China TrademarkA couple years back, I wrote a post explaining why it rarely made sense to file a trademark application in China via the Madrid System. Nothing has changed substantively since then, but a growing trend among foreign rightsholders has made the Madrid System even less relevant.

As I have written previously, the Chinese Trademark Office (CTMO) does not require trademark applicants to prove use of the mark at the time of application, or any time thereafter (unless a third party seeks to cancel the mark for non-use, which is only possible after three years). As a result, many corporations—especially multinational corporations facing an onslaught of counterfeit merchandise—have started filing applications that cover a range of goods far greater than what they are actually producing or selling. Although we don’t represent Starbucks, I like to hold them up as an example of the gold standard in “offensive” trademark registration. They have registered the word “Starbucks” in China as a trademark in all 45 classes of goods and services. Starbucks brand diapers? Covered. Starbucks brand patio furniture? Covered. Starbucks brand binoculars? Covered.

As far as I know, Starbucks has not sold and has no plans to sell branded diapers, patio furniture, or binoculars. Accordingly, it would not be able to register trademarks for such goods in the United States or most other countries in the world –and therefore could not use such registrations as the basis for a Madrid System application. In other words: the only way Starbucks, or any other company, can take advantage of the China trademark system’s unique protections would be by filing a national trademark application in China.

The only mystery to me is why more companies with the means and motivation aren’t taking advantage of the Chinese trademark system. I just did a quick search for “Star Trek” on the CTMO database—not that I’m looking forward to Star Trek Beyond or anything—and the folks at Viacom are just asking for trouble. They have registered “Star Trek” in only classes 9, 16, and 41, which means that an entrepreneurial Chinese company could soon be boldly going where no man has gone before. Star Trek vitamin supplements, anyone?

Internet of Things IoT
Internet of Things = Shenzhen

A little more than a year ago, I did a post, entitled, Shenzhen As China’s Most Competitive City. It Just Might Be…. I wrote that post in response to the Chinese Academy of Social Sciences having just named Shenzhen as “China’s most competitive city.” I talked of how our China lawyers were seeing a shift to Shenzhen among our clients:

Five years ago, my law firm’s clients would nearly always set up their China operations in either Shanghai or Beijing. Beijing if they were in media or entertainment or software and Shanghai if they were in consumer goods or finance or pretty much everything else. Though we would occasionally get strays who would set up in Qingdao or Dalian because they were in the fishing or shipping industry or Xiamen or Xi’an because they liked those cities or knew someone there, or Shenzhen because they knew the city from having gone there so many times to oversee their product manufacturing outsourcing, certainly our bigger and more sophisticated clients were choosing Beijing or Shanghai.

But in the last few years, many of our China WFOE formation clients are requesting we set them up in Shenzhen.

I noted that our clients were giving us the following reasons for choosing Shenzhen:

1. It’s close to Hong Kong but cheaper.

2. It’s become the electronics hardware center for China, and not just for manufacturing, but for design and engineering.

3. It may not be as exciting as Shanghai or Beijing, but it’s the best place for business.

4. It is a nice place with a number of good international schools.

5. It is a lot less expensive than Shanghai or Beijing.

In just the last year since I wrote the above, Shenzhen (despite getting considerably more expensive) has almost taken over our China practice. Not so much with WFOE formations (though those for Shenzhen have increased) but with anything having to do with hardware and with the Internet of Things (IoT). At least half of our new clients in the last year are involved with Shenzhen. Some are seeking to go into Shenzhen via WFOEs, but most are working with the electronics manufacturers there and with them they are looking to manufacture, do joint ventures or technology licensing deals. If we were to subtract out our China media and entertainment work (virtually all of which takes place in Beijing) Shenzhen is without a doubt the most important city for our law practice right now.

As part of that, Steve Dickinson and I will be going to Shenzhen in late September to speak on the legal issues related to hardware and the Internet of Things. We have spoken countless times in Beijing and in Shanghai (and even in Qingdao and Dalian) but until about a year ago, never in Shenzhen, and yet we will be speaking at least twice there in September.

