Our international IP lawyers love lists and the below is a list of the 12 things we most often recommend regarding China trademarks to our clients that do business in China and have at least one brand they care about. Most of these items apply with equal force to most other countries as well.
1. Register the trademarks you are using in China for the products/services you are using.
This is as close to a no-brainer as there is in China IP. But nearly every week we hear from folks who have discovered that someone else registered their trademark in China, so here goes: China is a first-to-file jurisdiction for trademarks and does not have robust enforcement against trademark squatters. A foreign trademark registration has no relevance in China, because every country has its own trademark system. And no matter how well-known you may think your trademark is, it’s not well-known enough in China to gain protection without registration. The bottom line is that if you don’t register your own trademark, someone else will do it for you – and then you’ll be faced with the unpleasant choice of either paying them off or selecting a new brand name for China. Think of it this way: if you lived on the San Andreas Fault and earthquake insurance was really cheap, wouldn’t you buy insurance?
2. Register your trademarks in additional classes/subclasses.
For better or worse, trademark protection in China is limited to the subclass(es) in which a given trademark is registered. With a few minor exceptions, if you have a trademark for a single good in a given subclass, that registration will also cover ALL other goods in that subclass, but no other goods in any other subclass. And because China does not have an affirmative use requirement, it is possible to register your trademark to cover goods and services beyond those you are actually using in China. It could be for goods/services that you hope to use in China one day, or it could be for goods/services you simply don’t want anyone else to use in China using your name. Most companies conduct a cost-benefit analysis and select a few high-priority classes in which they would like protection. If you make swimwear, you probably don’t care too much about someone selling motor oil or microscopes using your brand name. But if you’re a company with deep pockets and/or a deep-seated aversion to seeing someone else use your logo, think about the Starbucks approach: register your trademark in all 45 classes and all of the related subclasses.
3. Register more trademarks than you are currently using.
The logic here is similar to the previous resolution. China doesn’t require proof of use to register (or maintain) a trademark, so you can register trademarks that you have never used in any classes (and may never use). These could be marks that you hope to use in China one day, or they could be marks that you simply don’t want anyone else to use in China. Usually the latter category includes trademarks that the China Trademark Office (CTMO) would not deem to conflict with yours, but that you would consider objectionable.
4. Monitor your trademarks.
The CTMO is not the most communicative bureaucracy. Absent a challenge (e.g,, based on use or validity) to your trademark, after registration you won’t hear from them for another 10 years, and that’s assuming you renew the mark. You won’t hear from them if a third party tries to register a mark that is similar to yours and in the same subclass(es). You also won’t hear from them if a third party tries to register the exact same mark that you have registered in the U.S. In either case you may have grounds for a successful opposition, but it will depend on the identity of the third party. (Your best shot is if the applicant is a current or former business partner.) But the window of opposition is relatively short – three months from the date of publication – and it’s hard to oppose a trademark you don’t hear about until too late. You can also attempt to invalidate a mark after registration, but at that point you’re fighting a rearguard action against a mark that will be valid unless and until you succeed in invalidating it. The best solution, of course, is to file applications yourself before third parties can do so. But failing that, regularly monitor the CTMO database and the Trademark Gazette for potential conflicts.
5. File non-use cancellations against squatters.
Has “your” mark has been registered by a trademark squatter in China? Some squatters have no intention of ever using their registered trademarks in commerce; their sole goal is to sell the mark to the highest bidder. The good news is that three years after registration, all trademarks are vulnerable to cancellation for non-use. If you have the patience to wait three years (or only recently found out about the existence of such a mark), this could be a great option. As an initial step, you should conduct a thorough Internet search to see if the mark is being used. It’s not foolproof, but given the preeminence of e-commerce in China, if someone is legitimately using a mark in China, the Internet will contain signs of such use. If the search comes back clean, file a non-use cancellation against the squatter and also file a new trademark application of your own. (Cancelling a trademark does not transfer ownership of the cancelled mark; it just renders the mark invalid.)
