In a country where manufacturing counterfeit products is as big a business as manufacturing legitimate merchandise, if you conduct business in or import goods into China, it is wise to ensure that your rights to trade marks associated with any of your Chinese bound goods and services are protected as early as possible.
The cost of conducting due diligence before you embark on a foreign trade mark filing programme may be considered to be an expensive exercise for some brand owners. However, being forced to rebrand your product or worse still, remove your product from a particular overseas market is likely to be a relatively more expensive exercise to undertake.
In 2010, China’s State Administration for Industry and Commerce handled more than 56,000 trademark infringement cases, the value of which was worth more than $200 million¹. Counterfeit versions of products bearing an identical or similar trade mark to those of your brand flooding the market could cause your business and the goodwill associated with it serious harm.
First-to-file rule
Ideally, registration of your trade mark before you start conducting any business within or into China will provide the best protection against your trade mark being misappropriated by others.
In China, the ‘first-to-file’ rule applies between competing trade mark owners. What does this mean for your business? Essentially, by failing to register your trade mark in China before another party does, you may find ironically, that by using your trade mark you are found to be infringing ‘your own trade mark’.
Consequences of not filing first
By failing to be proactive in the protection of your trade mark and filing first, you may be confronted with the insuperable task of having to claw back your own intellectual property or, be put in a position where you have to buy a licence from the party who has filed for ‘your trade mark’ first to continue promoting your goods and services using that trade mark.
There are many businesses in China that operate by filing for the registration of trade marks before the trade owner of the trade mark does and then exacting a licence fee from the true owner for the use of the trade mark².
Should you find yourself in this position there are limited grounds for filing an opposition and commencing proceedings against a party who has filed for ‘your trade mark’ first. In some matters that we have been involved in, it has proven to be vastly more economical for the client to purchase their trade mark back from the other party than it would have been to oppose the registration.
This is primarily because, there are limited grounds upon which an aggrieved unregistered trade mark owner can successfully challenge the registration of their trade mark by another in China. The task of opposing registration is financially daunting and time consuming and in most cases fruitless, for the ultimate outcome is usually unfavourable. The short point is that prevention is exponentially better than the cure. Meaning that the obvious panacea to what appears to be a endemic problem is, file first.
Relevance to your business
This caution is relevant to businesses that are importing, manufacturing and selling products and services in China. As an example, even a company as influential as Apple is not immune from having its right to use a trade mark as ubiquitous and globally synonymous with Apple usurped by a party who had been the first to file a trade mark application.
Apple recently failed in an application to a Chinese court to sue a Taiwanese company, Proview Technology (Shenzen), for infringing on its trade mark for ‘iPad’. Proview Technology lawfully registered the trade mark ‘iPad’ in China back in 2000³. Consequently, Apple cannot sell its iPads under the name iPad in China without entering into a commercial licensing arrangement with Proview Technology or else it will be infringing on Proview Technology’s trade mark rights.
Although this is not example of a trade mark being misappropriated (but merely registered first), it illustrates how a multi-national’s commercial endeavours within China can be confounded (as is the case in most jurisdictions) if there is a pre-existing trade mark registered in the name of a third party that is identical to, or substantially similar to the trade mark of the multi-national.
To ensure total protection of your trade mark in China it is strongly advised to register not only the English version of your trade mark but also a Chinese version. The Chinese version can either take the form of a direct translation or a phonetic version of the Australian trade mark.
Importantly, when registering ‘your trade mark’ you must register the trade mark under the various categories for goods and services in which your trade mark will be used or you may find that somebody else does. In which case, you will experience the problems outlined above, leaving you with limited options in acquiring the right to legitimately use your trade mark with in the omitted class(es) of goods and services.
Ensure that you are not putting your trade mark in a position of vulnerability by being proactive in the protection of all of your trade marks in China, and for that matter any jurisdiction where you are, or intend to conduct business.
¹ ‘Trademark Infringement Cases in China’ (28 March 2011)
² ‘China Trademark Law: Simple and Effective’ (21 December 2007)
³ ‘Chinese court rejects Apple lawsuit over iPad name’ (6 December 2011)
