More than four years ago, we did a post, entitled, China: Do Just One Thing. Trademarks. In that post, we emphasized the absolutely critical importance of registering your trademarks in China, not later but now:
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 important those are to help prevent potential manufacturers from replicating their product. And I tell them about how important it is that they have an OEM Agreement to define and “regulate” their relationship with their Chinese manufacturer.
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 Quartz Magazine (a great magazine put out by The Atlantic) article from earlier today does a great job nailing this point home. The article is entitled, In China, Michael Jordan does not hold the rights to his own name, and it illustrates the importance of you (and Michael Jordan) registering any and all trademarks in China (right now) important to you now or that may be important to you later. Because — as our China lawyers are always telling our clients — if you don’t do it, someone else will.
Please do read the Quartz Magazine article because the key to it is all that Michael Jordan has done and will continue to do in an effort to get back various trademarks important to him. To summarize, Jordan has already lost at least two Chinese court lawsuits against Qiaodan Sports, a now large Chinese company alleged by Jordan to be using 78 of his trademarks, including Qiadon, his name as commonly used in Chinese, and at least one of his images, as per the below.
The article makes clear that Jordan is not done suing Qiadon and that he plans on taking his case next to China’s Supreme People’s Court. Some of you who read the Quartz article will no doubt be outraged about Qiadon’s actions and believe the Chinese court rulings against Jordan have been wrong. Others may read it and think that the Chinese court has properly followed China’s trademark laws as written. I read it and recognize that unless I were to spend tens of hours reviewing the court transcripts and more, I would not have a good sense of who between Jordan and Qiadon is legally correct/entitled and I am not going to do that.
Because in the end the way I see it is that this article is just yet another example of how easy the calculation should be for any company doing business in China or contemplating doing business in China. Are you better off spending thousands of dollars now protecting your brand(s) and your trade-names in China by registering them in China, or are you better off spending hundreds of thousands of dollars (maybe even millions of dollars) later in litigating against those who are using your brand(s) and/or your trade-names in China?
Michael Jordan may eventually prevail on some or even all of his trademark infringement claims against Qiadon in China, or he may not. But either way, he will have paid a big price to get there, both out of pocket for the litigation and in the harm his brand has incurred in China from Qiadon as a competitor. Those costs dwarf what it would have cost Jordan to have filed for trademarks in China early on.