The importance of brand in the wine industry
For most businesses, brand is crucial because it enables you distinguish your product or service from your competitors.
This is especially true in the wine industry where competition is fierce, especially in overseas markets.
Protecting your brand in China
The harsh reality for wine producers is that the hard work you have put into creating a brand (backed by goodwill and a reputation for a high-quality product) is only as protected as your ability to use your brand to the exclusion of anyone else around the world.
The challenges associated with protecting a wine brand in the Chinese market
At present, it is becoming increasingly common for Chinese agents to register Australian wine trade marks in China before Australian producers get the chance to do so.
In what are becoming increasingly prevalent cases of trade mark squatting, not only are Australian wine trade marks being infringed in China but people are registering these trade marks as their own ideas. In addition, in Australia, there have been cases where Chinese distributors of Australian wine are registering their client’s trade marks and either counterfeiting them or selling them back to the winemaker on the basis of exclusive distribution.
The issue becomes even more concerning when you consider that Australian wine exports to China were up 15% in the year ending December 2017, at $2.56 billion dollars in 2017.1
In today’s global market, it is no longer adequate to simply register your brand as a trade mark in Australia and assume no one else will use your brand. Instead, you need to consider how to protect your trade mark around the world.
The scope of an Australian trade mark
A registered trade mark in Australia protects your wine brand internally within Australia, as well as products which are exported from Australia.2 This means that your registered trade mark is protected against infringement when used in Australia, sold in Australia or exported from Australia.
Where the protection of your wine products becomes a concern is where wine is produced and sold in another country.
In short, your registered Australian trade mark provides you with no brand protection in China.
China’s trade mark system
China has a ‘first to file’ trade mark system.3 This means the first applicant to register a trade mark has all rights to the trade mark, regardless of whether they were the first to use it. This means that, until you register a trade mark, you have no rights to protect your brand in China.
The ‘first to file’ system has led to the proliferation of trade mark applications in China for the sole purpose of having the real owner/user of the trademark buying it back from them at an inflated price.
How to protect your trade mark in China through litigation
An application to oppose the registration of a trade mark in China must be made within three (3) months.4
There are limited circumstances where it is possible to challenge the registration of a trade mark in China under the Trademark Law of the People’s Republic of China. A request to declare a registered trade mark invalid must be done within five (5) years of registration.5
You have grounds to challenge the trade mark in a situation where a trade mark was registered by a company because it knew of the existence of your unregistered trade mark due to ‘contractual, business or other relationships’ or the company is an ‘agent or representative’.6
Under the Trademark Law of the People’s Republic of China, you will also be able to challenge the trade mark where the trade mark was registered using ‘improper means’, you have been using the trade mark prior to it being registered by someone else and you enjoy ‘a certain reputation’.7
Another exception is where your product is ‘well-known’ and the registered trade mark is used for the purpose of creating a ‘reproduction, imitation, or translation of another person's well-known trademark not registered in China’.8
To prove these exceptions, you would need to engage in litigation proceedings in China. Unfortunately, many cases are unsuccessful in China and commencing litigation is both a lengthy and costly process.
How to claim priority from an earlier trade mark filed in a Paris Convention Country
In some circumstances, a trade mark applicant may, pursuant to the Paris Convention for the Protection of Industrial Property (Paris Convention),9 be able claim priority over another trademark application if they have first filed a trademark application in another country for the same trade mark and both countries are party to the Paris Convention.
The application must be filed within six (6) months.
However, this is not the case in China. China does not consider itself bound by the provisions of paragraph (1) of Article 28.
How to apply for a cancellation of the trade mark in China
If the Chinese company registered the trade mark more than three (3) years ago and has not used the trade mark during this period, you may make an application to the China Trademark Office to cancel the trade mark.10
If the company registered the trade mark less than three (3) years ago, it is not possible to apply for their trade mark to be cancelled. You could wait for the three (3) years to pass and, then, submit an application for the trade mark to be cancelled.
Possible commercial steps you can take in China if a company has registered your trade mark and your legal options are limited
If your trade mark was registered by another company in China, with the plan to sell it to you at an inflated price, your options are limited.
You may need to explore some commercial solutions such as:
- Negotiating to purchase the trade mark from the company
- Creating a new brand for the Chinese market.
If you are considering broadening your market to China, we recommend you register your brand for a trade mark in China.
However, we appreciate this is not always possible.
In addition, you also need to be careful you do expose your company to the potential of having a trade mark cancelled due to non-use after a period of three (3) years.
If it is too late and your trade mark has already been registered by someone else, you will need to consider both your legal and commercial options.