China Trademark Registration China Company Registration

5 reasons trademarking in China is more important than you think

April 06,2017 | Andy Clayton

Trademark protection is important in China. This cannot be stressed enough. Having negotiated on behalf of companies who have fallen foul of trademarking in China, and witnessed their painful consequences, I cannot over-emphasise this.

 

In short, as soon as you have decided that you want some kind of presence in China, and before you start selling or doing any marketing in China, have your brand and products trademarked. This saves so much potential difficulty later on.

 

Corporate army against three digital grey server towers.jpeg

 

One recent example involved a company spending months preparing for their market entry, locking down deals, setting up their supply chain and putting in place robust operating procedures to fuel growth. Imagine the horror when they discovered their trademark had been registered by another party in China, all of a sudden plunging the future of their entire China operation into uncertainty

 

We often get asked “Should I test the market, or trial some sales before trademarking?” 

 

The answer is: Bad idea..

 

Don't become another horror story, understand the trademark environment in China

 

China's IP (Intellectual Property) and trademarking rules operate rather differently, it can all seem quite unfair and biased at first, but understanding the fundamentals can help keep you one step ahead..

 

1. It's a closed system

The system may pay lip service to international treaties such as the Madrid Protocol and general international standards, but the reality is that China operates as an island, with its own rules and ways of working. If unsure, get some advice from a trusted local partner before proceeding.

 

2. IP is enforced

Gone are the days when IP protection wasn't worth much in China. As enforcement of IP has strengthened, the battleground has now shifted, towards ownership of valuable IP.

 

3. China operates a first to file system

Even if you own your brand in other territories and can clearly prove this, in China, all that matters is who registered the trademark locally first. This has always been the principle in the past, but it is now starting to be challenged in the courts (take a look in our related article), an there is now precedent of global brand owners winning their IP back in the courts. However, the legal process for this is long and expensive.

 

4. Filing a trademark is easy

It's not particularly expensive or onerous to register your trademark, you know within 1-2 whether your application has been confirmed. We regularly register trademarks for clients entering the Chinese market, and would be happy to provide you with a quote.

 

5. Court rulings can often seem arbitrary

The few high profile case (e.g. Michael Jordan and Apple) that demonstrate the Chinese trademark system operating fairly, are eclipsed by a larger volume of smaller, unreported cases where rulings gave the sense of local companies being given an unfair advantage.

 

The painful scenario is to discover that your trademark has been hi-jacked (see our related article which explores this in more detail). This can lead to legal cases where Western companies enter arguments centered around global brand ownership right, whereas local courts are equally (if not more) receptive to arguments by local companies that they were the first to develop or use the brand in China. It's a sticky situation to be in, and can all be avoided by filing before you start marketing.

 

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