Intellectual Property Rights

What to do if your trade mark is misappropriated in China?

March 25, 2014

First published in the Watermark Journal Volume 29 Number 4

A client recently exhibited a range of their wines at a trade exhibition in China.  They subsequently found out that a Chinese entity had filed a Chinese trade mark application for their trade mark after the end of the exhibition.

We have also heard stories of companies going to China to develop business relationships there, whether to have products manufactured in China or to set up a distributorship, only to find out later that the Chinese company they had been dealing with had sought registration of their trade mark.

There are also many so-called trade mark ‘squatters’ who seek protection in China for trade marks of overseas companies in the hope that they can subsequently seek payment from the rightful trade mark owners.

Such issues arise because China is a ’first to file’ country in which exclusive rights to a trade mark will normally be given to the entity who first files an application to register that trade mark.  If the application is registered, they would then potentially be in a position to prevent others from using that trade mark within China.  Chinese Law also enables the owner of a Chinese trade mark registration to prevent the export of products bearing that trade mark from China. This would of course be of concern if you were the rightful foreign owner of the trade mark, and were therefore prevented from using that trade mark within China, or from exporting from China products manufactured in that country on behalf of your company bearing the original trade mark.

So what can be done in such situations?

It is often the case that the Chinese entity that has registered the trade mark does not have any intention to actually use the trade mark in China themselves.  Under these circumstances, it may be possible to have that registration cancelled for non-use of the trade mark.  The Chinese entity must have not used the trade mark in China for a period of three years after registration of the trade mark, and before your application for cancellation of the mark, for cancellation to occur.  This may be a cost effective option where the trade mark registration has already been in force for more than three years.  It is also not necessary to provide any evidence supporting the non-use action, the onus resting on the Chinese entity to prove that they had indeed used the trade mark.

In other circumstances, it may be necessary to initiate opposition or cancellation proceedings in order to try to remove an application or registration. Chinese Trade Mark Law allows for preventing the registration of a trade mark, and having the Chinese entity prohibited from using that trade mark, if:

  • the foreign company had a business relationship with the Chinese entity before the filing date of the trade mark application; and
  • the foreign company was the original creator and user of the trade mark.

Furthermore, Chinese Trade Mark Law allows the removal of a trade mark application where the foreign company had a prior right over the trade mark, and where the foreign company had used the trade mark prior to filing of the trade mark application by the Chinese entity, and the trade mark enjoyed some reputation.  This option is particularly useful for a foreign company having a device trade mark for which they could claim an existing copyright protection.

It is however difficult to pursue such opposition or cancellation proceedings, because the foreign company must be able to provide sufficient evidence to support their petition if they are to have any chance of succeeding. Significant costs are therefore likely to be incurred in pursuing such actions.

It would of course be preferable to avoid having to undertake any such actions to regain your trade mark rights in China from the outset.  We recommend that Chinese trade mark applications be filed as soon as possible if your company is considering doing business in China.  Ideally, the applications should be filed before business negotiations are commenced.

Regarding the client referred to at the beginning of this article, they were eventually able to have the trade mark application filed by the Chinese entity removed from the trade mark register.

By Michael Chin Quan

Brands   control   process   strategy   trade marks

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