China is now the second largest economy on the planet, and has become a key market for businesses worldwide. So, securing ownership of your brand in China should be an important part of your plans. While the Chinese system of trade mark registration shares many common elements with the European regime there are subtle differences that can be a trap for the unwary, and in this blog post we are going to take a look at two of them.
Throughout much of the world, trade marks are categorised according to the Nice Classification. This system sets out 45 classes of goods and services for which a given trademark will be used, for example class 25 covers clothing, class 9 covers software, and class 41 covers education, among other things. The same trademark name can be registered in different classes by non-competing businesses, and you can find out more about trademark classification here.
Although the Chinese trademark system does make use of the Nice Classification, it further divides these classes into narrower subcategories. This means the same mark can be registered in the same international class, for similar goods or services, provided that the registrations fall within different subclasses. For example, general footwear, and football boots, would fall in different subclasses, and the same trademark might be registered by different companies in each.
A cost effective, and efficient way to protect trademarks abroad is by using the Madrid Protocol system of international trademark registration. This mechanism lets you extend an existing application or registration into a number of different countries in one go, rather than filing in each individually. However, the international applications must be filed in the same classes, and against the same goods and services. Typically this is not a problem, but in China, while it may be cost effective at first to file using the Madrid system, you may find that you also need to file an application directly to ensure you are protected in the correct subclasses. In fact, where you have the resources available, registering a national Chinese mark may be the priority.
Translation, transliteration and Chinese characters
While in the UK, and Europe generally, you often only need to consider the English language trademarks that you use with your products, there are several dimensions to securing trademark protection in China. The original brand name may be a priority, but your business, products or services will also become known by a name in a local dialect. Unless you develop a strategy early on, you may find that the market has chosen a brand name for you. This is what happened in the early 1990s, when Chinese businesses began using Chinese characters to approximate the sound “Coca-Cola”. Unfortunately, though the wording used may have had a similar pronunciation, actual translations of the text included “female horse fastened with wax” and “bite the wax tadpole”.
So, well in advance of taking steps to extend your brand into China, you should decide how you would like to be known. Beyond your domestic branding, you will need to consider translation or transliteration of your name, whereby you either use words in a local dialect to approximate the sound, or translate the meaning of your trademark into Chinese. Coca-Cola were lucky to find a Mandarin pronunciation which had a positive meaning (“Ke Kou Ke Le”, roughly “permitting the mouth to rejoice”), but you may not find it so easy. You will also need to consider registering your trademark in Chinese characters, and the position is further complicated by the fact that many different characters have the same pronunciation, so the best approach will depend on the particular name you choose.
Timing and Manufacturing
IP squatting, whereby trademarks are registered by a local entity which then trades on your success, or which tries to sell the rights back to you, is a problem in China, where it can sometimes be big business. So, timing is important. If you wait for your plans to mature, you may find it’s too late, and a local Chinese business has already adopted your branding, as happened to Starbucks. While the coffee giant eventually won its legal battle with the Shanghai coffee corporation, it could have avoided the costly dispute if it had registered its own brand in good time.
It is typical for businesses to outsource manufacturing of their products to China, and in doing so license their Chinese partner to use their trade mark for that purpose. In some cases, the Chinese manufacturer, or another entity in China, will hijack the brand, registering it as a trade mark and securing ownership of the rights to it in China. Case law on this point is developing, but there is a risk that such a hijacker might bring an action against the manufacturer for trade mark infringement, stopping production in its tracks. So, even if you manufacture but don’t sell your products in China, it is crucial to secure local trade mark protection.
Though not relevant to every business, if in the longer term you hope to manufacture or sell in China, it is prudent to take steps quickly to protect your interests.
To find out more about trademark registration in China and elsewhere, please submit an enquiry.