Any time we try to explain what any company needs to take into account when facing the Chinese market for any project, I turn to the wisdom of my colleague Nicola Aporti’s words in the introduction of his book about Food Law in China.
I quote: «The main mistake (and, unfortunately, also the most common) that can be made when starting any business project in China is to underestimate the enormous differences that exist with respect to our countries or other Asian markets. China is different. A world apart and in many ways characterized by unparalleled complexity and unique distinctive peculiarities. Not understanding it or not taking it into account means losing the battle in advance in any project we start in this country. »
In this context, protecting your trademark and those distinctive signs and external appearance of your products in China should be one of the first and also crucial steps to be taken by any company aiming to develop its business or sell its products in China.
Unfortunately, the protection and registration of those assets is many times ignored or overlooked by foreign companies when facing the Chinese market, unaware of how that lack of proper legal protection of their distinctive signs may define the success or failure of their business in China.
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A strong trademark can be instrumental in winning new customers when establishing a brand in China. Because you invest time and money into building the reputation of your company, it would be very damaging to your business if someone else begins using your name and/or brand to sell their own products or services. And let me add something... there cannot be a strong trademark without proper legal protection covered by the registration of the trademark in each country.
In particular, in China a trademark can be registered through the ‘national’ or ‘international’ system and can only be effectively protected in China once it has been registered. Due to the particularities and differences of the Chinese intellectual property system, we tend to advise the convenience of registering a trademark in China following the national system. That is, filing an application to register your trademark in China directly before the China Intellectual Property Administration (CNIPA).
Information about protection and registration of your intellectual property in China can be found through many different entities. From CBBC to the China IPR SME helpdesk supported by the EU, Chambers of Commerce and Trade Offices from different countries.
However, when it comes to conduct the process of registration of your trademark in China it is highly advised to obtain professional assistance to help you with. There are certain technical details and particularities for which a comprehensive understanding of the Chinese intellectual property system is required, so professional advice from law firms or intellectual property agencies is essential to duly protect your assets and rights.
Nevertheless, trademark registration may not be enough in certain scenarios to protect all those features that characterize and enhance your product or services.
It may be the case that certain technical details of your product are unique and represent its main value. Or perhaps your product has gained some of its reputation and recognition in the market due to certain specific details of its external appearance.
All those aspects need to be taken into account and can also be protected by means of intellectual property protection tools, such as patents, designs or trade secrets. For that reason, a case-by-case preliminary analysis is essential to define a comprehensive protection strategy of those main aspects of the product or service.
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In addition, once we have decided to go ahead commencing the registration process of a trademark in China, it can be actually quite common to detect similar or identical trademarks already registered in the Country by third companies.
As China uses a first-to-file system, many SMEs are caught out because they fail to register their trademark in China, and then at the time they want to do business here, they find out that their trade mark has already been granted to a Chinese company. Very often the Chinese company in these cases registers the mark with the intention of selling it back to the foreign company at an inflated price.
These tactical trademark registrations are commonly called ‘bad-faith registrations’, and are a significant problem that many companies encounter in China. They can limit the foreign company’s freedom to operate by restricting its ability to enter the Chinese market, or even to source goods from China, because the Chinese trade mark holder is able to intercept goods bearing the trade mark at Chinese customs.
As we already mentioned in the beginning of this article, the best strategy we can follow to prevent these situations from happening is to anticipate those bad faith applications by protecting (registering) your trademark in China as soon as possible.
Nevertheless, if your company is confronted with the situation in which somebody else has already registered your desired trade mark in China, there may still be a way to contend it. In that case, we may need to initiate additional specific actions before China Intellectual Property Office aimed to either cancel or invalidate those preemptive registrations or negotiate with their registrants to have them assigned to us.
Finally, once your trademark is successfully registered in China and you are using it in the market to promote your products or services, there may be also third companies who, in an attempt to take advantage of the popularity or recognition of the trademark, copy it or use it to commercialize the same or similar products.
These behaviors from third companies may cause confusion in the market about the origin and genuineness of those (counterfeit) goods, as the trademark attached to them may be identical or similar to yours. This situation usually represents an infringement of the rights of the trademark holder, harming its interests. Consequently, it is important to tackle those infringing activities as soon as possible and enforce the trademark holder rights by means of the legal tools provided by the intellectual property regulations.
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This potential scenario of infringement of trademark rights has been usually mistakenly perceived by foreign companies as one in which you cannot do anything to protect your products and your rights in the market. This myth enshrined by the expression “in China you cannot do anything if someone copies you” is still very present in many foreign companies’ mindsets while, in fact, that perception is far away from reality and the actual actions that can be taken to tackle those infringing activities and the infringers itself.
Again, professional advice to analyze and define a strategy on how to better act against those infringers is necessary. But as we have seen in many previous cases, if we are solid and persistent enforcing your rights and defending the authenticity of your products, market opportunities can also grow proportionally and that often come accompanied with an increase recognition and popularity of the brand and products among the consumers.
Thus, the path, even if long, may worth it.
*A modified version of this article has been published on Focus by the CBBC