More than three years ago, we did the following post, entitled, China: Do Just One Thing. Trademarks.

From time to time I get calls from start-up companies about to embark on manufacturing in China. They are calling to ask what they need to do “to protect themselves.”

I tell them about NNN Agreements and how they can help prevent potential manufacturers from replicating their product. And I tell them about how important it is that they have an OEM Agreement with their Chinese manufacture

Then I tell them how if they do nothing else, they should immediately register their trademarks in China. This one usually surprises them and they often think I have misunderstood what they are planning for China. They at first do not understand why I am emphasizing the need for their filing a trademark in China when they have no plans to sell their product in China. I then explain the following to them:

China is a first to file country, which means that, with very few exceptions, whoever files for a particular trademark in a particular category gets it. So if the name of your company is XYZ and you make shoes and you have been manufacturing your shoes in China for the last three years and someone registers the XYZ trademark for shoes, that other company gets the trademark. And then, armed with the trademark, that company has every right to stop your XYZ shoes from leaving China because they violate its trademark.

Then they understand.

A recent CNN Article, Brand wars: Battling China’s trademark “squatters” does a really good job of emphasizing with examples why registering your trademark is so important in China. The article talks about how there are companies and individuals who register in China the trademarks for rising brands (or logos) outside China:

Savvy to China’s complex trademark laws, these individuals target valuable foreign brands and register them as trademarks in China.

When international companies want to launch their products on the Chinese market, they’re often left with little choice but to cough up huge sums to buy back the trademark, rebrand their product or fight for the right to use the brand through lengthy legal battles.

The article talks of how Penfolds, an Australian winery, “is currently at the center of a legal dispute over the use of its own name in China” after “a notorious squatter” registered Penfolds’ Chinese name, “Ben Fu — a transliteration that means ‘chasing prosperity.'”

The article goes on to discuss similar issues companies like Tesla, Pfizer, and Castel Frères have had with China trademark squatters and then nicely outlines what foreign companies can do to avoid such problems, including first and foremost “immediately” figuring out what trademarks should be protected in China and then securing that protection through registration.

For more on China trademarks, check out the following: