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China Trademark Protection Basics

Posted in Basics of China Business Law

China trademark protectionMy good friend and trademark lawyer extraordinaire, Mike Atkins, recently wrote a post on his Seattle Trademark Lawyer Blog entitled Basics of Trademark Protection in Plain English. Though that post deals exclusively with U.S. trademarks, nearly all of its big-picture analysis is apropos to China trademarks as well.

Below I take what Mike said, and explain how it applies to China or not. Mike’s portion is in regular font and my portion is in italics.

A. Trademark Enforcement principles. The main way to protect a trademark is by perfecting and maximizing one’s rights in the mark, which usually occurs by registering it with the U.S. Patent and Trademark Office, and then by enforcing those rights against competitors, imitators, and would-be users in an effort to keep them as far away as possible from the property.

Enforcement, in turn, usually boils down to sending cease-and-desist letters to the wrongdoers in the hopes of obtaining voluntary compliance with your demands, under threat of suit; and if the wrongdoer doesn’t voluntarily comply, to carrying out the threat and commencing suit. In this respect, protection of one’s intellectual property rights is both binary and simple: either the wrongdoer voluntarily stops its bad behavior in response to your pressure, or it doesn’t; and, if needed, you either escalate the dispute to court, or you don’t. There really aren’t any other legal options. (I don’t count hiring the likes of Tony Soprano (R.I.P) to enforce one’s rights as a legal – or advisable – option.)

Generally true for China, with a few minor modifications. First, and most obviously is that you need to register your mark with the China Trademark office, not the USPTO. Second, you need to consider whether to register your mark in just English, just Chinese, or both. Third, though the bit about having to choose between pursuing and not pursuing escalation is true, China has other dispute resolution options in addition to a straight-up lawsuit. 

B. Basic Principles of Trademark Law. Trademarks function the way cattle brands function on a ranch. Cattle brands distinguish one cow from another, so there’s no question which cow belongs to which rancher, even if they get mixed together. Trademarks are the same way. They are unique names, symbols, or tag lines (among many other devices) that tell consumers that a good or service sold in connection with the brand comes from a particular producer. They are affixed to the product itself, or product packaging, or they are displayed on websites or other promotional materials. When consumers see a Nike shoe, for example, the Nike name, Swoosh logo, and “Just Do It” tag line tell consumers that the shoe doesn’t come from Adidas, New Balance, or any other manufacturer – it only comes from Nike. In this way, trademarks symbolize the owner’s reputation and encourage good, consistent, quality by enabling consumers to efficiently identify producers and make repeat purchases. In other words, if you like Nike shoes, you know where to go when you need to buy a pair (or who to avoid if you weren’t satisfied with your previous purchase).

Trademark law is a creature of both state and federal law (and both statutory and common law). At bottom, trademark rights arise through use, which means affixing the mark to a good or product packaging (for goods) or by displaying the mark on websites or signs (for services), and selling the item to consumers. Registration is available through state governments and the U.S.P.T.O. Registration is not required, but it expands the geographically limited rights that automatically arise through use. There is a lot to say about trademark registration, but further discussion is outside the scope of this discussion.

Protecting a brand normally starts with selecting a brand. Protection has two facets, which you can think of in terms of both sides of a coin. You probably want to register your mark (or at least have that option), and you want to be able to enforce it in court. But you also want to choose a brand that won’t get you sued by another trademark owner. In other words, there are “offensive” considerations, and “defensive” considerations. To understand them, you need to know a few basic principles.

First, the maxim of “first in time, first in right” often controls. That means if you start using your mark first, you (usually) can go to court to prevent later adopters from using a brand that is close to yours in connection with similar goods or services. Registrations can change this outcome, but that discussion is outside the scope of this writing. Therefore, we will proceed with the simple notion that when there is a conflict between two trademark owners’ rights, the first user in a given geographic area will have superior rights – called priority – and will win in a trademark infringement lawsuit against a later adopter.

To do so, however, a trademark plaintiff also needs to prove that the later adopter’s trademark use is “likely to cause confusion” with the plaintiff’s prior trademark use. Whether a likelihood (probability) of consumer confusion exists is determined by the multi-factor test that applies in a given jurisdiction. In the Ninth Circuit, it is known as the “Sleekcraft” factors, after the influential trademark infringement case of AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979). But other jurisdictions have similar tests under different names. Regardless of the jurisdiction, courts apply this test to determine whether an ordinary consumer would likely be confused into believing that the branded goods or services that come from the later adopter (the “junior” user) come from, are approved by, or having something to do with, the earlier adopter (the “senior” user). If the answer is yes, then a court would find the junior user liable for trademark infringement.

The main factors in assessing a likelihood of confusion are the similarity in the parties’ marks (considering sight, sound, and meaning); similarity in the goods or services offered under the parties’ marks; the similarity in how the parties’ goods or services are advertised, marketed, and sold; and whether consumers have actually been confused in the marketplace. There are other factors, but these usually are the most important.

Mike’s first three paragraphs apply with equal force to China (with the exception of the part about federal and state law). But his last three paragraphs do not really apply to China at all. It is this distinction between the two systems (that of the United States and other common law countries like England and Australia and Canada versus China and other civil law countries like Germany, Japan, Korea, and France) that so often trips up American and British companies. China is NOT a first to use country; it is a first to file company. 

What this means is that if you make all sorts of men’s shirts and I register “your” brand as my trademark in China for men’s shirts, I get that trademark and you cannot use that trademark in China, at all, not even for goods to be exported. What that also means is that if you register your trademark for men’s shirts in China, I can go off and register that same trademark for men’s gloves and men’s shoes and I will get it, likelihood of confusion be damned. 

U.S. and China trademark law. Similar but different.

For more on the basics of China trademark law, check out the following: