watermelons) had registered a trademark for their watermelons and established an association to promote them. The Linquan watermelons had, according to the Shanghai Daily, became “the top sellers, even though their price was much higher than watermelons from other regions.”

Sales of Linquan watermelons then plunged amid rumors they had been injected with HIV tainted blood. The rumors had a devastating impact on sales. The newspaper interviewed one of the farmers who said he planted more than 6.7 hectares of watermelon this year. Before the rumors, he had sold out all of the watermelons harvested. After the rumors, much of the inventory rotted.

It should be clear from this incident that securing a trademark in China can be an effective tool for distinguishing your product from the competition and for allowing you to charge a premium price for it. That is exactly what happened here. The efficacy of trademarks in China allowed the Linquan farmers to charge significantly more than others and yet sell out of their watermelon crop, and it also caused its rivals to feel they needed to spread the vicious AIDS rumor.

So now that I have (I hope) convinced you that it makes sense to protect a trademark in China, the next step is to explain how to do so. Easy. Register it. Plain and simple.

China is a first-to-register country, which means that unless your trademark is a well known mark (and let me assure you it almost certainly is not and you definitely do not want to be litigating this issue in any event), whoever registers it in China first gets it. Put another way, to expect trademark protection in China, foreign companies must register their trademarks in China and the prudent company does this before going in.

There are actually a number of people in China who make a living by usurping foreign trademarks and then selling a license to that trademark to the original license holder. Once one comes to grip with the fact that China, like most of the rest of the world, is a “first to file” country, one can understand how easy this usurpation is, and also, how easy it is to prevent it.

The fact that you are manufacturing your product in China just for export does not in any way minimize the need for you to protect your trademark. Under China trademark law, once someone registers “your” trademark in China, they have the power to stop your goods at the border and prevent them from leaving China.

China’s trademark requirements are actually quite similar to those in most other countries. The trademark must not conflict with an existing Chinese trademark and it must be distinctive. China allows for registration of all marks for goods, services, collective marks and certification marks.

In deciding what to trademark, foreign companies must consider all sorts of things. Take Starbucks, for instance. Starbucks registered more than 200 trademarks in China. It has registered Starbucks in English and the translation of “star” and “bucks” together in Chinese. Any foreign company strategizing about what to trademark in China must have a fluent Mandarin speaker to assist. Indeed, some of the very largest foreign companies register trademarks in other dialects used in China as well.

China’s Trademark Office maintains a centralized database of all registered and applied-for trademarks. Trademark applications that pass a preliminary screening are published by the Trademark Office and subject to a three-month period for objection. If there are no objections within this three-month period, or if the Chinese Trademark Office rejects the objections as frivolous, the trademark is registered. If the Chinese Trademark Office supports an objection, it will deny the application. Denied applications may be appealed to the State Administration of Industry and Commerce Trademark Review & Approval Board and then to the People’s Court. Based on our experience, objections to trademarks are rare.

A Chinese trademark gives foreign companies a surprising amount of protection in China. If a foreign company learns that its trademark is being infringed in China, it has a number of actions available to it.

We usually advise our clients to pursue a multi-pronged approach to protect an infringed-upon trademark and to pursue the infringer. The foreign trademark owner should usually file a lawsuit against the infringer, seeking damages and an injunction stopping the infringer from continuing to sell the infringing goods. The Chinese courts in the more commercialized regions are actually quite willing to enforce China’s trademark laws, even for foreign companies.

Trademark infringement is a crime in China. For serious cases of infringement, a complaint to the office of the public prosecutor can often result in a criminal prosecution against the infringer. The Chinese police will close the offending operation and seize the counterfeit goods. The courts are authorized to impose both fines and imprisonment. Finally, if the counterfeit goods are destined for export, a notice to the Chinese customs authorities will prevent export of the counterfeit goods.

  • Karl J. Weaver

    For the past four companies I worked for in Washington State, I created their company and product name & logo in Chinese for the Greater China market. For the most recent company (which will remain private in this post), there was already a company in China using a similar English name with a few words cleverly changed to pronounce the same word (like tek instead of tech)and, what’s worse was that other firm was also in the high-tech sector. Thus, we didn’t obtain approval from China’s registra office to register the English name, therefore, we decided to register the Chinese name I translated to be used for the company’s Chinese and English names in Greater China. Since the goal was to create a software R&D Center locally anyway, it gave the company a local flavor and my Chinese translated name was so phonetically close to the English that most of my colleagues in company headquarters could pronounce it. For success, a dual English and Chinese branding strategy is wise, I’ve been using this strategy since 1993.

  • http://badbadchina.blogspot.com nanheyangrouchuan

    Here is a question/poser:
    What if someone had a US patented product with IPT filing? What would it take to sell a license to Beijing? Since no one can sue a sovereign government (or hope to get anything other than a WTO finger waving after great personal expense) how would one go about marketing a product to the PRC with the intent of collecting one large IP licensing fee and in return Beijing gets full sway to do whatever it wants with said IP knowledge?

  • robert li

    This is the most winged words about the IP situation in China I ever saw.
    It seems that Mr. Daniel P. Harris is quite familiar with the China Trademark Law and the practice in China. Most of the details are properly right. In my experiences, the trademark law enforcement should be the best comparing with Patent Law and Copyright Law.
    Thanks.

  • JChesser

    Great post! I especially liked the mention of creating and protecting Chinese trademarks (such as Starbucks’ XingBaKe). Would like to hear more from Dan on patent law and copyright protection in China.

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  • Patricia Lau

    I have already registered my trademark in China and now manufacturing my products under this brand in China just for export to my country ,there isn’t any selling done in China and can my trademark be taken over by my supplier and also become his brand in China and selling it there.
    Please advise .
    Thank you

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