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Understanding Brand Protection in China: Beyond Trade Mark Registration

Date: 05 October 2016
Author: Joanne Martin
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The message

  • Use the administrative processes available in China to protect brands and trade marks as they are relatively straightforward
  • They are less expensive than initiating or defending litigation requiring evidence, investigations, legal documents, court proceedings
  • Chinese companies routinely use these processes as business tools to enforce rights against foreign traders.

Two minute summary 

  • Register trade marks well in advance of plans to manufacture in China or sell product as trade mark registration can be a lengthy process
  • Remember to develop and consistently use a Chinese character mark in association with the English language mark as failure to do so can give rise to problems on a number of fronts
  • Registration of copyright in logos, devices or other artistic works used as brands, such as labels can provide powerful additional rights 
  • Consider recordal of registered trade marks with the Chinese Customs Office
  • Consider a tailored approach to trade mark protection for China as one size does not fit all and a bundle of rights is much more effective as an enforcement tool in the complex Chinese market.

Australian businesses have developed a sophisticated understanding of trade mark protection in China, however protection and enforcement can still bring surprises. As Australia’s trade with China continues to grow, the need for clever strategies for brand protection also grows. The message for trade mark protection has always been to register early, as China is a ‘first to file’ jurisdiction, and the owner of a trade mark is the first to register a mark. There are some exceptions, as an application or registration can be challenged if it has been filed in bad faith or is a well-known trade mark, but there is little opportunity for the average business to rely on these exceptions.

As China continues to open its doors to western products and businesses, and trade mark law evolves in China, the lessons learnt are that registering key trade marks may not be enough – the savvy brand owner needs to consider a range of options.

What options are available?

  1. File and file early - thinking of manufacturing or selling products or services in China? Then file for your key trade marks, both the words and the logos. Chinese law does not protect a mark unless it is registered.

    If a trade mark is applied for or registered by another trader in China, there is little opportunity to have it cancelled unless it is a well-known mark of another trader or filed in bad faith. Establishing that a mark is well known in can be difficult and costly to prove. Bad faith is narrowly interpreted and usually it is necessary to show that the filing is in breach of a contract, licence or other agreement. It is not bad faith for a party to file a trade mark of another company, for example, after business discussions; rather there must be some level of illegality. It is more effective and less costly to register early than have to challenge the validity of a registration or oppose an application.
     
  2. File for a Chinese character trade mark - Chinese consumers invariably refer to foreign brands by a Chinese version of the brand name. This is likely to remain the case for the majority of foreign marks used in China. Where there is no official Chinese language version of a mark created, used and promoted by the foreign owner, is likely that the local Chinese customers will create a Chinese version, sometimes harmless, but sometimes a parody or less flattering.

    For example, the name commonly used by Chinese consumers for VIAGRA is the Chinese language words for “BIG BROTHER”. A Chinese company registered the Chinese character version of these words, and Pfizer spent over a decade trying to obtain the Chinese character mark for BIG BROTHER mark but did not succeed. In a 2015 case, New Balance Shoe Inc owned the English language registration for NEW BALANCE. A Chinese national registered the Chinese character mark for NEW BALANCE. The US company had used the English and Chinese version of NEW BALANCE for its products in China but had failed to register the Chinese character version. The US company was successfully sued by the owner of the Chinese character mark, required to cease using the Chinese character mark, and to pay AU$16 million in damages. It is important for businesses to develop and consistently use a Chinese character version of their trade marks, taglines and company names, which reflect the meaning of the marks and brands and the image of the business.
     
  3. Copyright Registration provides strong rights - For marks in stylised get-up, logos and devices, that is, artistic works, it is possible to obtain copyright registration by submitting an application together with proof of ownership of copyright, with the National Copyright Administration Office.

    Copyright registration is both less expensive and quicker than trade mark registration, as registration is achieved in 1 to 2 months if the proof of copyright ownership document is clear. Registered copyright has the added value that it is not limited to any particular goods or services, as is the case with registered trade marks. Copyright registration can be useful to prove ownership of a logo or device in opposition or removal proceedings against another trade mark.
     
  4. Register your trade mark with Chinese Customs - This is a useful tool to stop the improper export of infringing products from China. This process requires that your trade mark is registered, but once this step has been achieved, recordal of the registered mark with Chinese Customs is both inexpensive and quick, namely a 3 to 5 month process. This permits the Chinese Customs Office to search outgoing exports for possible infringing products, either on its own initiative or on the request of the registered trade mark owner.

    If goods are seized, there is a process for notification of the registered trade mark owner to verify if the goods are an infringement and if so, a bond is payable by the registered owner for the seizing and storing the goods. Customs then sends a notification to the exporter, and makes a determination within 30 days as to whether the goods are infringing. Thereafter there is a process for an administrative decision whether to penalise the infringer and dispose of the goods. The bond is then returned to the registered owner.

Things to think about

If a business is likely to have products manufactured in China, to sell products in China, or has the type of mark and product that are likely to attract the attention of a Chinese business, in particular, popular fashion and accessories, foods, cosmetics, or nutritional and health products, contact a trade mark advisor to develop an appropriate strategy to put protection around trade marks, brands, packaging and labels.

Tags:  Trade Marks, China, Trademarks, Joanne Martin
 
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