6. Come up with a Chinese name for your mark and register it.
If you care about your brand in China, it’s not enough just to register the English-language version. You also need to protect your Chinese brand – even if you don’t even have one yet. The minute your English-language brand gets attention in China, it will be given a Chinese name by the local media and consumers. And the minute that happens, someone will register the Chinese name as a trademark, and you’ll have forfeited not only the right to use your Chinese brand name, but the ability to choose it in the first place. This story has played out a number of times throughout the years, with companies from Pfizer to Hermes to Penfolds.
But knowing that you need a Chinese name is different from actually selecting one. As I wrote just a few months ago:
Picking a Chinese name is tricky, and simply being fluent in Chinese does not make someone an expert in Chinese-language branding any more than being fluent in English makes a random American an expert in English-language branding. Far too often we see companies delegate this important decision to their “guy in China,” with predictably middling results. Yes, it’s better than having a non-native speaker pick the Chinese brand name by using Google Translate, but that’s not saying much. We work with several branding companies that specialize in this work.
7. Register similar Chinese names.
As we have written, a foreign company’s Chinese brand name usually falls into one of the following categories:
- A direct translation of each word in the name. This is what Microsoft has done: 微软, Chinese characters for “micro” and “soft.”
- A transliteration, in which the Chinese characters approximate the sound of the English-language name. This is what Google has done: 谷歌, Chinese characters that make the sounds “gu” and “ge.”
- A new name with a positive connotation with no obvious connection to the English-language antecedent. This is what Pfizer has done: 辉瑞, Chinese characters that make the sounds “hui” and “rui” and mean “brilliant and auspicious” (more or less).
- A combination of the above. This is what Starbucks has done: 星巴克, the Chinese character for “star” and Chinese characters that make the sounds “ba” and “ke” (“bucks,” more or less).
No matter what method is used, because Chinese has so many homonyms (i.e., characters with the same sound) it is all too easy to come up with alternative Chinese brand names that sound exactly the same but use different characters. The possibilities are even greater when you include characters with similar (but not identical) sounds. And a soundalike mark is good enough for a counterfeiter.
The Chinese Trademark Office (CTMO) is likely to block Chinese brand names that are only one character away from your registered mark and cover the same goods/services. But it’s far from guaranteed they’ll do so. A better approach is to identify the Chinese brand names that are similar enough to yours that you wouldn’t want them to be registered by a third party, and register them yourself before someone else does.
8. Have your Chinese business partners execute a formal agreement.
Having your Chinese business partners execute (i.e., sign and chop with the company seal) a formal agreement is a good idea for all kinds of reasons, whether that agreement is an OEM agreement, an NNN agreement, a licensing agreement, or otherwise. Such an agreement establishes the basic terms of the business relationship, clarifies the expectations on both sides, and provides a basis for a lawsuit should things go awry. And in the trademark context, a signed, chopped agreement can be the difference between winning and losing when you discover that your former Chinese business partner has filed an application for “your” trademark.
Our agreements always have a separate IP section forbidding the Chinese party from taking any actions to interfere with your IP rights (e.g., filing applications for “your” trademarks or opposing/attempting to invalidate your existing trademarks). Such language, when formally agreed to by a Chinese entity, is relatively easy to enforce, and often will prevent spurious trademark applications in the first place. And if you do need to take action against your former supplier either in court or before the CTMO, having an original signed, chopped agreement in which your Chinese business partner agrees to respect your IP is powerful evidence in your favor.
Needless to say, the time to execute these agreements is at the beginning of the relationship when everyone’s happy – not when your Chinese supplier has proven incompetent or worse and you are no longer on speaking terms.
9. Keep copies of all documents to/from your Chinese business partner.
Many companies still do business in China solely on the basis of purchase orders written in English and English-language emails sent to their Chinese business partners’ personal email account. This arrangement is ideal for the Chinese side and horrible for the foreign side because it creates great ambiguity about both the terms and the Chinese side’s identity, and thereby minimizes their liability. It’s difficult to hold a Chinese company liable when you don’t even know their real name.