Of course it is not just lawyers who are taking note of Shenzhen’s increasing importance. Renaud Anjoran, on his Quality Inspection Blog, recently did a post entitled Shenzhen, the Best City in China for Manufacturing? Renaud started his post by talking of how views of Shenzhen vis–à–vis (I’m using French here as a nod to Renaud) Hong Kong have so radically changed:

Many Hong Kong people still shriver when they hear “Shenzhen”. It used to be a very poor patch of land along their border with the mainland. Unsurprisingly, Hong Kong people were seen as an easy target for some Shenzhen criminals. But things have changed a lot.

Nowadays, most Shenzhen residents are happy with their lives. When they visit Hong Kong, they wonder how people can survive in such a tiny, cramped environment, where the basic necessities of life are so expensive.

Renaud then writes about how so many tech companies are located in Shenzhen:

Recently a bunch of glowing articles about Shenzhen appeared in the Western press. They tend to focus on the long list of tech companies headquartered in Shenzhen: Huawei and ZTE (telecom equipment, phones…), Tencent (the only other internet company at Alibaba’s scale in China), DJI (drones), OnePlus (mobile phones)…

MakerBot, the famous 3D printing company, was a big advocate of “Made in USA”… until they moved production to Shenzhen!

Renaud then puts forth the following proposition: “Quite simply, the North of Shenzhen might be the best location in China, and even in Asia, for a manufacturer of complex products.”

I will raise Renaud one by saying that for most hardware and for virtually all IoT products, Shenzhen seems to have become just about the ONLY place for manufacturing in China, and, to a large extent, in the world.I cannot even think of even one of our IoT clients not tied in with Shenzhen. It’s possible such a client exists, but every single one that springs to mind is linked to Shenzhen.

As IoT continues to boom, Shenzhen no doubt will as well.

What are you seeing out there?

For more on China and the Internet of Things, check out the following:

 

China LawyersBecause of this blog, our China lawyers get a fairly steady stream of China law questions from readers, mostly via emails but occasionally via blog comments as well. If we were to conduct research on all the questions we get asked and then comprehensively answer them, we would become overwhelmed. So what we usually do is provide a super fast general answer and, when it is easy to do so, a link or two to a blog post that may provide some additional guidance. We figure we might as well post some of these on here as well. On Fridays, like today.

One of the most frequent, weirdest, and probably most insulting questions our China lawyers get is the one where we are provided a link and then asked if this is a real or a good Chinese law firm. How are we even supposed to respond to that anyway. My tactic (after having received so incredibly many of these is with something snarky like the following:

Let me get this straight. You are writing my law firm asking me to conduct free research for you and then provide you with free advice so that you can go ahead and use another law firm? Is it just me, or should I not feel entitled to tell you that we will not provide you with this service unless we are paid USD$3500 upfront.”

Needless to say, nobody has ever taken me up on this offer. But perhaps they should.

Over the years we have often written about fake Chinese law firms and the havoc they cause to real American and European and Australian companies, and probably to companies from a whole host of other countries as well. The below are two of our oldest most classic posts on the topic and two of our more recent ones:

We have many times represented companies that thought they had paid money to a Chinese law firm for something like registering a trademark in China or drafting a manufacturing agreement or forming a WFOE, only to learn that they had instead paid money somebody who had set up a temporary website with the sole intention of bilking the unwary. I have never heard of a real Chinese lawyer doing this. The trick is knowing who is a real lawyer and who is not.

Anyway, I thought about these fake law firms this week because I both heard from someone who had paid someone (I presume a fake lawyer) to register a couple trademarks for them in China a few years ago and then just discovered that nothing had ever been filed and the “law firm” no longer exists and because our law firm has for the third time been “faked.” Go here to see the fake HarrisMoure law firm and go here to see our real website for our real law firm. I have already received two emails from people alerting us to the fake law firm and telling us of how the fake law firm had cheated them. I have no idea whether this fake law firm is based in China or not, but it should be lesson to all who seek out law firms on the internet to at least conduct the following basic due diligence:

1. Determine how long the law firm has been in existence. Really in existence, not just some date on its website. If it hasn’t been around for many years, you should be wary. Of course there are plenty of legitimate law firms formed just this year, but longevity is at least some proof of legitimacy.

