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21 June 2017 Make your mark in China

By Eric Ziehlke, Partner and Esther Khoo, Graduate Solicitor

protecting your trade mark in china

Australian businesses are increasingly recognising the growing importance of China both as a market for their goods and services and as a source of manufactured products. The protection of trade marks in China should be of critical importance for such businesses. Recent public discussion highlights how well-known companies such as Penfolds and Weet-Bix and high-profile individuals like Michael Jordan were caught up in legal battles over trade marks in China due to failure to register their trade marks at the outset.

Although there are similarities between the Australian and Chinese trade marks systems, there are some fundamental differences. Here are our top five tips for businesses thinking about moving into China.

(1) "First to file" v "First to use"

The key distinction between the Australian and Chinese trade marks system is that China adopts a "first to file" registration system rather than the Australian "first to use" system. In Australia, you may still have some legal claim over a trade mark if you can demonstrate that your business has used the mark in the past. In China, prior usage is not considered. The first person to file for a particular trade mark generally owns the trade mark. This can lead to many problems for Australian businesses intending to operate in China. Businesses who plan on opening in China, but do not register their trade marks pre-emptively may find themselves in a protracted legal disputes over the ownership of the marks. These disputes generally arise with other companies who have registered similar marks. Remedies can include the filing of an application to cancel a mark or negotiations to buy the mark. Neither option is particularly palatable.

 (2) Branding in China

One important commercial consideration to keep in mind lies in determining the Chinese branding of your product or business. It is important to register your trade mark both in Chinese and transliterated form (pinyin), which is the English form of the Chinese name. As most Chinese customers prefer to use a Chinese name for your brand, it is important for you to select a Chinese brand name. If you do not do so, another party may start using a Chinese version of your brand name to refer to a similar product or service. This name could then be registered by that party, thus obstructing your marketing activities in China.

(3) Manufacturing in China

If you manufacture your goods in China, you are at risk of breaching the rights associated with a registered trade mark. This could apply even if you do not sell your goods in China. The act of placing your brand on manufactured goods means that you are effectively using your trade mark in China. It is therefore important to register your trade mark for any product you intend to manufacture.

A particularly important aspect to consider in setting up a manufacturing business in China is that you maintain ownership of the intellectual property in the technology and associated commercial reputation in that product. It is therefore important to both enter into binding agreements as to the use and licensing of your intellectual property.

(4) Filing a trade mark application in China

There are two main methods of filing a trade mark in China. The simplest method is to file an international trade mark application from Australia which designates the jurisdiction of China. An international application must be based on your previously filed Australian trade mark. Alternatively, a trade mark application may be filed directly in China through Chinese lawyers based in China. Although such an application may be more expensive than an international application, a China-based trade mark specialist has more experience in determining the precise wording of the specification of the mark in order that it complies with Chinese practice.

Trade mark registrations in China are valid for 10 years. The trade mark may be renewed every 10 years but can be removed from the register for non-use. A standard trade mark registration takes 12 to 15 months to be approved from date of application.

(5) Liaising with Government

Australia has sent its first IP Australia Counsellor to China, David Bennett, who is working out of the Australian Embassy in Beijing as of early 2017. Mr Bennett's role involves supporting Australian business to navigate the Chinese IP system, which includes providing guidance on IP registration, enforcement and court procedures and liaising with the Australian business community in China. This is a welcome step as the United States, Britain and Japan have all had China IP counsellors for some years.

The relationship between IP Australia and the State Intellectual Property Office of China was further strengthened with the signing of a Memorandum of Understanding between the two organisations during the visit of the Chinese Premier to Australia in March 2017.

IF YOU REMEMBER ONE THING

Be proactive about protecting your IP in China. Trade mark applications are not particularly expensive and failure to seek registration could destroy the reputation you are seeking to create in China and severely restrict your opportunity to break into what is becoming the world's largest market.

Swaab Attorneys has significant experience in drafting and prosecuting trade mark applications in Australia and overseas. As a member of Meritas, a global network of 177 law firms servicing 226 key markets, we are well placed to deliver a comprehensive IP strategy for your business looking to expand internationally.

If you have any questions related to protecting your trade mark in China, Australia or internationally, please contact us.

 

Eric Ziehlke, Partner  |  Phone: +61 2 9233 5544  |  Email: ejz@swaab.com.au

If you would like to republish this article, it is generally approved, but prior to doing so please contact the Marketing team at marketing@swaab.com.au

This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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