Trademarks and China – Preventing a Great Wall of Laments

There is no point in expressing the importance of China's economy. With an estimated population of 1.4 billion and the fact that an immense portion of the world’s goods are being produced and shipped from China, trademark owners should be marching to protect their trademarks in mainland China, Hong Kong and Macau.

As a First-to-File jurisdiction, actual use or true ownership of a trademark is for the most part irrelevant. Evidence of use will not have to be provided to register a trademark, nor is it required to accompany a declaration of use or specimen of use in order to register a trademark or renew it. In China, foreign trademark owners are left vulnerable to becoming the victim of trademark squatting and face true difficulties in regaining their trademarks. The sheer magnitude of China's economy, growth in spending capacity of local consumers and trademark law and procedure that in practice facilitates the appropriation of another’s trademarks, has made for a perfect equation in giving rise to acts of trademark squatting.

Bad-faith trademark filing (aka trademark squatting), is used to refer to the actions of a person that registers, in bad faith, a trademark that is known and identified with another. The number of acts of trademark squatting continues to grow incrementally in China every year.

If your business is not interested in offering products in China but has its products manufactured there

Even if you are not interested in offering your products in China but are or wish to produce your products there, REGISTER YOUR TRADEDMARK! All too often we receive frantic new clients who have had their products held up in Chinese ports. The reason? Someone else has registered the trademark in China and registered the trademark with customs. If this occurs the only short-term solution, and often the only one, is to negotiate with the owner of the trademark registration in China to have the mark transferred. We even have had several cases in which the person that registered the trademark in China is directly associated with the factory or company in charge of manufacturing our clients’ products. Registrations in these cases are done with the intention of selling to the “real owner” at an inflated price or using it as a bargaining chip to secure future manufacturing contracts.

If you manufacture your products in China and wish to prevent the risk of having your merchandise held up by customs due to the actions of a trademark squatter, register your trademark. A couple of bucks now is peanuts compared with what you may end up having to dish out if you do not preventively register it.

If you already registered your trademark in China or are planning to in the future

Make sure you register your trademark in all of China's corresponding sub-classes

China, along with the vast majority of other countries, follows the Nice classification system. However, China is unique in the way each class is also subdivided into sub-classes. Therefore, although you may have registered your trademark in a corresponding class, a similar or even identical trademark may eventually be registered in the same class but in different sub-classes. In most other countries this would not be possible as most products or services in a single class are closely related, thus office actions or grounds for third party oppositions would exist. Due to China's sub-class system it is recommended that in order to prevent “parallel” registrations, the description of goods or services of a trademark should be broadened if necessary, in order to register and cover all sub-classes that contain similar or related goods or services under the same class.

For example, if your businesses products are clothing in general then products such as sweaters, baby pants, bathing suits, sandals and mittens would all fall under class 25, and in most countries a general description of goods would be sufficient to adequately protect the trademark for all products under this class. However, in China the mentioned products are all in different sub classes under class 25:

• Sweaters correspond to subclass 01 under class 25.
• Baby Pants correspond to subclass 02 under class 25.
• Bathing suits correspond to subclass 03 under class 25.
• Sandals correspond to subclass 07 under class 25.
• Mittens correspond to subclass 10 under class 25.

It is most advisable that when preparing a description of goods or services for your trademark in China, you insist that the local agent take the necessary steps to register your trademark under all or as many sub-classes as possible which relate to your trademark's description of goods and/or services.

If you only registered or are thinking of registering your trademark in English or other non-Chinese characters

The majority of Chinese consumers, especially from the mainland, identify products and companies only by their Chinese names  or trademarks. Although you might have registered your trademark in English, you may want to get a step ahead and control how Chinese consumers will refer to your company, products, or services. Furthermore, be advised that although you may have registered your trademark in English, third parties may still register the Chinese equivalent.

When entering the Chinese market, a considerable amount of thought should be given to deciding which should be the Chinese equivalent of your mark for local consumers. Many times, a “simple” and straightforward translation may damage your brand's image. Take Pepsi’s blooper when deciding the Chinese version of their slogan “Come alive with the Pepsi Generation”, the Chinese version (translation) was “Pepsi brings your ancestors back from the grave”… just imagine the general disappointment or fear it brought to sons-in-law.

The Chinese version of your trademark is one that should be created by marketing experts that are native speakers. Depending on the pros and cons, one may opt for the Chinese version of the mark to be a translation, transliteration or simply a phonetic equivalency. However, consideration must be given to how a trademark will be perceived through the different dialects. What may work in Cantonese will not necessarily work in Mandarin. Furthermore, since Chinese characters are ideograms (graphic symbols that represent concepts or ideas), which characters should be used, whether simplified and non-simplified characters, is something that will also have to be analyzed by marketing specialists. Google translate just won’t cut it…

Protecting your trademark in Hong Kong and Macau

Registering a trademark in China does not grant protection in Hong Kong or Macau, as these two jurisdictions are special administrative regions and each has their own registration office. In other words, in order for a trademark to have protection either in Hong Kong or Macau a trademark would have to be registered directly in each territory of interest.

The same goes for Taiwan, as an independent country, trademarks must be directly registered through the intellectual property office of Taiwan.