2. Read about the law firm and its lawyers on other sites. Real law firms exist outside their websites. Does this law firm show up on court records as having represented someone? Have any of its lawyers published articles with recognized media? Are any of its lawyers listed on lawyer ranking websites? Dig deep to be sure.

3. Go ahead and call the relevant bar associations or lawyer licensing bureaus to confirm.

4. Most importantly, do not be afraid to go with your gut. Just about every time I have talked to someone who used a fake law firm they have admitted that something (oftentimes the too low pricing) made them wary even before they paid.

5. Be careful out there.

UPDATE: Cannot resist adding this piece regarding a fake Qing-Era Mansion.

 

China Joint Venture
China joint ventures. When in doubt, don’t.

Many of our foreign company clients (usually North American, European or Australian) have their product made in China under a contract manufacturing arrangement with a Chinese manufacturer. At the start of this relationship, the foreign company’s goal is to sell its product in the North American and European markets. But as China continues to get wealthier and more sophisticated, it often happens that a Chinese company approaches the foreign company about selling the foreign company’s product in China to Chinese customers.

When the foreign company investigates the situation, it quickly discovers that selling its product into China will be considerably more complex than initially seems. Since the foreign company does not own the product until after it is shipped outside of China, selling the product within China will necessarily involve a complex process of exporting out of China and then selling back into China. This results in potentially having to pay VAT twice: once on the export and again on the import. As a result of this, foreign buyers of contract manufactured product will often be approached by a Chinese company with elaborate schemes designed to avoid such taxation.

Such schemes should almost always be avoided.

The Chinese company often will try to convince the foreign company to enter into a complex “partnership” or joint venture that will “allow” the foreign company to participate in the product distribution business in China. Entering into such a partnership is virtually always a mistake and the sensible foreign company should not want to have anything to do with this kind of business in China, particularly when tax avoidance and “incentives” for making sales are the major objective. For more on China Joint Ventures, check out the following:

The foreign company should instead insist on operating under the standard distribution model used throughout the world. The foreign company should purchase its product from its Chinese manufacturer, receive that product outside of China (in an export processing zone or when shipped) and then sell that product back into China to a qualified PRC distributor. The distributor can be located in China, or in a PRC export processing zone or in Hong Kong. The foreign company should set up that distribution relationship so that it earns its profit from that initial sale, freeing the foreign company from any concerns with the financial side of the Chinese operation. On the other hand, the foreign company should strictly monitor the operations of the Chinese distributor through a standard distribution agreement.

If the foreign company wishes to support its PRC distributor, it is free to offer incentives. There are many ways to do this, including by a) not charging the Chinese distributer for product that will be used as samples, b) giving the Chinese distributer reduced pricing for a certain number of products, and/or c) providing the Chinese distributer with cash incentive payments for advertising, for seminars and/or to partially or completely cover the cost of government registrations. However, such incentives should be offered to a distributor operating under a standard distribution agreement that allows the foreign company to terminate the agreement if the distributor does not perform (which is common), that allows the foreign company  the absolute right to audit the distributer’s performance, and that allows the foreign company to immediately terminate the Chinese distributor if it engages in irregular conduct such as bribery or kick backs (which is common). One major defect in any kind of partnership/joint venture approach is that it is difficult to hold the Chinese side to a tight performance standard when there is a business ownership relationship. It is like a marriage: easy to get into, but hard to get out of.

