China: Strategy For Foreign Rights Holders Against TM Squatting In China

Last Updated: 28 December 2017
Article by Frank Liu

A large number of companies with brands that have had a significant history and degree of notoriety abroad did not in the past place any great importance on registering their brands as trademarks in China because their major markets were not in the country. The sales of some brands in China have been aided by domestic distributors, but they, too, failed to register their trademarks in such situations.

With the changing economic environment, China as a market with a relatively active economy has increasingly drawn the attention of these developing brands. However, once these brands establish a company in China and prepare to go all in, they often discover that their trademarks have been preemptively registered in their core classes by others. Failure to secure the registration of such trademarks in China will have a major impact on the business development of such brands in China, and if business development is forced for short-term gains, their business interests may suffer material damage due to trademark infringement claims.

The trademark registration regime in China operates on the first-to-file principle. Trademark squatting is naturally an extremely negative factor for the business development of a company. However, if an active approach is taken, there is still some hope; if a well-suited response strategy is taken, an "every cloud has a silver lining" type of effect could very well manifest itself.

Where a brand has not been registered in China, or there is a gap in the type of goods/services it is registered for, the first thing to do is carry out the necessary registration. Of course, for the great majority of brands, it is not necessary to carry out registration in all 45 classes of goods/services. In addition to the core class of one's goods/services, it is a good idea to carry out registration in related classes, based on the specific scope of business and development of the brand.

When applying for registration in the core class, a single application in words or a device that has been preemptively registered will necessarily be blocked by the prior filing. In such a scenario, consideration may be given to filing an application including brand devices or words that have not been preemptively registered, to enhance the chances of success. On the other hand, certain efforts may also be made to prevent others from carrying out further filings by erect obstructions against subsequent acts. Where preemptive registration by another in the core class has occurred, registration in related classes where preemptive registration has not occurred is extremely important. Registration in appropriate related classes not only allows for bleeding into the business of peripheral goods/services, but such registrations may also, in future, become counters in trademark negotiations and weapons in combating infringement.

Of course, only filing trademark applications is a rather passive response to preemptive registration. More active measures, depending on the specific circumstances, include such things as applying for invalidation or cancellation of the preemptively registered trademark. Under such a circumstance, evidence of the use of the trademark by the brand in carrying out sales in China in the past is extremely important. Furthermore, under many circumstances, the trademark squatter is very likely to have had contact with the distributor of the brand in China, and even in some instances it will be the distributor of the brand or one of its connected parties that has preemptively registered the brand. If evidence of this can be collected, it can provide powerful support for efforts to have the trademark invalidated or cancelled. While taking action against the preemptively registered trademark, consideration may also be given to trying to purchase the trademark through anonymous negotiations, and if the price is appropriate, this could also be an effective means of resolving the problem.

When responding to the preemptive registration of a trademark, in addition to working on the trademark itself, consideration may also be given to other potentially advantageous factors that actively increase the counters available for responding to such preemptive registrations. For example, if there has been a contractual relationship between the trademark squatter and the brand, consideration may be given to seeking instances of breach of contract by the other party and seek relief based on the Contract Law.

In addressing the acts of the trademark squatter, one also should not limit oneself solely to trademarks. If other intellectual property rights of the brand itself, e.g. copyrights, patents, and enterprise names, have been infringed by the trademark squatter, legal action may also be taken from the perspective of copyright infringement, patent infringement or unfair competition, placing pressure on the other party.

In certain cases, the author has assisted brands in trying to use commercial means to negotiate with the other party, proposing a commercial arrangement that answers to the other party's potential commercial needs, thereby achieving the objective of having the trademark transferred to the brand. If the negotiations proceed smoothly and the trademark squatter itself has certain business advantages, some trademark squatters may, after transfer of the trademark to the brand, even become an officially licensed distributor of the brand in China to jointly promote development of the business of the brand.

In summary, when responding to the preemptive registration of a trademark in China, it is necessary to comprehensively consider issues both from a legal and a commercial perspective and take into account the remedies available under trademark and other laws to actively formulate a response strategy. Only in this way can the interests of the brand in China be safeguarded to the greatest extent.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions