Last month, a European firm interested in entering Chinese market inquired about the necessity of China trademark registration.
In all honesty, you don’t need to have a physical presence in China to risk your intellectual property. If you have ever showcased your products or services at a trade exhibition in China, or anywhere globally, your IP is vulnerable. China operates on a “first-to-file” trademark system, so registering your trademark early provides a significant advantage and legal protection for your business.
Here are the main reasons why registering a trademark in China is vital:
- First-to-File System
As mentioned above, China operates under a “first-to-file” trademark system, meaning that the first entity to register a trademark owns its rights, regardless of prior use elsewhere. This differs from the “first-to-use” system in other countries like the United States.
- Protection Against Infringement
Registering a trademark in China provides legal protection against counterfeiting and unauthorized use. With a registered trademark, businesses can sue for damages and seek injunctions to stop unauthorized use of the trademark.
In 2017, New Balance won a case against New Boom, a Chinese shoemaker, for using a logo similar to New Balance’s “N” logo. The court ordered New Boom to pay RMB 10 million (approximately $1.5 million) in damages and cease using the infringing logo.
- E-commerce
A registered trademark is often required to sell products on Chinese e-commerce platforms. This registration not only facilitates market entry but also allows businesses to remove counterfeit listings from these platforms, ensuring that customers receive genuine products.
- Licensing and Distribution
A registered trademark is necessary for licensing products to distributors in China. Without it, businesses cannot legally authorize distributors to sell their products, which can hinder market expansion and lead to potential legal disputes.
- M&A
You might not plan to sell your business now, but you might in the future. A company with secured IP rights makes for a more attractive target and has a higher value.
General Best Practices
Foreign Companies Selling Directly in China
- Register Trademarks Early: Ensuring trademark registration with the China National Intellectual Property Administration (CNIPA) before entering the market will prevent trademark squatting and secure legal rights.
- Monitor for Infringements: Regularly monitor the market for potential infringements.
- Use Non-Disclosure Agreements (NDAs): When sharing sensitive information with local partners or employees, use robust NDAs to protect your IP.
Foreign Companies Selling to China Indirectly via Distributors
- Trademark Registration: Registering your trademarks in China, even if you are not directly selling there, ensures protection against unauthorized use by distributors or third parties.
- Clear Contracts: Draft clear and enforceable contracts with distributors, specifying the terms of trademark use and the consequences of infringement.
- Control: Conduct regular audits of your distributors to ensure compliance with trademark usage agreements.
Foreign Companies Engaging OEMs in China
- OEM Agreements: Include specific clauses in OEM agreements that address trademark usage, IP ownership, and confidentiality.
- Register Trademarks: Register your trademarks in China to prevent OEMs from registering them in their name.
- Quality Control: Implement strict quality control measures to ensure that OEMs produce goods that meet your standards and do not infringe on your trademarks. Conduct regular inspections of OEM facilities to ensure compliance with your IP policies and agreements.
Registering Chinese Transliteration of Your Trademark
Often, registering only character names is not enough, and it makes sense to register Chinese transliterations or similar names of the foreign trademark.
Between the late 1990s and 2000s, Fujian sportswear manufacturer Qiaodan Sports Company registered approximately 200 trademarks closely related to Michael Jordan’s name, image, or likeness. Commonly known in China as 乔丹 Qiaodan, Jordan sued Qiaodan Sports for using his Chinese name and his jersey number 23 without permission. After multiple appeals, China’s Supreme People’s Court ruled in favor of Jordan in 2020, recognizing his rights to the name and ordering Qiaodan Sports to stop using it.
Steps for Trademark Registration
1.Pre-registration Trademark Search
Before applying, conduct a trademark search to ensure that your desired trademark is available and does not conflict with existing trademarks through the China Trademark Office of China National Intellectual Property Administration (CNIPA) website or by reaching out to us.
2.Filing the Trademark Application
Submit your application to the CNIPA. If you are a foreign applicant, you must authorize a local agency to file on your behalf.
3.Examination
CNIPA will conduct a formal examination to ensure an application meets all procedural requirements. This step typically takes a few weeks.
After making sure requirements are met, CNIPA examines the trademark for eligibility. They check for conflicts with existing trademarks and ensure that the trademark complies with Chinese laws and public morality. This process can take up to 9 months.
4.Publication for Opposition
After the trademark passes the substantive examination, the trademark notice is published on the government website for a 3-month opposition period. During this time, third parties can file objections to the registration.
5.Registration and Certificate Issuance
If no opposition is filed, CNIPA will register the trademark and issue a certificate. This grants the applicant exclusive rights to use the trademark in China.
The whole process normally takes 12-16 months. Trademarks in China are valid for 10 years from the registration date and can be renewed indefinitely for additional 10-year periods.
Multi-Class Applications
Ensure the registration covers all categories of goods and services (or items) you sell. Famous Japanese brand MUJI lost a lawsuit to a local cotton goods brand after a failure to register a trademark under Class 24 of the trademark registration classifications (textile products).
The Madrid System
Filing for a trademark registration directly in China is more efficient for brand protection than using the Madrid System administered by the World Intellectual Property Organization (WIPO).
China Nice classification system separates items into 45 classes, each divided into individually treated subclasses. The registration rights applied to a subclass item do not apply to other subclasses or the entire class. Each product or service has a precise description. The overall system is complex and quite different from WIPO’s.
Contact us for China support and guidance.
Postscript
Michael Jordan’s case is old, but the lesson remains: it took Jordan 9 years and legal teams from two of China’s top law firms to win. Unless your net worth is USD 3,5 BL and you can handle a long-term trademark battle, we strongly recommend registering your trademark in China before someone else does.
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