First to registration system
Chinese trade mark system is a “first to registration” system. With such system, whoever files and registers a trade mark earlier owns the trade mark. As Chinese trade mark registration does not require evidence of use of the trade mark, and the costs for applications are comparatively low compared to costs in Australia and many western countries, there are some opportunists take advantage of the “first to registration” system, profit from trade mark squatting and selling. In this respect, foreign trade marks are usually the targets of trade mark squatters. Before foreign brands enter China, squatters can easily find out foreign trade marks on the Internet and have them registered in China. When brands enter Chinese market, or try to register their trade marks in China, squatters could exercise their trade mark rights to stop them from registration. In those cases, in order to enter Chinese market, foreign brands have to either purchase the trade marks from squatters or re-brand their products.
To avoid your trade mark being taken by squatters, it is always recommended to consider registering trade marks in China as early as possible, for a defensive purpose. Noting that IP rights are territorial in China, registrations are needed separately in mainland China, Hong Kong, Macau and Taiwan.
Registrability search serves to reduce the risk of rejection
A prior registrability search is always recommended foreign trade mark applications, especially when entering China. With millions trade mark applications filed per year, the chance to find similar or even identical trade marks in China is higher than in other jurisdictions whereas a prior search can effectively identify prior arts and allow the applicant to adjust the application before lodgement.
Another factor that cannot be neglected is language. An English word mark is registrable in Australia may not be registrable in China due to language issues. For example, English words “NMD”, “TMD”, “MLGB” are unlikely to be registered in China because the connotations of these words to a certain extent are associated with coarse languages in Chinese. Foreign applicants not being aware of language issues easily get stuck in prosecution stage. A prior trade mark search can avoid such predicament.
The need to consider registration for Chinese transliteration, Chinese brand name, and logo
To obtain a comprehensive protection for a brand in China, merely registering the English brand name is never enough. The Chinese name, Chinese translation and transliteration of the name, and the logo of the brand, play the same important role as the English name does. Lessons from the following brands tell the reasons.
Castel wines were known as 卡斯特 (Chinese transliteration in Chinese Pinyin: Kǎ sī tè) in Chinese. To protect the brand, Castel registered a trade mark for its English name however it did not realise its Chinese transliteration was a registered trade mark owned by an unrelated party. Castel was sued for infringement by using the Chinese name and was fined RMB 500,000 (approximately AUD100,000).
Another story, “航海王” (means The King of Sailing), the official Chinese name of a famous Japanese comic, One Piece, is a registered trade mark, owned by the Japanese publisher Shueisha Inc.
Nevertheless, there was an unofficial name of the work “海贼王” (means The King of Pirates) which had obtained more awareness than the official name. When One Piece developed a computer game and tried to register “海贼王” (The King of Pirates) in respect of computer games and software goods, it found the trade mark had already been registered by another Chinese IT company. Hence, any One Piece could no longer use “海贼王” on games or any gaming related products.
The last lesson from New Balance tells us how important a logo trade mark could be. Despite the logo “N” is an iconic design of New Balance sneakers, the brand does not actually own any trade mark rights on the logo. Consequently, though the brand always tries to stop other shoe makers from using “N” on shoes designs, it usually fails in lawsuits.
Trade mark protections could be a long-term ongoing approach for business. A thought through trade mark strategy provides a safe environment for brand development, in the meanwhile, guarantees return on branding investments. You may need to seek professional advice from a trade mark attorney to determine a strategy that best fits your goal. Baxter IP would always be pleased to help.