Trademark registration in China became much more accessible in recent years. It goes hand in hand with China’s massive economic development. The Chinese market is now world leading in various fields, and attracts many foreign companies. Yet, China’s trademark system has some unique features you should be familiar with. In this article, we will explain why you should submit your trademark applications in China as soon as possible, why you should consider a Chinese transcript of your brands and some more important things about China’s trademark system.
Decker & Ofir is a boutique law firm specializing in trademark law and intellectual property (IP). The firm represents Israeli and international clients in IP legal matters. The services offered by the firm include assistance with handling trademark registration in various countries, representation in trademark legal proceedings, portfolio management, etc.
The Chinese Market in 2021
Any company that wishes to stand out in today’s global market must take China into account. During the last 2 decades, China has experienced a tremendous economic growth, and became the world’s second-largest economy. With more than a billion consumers, the Chinese market simply cannot be ignored.
The increasing interest of the Chinese consumers in international brands has changed the country’s approach toward trademark protection. China was known in the past for its many cases of trademark infringement and counterfeiting of goods. Although these phenomena still occur, they are not as extensive. The Chinese enforcement system goes through some significant reforms. It gets more efficient in IP protection, and particularly trademark protection.
The above factors attract many international companies to enter the Chinese market. The trademark registration system in China serves hundreds of thousands of international companies. Yet, the Chinese system is not quite similar to the systems in other countries. There are some important factors to be aware of in this regard, before filing your trademark application in China.
Throughout the years, our firm has gained long experience in trademark registration and litigation for international clients. We work together with leading trademark experts in China, and are familiar with the unique features of the Chinese system. Below we will share from our experience some beneficial tips for those who consider registering their trademark in China.
What You Should Know About China’s Trademark System?
The trademark system in China has become much more accessible for international companies. It enables both local and international registration. Upon registration, trademark protection can be enforced not only through the Chinese courts. China also has trademark enforcement offices that are authorized to issue administrative orders against cases of infringement.
As mentioned above, there are some great differences between the Chinese trademark system and the systems in most western countries. The main and most important difference is the absence of legal protection without trademark registration. In many countries, including Israel, there are several alternative legal protections that can be granted to unregistered trademarks. For instance, the tort of “passing off”.
In China, there is a narrow possibility to obtain recognition of well-known trademarks. However, in most cases this privilege is reserved exclusively to powerful and widely-known brands. The Chinese authorities have set a high burden of proof that the mark is well-known. It makes it extremely challenging to gain legal protection without trademark registration. Thus, trademark registration in China is crucial, in order to ensure protection for your brands.
Register Your Trademarks, Before Others Will
Moreover, the Chinese trademark system operates by the “first to file” method. It means that the first person or company who files a trademark application will be able to gain trademark protection. Even those who are not the authentic owners of a brand can technically own it, and prevent the authentic owners from using it!
In most parts of the world, this is the method of the patent system. Yet, for trademarks, the method can be better described as “first to use”. Registration by others could be a valid claim in trademark opposition proceedings. The situation in China is much more complex. It is therefore very important to register a trademark as quickly as possible by its original owner. Otherwise, she might lose her protection in the territory.
How to Spell Your Brand in Chinese?
Another area of difference compared to other trademark systems is the language of the mark. Most non-English speaking countries grant protection to trademarks in other languages, even when the brand’s name is not marketed in its original language. For instance, in the Cartier case, the Israeli court issued an injunction against Israeli ice cream company who labeled its product by the Hebrew transcription of “Cartier” (קרטייה). There are many similar cases in other countries, in which the results were the same.
In China, however, even when a trademark is registered in English, it won’t necessarily protect its transcription into Chinese characters. Therefore, registration of Chinese transcription is important in order to prevent others from using the brand when it is written in Chinese. Our tips so far are as follows: (1) Register your trademark in China, in order to gain legal protection; (2) Do it quickly, before others will; (3) Do consider registration of the Chinese transliteration of the mark.
How Chinese Trademark Applications are Being Processed?
The Chinese Trademark Office (CTMO) is the authority in charge of processing trademark applications. There are 2 main registration tracks. One is by filing a local trademark application, directly to the Chinese authorities. The second option is to file an international trademark application from another country’s trademark office, via Madrid Protocol.
