January 9, 2020
If a European company tries to enter the Chinese market without knowing the trademark regulations and practices of the country, it can result in obstacles to trade, forfeitures of rights and significant financial losses. Kolster’s partner Jani Kaulo has been advising companies on the Chinese market for years and is now giving practical tips on how to succeed there.
Millions of trademark applications are filed each year in China, and the vast majority of the applications come from Chinese companies. There are still hundreds of thousands of fraudulently registered trademarks that have been ‘hijacked’ from their rightful owners among the registered trademarks. China is strongly a so-called first-to-file country, meaning that the first to apply for registration will also obtain it.
Finnish brand owners keep repeating the same mistakes in China. The Trademark Law of the People’s Republic of China and its provisions differ in content from the Trade Marks Directive of the European Union and the Finnish Trademarks Act. Ignorance can be disastrous for a company.
However, European brand owners are well-placed to take advantage of their trademarks financially on the Chinese market, where brand awareness is increasing. This requires that the company’s home base is in order and that the IPR strategy developed to support the business strategy includes a brand strategy for China.
Because most Chinese people find foreign names difficult to pronounce, a local version of western trademarks quickly arises. It is better to establish one yourself.
The trademark holder should create a Chinese equivalent of the trademark at the latest when the trademark is introduced in China. This also allows the company to avoid the trademark being hijacked in a loosely formed Chinese version, i.e. it being registered fraudulently.
The Chinese version should be used in conjunction with the original trademark so that the two can be associated with each other. This builds a stronger brand.
It is advisable to employ a native Chinese-speaking professional to create the Chinese trademark, as meaning is a particularly important part of a good trademark. Before making a final decision on the local trademark and introducing it in China, it is also recommended to conduct a preliminary examination on the availability and eligibility for registration of the trademark in China. This ensures that the trademark is available and that you are not infringing the trademark rights of a third party. The need for a preliminary examination is becoming more emphasised year by year as the Chinese trademark register fills up with trademarks that then become obstacles to subsequent applications. Preliminary examinations allow you to select a trademark that is then likely to be eligible for registration.
For example, the Chinese version of the Finnish propeller propulsion unit STEERPROP is 斯迪舶 (pronounced: si di bo). The Chinese trademark is therefore reminiscent of the original when pronounced. The character 斯 can mean ‘this’ or ‘that kind’. It is also a Chinese surname. The character 迪 can mean ‘straight’, ‘to follow’ or ‘forward’. The character 舶 means a large, ocean-going vessel. So the last character clearly indicates that the trademark is associated with the marine industry.
Learn more about the correct timing and content of a trademark registration application.
If you have applied to register a trademark via an international route by naming China in your international trademark application, you will still need to apply for a registration certificate in Chinese separately. It is required when dealing with authorities and courts.
The Chinese authorities only accept registration certificates in Chinese, and it can take months to obtain a Chinese registration certificate. You should therefore apply for one as soon as the notification of international registration arrives from the Chinese Trademark Office so that you can be ready to react to a potential infringement instantly, if necessary.
The Chinese Trademark Office considers the identical or similar trademarks of similar or identical items as inseparable entities that must be owned by the same company. Therefore, if the owner wants to divide these types of trademarks out to another company, the owner must transfer all related trademarks to the same company.
One trademark registration may not be divided into parts for transfer. In such cases, the parties concerned should consider co-ownership or a special licensing agreement.
It is also good to remember that if a logo trademark is not eligible for registration as a trademark due to earlier similar trademarks or for some other reason, it should be protected by copyright registration. It is valid retroactively from the date that the logo was created.
An applicant for registration may not assign the registration symbol ® to its trademark until it has been registered by the Chinese Trademark Office. Unlawful use of the symbol may result in punishment under the Trademark Law of the People’s Republic of China. Authorities may not always have time to monitor the use of the symbol, but competitors could report its use.
European companies should keep this risk in mind especially when the trademark is registered in the European Union or other geographical areas but not in mainland China, and the companies are exporting their products to mainland China.
The same applies if the company’s trademark is not registered in China, but the company is transferring manufacturing or a licence to a Chinese company.
These situations will not arise when you apply for trademark registration in good time.
The Chinese trademark authorities do not accept trademarks that contain well-known geographical names, such as the name of a country or city, for registration apart from exceptional cases. In practice, such an exception would be if the authorities of the country in question have authorised the use of the geographical name in a trademark.
Although the Chinese trademark authorities do not require assurance of trademark use, the owner must endeavour to retain proof of use after using the trademark. It is crucial to the continued validity of a registered trademark should a third party seek the cancellation of the registration due to non-use.
Proof is also required if a trademark right has been infringed and the owner of the registered trademark is seeking compensation for the infringement. In this case, the owner must demonstrate the use of the trademark during the previous three years at the request of the opposing party. Otherwise, the court may dismiss the claim for compensation.
Having proof also guarantees better protection for widely known or reputed trademarks in China. Valid proof is essential for demonstrating widespread recognition or reputation.
Valid proof meets the following five conditions:
1. The proof features the same trademark as the registration certificate.
2. The goods and services are the same as, or very similar to, those presented in the registration certificate.
3. The trademark has been used by the registration holder or its licensee.
4. The trademark has been used in the People’s Republic of China.
5. The use of the trademark has taken place during the required time period.
Do you need help protecting your brand and trademark on the Chinese market? Contact our expert.
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