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IPR - China

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Far too often we underestimate the risks involved for our know how, designs and innovations in processes and products when we exhibit the fruit of our work in foreign countries. Sectors like ours are particularly vulnerable to piracy of trademarks, designs and patents. Losses can be substantial and threaten even the livelihood of our operators. However, costs for preventing or correcting IPR infringements are not irrelevant either. There is no strategy that fits all and every operator has to assess what's best for his company.

Take the 30-minute interactive guides to gain practical information on IPR protection and enforcement

To learn more about trademarks, please visit the first in a series of E-learning modules from the Helpdesk here. The second E-learning module addresses IPR issues at trade fairs and can be found here.
 
Visit the following resources made available by the EU IPR Helpdesk: http://china-iprhelpdesk.eu/

1. What is a trademark?

A trademark is a visual sign that distinguishes one good or services from another. Trademarks allow customers to identify a provider and as the basis of a brand, properly registering and protecting your trademark is an important part of building and protection a strong brand identity in the market.

In China, a registered trademark:
Is any distinct sign that identifies goods or services
Grants the owner the exclusive right to use the sign to promote goods or services within the PRC

2. Why should you register your trademark in China?

If you do not register your trademark in China, you cannot prevent other companies using that mark to promote their goods or services, or from producing goods for export to other markets. This can lead to loss of sales reputation in not only the Chinese market but also other external markets. It is important to note that your European trademark registration gives you no rights in China. Furthermore, China is a first-to-file jurisdiction meaning other companies can and often will register your mark, and therefore preventing you from selling under that trademark even producing for export in China. This will require you to carry out a trademark invalidation procedure or even to buy back your mark, which can be time consuming and expensive.

3. How do you register a trademark?

There are two ways to gain trademark protection in China. You can either register your mark directly with the China Trademark Office (through national registration) or you can extend the protection you already possess in a different territory by way of an International Registration, via the World Intellectual Property Organisation (WIPO). There are three steps to a domestic registration:

Formal examination: Ensures your trademark file is complete and that all fees have been paid.
Substantial examination: Verifies that the various criteria applicable to trademarks in China have been met.
Publication in the trademark gazette: Allows a three-month window for other parties to file an objection with the CMTO. At the end of this period, if no objections have been filed or if objections have been filed but fail, the trademark is registered and valid for ten years.
This entire process, although simple, can take up to three years. You should also note that if you do not have a registered office in China, you must hire a Chinese trademark agent to register your trademark domestically.

4. How much does it cost to register a trademark?

Domestic Registration

Trademark registration fee (includes ten sub-categories): RMB 1,000
Trademark renewal fee: RMB 2,000
Length of application process: 18 months - three years

The cost to extend an international trademark to cover China can vary. For more details, please visit www.wipo.int/madrid/feecalc to use WIPO's online feel calculation tool.

Once registered, your trademark is valid for ten years, which can then be renewed without limit for an additional ten years.

5. Case Study

In 2002, a Netherlands-based SME called MusicNow began a full production of speakers in a factory based in southern China to export their finished goods for sale in to Europe. MusicNow did not register its trademark in China as they were not selling goods in the Chinese market. Several years later, the company decided to move production to another China-based supplier. However, when a new shipment of speakers reached port, MusicNow was informed that the goods had been seized and were being held by the General Administration for Customs (GAC).

MusicNow investigated the situation and discovered that the original Chinese supplier had legally registered its trademark, meaning the Dutch SME could no longer produce labelled speakers in China.

The original supplier then offered to sell back the trademark to the Dutch SME for EUR 4 million. MusicNow could not pay the sum and could not apply to have the trademark cancelled as the five year statute of limitation had already expired.

MusicNow was forced to produce speakers again, without a trademark attached, adding the trademark in Europe, following export. Due to their IPR being infringed, the SME lost millions of Euros due to the goods seized at Customs and the loss of sales.