Foreign companies looking to operate and expand their business in China must register their trademarks. Proper trademark registration is crucial, and it must be done correctly, in a comprehensive and timely manner.
A trademark registered in one country doesn’t automatically grant protection in another. Brands must register their trademarks in every country they operate in, especially in jurisdictions like China, which follow a “first-to-file” system.
Particularly in China, registration alone is not enough to protect a company’s intellectual property and brand. Foreign companies operating in the country should have a far-reaching strategy that includes trademark registration with customs, control of suppliers and effective monitoring of online and offline markets, among other actions.
Trademark definition
A trademark sign identifies the specific or primary use of a particular good or service, allowing consumers to distinguish between the goods or services of different producers. It may be composed of words, devices, letters, numerals, three-dimensional signs (shapes), color combinations, or a combination of all of the above.
To register a trademark in China, a brand must legal. It cannot be identical or similar to the name or flag of a state or an international organization. It cannot discriminate against a nationality or indulge in exaggerated or fraudulent advertising.
The mark must be distinctive. It must be easily distinguishable from the producer of other goods and services.
The mark cannot be functional. China does not accept marks that refer to the nature or model of the good or service itself (e.g. an apple grower cannot register the word apple as a brand). The mark cannot sabotage competitors by referring to a technical effect, thereby confusing consumers when choosing a product or service selling the same or similar technical effect.
The mark must be available for registration. The China Trademark Office (CTMO) official trademark database is available online and can be used to search existing trademarks. The database covers preliminary approvals, final approvals, renewals, and modifications of all trademarks and is available in Chinese and in English.
China only legally recognizes trademarks registered within its own jurisdiction, which is why foreign companies should consider this as one of their top priorities. If the brand is well-established, it will most likely encounter trademark squatters, counterfeiters, or grey market suppliers.
However, well-known trademarks enjoy some protection under Chinese law. This protection is the closest China comes to protecting unregistered trademarks. The circumstances under which such protection is afforded are limited, given that the standard for a trademark being considered well-known is exceedingly high.
Companies that decide to operate in China without a registered trademark in the region can easily lose their infringement claims, irrespective of whether they legitimately sell goods in other countries under that brand or even if they manufacture in China to sell elsewhere.
Trademark search
Before registering a brand in China, a company must check that it is available and has not been previously registered by another entity (known as a ‘bad-faith’ registration), or is too similar to any other registered trademark. This step saves resources on an application which will be rejected and could delay business operations in China.
Trademark agents can conduct a search on a company’s behalf, but individuals can also do it themselves on the CTMO online database which records all trademarks applied for and registered in China. The database is available in English and is free to use.
If your trademark is in the database, it means that it was probably registered in ‘bad-faith’ and is now effectively owned in China by someone else.
At this point, if it is still during the three-month period between the bad-faith registration of your trademark being published in the Trademark Gazette and the trademark being granted, you can file an opposition with CTMO.
If the trademark has already been registered, you may be able to have the registration invalidated by filing a case with the Trademark Review and Adjudication Board (TRAB). The chance of success will depend on the specifics of the case.
It may be possible to buy the trademark through an online ‘supermarket’ or by negotiating directly with the trademark owner, or through an intermediary such as a lawyer or trademark agent.
Registering the trademark in Chinese characters
Companies operating in China should know that their trademark in Roman characters will not completely protect them against infringement. The same or similar trademark can be registered in Chinese characters by another business. This is also key to a business’ profitability and image in China.
If others use your trademark in the local language, there are chances of losing customers and diminishing brand value due to the meaning, the pronunciation, or even the appearance of the Chinese characters.
Trademark protection
No matter how many registration certificates a trademark has, the company who owns it has the main responsibility to protect it. Monitoring counterfeiting activity regularly in both online and offline markets is essential.
Chinese authorities simply do not have the resources to deal with every case of counterfeited merchandise, nor are they familiar with the particulars of every brand.
Foreign companies should have a plan in place to monitor the online and offline markets where their products are sold. Some of the most important online platforms to watch in China are Taobao, JD.com, Pinduoduo, and social commerce apps.
It is recommended to regularly do online searches of the brand in both English and Chinese to identify illegal sales. Another step is to visit in person trade fairs, wholesale markets, factories, and locations where counterfeits could originate.
Gathering evidence, such as photos and purchase records, can be helpful when starting legal action. Combating counterfeiting is an ongoing process, so persistence is key.
Woodburn Accountants & Advisors is one of China’s most trusted business setup advisory firms.
Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.
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