There might just be one too many stories on the troubles that foreign companies or individuals are facing in China over their brands or names. Look at these:
- Apple was sued for infringing the registered trade marks "IPAD" held by Proview Shenzhen in China. Apple thought it had purchased the marks, only to find out later the contract did not identify the registered owner.
- Michael Jordan sued a Chinese sportswear company for using the Chinese transliteration of his name "Qiaodan" and the iconic number 23.
- A Chinese sports company applied to register the mark "Jeremy S.H.L. Lin Shuhao (in Chinese)" in China more than a year before Jeremy Lin rose to stardom in the NBA.
- Hermes failed in its attempts before the Trade Marks Review and Adjudication Board and the Beijing court to cancel an earlier trade mark for "Ai Ma Shi" (similar to Hermes' Chinese name) which was registered in 1995.
The above stories might sound familiar. Indeed there is nothing significantly new about the trade mark law and practice in China that gave rise to those problems. There are however pitfalls under the Chinese system (or indeed any trade mark system with which one is unfamiliar) that may trap the unwary.
Below are some tips that highlight the issues and suggest steps that a foreign brand owner could take to enhance its position.
Tip 1: Plan Early
China adopts the "first to file" principle for trade mark registrations. While it is difficult to predict when one will get a chance to shine in the NBA, in many other cases a brand has already been conceived or used before it enters the Chinese market. Obtaining trade mark registrations in China early or identifying potentially conflicting registrations should be top on the list before one goes into the Chinese market. Remember too that the Chinese Trade Marks Office is one of the busiest in the world and trade mark registrations can take years to complete when there are citations, oppositions and reviews.
Tip 2: Register in the Right Class
China adopts the Nice Classification. However, goods or services falling under different sub-classes within the same class are not necessarily considered similar. One must carefully choose which sub-class(es) to register in order to obtain the desired protection.
Tip 3: Mind the Language
As the Michael Jordan and Hermes cases show, the Chinese name or transliteration of a foreign brand is vulnerable to third party registrations. If a brand does not have its own Chinese equivalent, the Chinese consumers or squatters will likely invent one. Devising a Chinese equivalent which reflects the meaning and pronunciation of the original brand is an art, but this is something a foreign brand owner should give thoughts to at the outset of its brand strategy.
Tip 4: Know Your Opponent
If one needs to purchase an earlier registration from a local entity, make sure of proper due diligence. In China, one often finds companies with strikingly similar names. It is of utmost importance to ascertain the ownership, validity and status of a registration. Better still, one should conduct background and credit checks to get information about who you are up against. The strategy against an individual squatter could be very different from that against a genuine early user.
Tip 5: Signing an Assignment Is Not the End
In China, an assignment of a registered trade mark is not effective until approved by the Trade Marks Office. In practice, the process takes about 10 to 12 months. The Trade Marks Office is far from a rubber stamp and is strict on formalities. For example, the officials will require to see a prescribed assignment form, valid ID copies, as well as matching signatures and company seals.
Tip 6: Keep an Eye
Spotting potentially conflicting or bad faith applications early (by monitoring the trade mark gazettes) and taking prompt action (e.g. opposition) is extremely important. Seize the offensive - ignoring those applications do not just mean that that third party will obtain a trade mark registration, it also gives that party a case of trade mark infringement (and customs seizure) against you, your distributors, retailers and/or manufacturers over the use of your original brand in China.
Tip 7: Become Well-known
Gaining the recognition of a well-known mark in China affords a much wider and stronger protection, even against dissimilar goods and services. It is probably easier said than done - the threshold is very high, but there were successful stories. One such example is Sotheby's Chinese name which was designated as "well-known" by a Beijing court (see our Legal Update: Mainland PRC: Two recent judgments against trade mark infringement and unfair competition ). One needs to produce really impressive evidence of use, promotion and/or sale in China - it is generally believed that this must last for at least 5 years and extend to no fewer than 10 provinces. Start keeping your awards, news reports, advertisements, etc. in order, and in their original forms.
Tip 8: Copyright the Brand
If your brand (e.g. a logo) qualifies as a copyright work, this could provide an additional or alternative ground for protection. The Chinese trade mark law recognises that earlier copyright provides a ground for revoking a registered trade mark. Ideally one should produce all the relevant drawings, sketches, assignments to prove copyright. Having a voluntary copyright registration in China or in other jurisdictions would also come in handy as evidence of ownership.
Tip 9: Know the Enforcement Channels
The actions taken by Proview Shenzhen in the IPAD dispute highlight the multiple trade mark enforcement channels in China, including administrative raids, litigation, and customs seizure. A variety of remedies are available, e.g. confiscation, fine, damages, injunction. These remedies are generally not exclusive to each other. Further, China is a civil law system so case law is not binding as in a common law forum. Brand owners should be aware of all these enforcement channels, and potential weapons.
Tip 10: Develop a Policy
This tip is not unique to China but it is important to have a policy tailored for the Chinese system. The policy should cover matters like brand conception and design, registration, marketing monitoring (e.g. conflicting marks; counterfeits), record keeping, licensing, contracts (e.g. distributors; manufacturers), and enforcement.