Intellectual Property Protection in China

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Author: Dominik Stuiber

China is considered today to be ‘The Wild-West’ when it comes to Intellectual Property (IP) Rights. IP infringements occur on a daily basis and IP piracy and squatting is a common problem. Enforcement claims by foreign brands against infringements in China against the misuse of their trademarks and IP (Intellectual Property) continue to often be unsuccessful.

One of the reasons for this is the registration regime. A substantial difference lies in the applicable principle in China (first-to-file) versus the first-to-use principle, which applies in most developed IP regimes. In China’s first-to-file registration system, the use, or intended use, of a trademark is irrelevant. As long as the trademark is registered, it will enjoy protection. Whereas, the first-to-use principle may provide trademark protection even if the mark has not been registered but has been used in commerce. The first-to-file regime enables trademark squatting and piracy, a practice otherwise considered as bad-faith registrations. This is also a common reason why filing an infringement claim in China is a challenging undertaking and often, the only remedy is to acquire the trademark from its Chinese owner.

However, it seems that a shift in trademark policy is starting to happen in China. China’s Intellectual Property Office declared its intention to implement an IP strategy to develop China into an IP powerhouse. The Chinese courts and trademark authorities have started to clarify the element of bad faith: “Bad faith registrations are malicious. They disturb the market and distort the trademark system”, said chief judge Su Chi. Bad faith refers to the filing of a trademark of a famous foreign brand with the intent to profit from it. The recent cases of international brands such as Facebook, Michael Jordan, MGM Studios and Esso which were decided in their favour against IP infringement in China are possibly a sign of that new direction. Nevertheless, for smaller brands, the outlook may not be as bright. Infringement suits can be very lengthy and costly procedures implying that smaller firms would simply not survive.

Why do you need a trademark in China?

Manufacturing in China

Producing goods in China exposes the IP to the manufacturer meaning that if the contractor decides to register your trademark in bad faith, i.e. if the contractor is being replaced, the goods may be held by customs and prevented from export.

The manufacturer sells the goods in China with your IP.

Sales and distribution in China

Under the trademark law in China, any party who facilitates an IP infringement may be held accountable. Most distributers, shops, malls and e-retailers are reluctant to lease shop space, (be it physical or online), to anyone without evidence of IP and trademark ownership in China.

For commercial purpose, it is recommended to create and protect a trademark in Chinese. As a product branded only with Chinese characters in a Western country would have little commercial success, so also selling a brand with Latin letters in China may not be relevant - people will start using a Chinese name for your brand. Having registered a Latin trademark would not extend to the Chinese name. Someone else could register the Chinese name and prevent you from using it.

How long will it take to register a trademark in China?

The average time required to register a trademark in China is 18 months. Thus, planning and strategy in entering China are important. Otherwise, your investments are potentially idle and non-productive.

Where do I start?

Contact info@encorepro.com with your questions.