Due to the need to export product from China and then import it back into China, the distributor often will establish an entity in Hong Kong to handle these operations. The foreign company can take an ownership interest in the Hong Kong distributor, but the basic rules remain the same: 1) the Hong Kong distributor should be treated as an arms length third party, operating under a standard distribution agreement and 2) the foreign company (the North American or European or Australian company) should earn its profits from sales to the distributor — taking the profits NOW — and not from the very uncertain and tax disadvantaged distribution of profits from the distributor at some unknown inherently uncertain later date. The foreign company should understand that it is a myth that it will be able to exercise more control in a joint venture than via the above sort of distributer relationship. It is very difficult for a foreign company to control a joint venture thousands of miles away and with no right to make a quick and decisive contract termination decision.

It is rare for foreign companies (particularly SMEs) to want to get intensely involved in the business of product distribution in a vast and complex market like the PRC. This is why major multi-nationals often contract with Chinese distributors to do the work. It is virtually unheard of for foreign SMEs that understand the issues to even consider taking on this difficult burden. But inexperienced SMEs and start-up companies seem constantly to get approached with this kind of ill-conceived concept, for obvious reasons.

If you are having your product made in China (or even outside China) and you are approached with a proposal to “joint venture” on selling your product into China, the first thing you should do is apply the following three basic rules that apply to any project concerning China:

  1. If the proposal is complex, don’t do it. You should be able to understand every word of the proposal in a first reading.
  1. If the proposal involves an equity joint venture business, don’t do it. Do not get into any business relationship with an entity in China that you cannot terminate by a simple contract termination notice.
  1. If the proposal is not supported with a detailed set of financial projections, don’t do it. A “business plan” full of fluff and fancy jargon that no one really understands does not count. You need a standard set of financial projections (hard numbers, not jargon) with each assumption clearly spelled out and supported with facts.

Just follow these three rules and you will save yourself time and money in dealing with projects in China.

For more on China joint ventures, check out Joint Venture Jeopardy (WSJ) and Avoiding Mistakes in China Joint Ventures (AmCham) and for more on China distributer relationships and distribution agreements, check out the following:

index-315754_960_720This is the third in a series of posts about getting paid by a Chinese company. In Have the Rules Changed? I looked briefly at the underlying framework of rules that apply to foreign conversions and remittances. Is there a PRC Tax Problem? dealt with some of the tax-related issues that cause payment delays or defaults. In this third post I look at some basic due diligence that can identify or avoid defaults or delays in money transfers out of China.

If you don’t get paid, ask yourself these questions before you rush to blame the Chinese company:

1. Do you have any idea what taxes should have been paid by the Chinese company and what taxes should be deducted from the remittance itself?

2. Was your contract exempt from the kind of prior registrations required by the tax authorities?

3. Do you even have an enforceable contract against the Chinese company in China?

4. Has an independent person gone down to the Chinese company’s bank branch to confirm what their particular requirements and concerns are?

5. Did you withhold any deliverables until you received all or substantially all of the money out of China?

6. Did you ask the Chinese company to provide examples of previous successful foreign remittances?

7. Does the business license of the Chinese company allow for foreign trade and thereby indicate that foreign remittances would not be unusual in the ordinary course of business?

8. If you’re dealing with a State Owned Entity (SOE), or a very large company of any kind, did you understand all of the internal approvals that company would require before a payment could be authorized and did you appreciate how long this might take?

If the answer to any one of these questions is “no”, don’t blame the Chinese company.

China trademarks at customsA few weeks back, China Customs released its IP protection statistics for 2015. The data revealed a number of interesting trends, many of which were summarized in Mark Cohen’s China IPR Blog. I’d like to focus on two in particular.

1. Trademark infringements made up 98% of the items seized, with copyright and patent infringements combined accounting for the remaining 2% of seizures.

A simplistic (and incorrect) interpretation of this statistic would suggest that trademark infringement is a far bigger problem than copyright and patent infringement. In fact, the reason for the disparity is that it’s relatively easy for a customs inspector to tell if a product is violating a trademark based on a quick visual inspection – and almost impossible to tell if a product is violating a copyright or trademark. This does not mean that copyright and patent holders should throw up their hands and give up; it just means they should pursue other avenues. For copyright holders (especially owners of movies, television programs, recorded music, and books), it largely means pursuing download sites and the service providers that host them. For patent holders, it means filing lawsuits in China and/or the US, and pursuing 337 actions in the US.

