Trade mark squatting has always been a nuisance to brand owners in China. Even when brand owners have adopted rigorous protection and precaution strategies to maintain a seemingly strong registration portfolio, often trade mark squatters may still register or attempt to register Chinese transliterations or Chinese names of foreign brands that are adopted by local consumers or traders in the market.

Chinese Characters Trade marks

Some Chinese consumers may find brand names in English or other foreign languages such as French or Italian hard to pronounce. Different Chinese transliterations of brand names are then created and used in the market which can become prevalent – to the extent that sometimes they are better recognised than the original foreign names.

Before brand owners have even become aware of it, squatters may have already registered the Chinese transliterations of their reputable trade marks. Below are just a few examples of such instances:

Allowing such squatting to occur may prove costly to brand owners.

Mandatory translation of Trade Mark Applicant's name

Recently, the Chinese Trade Mark Office has implemented a more stringent approach towards the translation of names of foreign applicants seeking trade mark registrations in China for the first time. A foreign applicant whose name consists of letters or words that cannot be translated or transliterated into Chinese completely (for example, the Korean electronics brand name "LG Electronics Inc." only translates to "LG 電子株式會社") cannot be registered. The Chinese Trade Mark Office now insists on a full translation of the name into Chinese, particularly if the applicant does not have any prior trade mark records in China.

As a foreign applicant needs to record a full translation of its entity's name in Chinese, brand owners may have to pay more thought at the outset to choosing the right translation or transliteration for their company's name and their trade marks, and thus pre-empt trade mark squatting.

What about brands that already have a Chinese name?

Brands that already have Chinese names registered in China are also facing new challenges as there has been a recent trend for squatters to attempt to snatch their common names or nicknames. For instance, Cheung Kong Holdings Limited (長江實業(集團)有限公司) is often referred to as "長實" by the press and the public. While both the Chinese and the English names for the group have been secured, trade mark squatters have been trying their luck in going for the short form "長實集團".

In these circumstances, brand owners may have insufficient argument to mount successful opposition to such names as they are not the official names appearing in corporate documents, products or advertisements.

Under the new Chinese Trade Mark Law, if opposition to a name fails in the first instance, there is no right of review and the mark will proceed to registration. The only recourse available at this point for an aggrieved brand owner would be to pursue a cancellation action. This significantly shortens the window for brand owners to postpone the registration of an undesired mark by way of the opposition and review process, which was available under the old law.

So, what should brand owners do?

Select and register a Chinese Characters trade mark

Adopt and register a fitting Chinese name to:

  • Help the brand better connect with local consumers directly and instantly;
  • Promote a uniform brand image for the Greater China region;
  • Reduce the chance of an unauthorised Chinese transliteration/translation of the brand being created by local consumers – or worse, by infringers;
  • Avoid inconsistent transliteration/translation in different countries within the Greater China regions;
  • Better protect the brand name from trade mark squatting.

The provisions introduced by the new Chinese Trade Mark Law highlight the urgency of choosing the right Chinese characters trade marks, getting broader registration that would also cover nicknames to pre-empt squatting, and having the Chinese characters mark reviewed and assessed by locals to ensure it does not bear any negative or degrading meaning in Chinese.

Watch out for subsequent name variations in the market

Brand owners may adopt different Chinese characters trade marks using different characters to cater for different markets (China, Hong Kong and Taiwan) where different Chinese dialects are used (such as Cantonese and Mandarin). Different pronunciations of names are adopted for different regions to resemble the original brand name in a foreign language. Such variations may potentially dilute the distinctive character of the Chinese characters mark and offer theopportunity for trade mark squatters to develop other different versions of the Chinese characters mark in China. Below are some examples of how the different transliterations (usually used in Taiwan or Hong Kong) could look dissimilar to the official transliteration in China:

To reduce the chances of trade mark squatting, multiple versions of Chinese characters trade marks should be registered. Consistent design and font style amongst the different versions can better preserve the overall distinctiveness of the brand image and show consumers that such multiple versions all belong to the same (and to only one) brand.

Conclusion

With the new Chinese Trade Mark Law just round the corner, now would be the appropriate time for brand owners to review their existing trade mark protection in China and to seize the opportunity to strengthen their portfolio.

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This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.