The "Wangzhihe" (an old and famous Chinese brand) German trademark squatting case was really a sensation to the public in 2005, in which Wangzhihe finally clawed back its trademark right after many difficulties. This case gives us valuable lessons and also cautions famous Chinese enterprises for the importance of trademark overseas protection.

In recent years, on one hand, with China’s rapid economic growth, an increasing number of Chinese companies have ventured abroad, entering the international market and playing an important role in global competition. On the other hand, with the growing reputation and amounts of production exportation, the Chinese enterprises have become more and more influential in the overseas market, while the risks of squatting cases against their trade names and trademarks are becoming more serious, especially when the public awareness of intellectual property are increading as well

There are lots of reasons for trademark squatting, most of which are the poor awareness and knowledge of trademark of those enterprises who suffer from squatting trademarks. When these enterprises are still small and at the initial stages of exporting products, they are also under too strict budget control to deal with somehow large expenses for trademark overseas registration. Later as a result of the development of these enterprises, they are able and endeavor to enlarge their businesses in the overseas market, but to discover that their trademarks have already been registered by others, which put itself in a very passive position eventually.

To avoid overseas trademark squatting, enterprises should follow with the "First-to-Register Mark" principle. Currently, a majority of countries and regions adopt the "First-to-File" doctrine, but only a handful of countries adopt the" First-to-Use "doctrine, such as the US. The" First-to-File " doctrine means that the registration of trademark does not depend on prior use (Article 29 of the PRC Trademark Law provides that where two or more applicants apply to register identical or similar trademarks over same or similar goods, the Trademark Office shall preliminarily examine and publish the pre-registered trademark), therefore, it is critical for enterprises to have an earlier filing date for trademark registration. In consideration of the different systems for applications for trademark registration in each coutries, Chinese enterprises, who are looking for business development overseas and become international, should adopt the "First-to-Register Mark" principle, namely, the earlier application to file for trademark registration, the larger benefits to get by means of trademark rights.

At present, Chinese enterprises may register their trademarks overseas through two methods. One is to file an application for trademark registration in a each single country or region, while the other is to apply via the Madrid system for international trademark registration, where under the provisions of the Madr id Agreement concerning the International Registration of Marks (hereinafter the "Madrid Agreement") or the Protocol Relating to the Madrid Agreement concerning the International Registration of Marks (hereinafter the "Madrid Protocol"), applicants may register their marks in one or more member countries via the Madrid system for international registration.

Compared with the application for registration in a single country or region, Madrid international registration, as the main protecting means for trademarks overseas, has great advantages, which can be summarized as follows:

1. Registration without going abroad

Compared with the application for registration in a single country or region, under the Madrid system for international registration, an applicant may file an application for the international trademark registration without going abroad, which means that an applicant need only submit required application documents to the International Registration Division of Trademark Office of the State Administration for Industry & Commerce (SAIC), so as to apply for the Madrid International Registration therein and designate into the interested countries or regions (all member countries or regions under the Madrid system).

With regard to the qualification of applicant for Madrid international registration, the Madrid Agreement provides a relative general requirement that an applicant may apply for Madrid international registration when one of the following conditions is met:

  1. the applicant has a real and effective industrial or commercial establishment in China; or
  2. the applicant has a domicile (or head office) in China; or
  3. the applicant is of Chinese nationality.

If the applicant meets any of the said conditions and has an prior trademark application/registration in China, he may file the Madrid international registration and designate in part or all member countries to extend the protection of trademark to the same coverage of countries..

2. One language, one application

Each country and region requires applicants to file application documents in its own official language, which is avoided well by means of the Madrid international registration. As the application is only filed to one trademark office, single language therefore is adopted, and even Chinese information can be used at the phase of original filing country, which is very convenient to applicants. In addition, to facilitate applicants of each country, four languages, i.e. English, French, Spanish and Portuguese are provided for use, so that applicants may use a language as per the requirement of their countries and their preferable languges.

When applying for Madrid international registration, an applicant should submit the Chinese version of "The Madrid International Registration Application Form I" and foreign language application form—MM forms (MM1-MM19) (MM as abbreviation for Madrid marks). The related application forms are available for download on the website of the Trademark Office of the SAIC.

3. Single currency, low costs

As same as the situation of application languages, al l the relevant fees must be paid in one currency, namely, Swiss Francs, due to the single international bureou to be dealt with. The cost is so cheap as only 653 or 903 Francs should be enough for the payment.

4. Subsequent designation, the same registration number

If an applicant does not designate a contracting member country when applying for international registration or originally designates a contracting party but gets refused or invalid, or such member country had not joined the Madrid system when the international registration was applied, the applicant may re-designate the member country by a subsequent designation for an extension of protection of its trademark in the country.

Subsequent designation means that after the Madrid international registration, based on the international application, the registrant of the trademark can file a petition with the additional member countries to request for an extension of protection for the trademark therein through the Madrid system. The trademark in subsequent designation uses the same registration number as that of the original registration, and the valid duration is from the date of subsequent designation to the invalid date of the original registration. As the registration number is the same, it is easy for applicants to manage their trademarks, such as having the same renewal date.

Besides the above advantages of the international registration under the Madrid system, the World Intellectual Property Organization (WIPO) also offers electronic information, where applicants can check their marks information as well as the process of registrations at any time so that they can manage their trademarks and products in the market efficiently.

The Madrid system for international registration plays a significant role in the overseas protection of trademarks. Under the current economy and market situation, trademarks are of vital importance to the commercial activities of an enterprise; therefore, Chinese enterprises should effectively make use of the Madrid system to protect their marks and avoid trademark squatting in other countries and regions, and keep ahead of the competition in the overseas market.