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Taming the Dragon: Trade Mark protection in China

Date: 30 August 2012
Author: Joanne Martin
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The Sydney Morning Herald article of 16 June 2012 reporting on misappropriation of HILL OF GRACE brands and labels of the Henschke wine family illustrates that  Australian traders continue to face risk of brand piracy.
 

The reasons for seeking registration of your marks earlier rather than later

The Chinese government is tightening legislation around trade mark rights so as to protect foreign trade mark owners.  For example, the Chinese customs laws have been strengthened in favour of foreign owners.  However it must be acknowledged that the appropriating of foreign trade marks is a growing business in China from which local people are even now making a living.   So bear in mind:
  • Chinese law generally does not protect a trade mark unless it is registered in China
  • It is always cheaper for a company to register its trade mark than to litigate
  • China is a first to register country which means that unless your trade mark is well-known (and that is a difficult exercise to prove) whoever registers a mark first in China is the trade mark owner
  • Litigation to displace registered rights is a costly and often ineffective exercise.
 

A checklist before manufacturing or selling in China

Australian companies manufacturing and selling in China need to be proactive in enhancing their trade mark protection, and a prudent company will search the availability of its trade mark and register before manufacturing or selling in China. The preliminary steps are:

  1. Conduct searches to ensure the availability of your trade mark for use.  For example, placing your brand on goods that are manufactured in China is considered use in China even if the goods are only intended for export. So “use” of a registered mark in this way could result in your products being seized by customs or infringement proceedings.  
  2. Register your trade mark at the earliest opportunity after searching.  Securing registration in China, where there is a huge backlog at the Chinese Trade Marks Office, can take a number of years (although once registered, your rights are in most cases effective from the original date of filing).  
  3. Consider filing your trade mark for all products or services for which you intend to use the mark. 
  4. If the mark is intended to be used in a logo form, also file an application for the logo.
  5. Consider creating and registering other versions of your trade mark to gain added protection. You may consider registering your brand as your word mark, and logo, together with a Chinese literal and/or phonetic translation (in Roman characters) and a Chinese transliteration (in Chinese characters).  This bundle of registrations offers broad protection against piracy.

Authorisations or Licences

For Australian companies having products manufactured and exported from China, it is becoming the practice of Chinese manufacturers to require signed authorisations or licenses from the trade mark owners and for these to be registered at Chinese Customs. 
 
This authorisation prevents the products being seized at Customs as potentially infringing products.  The rights granted by the authorisations or licences need to be clearly defined.  For example there should be no right to sub-license without prior approval, the rights do not extend beyond the manufacture period, and that the trade marks and how they are to be used should be specified.
 

The "take home" message

To get the broadest possible protection, it is useful to secure registration of your trade marks as early as possible and in as many forms and variations as is commercially affordable.  Of course, this means additional work and cost when applying for registration, but can provide very effective trade mark protection. To meet the challenges of Chinese law and practice, it is necessary to be armed with a strong portfolio of trade mark rights.
 
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