China has come a long way from its trademark infringement impasse of the 90’s and even early 2000’s by putting more stringent controls into place and enforcing copyright law more stringently with record fines against fraudulent companies.
Chinese trademark law is however different to Western trademark law and it is worth knowing the differences before beginning a trademarking process to avoid getting caught out.
Differences
There are two main differences to how Chinese trademark law works that companies entering the Chinese market must be aware of.
1. Most Western nations have a “First in Time, First Right” system. This means if you are trading under a name, you will have the right to contest another company trying to register your name even if you have not yet registered your trademark. This helps protect rightful owners from companies trying to make money by extortion or fraud.
In China however they rely on a system called “First to File”. This system is more simplistic and allows whoever registers the name first, full ownership of the trademark. This means companies wanting to work within China must act fast to protect their names and it is recommended even if you are not yet wanting to enter the Chinese market to register it before another company does to try and exploit you. This also means that even if your company only produces in China. If someone beats you to the registration process they could ask a court to stop your factories production because of trademark infringement.
2. Most countries in the world are participating members of the “Madrid System” of Trademark registration. This system is a cost-effective method that allows companies to register their trademarks all over the world in one application document. Although China is signed up to this form of Trademark law, in practice it is much more useful to sign up directly through the Chinese Trademark Office (CTMO). This is because the Madrid system applications go to the CTMO offices and it is their office staff who decide what industries your company belongs to and what subcategories to cover, without any consultation with companies for the average 18-month process of registering. By going directly to the CTMO you are allowed to pick your own categories and subcategories you want protection in and if an infringement is found, it can be stopped within days, whilst the Madrid System Trademarks registered in China can take up to three months for documents to be translated once a trademark infringement is identified until the government intervene.
Trademark registration through CTMO in a nutshell
1.Check suitability of trademark – You will not be able to edit an application once submitted.
2.Fill out and sign all CTMO (Chinese Trademark Office) documents. The cost is around 90$ per trademark.
3.SAIC (State Administration of Industry & Commerce of the People’s Republic of China) perform a formality check followed by a preliminary approval.
4.CTMO approves or throws out trademark application after 12-24-month period.
Other tips
· Unlike EU customs, GACC (General Administration of Customs in China) check goods both imported and exported. This means that they can act proactively to protect a company suffering from a trademark infringement. In 2002, 94% of goods seized at customs in China were for trademark infringement and not copyright or patent infringement as it is much easier for GACC officials to identify. GACC officials only check for trademark infringement against their own CTMO database. Registering Trademarks through CTMO and then registering at the GACC website (only available in Chinese) therefore give much added protection to companies.
· Chinese consumers unless instructed otherwise, will pick their own pronunciation for a Western style brand name. If this Chinese name for your company is not registered, it is open to being registered by opportunists to exploit your company if you were to gain ownership. It is therefore recommended to pick a Chinese pronunciation for your company and register the name.
