Q) I am about to sign an agreement to have a new children’s toy I have invented manufactured by a Chinese business partner. The toys will be exported back to Europe and will not be sold in China. This being the case, should I worry about protecting my brand name in China, and are there any other IP-related issues I should be concerned about?
A) There are several very good reasons to be concerned:
Firstly, securing appropriate Chinese IP protection will likely be critical to preventing others from manufacturing counterfeits or similarly/identically branded products in China. With China the world's manufacturing powerhouse, such protection could provide a major competitive advantage and prove key to investors and partners.
Secondly, even if your products are not sold in China, just manufacturing there could potentially infringe third-party trade marks, patents and other IP rights. It is therefore advisable to check for infringement risks in advance, as well as prioritising the protection your own IP in China. Otherwise, you run the risk of being sued for infringement of third-party IP rights, and of having your products seized by customs or other authorities prior to export.
Thirdly, in China (as in many other countries), registered trade mark rights are usually granted on a first-come, first-served basis. Any delay in seeking protection for your brand name in China will therefore leave the door open for others to obtain conflicting rights that could then block both the use and registration of your brand name there. Such conflicts often arise when parties innocently adopt similar or identical marks. However, I also see many cases where unscrupulous parties have successfully obtained Chinese registrations of marks which the original users omitted to register first. This is especially common with marks applied to goods manufactured (or likely to be manufactured) in China for export.
First published in the Financial Times, February 2013