Over the last six months or so, my firm’s work for Chinese companies going international has zoomed, and with that, my knowledge of how Chinese companies “handle” foreign companies has zoomed as well. One of the things I have learned is that Chinese companies understand the value of trademarks — YOUR trademark. Let me explain.
I am going to have to be very vague here so as to avoid revealing any confidential information, but I can be specific enough so you can get the gist. Two stories:
1. Chinese company manufactures product for US company. Product ships from China with US company name on it and US company distributes it throughout North America. China company also sells its product in North America under its own brand name. US company is trying to get Chinese company to lower its prices and Chinese company is balking. US company is talking of finding another manufacturer. Chinese company tells me that people in China “very friendly” to them registered the US company’s name in China for this product years ago and so if anyone else tries to manufacture this product in US company’s name, Chinese company will be able to stop them based on trademark violation.
China company is very smart. It knew that it could not register the trademark itself because China trademark law prohibits an agent to register the trademark of the company for whom it is acting as agent, so Chinese company did not register the trademark itself. US company is going to be in for a very rude awakening if it ceases to use this Chinese company for its manufacturing. Now here’s the part that ought to really scare you. I asked my Chinese client how they knew to secure the trademark and the response was “everybody in China knows about this.”
2. US Company A is in a very contentious battle with US Company B. US Company A had for many years been working with US Company B, with US Company A assisting US Company B in China. But when things started going bad, US Company A had a Chinese company secure a China trademark for a name that is absolutely essential for US Company B. US Company B does not know this yet as US Company A plans not to tell them unless and until things get really bad, along the lines of a loss at trial, if things ever get that far without resolution.
Because US Company A is a US company, I was a bit concerned that its having orchestrated the registering of a China trademark of a name that is absolutely critical for Company B might somehow subject Company A to legal liability in the US. However, I have discussed this with many US lawyers expert in this sort of thing and all of them are of the view that this is not going to be the case because Company A’s actions were completely legal in China. Amazingly enough, US Company A has a paper trail showing that it strongly advised US Company B of the need for US Company B to register its trademark in China.
Vacuums get filled and if you are having product made in China with your name on it, you had better register your trademark in China, even if (especially if?) your China presence is through a third party.
On the flip side of this, if you are a company that gets paid to handle China outsourcing for Western companies, you would be well advised to put something in writing somewhere (perhaps in your contract with the Western company) making clear that you are of the view that your client should be registering its trademark and that you will not be doing that for them. Such a provision will help protect you from a negligence or breach of contract lawsuit should what I described above happen to your Western client.

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Dan Harris

I am a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

I mostly represent companies doing business in emerging market countries. It has taken me many years to build my network and it takes constant communication and travel to maintain it. My work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

I was named as one of only three Washington State Amazing Lawyers in International Law, I am AV rated by Martindale-Hubbell Law Directory (its highest rating), I am rated 10.0 by AVVO.com (its highest rating), and I am a SuperLawyer.

I am a frequent writer and public speaker on doing business in Asia and I constantly travel between the United States and Asia. I most commonly speak on China law issues and I am the lead writer of the award winning China Law Blog (www.chinalawblog.com). Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed me regarding various aspects of my international law practice.

I am licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at my firm, I focus on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.

  • Great two stories; but I sort of missed the gist of the third story.

  • This is exactly why any company that contacts me about exploring the China market to source, sell, or otherwise gets told to spend the money to register their trademark in China.
    Amazing how so many still think that a US patent/ trademark will protect them here, or anywhere outside the US for that matter.
    good examples
    R

  • James G

    Okay, I understand the need to register your trademark in X country if you plan to do business there, but the idea of soooo many Chinese (and rival US or European) companies registering names of their competitors in hopes of screwing them someday is kinda…
    Well, I guess if you can make a buck off it, anything goes, apparently.

  • Trademark Registration In China.

    Not sure why, but I have been dealing a lot lately with China trademarks. I think it might be because in the last year or so, we have seen an increase in the ratio of our clients seeking to sell product into China as opposed to manufacturing it. The ke…