China is now the second largest economy after the USA, currently
the world's largest exporter and the largest market for
passenger vehicles. China's 1.3 billion consumers present a
market opportunity that many firms just can't ignore. As South
African trade with China grows, so does the risk that South African
brands sold in the country could be appropriated by unauthorised
Chinese companies or third parties.
Statistics concerning trade mark registration activity indicate
that China's own citizens are increasingly seeking the
unauthorised registration of third party trade marks. This trade
mark "squatting phenomenon" is evident in the trade mark
registration figures which have increased by more than 450% since
the year 2000. The vast majority of trade mark applications in
China are filed by Chinese organisations. In 2008, non-residents
accounted for approximately 30% of total trade mark applications.
China represents approximately 13% of all trade marks filed
globally. Much of this registration is driven by the single-class
filing system. China is one of the few countries that uses a
single-class filing system which requires brand owners to file
separate applications for each class in which they seek trade mark
Without adequate trade mark protection in China, attempts to
reclaim your brand can be laborious, expensive and sometimes
unsuccessful. Like many other countries, trade mark registrations
in China are based on a first to file system which means that the
party first to file becomes the holder of the trade mark regardless
of whether or not they are authorised to do so.
Because of the popularity of branded goods being manufactured in
China, counterfeiting is also widespread and it is not uncommon for
foreign brands to be appropriated. More often than not, the
encroaching party is a Chinese company that the rightful owner has
appointed as its local agent. The likelihood therefore of a local
producer in China securing a South African mark cannot be excluded,
for example a trade mark for wine. In these instances, the rightful
proprietor may have to consider instituting dispute cancellation
proceedings against the unauthorised party in order to have the
disputed trade mark removed from the Chinese trade mark register.
Succeeding in dispute cancellation proceedings is however an
onerous burden to shift and it can take at least three years for a
decision. Brand owners are therefore best advised to adopt the
following practices in China:
Registering your trade mark
China adopts the World Intellectual Property Organisation (WIPO)
international classification of goods and services. Taking into
account China's single class system and first to file policy,
consideration should be given to the 45 different trade mark
classes (each of which has several sub-classes) so as to avoid
loopholes in trade mark protection. In China it takes approximately
two to three years to secure trade mark registration assuming no
obstacles are encountered. A prior search of the Trade Mark
Register is recommended and if the mark is available a trade mark
application should immediately be filed.
Consider registering your trade mark in three
Intrinsic to China's market is the need to address the
country's three linguistic elements of form, sound and meaning.
Trade mark registration in both English and Mandarin in the
relevant class is therefore essential. Furthermore, a focus on your
brand's meaning, its look and sound may result in a third form
of your trade mark, its transliteration. This will convey the
unique meaning of the brand with no literal description.
Understanding the complex linguistic rules and taking into
account the appropriate culture should ensure the brand's
meaning is not lost once translated. In order for a trade mark to
succeed in China, the form, sound and meaning of the mark should
also be protected.
Anti counterfeiting measures
Over time it has transpired that the best way for companies
looking to protect their brands in China is by both education and
Customs operating procedures have evolved and Customs will work
with companies on educational programmes to help identify
counterfeit goods. It is possible to record your registered IPR
rights (designs, patents, copyrights and trade marks) with Customs,
whereby infringing goods will be monitored and seized by Customs,
whereas the goods from your authorised distributors recorded with
Customs will not be affected.
China's expanding consumer market and ongoing IP revolution
present opportunities, but these opportunities do not come without
risk. However, with the right cultural knowledge, time and resource
investment and navigation of a complex regulatory framework, brand
owners can build a consumer base and protect their assets.
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.
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