2. Of the items seized by Chinese Customs, the vast majority (98%) were seized based on a tip given to China Customs by the rightful IP rightsholder. In 2014, the percentage of goods seized due to such a tip was 65%.

Put together, these statistics strongly suggest one or both of the following: (1) IP rightsholders are actively engaged in pursuing infringers and (2) customs officials are kept busy enough with tips from IP rightsholders that they don’t have time to conduct many inspections on their own. (Chinese Customs inspects goods either on its own authority or based on a specific request from an IP rightsholder.) Either way, even if counterfeit product bearing your trademark is being regularly shipped from China, there’s only a miniscule chance it will be stopped at customs if you aren’t being proactive. What does it mean to be proactive? First, register your trademarks in China. Second, register those trademarks with Chinese Customs. Third, track the counterfeit product, which these days mostly leaves China via e-commerce. At the very least, you need to have a handle on what’s being sold on Alibaba, Taobao, JD.com, and other key Chinese e-commerce sites. Once you understand who is selling your goods and where the goods are coming from, you can start to engage customs.

For trademark owners, customs seizures can be a valuable part of an anti-infringement strategy. But don’t expect much help from the customs authorities if you can’t be bothered to help yourself.

China Lawyers
http://bit.ly/29510fC by Psyche-Clops

I alone must get some version of the following email (the below is a quick conglomeration of two that I received just this morning!) at least once a week, not to mention the other China lawyers in my firm:

My name is Norberto and I am from Spain. I have a question regarding China tax law because I am planning to start a company that will target the Chinese market.

We will be starting an online platform that targets learners and teachers in China. The platform will facilitate classes (language, math, etc.) between Chinese teachers and students and our company will take a fee for the intermediary services we provide. Students will pay our company and we keep a commission from that and remit the rest to the teacher.

What regulations apply to us paying these teachers? Will we be classified as paying “salaries” and therefore have tax liability or will all the tax responsibility be on the teachers themselves? Is there a minimum sum people can earn in China without our having to provide any information to the Chinese tax authorities?

Our plan is to have our company based outside of China initially, but then move into China once things start rolling.

My response (which I actually just now set as a one-click signature in my outlook account) is typically something like the following:

If China learns what you are doing (and it no doubt eventually will) its tax authorities will come after your company (and maybe you as well) for both company income taxes on the income you are generating from your doing business within China (probably around 25%) and for employer taxes and employer benefit payments on everyone you are using within China (probably around 40%), plus interest, plus penalties. Your company will also be at risk of being sued by the people it uses in China for various employment violations, including not having written employment contracts, not providing vacation time, etc.

My strongest advice for you if you do what you are planning to do is that you and anybody else identified with your company never go to China because the Chinese authorities like nothing more than to hold people until they pay all taxes, with interest and penalties. I suggest you read this article I wrote last year for Forbes Magazine, entitled, China’s Tax Authorities Want You, It details how China is really stepping up its efforts against companies that hire employees in China and/or do business in China without registering a company in China and paying their China taxes. Since I wrote this article (due in large part to its declining economy) China has only accelerated its efforts to track down and tax and penalize companies that do what you are proposing to do.

Antidumping and countervailing dutiesOver the last several years, many US importers have called me after learning that they are facing liability for antidumping and countervailing duties on a number of different products. These duties can be in the millions of dollars, even though the importers simply did not know that the products they were importing were covered by US antidumping and countervailing duty orders. Far too few companies realize that they can be held liable for duties for importing products into the United States.

This post highlights the breadth of products currently subject to antidumping and countervailing duty orders and it thus should serve as a warning to anyone in the United States who imports those products.

If you were an importer of solar rechargers for RV units are you aware that your product is covered by the US antidumping order on solar cells from China? If you were importing curtain walls/the sides of buildings, auto parts, geodesic domes, and lighting equipment, do you know that all of those products were covered by US antidumping and countervailing duty orders against aluminum extrusions?

