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Best practices for trademark protection in China

By Luis Diego Acuña
 

While Chinese Intellectual Property laws have seen considerable improvements over the years, they can do little to supplement the lack of initiative on behalf of businesses that fail to timely register their trademark rights. The most effective protection that trademark holders can achieve over their rights begins by exercising proper diligence and care. Being able to take full advantage of the possibilities offered by the legal framework governing this discipline in order to achieve the most adequate level of security is based upon this fundamental assumption. This is a rule valid worldwide and China is most certainly not the exception. However, a sad series of common misperceptions often distort this reality.

With this in mind, this article delves into some of the fundamentals of securing trademark protection in the country.

WHERE TO START

It is important to note from the outset that China essentially follows standard international practice in terms of the cost, the complexity, and the steps entailed in securing trademark protection and registration. It is in no small part thanks to China’s participation and accession to the World Trade Organization. There are certainly a few particularities that are not present in other countries –particularly Western ones-, but most negative can be easily overcome with adequate preparation and, most importantly, having well-versed local counsel.

Registration is naturally the first and most basic step that needs to be undertaken. Nevertheless, it never ceases to amaze how foreign entities initially neglect this crucial aspect while misguided by fabled notions that wrongly override their common business sense. In fact, many –if not most- of the best practices that guide business decisions in the rest of the world apply equally to China. No emphasis can be spared in highlighting that this is the key to overcoming some of the obstacles in the field.

Wisdom accrued through past experiences dictates that the ideal time to proceed with registration is even before entering the Mainland’s market. It is best to begin as early as possible; a philosophy underlined by the fact that the mere use or adoption of a trademark in connection with a particular commercial activity does not grant the holder exclusive rights or a priority for their acquisition.

Indeed, China uses a “first-to-file” system, meaning that under most circumstances a prior registrant’s claim is more likely to succeed over that of a prior user. There are many tales of competitors or sadly even employees or local trade partners that have come to realize that this is a fact that can be used to leverage, take advantage of, or pressure foreign entities that have not proceeded to timely address the necessity of securing their trademark rights. This is not the case, however, for well-known marks thanks to the extended privileges granted to them under the Paris Convention.

REGISTRATION WITH CHINESE CHARACTERISTICS

While beginning the process of registration is a positive first step in the right track to commence a successful trademark enforcement strategy, it is important to consider that branding and localization not only play an important role, but also are a necessity to account for the cultural and practical considerations that arise due to the language barrier.

Some of the most successful cases of entities conducting business in China are tied to masterful local branding. Take for instance the case of the “Coca-Cola” or “Pepsi” trademarks. Despite the language differences, they have cleverly managed to phonetically tie their valuable local and global brands, while also giving Chinese consumers a meaning that they can relate to in their own language. Respectively, both trademarks arguably sound somewhat similar in Chinese and Western pronunciations, thus being able to take advantage of their associated worldwide goodwill, but also –through a clever play of words- adopt a completely new meaning when written in Chinese characters, which makes them far more appealing locally.[1]

While these may be extreme examples in the sense that considerable branding effort was undertaken by the owners to come up with an optimal marketing strategy, they serve to exemplify a basic fact when it comes to Chinese trademarks. That is, most consumers have difficulty reading or understanding the Latin alphabet. This can be overcome by employing the services of a branding agency or the assistance of local counsel fluent in the language to help adapt the mark and the name of the owner to the market.

However, it should be noted that the Chinese Trademarks Office can register marks written both in the Latin alphabet and in Chinese characters. In fact, a single application can cover both instances. However, to ensure that the rights holder gets the broadest possible scope of protection, it is advisable to secure each registration in as many forms and variations as deemed convenient. Of course, this entails additional work when applying for registration and during the process of conducting searches to clear the mark for availability, but not doing this may entail the risk of crippling the registration’s effectiveness.

While obtaining the corresponding registration is as simple as in most jurisdictions, a not-so-desirable characteristic of the Chinese process is its duration. Obtaining approval can take several years under normal conditions. However, this is no cause to despair, as senior applicants are granted protection against junior applicants for conflicting trademarks as of the date of filing, provided that all substantive requirements for registration are complied with.

THE BORDERS OF PROTECTION

One final fact that should be noted, while not strictly related to the registration of trademarks rights in China, but it does have significant importance over their enforcement, is that customs authorities have been empowered with their own monitoring system to help prevent the export of counterfeited goods. Trademark owners, provided they are registered in China, can now apply for protection of their trademark rights directly at the borders, by having customs agents actively check for potentially infringing exports. Product samples, packaging and even suspected instances of piracy can be submitted before their consideration, which causes them to, ex officio, take measures to curb and stop these kinds of practices when detected.

Simple cares such as the ones mentioned in this article can help prevent some common pitfalls when entering the Chinese market. In the trademarks field, many problems can be avoided by taking simple precautionary measures that go a long way in avoiding the need to engage in costly and uncertain litigation.

 

Luis Diego Acuña is an Of Counsel at Grandall Legal Group, a top tier law firm in China. Luis Diego is a corporate/commercial lawyer specialized in working with foreign companies in their investments into and concerning China and Latin America. Luis Diego is involved in all aspects of their investment, from tax planning, corporate structuring, IP protection, due diligence, partner selection/negotiation, site purchase/lease, employment, and dispute resolution (excluding litigation). You may contact Luis Diego at mail@grandall.com.cn.

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