It has not been uncommon for small and medium companies, be it a start-up or an established institute, to meet trademark hurdles even disasters in China. Those affected companies either cannot carry on with their business under a particular trademark or have to pay millions to get back their trademark. This is particularly so in fashion and consumer goods industries. This article will survey the major problems and offer some insight on how to tackle them.
The problem: trademark squatting
Trademark squatting is rampant in China. It used to be quite common in the fashion industry because harnessing current reputation and fame of certain overseas brands can boost counterfeit sales with ease. Now the trend has been shifted to IT startups which have been closely watched by Chinese counterparts. Once a creative names have been published, more than likely, there will be trademark squatting in the same classes of goods or services.
Given that the China market is becoming increasingly important, overseas companies cannot ignore the possibilities of entering the China market someday. So what the companies should do to prevent a possible situation where their trademarks are squatted in China?
Solution One: register trademarks in China as soon as possible
The fundamental strategy is to register the trademarks in China as soon as possible. Unlike the US, China adopts registration-based system, which is equivalent to “first registered, first served.” Unregistered prior-used trademarks are offered with quite limited protection. Further, the true owners have to demonstrate lots of prior use evidence and possibly the bad faith of trademark squatter in order to fight back trademark squatters, which can cost thousands of US dollars.
For foreign registrations, it is possible to claim for priority when they are applied for registration in China. China is a signatory to the Paris Convention, which gives a six-month window time for foreign registrations to be applied for registration directly in China.
Other than direct trademark application in China, companies may use the Madrid Protocol to designate China as one of the country extensions.
Solution Two: copyright registration to prevent subsequent trademark squatting
This solution is ideal for designed logo, which qualify for copyright registration. The trademark owners may choose to register the designed logo as a copyrightable work either in China or in other countries, which should be a signatory to the Berne Convention. The copyright registration can be used in opposition or invalidation proceedings to tackle the squatting trademark issues.
The purpose of registering the designed logo is to assert prior rights because according to the China Trademark Law, trademark registration cannot interfere with prior rights, including copyrights. Doing so will have two benefits. One is that the resulting certificate of copyright registration is a strong piece of evidence to prove ownership which can be admitted before the Trademark Review and Appeal Board and all levels of courts. The other benefit is that such copyright registration can block squatting trademark registration in all classes of goods and services in opposition or invalidation proceedings.
Conclusion
In summary, the best solution to prevent trademark disasters in China is to register trademarks as soon as possible. In addition, a copyright registration of designed logo can effectively prevent all subsequent squatting trademark registration in an opposition or invalidation proceeding.
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