Last month, Dr. Angela Su (Su Qi 苏琪), Horizons partner and IPRS head, was invited by the Mexican Chamber of Commerce in Shanghai to offer her expertise on trademark protection in China. The seminar was attended by senior personnel from both the Mexican and wider expatriate community who are new to doing business in China or long-term entrepreneurs experiencing difficult circumstances related to IPRs. For the benefit of our readers, in this post, The Square talks with Dr. Su about the seminar and the advancement of trademark protection brought upon by current regulatory reforms.
The Square: Intellectual property rights in China have recently become a hot topic in light of the on-again, off-again US-China trade negotiations. Based on your most recent seminar, and frequent talks with the expatriate business community, in terms of trademark protection, what do you find to be the main challenges for foreign companies in Shanghai and widely in China?
Angela Su: In Horizons’ experience, many foreign companies appear to lack the basic understanding of trademark protection, beginning with trademark registration in China, which it seems to buff since it is the first step for any company planning to start a business in a new market. However, foreign companies typically do not file a trademark registration in China because they believe their trademark is protected under the World Intellectual Property Organisation (Madrid System), also known as WIPO.
During the seminars I’ve done, both in China and abroad, my presentation focuses on the essential basics relating to trademark protection and practical advice for China-based entrepreneurs, encouraging them to take the most beneficial, cost-effective steps in trademark protection.
The laws and regulations are in place, the improper understanding unfortunately not yet: in Horizons we take it seriously, and make our best efforts to serve the dissemination of this IPRs protection culture – the first step into the business and then finally into a foreign market. Our CCG partners are equally committed, and we can serve corporate clients in 17 different jurisdictions worldwide.
TS: Why is trademark registration in China important as opposed to simply relying upon the Madrid System?
AS: Under the Madrid System, a trademark may only be registered in English, French and Spanish. Therefore, any Chinese translation of the mark, in both Chinese characters and Pinyin*, will not be registered under the Madrid System, causing significant exposure to the brand concept and the business itself.
Direct registration in China enables the trademark to be registered in Roman letters, Chinese characters and Pinyin, which is essential for companies targeting Chinese consumers, as a trademark becomes safeguarded from other companies by filing a registration in Chinese characters and Pinyin. This allows trademarks in similar classes to be differentiated by Chinese consumers, who can easily identify the trademark with their mother language. Well translated trademarks of providing meaning and phonetics provide more accessibility and, overall, reflects the company’s ability to adapt to and prosper in the local market.
It should be noted that the classification system in China slightly differs from the Madrid System. Even though both China and the Madrid System adopt the international classification of goods and services, there are additional sub-classes under a classification in China. Therefore, where an application is filed under the Madrid System, the additional sub-classes under the China trademark system may not be covered. Hence, registering your trademark in China, as opposed to the Madrid System, provides greater protection in several crucial areas.
TS: What are the main problems facing foreign companies in Shanghai seeking to protect their trademark?
AS: Foreign companies in Shanghai often discover their trademark is already registered in China, even before they have entered the market. Upon such a discovery, they typically, they do not seek professional advice in this matter, as the general belief, to their detriment, is that trademark protection is not enforced in China, and they don’t stand a chance of getting their trademark back.
It is important to understand that China adopts the first-to-file principle, as opposed to first-to-use adopted in most western countries. Therefore, where a company considers entering into the China market, the first step is to file the trademark registration in China. Where a company discovers the trademark is already registered and it is preliminarily published in the trademark gazette, there is a three-month period in which the company may raise an opposition. Where the company discovers the registration of their trademark is acquired by fraud or any other improper means, there is a five-year period in which the company may apply for invalidation of such registration.
At Horizons, we often find that all too many clients coming to us for trademark help after realising their trademark is in use, have received bad or inaccurate advice provided by a ‘China expert’ or ‘local friend’; in many of these instances they have not taken any corrective measures to protect their trademark in China, which is why they erroneously believe trademark protection is unenforceable in China.
TS: Can you give an example of a best practices manner to safeguard a trademark in China?
AS: When registering the trademark, companies should ensure the mark holds distinctive characters and does not conflict with prior registered trademarks. Marks only bearing generic names, devices or model numbers of the goods cannot be registered as trademarks. Therefore, companies should consider to firstly conduct a preliminary search to ensure no similar trademark is registered; and secondly, if the mark is generic, distinctive characters should be added — which saves time and money prior to filing the trade registration.
Another point to make is that we often advise clients that once the trademark is registered in China, they may further protect the trademark from infringement by recording the trademark within the Chinese Customs database. In this manner, any unauthorised use of the trademark on goods exported or imported into China will be seized and detained by the General Administration of Customs (GAC). Once the infringement is determined, Customs will enact the relevant measures, such as confiscation and destruction of the infringing goods.
TS: On 23 April 2019, the Trademark Law was revised by the Standing Committee of the National People’s Congress. The revised law is effective from 1 November 2019, and provisions further protecting against trademark squatters. What are your thoughts on the latest reforms?
AS: The legislation reform is a part of the Three-Year Plan for Trademark Registration Facilitation Reform 2018-2020, commonly referred to as “The Three-Year Plan”[published in March 2018]. The Three-Year Plan, formed under the mandate for advocating innovative culture, strengthening IP innovation and protecting and utilising — all highlighted in the new era of President Xi Jinping initiated at 19th Communist Party of China National Congress — outlines the blueprint for the establishment of high-quality, convenient and efficient trademark application channels. It also endeavours to simplify trademark registration and management, as well as trademark review collaboration.
Overall, what is involved in the Three-Year Plan is assuredly good news for both foreign and domestic companies in China, as it is evident that China is highly committed to strengthening the protection of intellectual protection in a continued effort to adapt the economy from high-speed growth to high-quality development.
Praise for Horizons effort in supporting China’s IP reform from Mr. Gan Lin, member of the Standing Committee of the National Committee of the Chinese People’s Political Consultative Conference and Deputy Director of the State Administration for Industry and Commerce.
“The amendment going into effect on 1 November involves the strengthening of intellectual property protections and steps-up the fight against malicious registration of trademarks, as well as improves the system for remedying for such actions.
“The People’s Courts, the State Intellectual Property Office and other departments have been working hard to implement corrective actions for intellectual property rights to curb infringement. As a result, malicious trademark infringers may find themselves ‘ruined with nowhere to go’.
“Now, more than ever, it is increasingly meaningful for business operators in China to actively design and establish their intellectual property systems and prop-up their brands. We are happy to see that Horizons and CCG are among those firms specialized IPR rights who are committed to helping investors ensure their trademarks are protected.”
*Pinyin is the Romanization of the Chinese characters based on their pronunciation. In Mandarin Chinese, the phrase “Pin Yin” literally translates into “spell sound.” In other words, spelling out Chinese phrases with letters from the English alphabet. For example:
Pinyin: xué xí zhōng wén
If you have concerns related to trademark protection or other related corporate matters, please contact Horizons at email@example.com to schedule a consultation session. From RMB 1,500 per session, Horizons can provide insight, expertise and the right solutions for you.
Horizons Corporate Advisory helps clients solve complex problems, thrive and be inherently responsible in their business activities worldwide. The countries we operate in include Belarus, Belgium, China, Colombia, Costa Rica, Cyprus, Ecuador, France, Germany, Hong Kong, Indonesia, Italy, Lichtenstein, Luxemburg, Macau, Malta, Mexico, Mongolia, The Netherlands, Nigeria, Portugal, Russia, Singapore, Spain, Switzerland (French and German-speaking cantons), Turkey, United Kingdom (England and Wales) and the United States of America.