Are you thinking about doing business in China?

Tue, 16 Apr 2019

If the answer to the above question is ‘yes’ and you are thinking about trading in China, then read on, this article is for you to help to avoid the IP pitfalls that many fall into before entering the Chinese Market. Below we outline the challenges, and suggest preventive strategies.

Early registration

As soon as you are thinking about using your Trade Mark in China, your first thought should be about filing Trade Mark applications to protect the brand name. Please do not wait until you are in talks with a Chinese distributor, or have commenced use in China, as by that time, you may find that you are too late, and that someone else has beaten you to it, either your Chinese distributor, or a Trade Mark squatter. 

China operates a ‘first to file’ system, regardless of any use or intent to use. It is difficult and expensive to establish bad faith in China. The outcome of any trademark dispute is based on who registered the Mark first in China. Make sure that you as the IP holder are the first to register.

International or Domestic Trade Mark Application?

So now that you’re thinking about entering the Chinese Market, should you register your Trade Marks via the International Trade Mark route, or should you opt for separate National Chinese Trade Marks? Whilst you may hear rumours that a Trade Mark registration secured via the International route is not robust enough, and that you should always file for your Trade Mark directly in China, this is simply a rumour. Whether you choose to file an International Trade Mark, or a National Chinese Trade Mark, both are granted the same protection as if they had been directly filed through the Chinese Trade Marks office. If you have an International Trade Mark designating China, there is no requirement to file an additional domestic Mark via the Chinese Trade Marks office.

Registration Certification

If you have opted to file an International Trade Mark designating China, then as soon as you have registered protection for your Mark, you should seek registration certification for the Marks. Such certifications will be issued from the Trade Mark Office in China. It is recommended to seek a registration certification, as it will be necessary to produce this document if you need to take action against a third party in China to prove ownership of your Mark to other parties. In addition, when conducting business in China, such as customs recordal, entering the Chinese markets via the opening of physical store, or extending into China via e-commerce routes, then customs, the stores permissions authorities and the internet platforms will require such certifications.  

Transliterations – translate to protect your Mark

If your Mark is an English word Mark, registering the English name alone is not sufficient, it is highly recommended to also register your trade mark in Chinese characters to make the brand localised to Chinese consumers.   

When obtaining a transliteration of your Mark, consideration must be had to the Chinese characters to be used, their sound when pronounced and their meaning. In some cases, direct Chinese transliterations, do not translate well, they may not make sense, and the words may need to be adjusted to make sense to Chinese consumers.

Ideally you should instruct a Bilingual expert for this process. They will find the right brand name to register as a Trade Mark by using a combination of literal translation, phonetic transliteration, and descriptive and conceptual meanings.  

Multiple registrations – Sub classes

So, is there anything else you need to be aware of? Good question, in China protection of Marks is dependent upon the classification of goods. In China goods and services do not just fall into classes, they also have sub classes. 

If you have not protected your Mark in the relevant sub classes, you may find yourself in a situation where you are not able to prevent third parties from using and registering similar Marks on similar but not the same group of goods. For illustration purposes, if you have a Trade Mark registration in China covering for example ‘shampoo’ you would not be able to prevent use of the same Mark in relation to ‘cleaning preparations’. It is therefore recommended to file an Application covering any relevant groups of sub classes to maintain the broadest form of protection. The cost of filing in sub classes is minimal and therefore it makes economic sense upon filing to consider and register under as many relevant classes and sub-classes as your budget allows.

Three years of non use in China = cancellation

If a Chinese Registered Trade Mark is not used for three consecutive years without proper reasons for such non-use, any person or entity may apply to the Trade Mark office to cancel that registered Trade Mark.  

For the above reason alone, it is important to keep evidence of use of the mark in China, should you find yourselves on the wrong end of a cancellation action. If evidence of use cannot be provided and / or is not conclusive enough to prove that the Trade Mark has been in use for the past three years, the Trade Mark will be cancelled by the Trade Marks Office, and you will have to reapply for the registration of an identical or similar Mark. 

It is therefore important to maintain records and examples of use of your Trade Marks in China, in the event that they are required to rebut any cancellation claims. 

Good record keeping is key

As mentioned above, it is important to keep a log and dated examples of evidence of any use of your Trade Marks in China. Good record keeping is essential and will assist greatly if you find yourself involved in a legal argument. 

Police your registered Trade Mark

Once you have achieved registration it is vital that you monitor your Trade Marks for potential squatting or infringement. This can be done via online searching and a Trade Marks Watching Service.

Conclusion

So that is a brief rundown of the situation of potential pitfalls when applying to register your Trade Marks in China. Forewarned is forearmed, good advice is key. Please do not hesitate to contact us should you require Trade Mark protection in China. 

Jane Kennedy - Trade Mark Attorney at Vault IP  

  Jane is part of the Trade Mark team at Vault IP, providing commercial and practical advice in all areas of Trade Mark law. Read and learn more about Jane here: https://www.vault-ip.com/

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