News & Insights

Every week Australian companies, big and small, are affected by trade mark squatters in China.

Trade mark squatters are generally individuals or businesses that attain trade mark registrations for other people’s or business’ brands in bad faith prior to the registration by the real trademark owner.

Resolving the situation can cost thousands of dollars in actual costs, not to mention the drain on your business time and resources, as some of the world’s most well-known  brands – Nike, Air Jordan, New Balance – have found out.

The success rate of trying to prove bad faith or invalidation is low.

The best options are –

1. avoid trade mark squatters by being the first to file; or
2. try to negotiate the purchase of the registered trade mark from the trade mark squatter.

It isn’t uncommon for trade mark squatters to attend trade shows, expos and delegate meetings in China with the goal of identifying new brands from overseas that don’t have trade mark protection in China.

Accordingly, it is best to file your trade mark application before you get on the plane!

This can be done by filing an Australian trade mark application and relying on the Paris Convention to claim priority within the next six months. But ideally a filed Chinese trade mark application will be the best protection.

Daigou sellers

Daigou sellers are becoming an ever more present threat to the trade mark rights of businesses in Australia.

A Daigou seller is a person who lives outside China and purchases commodities for a customer in mainland China.  In essence they are an unauthorised distributor of genuine goods into China.

It isn’t uncommon for a Daigou seller to seek trade mark protection for an Australian business’ trade marks in China before the Australian business has even given thought to trading in China.  This establishes the Daigou seller as the registered trade mark rights owner in China (ie the Daigou seller has “hijacked” your trade mark).

There is currently no way to rectify this situation.

In fact, there have been instances where the Daigou seller has commenced trade mark infringement proceedings and has been successful against the legitimate brand owner – resulting in the true brand owner paying damages to the Daigou seller.

Copyright

One potential way to combat trade mark squatters and Daigou sellers in China is to attain copyright registration.

China has a copyright register which can provide protection of your logo or other work in which copyright subsists in 30 days or less of filing with the Chinese Copyright Office.

In fact, if needed, copyright registration can be attained on the same day as filing the application (though the fee to do this is considerably higher than for a 30 day registration).

Copyright registration is a very useful additional tool to fight infringers, including online, and has been used successfully to oppose trade mark applications where the copyright registration was filed prior to the filing of a trade mark application by the third party.

In this way, brand owners can enforce copyright registration against bad faith trade mark filings.

Customs seizure

The Chinese government is very serious about clamping down on intellectual property infringers.

They are supportive of and open to working with brand owners enforcing their intellectual property rights, and actively encourage brand owners to engage in the protection systems offered.

One system in place is the ability to record your trade mark, patent or design with Chinese Customs.  Of note is that there is no official fee to record your intellectual property.

Chinese Customs will then actively monitor all goods, whether they are being imported to, or exported from, China to determine if any goods infringe your intellectual property rights.  This monitoring can be assisted by having someone from your business train custom officials in how to identify infringing products, which is encouraged by the Chinese government.

Those brand owners that have done this have received a high success rate of having infringing goods refused exportation at the border control.  To date 19,500 shipments have been stopped, meaning over 42 million items have been prevented from entering the market.

Additionally, it is testament to the Chinese government and its stance on stopping the flow of infringing goods out of China that there is a 99% success rate for inspections relating to trade mark protection.

Chinese translation/transliteration

We strongly encourage trade mark registration is obtained for a Chinese translation and/or transliteration of your brand.

There are many instances where a western brand has entered China without trade mark protection for the translation and/or transliteration of it.

What often then occurrs is that a sharp business operator in China capitalises on this opportunity and obtains a registered trade mark for the translation and/or transliteration of the brand.

Then when the western brand attempts to promote its goods by use of the translation and/or transliteration it is unknowingly committing trade mark infringement.

There have been several cases where this has occurred resulting in the western brand owner paying damages to the Chinese business operator.

In choosing the translation and/or transliteration of your brand, it is vital to have a local Chinese trade mark attorney whois fluent in business level English and Mandarin provide various options for the translation and/or transliteration of your brand.

It is common for a western brand to have no direct translation and therefore many different translations and/or transliterations can relate to the same western brand.

By using a Chinese trade mark attorney, you can explore the meaning of each translation and/or transliteration and determine which is the most suitable for your brand in China.

The adoption of a Chinese character mark (ie a translation and/or transliteration of your brand) is a strong marketing and branding tool in China, it isn’t merely a translation.

take home points

1. Prevention is better than cure. Develop and protect strong Chinese branding.
2. Trade mark rights are granted on a first-to-file basis (ie use isn’t required)
   • Trade mark protection should be sought prior to making a public announcement of your brand (ie seek registration well ahead of market entry)
3. You must have total control of your brand in China (including a translation trade mark). If not… someone else will.

Please contact our Intellectual Property team  if you wish to discuss IP protection in China.