Plan for China – your trademark is important
Many businesses operate without registering a trademark in their home territory. While this is not a good idea, it is possible in many jurisdictions because at least some legal rights may accrue through use.
Home trademark rights do not extend to China
China is quite a different story. Your accumulated “at home” use of trade names, logos, and the like may accrue the rights previously referred to even without trademark registration.
Those rights are of no practical use in China, because trademarks are territorial. Rights outside China are not applicable inside China, the exception being where a local registered trademark is formally extended to China through the Madrid protocol. China trademark registration is very important for China success.
China is first to register – why wait?
There is another complication: China is a “first to register” trademark jurisdiction, not “first to use”. Put another way – you do not have to show any prior use at all to register a trademark in China. China is a developing country with lots of budding entrepreneurs looking for ways to get ahead. Some of them have taken to registering foreign trademarks in China, either to use as the name for their own business, or to sell to the rightful user outside China, In some cases it is just a tactic to prevent the rightful user from using its trademark in China. Irrespective of motivation, there is a real chance that someone in China will register your “brand” as a trademark in China.
China trademark registration protects you
There is an easy and relatively inexpensive way to prevent this – register your own trademark in China before others do. Chinese can register directly, but others must use an agent in China for this. It takes a little time, but it is the surest way to protect your brand in China. China trademark registration is therefore very important.
As with everything else, “cheap” is not usually the best value, so it is best to ensure that you get a complete service, not some bargain basement deal. It is your business future that is a stake here.
You could lose your China opportunity if you do not register your trademark in China.
An example might make the picture clearer. Imagine you are a well known wine producer, (say) “Alpinia Wines”. Every bottle you produce proudly bears the “Alpinia” mark at the top of the label, the masthead brand if you like. In the usual way the label then identifies the particular vineyard, the variety etc etc. Even the corks have the Alpinia brand on them.
Alpinia Wines decides that it wants to sell into China, one of the fastest growing markets for quality wines. The first shipment of wines is dispatched to their importer. Unfortunately, there is a problem. The importer advises that the shipment has been detained by China Customs because the labels infringe trademarks held by others. Alpinia has already been registered as a trademark for wine in China! China Customs warehousing charges are mounting and the wines will probably have to be destroyed. There could also be fines.
The owner of the Alpinia trademark in China for wines can request the China Customs to detain infringing goods . If products get past the China Customs undetected, as might happen, the trademark owner can still take action further down the line.
In the short term Alpinia Wines has no real options if China Customs has detained the goods. They might be able to quickly negotiate a licence with the trademark owner, but that is probably not very likely.
In the medium term, Alpinia Wines has limited options: it can re-brand for the China market, an expensive and unwanted course of action; it can try to obtain a licence or buy the China trademark from the China trademark owner; or it can try to find a legal ground that would permit them to have the China trademark cancelled or invalidated, allowing Alpinia Wines to apply for it.
Each of these options has common factors – they are inconvenient, expensive, uncertain, and time consuming. The time and cost invested in registering a trademark in China is trivial by comparison.
The example above has been drawn from our experience in this area. It is just an example on these pages, but for the business people involved it is devastating. The cost is not just the actual money costs, but the secondary cost of being diverted from developing the business and lost business opportunities that may be taken up by others. All preventable by timely trademark registration in China, which is what we have been recommending for a long time.
Take away point: China trademark registration is very important
- To answer our own question, on any rational analysis, having registered China trademarks is very important for anyone that may do business with China, even if doing business in or with China looks a long way off now.
- At the very latest, China trademarks should be registered as one of the very first steps in actually engaging with China.
- The likely cost of failing to register far outweighs the cost of registration.
GB
© 2014 Graham Brown and Wei Xin. All rights reserved.
Tags: China Business 101, Trademarks