Having your trademark registered in your home country does not mean that your trademark is protected in China. If considering doing business in China – whether by setting up a company, selling through an existing distributor or out-sourcing assembly for export – trademark registration should be your first step. It is one of the most cost effective means to protect your brand within China.
China employs a ‘first-to-file’ system for trademark registration and affords no protection to unregistered trademarks. This can come as a shock to companies that are used to the Anglo-American system, under which a company gains common law rights by virtue of using a brand in commerce. In China, a third party can both register ‘your’ trademark and prevent you from using it without selling a single product themselves. They may even be able to prevent you from using ‘your’ trademark in China if all you are doing in China is manufacturing products for export. Such trademark ‘squatting’ is fairly common and, when it occurs, the options are not particularly appealing: pay a licensing fee to the trademark squatter, buy the trademark outright or change your trademark.
Companies doing business in China should register as a trademark any ‘distinctive phrase’ or ‘logo’ used on their products or their packaging, or in the marketing or sale of services. Companies that sell products or services in China should also select and register a Chinese-language mark or they expose themselves to the risk that someone else will secure the Chinese trademark for your brand or product.
First mover advantage is considerable and the risks associated with inaction can be high. If you plan to use a brand name in China, register it yourself before anyone beats you to it. It typically takes 18 to 24 months for China’s Trademark Office (CMTO) to issue a trademark if everything goes smoothly. No one can stop you from using the mark while your application is pending, but neither can you legally stop anyone else from using it.
A trademark registration will be valid for 10 years and may be renewed indefinitely. It is also important to remember that a trademark that is not used in commerce for a three-year period is at risk of cancellation.