One year on since new trade mark laws took effect in China and there is little evidence to show it is becoming any easier for global brands to enforce their rights in the country.
The new laws and practices were intended to make it easier to enforce trade mark rights and provide greater levels of transparency and accountability surrounding IP infringement.
It’s easy to understand why an increasing number of western companies are looking to take advantage of the Chinese market as ecommerce sales have recently rocketed, outpacing the US. However, some companies are still finding it difficult to protect their brands in China.
In theory, trade mark protection in China should now be more straightforward but there are a number of significant pitfalls that businesses might not be aware of.
When registering a trade mark internationally, most companies will file for protection in China using the International Trade Mark System run by WIPO. This should provide them with the same rights and protection as registering a trade mark in China. However, without a registration certificate written in Mandarin or another Chinese language, businesses are likely to find it difficult to enforce their rights.
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There are other pitfalls that western businesses need to be aware of. For example, using the registered trade mark symbol ® without having a valid trade mark registered for the brand name in China could result in a fine equivalent to 20 percent of the company’s turnover.
Most companies aren’t aware that this is an offence that is strictly enforced by the Chinese government and some are finding that their goods are being counterfeited and registered in China but aren’t able to prevent infringement because they do not have a Chinese version of their trade mark.
A recent example of this rule being applied is the case of French wine company, Castel, being hit with a $5million fine for trade mark infringement. Castel had been using ‘Ka Si Li’ the Chinese translation for its marketing in China but had failed to obtain a Chinese trade mark.
This created a window of opportunity for the owner of a Shangai-based wine company who recognised the popularity of the product and registered the trade mark himself. When discovering that Shanghai Banti Wine and its owner Li Dao Zhi had been using the name ‘Ka Si Li’ to sell its wine, Castel attempted to get his trade mark revoked but failed and instead they were fined for infringement.
Counterfeit goods can have a detrimental effect on sales and brand image and in order to combat this, western companies need to ensure they have trade marks in place for marketing they intend to use in China.
The number of trade mark registrations in China has significantly increased in the past year as businesses hope to tap into the thriving marketplace but awareness of trade mark rules is still patchy. If western companies wish to take their products to market in China they need to be aware of the potential pitfalls and seek advice before doing so.
In terms of enforcement, China’s Administration for Industry and Commerce (AIC) have a significant number of officials who will enforce intellectual property rights on behalf of western companies relatively cheaply but selecting the right person, with the right experience to act for a business can be difficult and may require on-the-ground knowledge.
Dominic Murphy is a trade mark attorney at Withers & Rogers