Each route has its advantages and disadvantages. For instance, as we explained above, registering a trademark in a foreign language won’t always prevent use of its Chinese transcription. In such cases a local registration might be more appropriate. However, when the trademark does not include words, the international registration route might be more suitable. It is best to consult a trademark attorney with experience in trademark registration in China, in order to reach the right decision in each particular case.
Nevertheless, it is important to conduct a trademark search, in order to ensure no one else already owns the mark in China. The search can be conducted through the Chinese trademark database, which is open to the public. However, the search must be as wide and comprehensive as possible. It is not at all an easy task, since there is a huge amount of registered trademarks in the Chinese database. It is thus recommended to use professional trademark search services, which will help to ensure the mark is free for registration in China.
Costs and Duration of Trademark Registration Process in China
Compared to other countries, trademark registration fees in china are not very costly. The fees in US dollars amount to approximately $1000 for trademark registration under 1 class. Each additional class would have an additional fee of around $50. Similarly to other countries, there can be additional fees in the case of events occurring during the process. For instance, refusal for trademark registration would require to file an appeal, which will include additional costs.
Trademark registration process in China could be lengthy, as there are an immense number of applications. On average, the whole process takes about 12-24 months. At the end of the process, the trademark office will issue its decision whether to approve or refuse the registration. In a case of refusal, it is possible to file an appeal before an inner board of the CTMA. If the board would reject the appeal, it is possible to appeal to the Chinese Intellectual Property Courts.
Things to Know About Collaborating With Chinese Agents and Franchisees
Due to the unique characteristics of the Chinese market, it is customary to use agents and franchisees in order to market international trademarks. However, different problems may occur in such cases. For instance, there are cases where agents register the trademarks under their name without informing. If the brand’s owner wishes to replace the agent, the previous agent might hold the trademark as a “hostage”, and demand money for waiving its ownership.
It is therefore crucially important to define the terms with the Chinese agents and to set profound limits to their abilities. This would help to ensure they won’t register the trademark under their name, or commit any other action without prior consent by the brand’s owner.
Trademark Enforcement in China
China is unique in its trademark enforcement system. In most countries, the main address for battling trademark infringements would be the court. The Chinese courts do provide the standard legal remedies, such as damages and an injunctive relief. The procedure is not the same as in western countries and not always as transparent. Yet, the proceedings are relatively shorter compared to other countries, and the judges usually have background in IP matters.
However, there is another possible track in cases of trademark infringement in China: China’s Ministry of Industry and Information Technology has its trademark enforcement offices. The offices are located in different regions of the country. They are authorized to investigate trademark infringement cases and to enforce them together with the Chinese police.
The offices can also issue interim injunctions against infringements. Yet, the powers granted to the offices are limited compared to courts. For instance, they cannot rule damages for infringements. Yet, they can provide a fast and efficient treatment against infringers, while it is still possible to initiate parallel court proceedings.
Case Study – the New Balance Case
In order to deeply understand the significant differences of the Chinese trademark system compared to the system in western countries, one can learn from previous legal cases. The case of New Balance, the well known footwear and sports company, clearly shows that even top international companies can get into trouble while attempting to protect their brands in China.
New Balance chose to use a Chinese transcription of its brand, by the name of “Xin Bai Lun”. However, this mark was registered by a Chinese businessman by the name of Zhou Lelun. New Balance tried to oppose the registration, but failed. It then began to use the trademark to market its products.
Zhou filed a lawsuit against New Balance, and won. He was awarded with damages of 98 million yuan (approx. 15 million USD). New Balance appealed the judgement. The higher court rejected New Balance’s appeal with respect to its liability for trademark infringement. However, the court decided to reduce the amount of damages to 5 million yuan (approx. 800,000 USD).
Although the company is still not allowed to use the Chinese trademark “Xin Bai Lun”, New Balance continues to battle infringements of its logo in English. Recently, the company has won a long battle, for using its “N” logo. New Balance recently won the battle in court, and was awarded damages of around 3.8 million USD (the highest amount of damages in a Chinese trademark lawsuit yet). These cases demonstrate the importance of trademark registration in China. But they also illustrate the ongoing improvements of China’s enforcement system.
For more questions and inquiries about trademark registration in China, you can contact us. The law firm of Decker & Ofir is well experienced with representing Israeli and international clients in trademark registration in China and around the world. We work together with a leading Chinese agency, in order to assist our clients with handling trademark registration and IP litigation.