China is the world’s largest manufacturer and home to the world’s largest middle-class market. Over 900 million people spend $22 billion every day. Before you tap into the Chinese market, make sure you protect your intellectual property. How to register your trademark in China?
Trademark in China
Starbucks and logo copyright in China
Over a decade ago, Starbucks, an American global coffee company, decided to enter the Chinese market and open its coffee shops there. “Starbucks” was translated to Chinese as Xingbake (星巴克), but the corporation realized that this trademark is already registered by an entity known as Shanghai Xingbake Co. Ltd. Moreover, the Shanghai company started to open coffee shops that resembled the original ones, with a close copy of the world-renowned logo. Of course, the company was sued.
Finally, the Shanghai court settled the case after two years of proceedings. Shanghai Xingbake was ruled to stop copyright infringement practices and pay the compensation of 500 000 RMB.
This case is an important lesson in China’s copyright protection situation. The whole dispute might have never taken place if only Starbucks had taken certain necessary steps before entering the Chinese market.
Intellectual property in China
Intellectual property was introduced late in China. Although trademark is protected by law (Trademark law of the People’s Republic of China, 26 August 1982), law enforcement is not effective enough, counterfeit products are easy to come across, and their manufacturers are getting more and more proficient, the typical consumer is no longer able to tell the original from the fake one. Probably the biggest risk is trademark hijacking.
Big companies like Starbucks enjoy a higher level of protection than small and medium enterprises (SMEs). Even if they neglect the necessary formalities, they may try to prove that the trademark is world-renowned. For SMEs, proper registration is a must. The rule in China for IP is “first to file,” unlike the “first to use” in the US.
How to register a trademark in China?
- First, find the Chinese equivalent of our brand name. It should sound good in Chinese, and the characters should bear some features related to our products’ characteristics. The best examples include 可口可乐 for Coca-Cola, which literally means “delicious and amusing,” or 宝马 for BMW, which means “precious horse.” In order to fully protect our rights, names that sound similar to our brand name should also be registered.
- Applicants must register their trademarks in the China Trademark Office, a subsidiary of the State Administration of Industry and Commerce of China (located in Beijing). The whole process takes 1.5 to 2 years. China’s trademark registration system is divided into classes. Therefore, the infringers may register identical or similar trademarks under a different subclass of products. Thus defensive protection is advised – it is better to register the trademark of the products that are not yet planned for export; the earlier, the better.
- Renew the application every ten years. Request the renewal within 12 months before the expiration date.
Avoid trademark hijacking in China
Supplier acquires your trademark
A common mistake is outsourcing the production to China without registering the trademark. When a Western company wants to sell its product in China, it usually turns out that its trademark is already registered. And if the Chinese contractor sells bad quality products on the domestic market under the brand, the company’s reputation may be seriously damaged.
Cybersquatting in China
Another danger is the so-called cybersquatting. When we are about to start our operations in China, we may as well find out that our internet domain name is already occupied. How to deal with this situation? Our trademark should be registered in China, but it is not the end. In order to win the court case, several conditions should be met: for example, the defendant is malicious in his actions, he has no justifiable reason for registering the domain, and he causes confusion among the public. Otherwise, there is no chance of winning the case, and the only course of action would be to pay for the domain to its owner.
How to get back the right to our trademark?
But what if, despite all precautions, our rights have been infringed? In China, trademark owners have two ways of enforcing their rights. We already mentioned court actions, which may be effective but are costly and take a long time. Another way is to leave the case up to administrative organs. The Administration handles over 90% of trademark infringement cases for Industry and Commerce (AIC). Administration actions are fast enough and way cheaper than court actions. But AIC cannot order compensation, so court actions are recommended in more complex infringement cases.
Chinese authorities are often blamed for insufficient copyright protection and law enforcement. Indeed, many criminal activities are going on, and dozens of fake Louis Vuitton bags or iPhones can be bought at just a few crossroads from Tian’anmen Square. On the other hand, many actions were taken to create a more friendly environment for foreign investors. We should prepare ourselves well for all the dangers. Still, with the help of local law firms and trademark agencies, we can protect trademarks and make the company recognizable and thriving in the Chinese market.
Do not wait any longer and register your trademark in China.