From registering a trademark in China to protecting it once your business is established, for companies that want to export to China, IPR doesn’t have to be complicated, writes Daniel de Prado, Partner at HFG IP
Protecting your trade mark and the distinctive signs and external appearance of your products in China should be one of the first and also most crucial steps taken by any company aiming to develop its business or sell its products in China.
Unfortunately, the protection and registration of those assets are often 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.
A strong trade mark can be instrumental in winning new customers when establishing a brand in China. You invest time and money into building the reputation of your company, so it would be very damaging to your business if someone else began using your name and/or brand to sell their own products or services.
How to register your trademark or other intellectual property rights in China
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 of the Chinese intellectual property system, it is advised to register a trademark in China following the national system, i.e., filing an application to register your trademark in China directly before the China Intellectual Property Administration (CNIPA).
Many entities, including CBBC, offer information about protecting and registering your IPR in China. However, when it comes to registering your trademark in China, it is highly advised to obtain professional assistance. There are certain technical details and particularities for which a comprehensive understanding of the Chinese intellectual property system is required, so professional advice from a law firm or intellectual property agency is essential to protect your assets and rights.
Bad-faith trademark registrations can limit a foreign company’s freedom to operate by restricting its ability to enter the Chinese market
Nevertheless, in certain scenarios, trademark registration may not be enough to protect the features that characterise 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 for the main aspects of your product or service.
Common obstacles and potential scenarios when protecting your IPR in China
Once you have decided to start the process of registering a trademark in China, it is common to come across similar or identical trademarks already registered by other 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 when they want to do business here, they find that their trademark 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. They can limit a 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 trademark holder is able to intercept goods bearing the trademark at Chinese customs.
The only tried and tested way to prevent this from happening is to anticipate bad faith applications by protecting (registering) your trademark in China as soon as possible. Nevertheless, if your company is confronted with a situation in which somebody else has already registered your desired trademark in China, there may still be ways to contend it. In that case, it may be necessary to initiate additional specific actions with the China Intellectual Property Office with the aim of either cancelling or invalidating the preemptive registration or negotiating with the registrant.
How to defend and enforce your IPR once registered in China
Finally, once your trademark or other IPR are successfully registered in China and you are using them in the market to promote your products or services, there may also be third companies who, in an attempt to take advantage of the popularity or recognition of the trademark, copy it or use it to commercialise the same or similar products.
These behaviours may cause confusion in the market, casting doubt on the origin and authenticity of both your goods and the third party’s goods. This situation usually represents an infringement of the rights of the trademark holder, harming its interests. Consequently, it is important to tackle infringing activities as soon as possible and enforce the trademark holder’s rights by means of the legal tools provided by intellectual property regulations.
This potential scenario of the infringement of trademark rights is 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 is enshrined in the expression “in China you cannot do anything if someone copies you”, which 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 are numerous.
The professional advice is to analyse and define a strategy on how to act against IPR infringers. However, in previous cases, if we are solid and persistent in enforcing your rights and defending the authenticity of your products, market opportunities can also grow proportionally and that often comes accompanied by increased recognition and popularity of the brand and products among the consumers.
This article is part of a series on exporting to China. See all the articles in the series below.
Part 1: How to conduct market research
Part 2: Protecting your trade mark
Part 3: How to choose the correct route to enter the China market
Part 4: The dos and don’ts of choosing a distributor
Part 5: How to find and hire staff in China