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The wild Chinese market – how to protect your trademark in China


October 15, 2018

In China, millions of trademark applications are filed each year, including up to hundreds of thousands of trademarks ‘hijacked’ from their rightful owners. Kolster's Head of Asian Market, has noticed that Finnish brand owners keep repeating the same mistakes. His five tips will help you to avoid common errors and protect your brand on the Chinese market.

1. Register your trademark in time

Registration of a trademark provides the registration holder with exclusive rights to the trademark in China. A trademark is obtained by the party that applies for its registration first. If you do not apply for a trademark’s registration in time, it is possible – and even probable – that your trademark will be ‘hijacked’.

There are companies in China that scan the trademarks of European companies. These companies try to register foreign trademarks that are not yet registered in China, if there are signs that entry to the Chinese market is imminent. Signs of forthcoming market entry include contract negotiations with a Chinese partner, participation in fairs in China, or the introduction of Chinese marketing material.

The hijackers either sell the trademark back to its legal owner at a high price, or use the registration to claim compensation for a trademark infringement. In the worst-case scenario, hijackers begin to manufacture and sell products or services under the trademark, or to license its use by a third party.

Regaining a hijacked trademark by legal means is difficult; for example, the small-scale earlier use of a trademark in China does not provide sufficient grounds for its return in a case of hijacking. It must be proven that the hijacker is aware of the correct holder of the trademark, but has nevertheless applied to register it in its own name without permission. A trademark should therefore be registered as early as possible, to avoid its hijacking and the resulting problems.

2. Be careful with product and service classifications and names

Trademarks at risk of being hijacked also include European trademarks which have been registered in China on the basis of a goods or services list that is too narrow. There is a high risk of hijacking if your trademark registration in China is narrower than in the EU, for example.

In China, the goods and services covered by trademarks are divided into subcategories within each class. In general, only goods and services belonging to the same subcategory are deemed identical. This means that an identical trademark may be accepted for registration in China if it covers goods in different subcategories. Accordingly, hijackers will register an identical trademark for goods and services that are as close as possible to those covered by the registration of your trademark. For example, "Cereal preparations" are listed in Class 30, subcategory 8 and"Corn flakes" in Class 30, subcategory 6.

When applying to register trademarks, good and service names should be chosen that cover all similar subcategories.

3. Remember to obtain a registration certificate in Chinese

The Chinese authorities only accept registration certificates in Chinese. Such certificates are automatically issued for national applications only. When you apply to register a trademark via an international route, you must apply for the Chinese registration certificate separately, after the international registration. Failure to do so means that you cannot invoke the trademark’s registration in authorities, for example. 

It can take months to obtain a Chinese registration certificate. You should therefore apply for a certificate as soon as the notice of grant arrives from the WIPO. Following this, you can react to potential trademark infringements instantly.

4. Understand the rules of the ® symbol

You may not assign the registration symbol ® to your trademark until it has been registered by the Chinese trademark authorities. Unlawful use of the symbol may result in punishment under the Trademark Law of the People's Republic of China. The Chinese authorities may require that you stop using the symbol and pay a penalty of up to one-fifth of the amount of any turnover unlawfully acquired. Although the Chinese administration may lack the manpower to monitor use of the symbol, your competitors could report its use.

European companies should refrain from using the ® symbol if:

1. The trademark is registered in the European Union or other geographical areas other than mainland China, but your company exports products to mainland China. 

2. Your company's trademark is not registered in China, but you are transferring manufacturing or a licence to a Chinese company. In such a case, the Chinese company must also refrain from using the ® symbol.

5. Localise for the Chinese markets

In China, trademarks become known through their Chinese language version. Because most Chinese people find foreign names difficult to pronounce, a local version of western trademarks quickly arises. Chinese people also remember and recognise Chinese trademarks more easily. Create a Chinese version of your trademark immediately, in order to control the appearance of the trademark and avoid its hijacking in a loosely formed Chinese version.

Use a professional native speaker to create a trademark in the Chinese language. The meaning of the Chinese characters in question is a vital part of a good trademark, and the meanings of characters change in different contexts. 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 can mean ‘this’ or ‘that kind’. It is also a Chinese surname. The character can mean ‘straight’, ‘to follow’ or ‘forward’. The character means a large, ocean-going vessel. So the last character clearly indicates that the trademark is associated with the marine industry.

To avoid accidentally infringing third-party trademark rights, make sure that a Chinese trademark is available and can be registered in China before you introduce it. It is advisable to turn to a seasoned professional in the sector to help you localise your trademark.

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