The US presently has more than 130 antidumping and countervailing duty orders against China and hundreds of additional such orders against imports from other countries. The orders against Chinese products block more than $30 billion in imports and they can stay in place for 5 to 30 years. The orders can also expand to cover downstream products, such as curtain walls, solar cell consumer products, and gardening equipment.

With regards to China, more than 80 of the antidumping and countervailing duty orders are against raw materials, chemicals, metals and various steel products, used in downstream US production. In the Steel area, there are orders against the following Chinese steel products: carbon steel plate, hot rolled carbon steel flat products, circular welded and seamless carbon quality steel pipe, rectangular pipe and tube, circular welded austenitic stainless pressure pipe, steel threaded rod, oil country tubular goods, steel wire strand and wire, high pressure steel cylinders, non-oriented electrical steel, and carbon and certain alloy steel wire rod.

There are ongoing investigations against cold-rolled steel and corrosion resistant/galvanized steel so almost all Chinese steel products from China are blocked by US antidumping and countervailing duty orders.

In addition to steel, other metal products, such as silicomanganese, metallurgical coke, magnesium, silicon metal, and graphite electrodes, which are used in downstream steel production, are also blocked by antidumping orders. Electrolytic Manganese Dioxide used to produce batteries is also covered, which led Panasonic to close its US battery factory and move to China. The Magnesium orders have led to the destruction of the US Magnesium Dye Casting industry and to the movement of light weight auto parts production to Canada.

In addition to steel and metal products, chemicals products, such as sulfanilic acid, polyvinyl alcohol, barium carbonate, potassium permanganate, activated carbon, glycine, isocyanurates/swimming pool chemicals, xanthan gum, citric acid, and calcium hypochlorite, are covered by orders. The antidumping order on sulfanilic acid led to the injury of the US optical brightening industry, which brought its own antidumping case against China.

In addition to raw materials, many household products are covered by antidumping and countervailing duty orders as well, including ironing tables, steel sinks, wood flooring, wooden bedroom furniture, steel shelving, and steel cooking ware. Other consumer products covered are: tires, hand trucks, lawn groomers, steel nails, paper clips, pencils, ribbons, paper products, gift wrap and heavy forged hand tools.

Food products, such as shrimp, honey, crawfish and garlic, are also covered by antidumping orders against China and other countries.

At this point, any product being imported from China is at least somewhat import sensitive and thus is at some risk of being attacked by US trade actions. This means that you as an importer should monitor the products you import for any potential trade sanctions. And if you should be hit with sanctions, know that you can request an antidumping or countervailing duty review investigation to get the rates reduced and with that your own liability for past imports.

China negotiatingI have recently been communicating via email with a good friend of mine who has lived in Shanghai for around 20 years. He had written me about our recent series on negotiating with Chinese companies. In particular, we talked about when we push back against the Chinese companies, they are completely unprepared and assume a deer in headlights look. He then emailed me the following regarding the health care his pregnant wife has been receiving. I thought it interesting and relevant to our readers and so I secured his permission to run it here, after stripping it of all identifiers.

Enjoy.

 

Speaking of China and deer in headlights get this:

My wife receives prenatal care at a privately run maternity hospital in China. Since we have no insurance we paid 20,000RMB (3,500USD) for the prenatal package in cash. It’s been ok, getting this means she doesn’t have to take a number and wait for the 100 people ahead of her to go first as in many local hospitals. They did “fear monger” her into a useless test (because we have a pet cat) for an extra 500RMB (which I forewarned her about but she fell for it anyway). no big deal.

EVERY time since our second check up though the first thing out of the nurse’s mouths is: “have you paid for your birth package?” And it’s from 3-4 nurses each time. This has gotten annoying. Acting as a collection agency shouldn’t really fall to the “care giver”. Many people opt to have prenatal here and then go to the USA for the birth, I understand it’s a business but let’s have a little bit of professional decorum shall we?