In the trademark context, this issue comes up most often when a foreign company learns that their former Chinese business partner has filed an application for “their” trademark. (Typical generic scenario: Chinese manufacturer experiences quality fade; foreign buyer refuses to pay for defective merchandise; quality fade gets worse; foreign buyer stops purchasing altogether; Chinese manufacturer engages Sinosure to collect unpaid money and files trademark applications for the foreign buyer’s marks.)
China actually does a decent job policing bad faith trademark applications from foreign companies’ Chinese business partners. But in order for the CTMO to rule against the Chinese manufacturer who coopted “your” mark, you first need to prove the existence of a business relationship. As described in the previous resolution, the easiest way to do this is with a signed, chopped agreement. Failing that, you need to prove the relationship by circumstantial evidence, and the more original documents you have the better. The best evidence is documents issued by your business partner and bearing their company chop (like an invitation from them for purposes of a business visa), or documents issued by a third party clearly identifying both the foreign buyer and the Chinese party (like shipping or customs documents). Most of the time, foreign buyers don’t pay much attention to the documents from the Chinese side (perhaps because the Chinese side is so cavalier), and so the more documents that you keep on hand, the more likely you’ll have a document that could actually help.
10. Keep evidence of trademark use in China.
Unlike the US, China does not require affirmative proof of use in commerce to register or maintain a trademark. But you still need to collect and maintain evidence that you are using your trademark in China. Every trademark in China is vulnerable to a non-use cancellation starting three years after the registration date. And with the vast number of trademark applications being filed, more and more existing registrations are being cited as obstacles to new applications, which only increases the chance of a cancellation being filed against your mark.
The CTMO does not pursue non-use cancellations on its own; only a third party would file a non-use cancellation against your registration. But it happens all the time, and when it does you need to provide evidence that your trademark has been used in China during the past three years on the covered goods/services, or else your trademark registration will be cancelled.
Evidence can take many forms. If you are actively selling products in China, then proof should be easy: advertisements, packaging, website screenshots, and other publicly available marketing and sales ephemera. If all you do is manufacture in China, then you’ll need to reply on third-party documents that clearly demonstrate your use of the mark in China on the covered products: invoices, shipping documents, quality inspections, customs export declarations, and the like. Photographs (say, from your factory) are helpful to provide context but, standing alone, are usually insufficient to demonstrate use. This is another area where a business relationship evidenced solely by English-language purchase orders and emails to a personal email account are going to come back to haunt you, because neither one is likely to be sufficient evidence of trademark use.
11. Secure copyright registration for your trademark logo.
Copyright law protects creative works, and many trademarks that are mere standard character marks (aka word marks) do not qualify as creative works because they are too short. However, almost all trademarks expressed as a logo could also be protected by copyright in China. Some practitioners refer to a China trademark registration and a copyright registration together as a “super trademark.” The theory is that because copyright is not governed by the Nice Classification system, a copyright registration applies to all goods and services, and therefore means that no one besides you can ever use your logo for anything.
It doesn’t always work out that easily – and the remedies for copyright infringement aren’t nearly as robust as those for trademark infringement – but a copyright registration can definitely be useful when trying to take down Alibaba listings for fake branded products.
12. Record your trademarks with customs.
Every year, Chinese customs gets a little better about sussing out counterfeit goods. It’s a massive job, considering how much of the world’s goods (authentic or not) originate in China. Most countries, the US included, only check imported goods for counterfeits. China checks both, and they deserve credit for that.
But they don’t check everything; actually, they hardly check anything at all on their own. And unless your brand is as well known as Nike, your average Chinese customs inspector isn’t going to have any idea whether goods are authentic or not.
Really, the only way to get Chinese customs to pay attention at all is to have a valid trademark registration in China and then record that trademark registration with customs.