What you need to know about protecting your business by trademarking in China.
The second largest economy in the world is a temptation for any business. As the allure of China continues to grow, many Canadian companies are vying to position themselves to reap some of those benefits. But if you hope to give your business a tactical chance of success, then it’s essential to understand the function of intellectual property rights in the Chinese markets. More specifically, failure to be cautious of China’s trademark protection and enforcement regime can cause serious monetary and reputational damage to your business.
China’s first-to-file system: If you’re not first, you’re last.
China follows the first-to-file system when it comes to trademarks. The first-to-file system means that companies that successfully register a trademark first are better able to prevent other companies from using the same trademark. What’s even harder to believe is that a company does not need to have any intention to use the trademark to register it.
In China, this leads to what some refer to as ‘trademark squatting.’ If your business is not quick to the punch, you may end up facing legal battles similar to Apple, Tesla, and basketball legend Michael Jordan. In the case of Apple, they had to shell out $60 million just to get the trademark rights to the iPad name in China. For Michael Jordan, the battle has continued for over a decade as a company named Qiaodan (pronounced very similar to ‘Jordan’ in Chinese) filed trademarks for his jersey number and an eerily similar Jumpman logo.
Filing your trademark first is a critical step to avoiding tiresome and costly legal battles down the road. If you think you’re going to eventually sell your products in China, you may want to consider protecting your intellectual property early.
If you’re going to be first, make sure you do it properly
Applications for trademarks can be submitted to the China Trademark Office (CTO). In Canada, over 75% of trademarks are filed by professional trademark agents or lawyers given the complexity involved. If you’re going to register a trademark in China, you may want to work with a professional – to ensure your trademark name is properly searched and each step of your trademark application is done thoroughly. With Route86 Trademark services, you can run a preliminary search for your trademark in China for FREE, and get help with receiving clearance for your trademark and filing your application in China.
Breadth and depth
When registering your trademark, it’s also important to ensure that it is broad enough to cover either the immediate class of your good or service, in addition to any related classes. Be diligent with your understanding of China’s trademark sub-class system as there are some key differences from what you may be familiar with in the Nice Classification system. It will also be helpful to review this with a trademark agent or lawyer before you file your application.
Language differences add complexity
Registering a trademark in China with roman characters (i.e the English alphabet) does not automatically protect you from the unwanted use or registration of the same trademark name in Chinese. You may want to carefully consider the trademark you are registering and ensure you’ve had marketing, legal experts, and native speakers review your application.
Should you be excited about entering the Chinese economy? Of course. Whether you’re investing or selling products directly to consumers, China’s markets present opportunities that are unmatched anywhere else in the world. But without a firm grasp of the first-to-file system for trademarking, the likelihood of achieving any degree of success is slim. Maximizing your intellectual property protection starts with registering your trademarks prior to entering the Chinese market. Then once you’ve taken the steps to adequately protect your business, be prepared to be vigilant when enforcing those rights.
Dr. Jian Xu, “Chinese Intellectual Property – A Practitioner’s Guide”, Chinese Intellectual Property Publishing House, January 2013.
This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates.