Make your mark in China

Pro­tect­ing your trade mark in China

Aus­tralian busi­ness­es are increas­ing­ly recog­nis­ing the grow­ing impor­tance of Chi­na both as a mar­ket for their goods and ser­vices and as a source of man­u­fac­tured prod­ucts. The pro­tec­tion of trade marks in Chi­na should be of crit­i­cal impor­tance for such busi­ness­es. Recent pub­lic dis­cus­sion high­lights how well-known com­pa­nies such as Pen­folds and Weet-Bix and high-pro­file indi­vid­u­als like Michael Jor­dan were caught up in legal bat­tles over trade marks in Chi­na due to fail­ure to reg­is­ter their trade marks at the outset.

Although there are sim­i­lar­i­ties between the Aus­tralian and Chi­nese trade marks sys­tems, there are some fun­da­men­tal dif­fer­ences. Here are our top five tips for busi­ness­es think­ing about mov­ing into China.

(1) ​“First to file” v ​“First to use”

The key dis­tinc­tion between the Aus­tralian and Chi­nese trade marks sys­tem is that Chi­na adopts a ​“first to file” reg­is­tra­tion sys­tem rather than the Aus­tralian ​“first to use” sys­tem. In Aus­tralia, you may still have some legal claim over a trade mark if you can demon­strate that your busi­ness has used the mark in the past. In Chi­na, pri­or usage is not con­sid­ered. The first per­son to file for a par­tic­u­lar trade mark gen­er­al­ly owns the trade mark. This can lead to many prob­lems for Aus­tralian busi­ness­es intend­ing to oper­ate in Chi­na. Busi­ness­es who plan on open­ing in Chi­na, but do not reg­is­ter their trade marks pre-emp­tive­ly may find them­selves in a pro­tract­ed legal dis­putes over the own­er­ship of the marks. These dis­putes gen­er­al­ly arise with oth­er com­pa­nies who have reg­is­tered sim­i­lar marks. Reme­dies can include the fil­ing of an appli­ca­tion to can­cel a mark or nego­ti­a­tions to buy the mark. Nei­ther option is par­tic­u­lar­ly palatable.

(2) Brand­ing in China

One impor­tant com­mer­cial con­sid­er­a­tion to keep in mind lies in deter­min­ing the Chi­nese brand­ing of your prod­uct or busi­ness. It is impor­tant to reg­is­ter your trade mark both in Chi­nese and translit­er­at­ed form (pinyin), which is the Eng­lish form of the Chi­nese name. As most Chi­nese cus­tomers pre­fer to use a Chi­nese name for your brand, it is impor­tant for you to select a Chi­nese brand name. If you do not do so, anoth­er par­ty may start using a Chi­nese ver­sion of your brand name to refer to a sim­i­lar prod­uct or ser­vice. This name could then be reg­is­tered by that par­ty, thus obstruct­ing your mar­ket­ing activ­i­ties in China.

(3) Man­u­fac­tur­ing in China

If you man­u­fac­ture your goods in Chi­na, you are at risk of breach­ing the rights asso­ci­at­ed with a reg­is­tered trade mark. This could apply even if you do not sell your goods in Chi­na. The act of plac­ing your brand on man­u­fac­tured goods means that you are effec­tive­ly using your trade mark in Chi­na. It is there­fore impor­tant to reg­is­ter your trade mark for any prod­uct you intend to manufacture.

A par­tic­u­lar­ly impor­tant aspect to con­sid­er in set­ting up a man­u­fac­tur­ing busi­ness in Chi­na is that you main­tain own­er­ship of the intel­lec­tu­al prop­er­ty in the tech­nol­o­gy and asso­ci­at­ed com­mer­cial rep­u­ta­tion in that prod­uct. It is there­fore impor­tant to both enter into bind­ing agree­ments as to the use and licens­ing of your intel­lec­tu­al property.

(4) Fil­ing a trade mark appli­ca­tion in China

There are two main meth­ods of fil­ing a trade mark in Chi­na. The sim­plest method is to file an inter­na­tion­al trade mark appli­ca­tion from Aus­tralia which des­ig­nates the juris­dic­tion of Chi­na. An inter­na­tion­al appli­ca­tion must be based on your pre­vi­ous­ly filed Aus­tralian trade mark. Alter­na­tive­ly, a trade mark appli­ca­tion may be filed direct­ly in Chi­na through Chi­nese lawyers based in Chi­na. Although such an appli­ca­tion may be more expen­sive than an inter­na­tion­al appli­ca­tion, a Chi­na-based trade mark spe­cial­ist has more expe­ri­ence in deter­min­ing the pre­cise word­ing of the spec­i­fi­ca­tion of the mark in order that it com­plies with Chi­nese practice.

Trade mark reg­is­tra­tions in Chi­na are valid for 10 years. The trade mark may be renewed every 10 years but can be removed from the reg­is­ter for non-use. A stan­dard trade mark reg­is­tra­tion takes 12 to 15 months to be approved from date of application.

(5) Liais­ing with Government

Aus­tralia has sent its first IP Aus­tralia Coun­sel­lor to Chi­na, David Ben­nett, who is work­ing out of the Aus­tralian Embassy in Bei­jing as of ear­ly 2017. Mr Ben­net­t’s role involves sup­port­ing Aus­tralian busi­ness to nav­i­gate the Chi­nese IP sys­tem, which includes pro­vid­ing guid­ance on IP reg­is­tra­tion, enforce­ment and court pro­ce­dures and liais­ing with the Aus­tralian busi­ness com­mu­ni­ty in Chi­na. This is a wel­come step as the Unit­ed States, Britain and Japan have all had Chi­na IP coun­sel­lors for some years.

The rela­tion­ship between IP Aus­tralia and the State Intel­lec­tu­al Prop­er­ty Office of Chi­na was fur­ther strength­ened with the sign­ing of a Mem­o­ran­dum of Under­stand­ing between the two organ­i­sa­tions dur­ing the vis­it of the Chi­nese Pre­mier to Aus­tralia in March 2017.

IF YOU REMEM­BER ONE THING

Be proac­tive about pro­tect­ing your IP in Chi­na. Trade mark appli­ca­tions are not par­tic­u­lar­ly expen­sive and fail­ure to seek reg­is­tra­tion could destroy the rep­u­ta­tion you are seek­ing to cre­ate in Chi­na and severe­ly restrict your oppor­tu­ni­ty to break into what is becom­ing the world’s largest market.

Swaab Attor­neys has sig­nif­i­cant expe­ri­ence in draft­ing and pros­e­cut­ing trade mark appli­ca­tions in Aus­tralia and over­seas. As a mem­ber of Mer­i­tas, a glob­al net­work of 177 law firms ser­vic­ing 226 key mar­kets, we are well placed to deliv­er a com­pre­hen­sive IP strat­e­gy for your busi­ness look­ing to expand inter­na­tion­al­ly.

If you have any ques­tions relat­ed to pro­tect­ing your trade mark in Chi­na, Aus­tralia or inter­na­tion­al­ly, please con­tact us.