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Register Your China Trademark Or Go Home

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Got a very thoughtful comment the other day, stating the following:

This blog is wonderful and there is a ton of useful information advice here as everyone knows. I don’t even need to say that because it is so obvious. However one thing I don’t understand is why you are constantly preaching to companies to register and to attempt to protect their IP in China without qualifying this advice by saying,…”if you have the means to do so.” The fact is that it is expensive to hire an international law firm such as yours to handle trademark, copyright, patent registrations in China and many small companies just do not have the resources to do this — even if they would like to ( I am talking here about companies that source in China) I know because half the companies I work with are like this. They are very small companies — of ten run out of someone’s home — that can barely afford to get on a plane and go to China to visit a vendor or inspect an order. If one of these people had to choose between inspecting an important order that would put them on the map or registering their IP in a country where even registered IP is vulnerable, what would be the smart thing to do ? I would argue that they need to get on the plane and go inspect their order. If you were to say, well, maybe these people are not ready to do business in China, I would counter that by saying sourcing in China is the only hope these people have to build a business. They have to try, imperfect as it might seem sometimes.

I think registering IP in China is a good idea for companies that can really afford to do so. I do not disagree with your advice here. Unfortunately there are many small companies out there that just cannot afford it and so I think the better advice is always to qualify these statements with “if you can possibly budget it I would strongly advise …” or something along those lines.

Nope.  Not gonna happen.

Let me explain.

My job as a lawyer is to tell my clients/potential clients what they need to do to protect themselves in China AND tell them what my law firm will charge them for that protection.  I then explain why it is that I think they need to do something and I also explain the risks to them of their not doing what I suggest.  Most of the time, this information is more than enough for my clients/potential clients to make their own decisions on how to proceed.  Sometimes they will ask my opinion and when I have one, I give it.  When it comes to registering a trademark in China, I virtually always tell them to file.  I tell them to file because filing is not expensive; it is the extremely rare company that needs to spend even $5,000 to protect all of its trademarks in China.  More importantly, however, I tell them to file their trademarks in China because I have dealt with far too many American companies that have had their product seized in China after someone else went off and registered the trademark the American company was using.  Once the product is seized, the American company either pays a licensing fee determined by the Chinese trademark squatter or simply relinquishes all of its products.  I have also dealt far too often with American companies that have had to engage in a massive re-branding worldwide after someone “took their” trademark in China.

Nope.  I ain’t backing down on this one.  I know this is going to anger some people, but any company that does not have enough money to protect its key intellectual property assets simply lacks the wherewithal to be doing business in China. Registering your trademark in China is flat out one of the most important things you can do.

So just do it.

For more reasons why I am so adamant on this, please check out the following:

What do you think?

  • BostonSense

    Dan,
    I agree with you, and I don’t think you should change your general position, but based on what that writer had posted, it appears he may be talking about apples to your oranges. If he’s working with tiny Western companies sourcing already produced products in China, and that (i) are not ordering specially manufactured goods, (ii) don’t have an established brand, and (iii) are not selling (or planning ever to sell) into the Chinese market, then I am not sure what they would be registering as a trademark in China, nor for what purpose. For that matter, I’m not sure whether such folks (unless they themselves are Chinese, maintain friends/relatives in China, and have the ability to pay and follow up via those peoples’ RMB accounts–in which case, why are they even traveling to China?) are able to source or order products effectively (i.e. and not end up buying at inflated prices from alibaba brokers, etc.) and if so, to do so on a consistent basis, and in a manner where they can also manage returns, warranty services, nonconforming goods, etc. But it is the company that has value and goodwill to its name, and/or that is ordering special manufactured goods (or parts, or is having them assembled) in China, and/or is sending specifications or molds or the like to China, and is having its brand or logo imprinted on those goods, or is planning someday to sell into (or even through) China, whom absolutely can’t afford NOT to register its trademark. Now. Not tomorrow. TODAY.

  • http://twitter.com/theeastasiaco East Asia Co.

    Dan:

    Thanks for replying to my post. I know that trademark squatting is a problem but I was not aware that orders were held at ransom with any regularity. I know it does happen sometimes ( seldom I thought). That was interesting to read and makes me think a little more about the advice I give people, which is simply do it if you can, but if you can’t then don’t lose sleep over it. I guess now the advice I would give people is ” if you can do it, great. If you can’t just buy some Unisom and try to get a good night’s sleep.” :)

    But however you look it at protecting IP in China is not cheap. And you yourself said as much in a UK Telegraph article last year in which you were quoted as saying “Each trademark filing costs around £460,” said Mr Harris. “So if you are Pfizer you register your name across all 40 categories. Then you have to register
    Viagra across all 40, and then your logo across them all and it begins to add
    up.” That is $700.00 per category and a whopping total of $ 28,000. Well if you are not Pfizer, for whom $ 28,000 is crumbs, and are just ABC company in Podunk USA, how can you afford this ? Mind you this is only trademarks and not patents or copyrights for written material, (children’s books for example, a current project I have). I’m sorry but I just think this is expensive. And that is doing work on the front end only. What happens when a company in China infringes on your IP ? What about those costs ? As you say they “add up.”

    If I heeded the advice in the last paragraph of your post today, I would have to go back to some of my clients and tell them “My apologies, bud, but you just don’t have the money to start a business. I think you should close up your online store immediately and go back to your old job whatever that was. ” In fact many of these people are extremely dirven, they have a good product, good sales and loyal customers; in short they have a perfectly legitimate business. They are just small and simply lack the resources to do all the things that they should do in an ideal China sourcing world. I’m sorry but I just have a hard time telling people who are achieving success to quit just because they don’t have enough money. That is like telling the kid who is 5’4″ that he/she can’t play basketball even though he/she has just drilled seven straight 3 pointers. The better advice IMHO is to encourage them, at the same time you make them aware of the difficulty, and provide them with the knowledge that will allow them to win in China. Because the fact is that small companies who do not protect their IP when they go into China can sometimes be more “successful” than large companies who do.

    • http://www.chinalawblog.com/ Dan Harris

      Wrong, and even though the 460 Pounds is really just for out of pocket costs. I would say that around 85 percent of the companies that come to us need only one China trademark, 10 percent need two, and only five percent or so need more than that. The overwhelming majority of the time, one trademark is enough, especially for those companies that are only trying to establish enough of a stakehold to avoid having a Chinese company be able to block them from being able to export their product from China. And again, if your goal is simply to be able to export your product, then if you find someone using your trademark in China, you hardly care. In those circumstances, we suggest the company write a threatening letter and that is so that nobody can claim that they relinquished their rights. We generally tell our sourcing companies clients to put in their contracts with their clients that their clients are entirely responsible for trademarks and other IP and that their clients should consult their own lawyers regarding the same. We do this because we are well aware of sourcing companies getting sued by their clients when their clients’ goods are prevented from leaving China due to trademark violations. The client’s basis for the lawsuit is that the sourcing company sold themselves as “the China experts” and so the client simply believed this extended to things like IP.

  • Sandee Huberman

    It seems to me that if you cannot afford to do business properly in China, perhaps you should hold off on doing business in China. The cost is the cost. Better to know up front.