For a basic natural childbirth package it’s 30,000RMB. But come to find out, they outsource it down the road to a local hospital. We were shown the fancy private room they rent out but if you read between the lines it’s easy to see the private hospital flips the local hospital 5,000RMB and pockets the rest. To have our “doctor” (who’s not impressive in any way) it’s a cool 45,000RMB. This doctor asks my wife’s age every visit. She’s 34 and since over 35 is considered high risk pregnancy in China and therefore more expensive, I almost get the sense he is asking each time to try to make more.

They have a shiny new center that is their showcase hospital, one nurse says that’s where we are to go and the next one contradicts her. No one is on the same page. When we pressed the customer service manager on which hospital we should go to when labor begins her answer was “you should call us to let you know what hospital to go to,” with a vague explanation about room availability as the logic behind her answer. How can you book a room for giving birth? it’s not a sure thing when the baby will come.

At our most recent ultrasound, the nurse, as always, led with “have you paid for the delivery package yet?” . She even came into the ultrasound room and was literally trying to force the document into my wife’s hands  while her dress was up, legs in stirrups and belly exposed. I had visions of her signing the document on her bare belly. My wife told her we hadn’t decided (largely because of all the nurses’ greedy behavior). The nurse then turned to me and said “your wife needs to sign this.” I waved her off and said in English we haven’t decided. The room was filled with tension caused by this nurse’s aggressive behavior. She then told my wife we HAD to pay today. We paid for 40 weeks and the customer service rep told us on an earlier visit it wasn’t a problem to wait.

My wife started to worry and I argued with her a bit outside the office (we never argue). I had a sit down with the customer service manager and told her that each time we came, the nurses’ unprofessionalism has caused us to check another local hospital recommended by an acquaintance with an “in” there.

70% of birth’s in China are C-sections largely because the doctors don’t want to wait for the birth. The whole point is we are trying to avoid a C-section (my wife has had not one problem with her pregnancy). This high pressure for the money makes me feel that we are being set up for a money grab. If it’s a C-section, the cost doubles, even to have an epidural or induce labor would tack on an additional 13,500RMB and when the pressure is on, I’m sure many couples agree out of fear. The nursing staff’s behavior is akin to a boxer telegraphing his next punch, and I’ve ducked many here.

I then pressed the manager about the percentage of people who paid for a 30,000RMB natural childbirth package and then actually had a natural birth. The deer was in the headlights my friend and I put the high beams on. She said 60%, so that’s about 50/50. We were previously told that the percentage of people who paid 45,000RMB that had a natural birth was 85%.

I told her we would check the local hospital to see (it will be a third of the price) how we felt and I asked if we still wanted to use our current hospital would that be ok. Answer: Yes, of course, and a big apology for the nurses repeatedly trying to strong arm us.

Typical China experience, the more you pay the more legal/better it is.

China trademarkWhen I was a kid, I entertained myself by writing advertisements for products that didn’t exist. Like the wildly popular household cleaner “Kwik-Kleen.” (I know – it’s shocking that Madison Avenue never came calling.) Whenever I would write my fake ad copy, I would include the ™ designation after my brand name. I didn’t really understand what ® meant, but I knew that ™ was short for trademark and that was enough for me.

Now that I have a law degree and deal with trademarks on a daily basis, I understand that ® is used after a registered trademark, and that using this symbol on an unregistered mark (as I would happily have done for Kwik-Kleen) is illegal. I also understand that ™ does not have strict legal significance and can be used by anyone; it is merely an indication of the source of the goods in question. In other words, ™ is used to put people on notice of common law trademark use.

The above summary applies to trademark use in both the US and China, but with one key difference.

I have seen a number of brand names in China identified with the ™ mark. Unless these marks are the subject of pending trademark applications, such usage is incredibly foolhardy. China is a civil law country and does not recognize common law rights. Designating a brand name with ™ doesn’t put people on notice of your common law rights. Rather, it puts trademark squatters on notice that you have a brand name that you consider valuable and haven’t protected yet.

Is that really the message you want to be sending?