Trademark Hijacking in China: The Importance of Trademark Registration

Trademark hijacking is a problem numerous of our clients have experienced in China over the past 18 months. We therefore feel that it is important to raise awareness of this problem and the highlight the importance of ensuring that your trademark is registered in China before doing any business there whether it be exhibiting at a show, sourcing a company to manufacture your product or selling your goods or services in China.

Trademark hijacking usually involves a company or person registering the trademark of a foreign company in China without the knowledge or consent of the foreign company. This can have serious implications for the foreign company as it can be prevented from supplying goods or services in China. However, it can also be prevented from sourcing or getting its products manufactured in China.

If you are a company or brand looking to do business in China, it is important to consider the complex nature of Chinese trademark law. China follows a ‘first filing principle’ in regards to trademark registration, which means that the first person/company to file a trademark in China – even if it is identical to yours or a well-known brand – will be the undisputed owner of that trademark.

It is a system that has led to widespread ‘trademark hijacking’ and it has affected some of the biggest global brands. A year ago, Apple settled a Chinese trademark dispute worth $60 Million – a situation caused by a Chinese firm, Proview, acquiring the ‘iPad’ trademark in 2009. Apple previously bought the rights from Proview’s Taiwanese affiliate for $55,000, but this did not cover the trademark in China.

‘Trademark Squatting’ is a similar problem – a process where companies trademark a word or logo which could be lucrative in the future.

In China a trademark (except well-known trade marks) practically has no protection if it is not registered, and it is extremely difficult to object if a third party has already registered your trademark unless you can prove bad faith. The onus of proving bad faith obviously rests on the party challenging the registration and unless your mark is well-known (which unfortunately is not the position in the majority of cases) or you are able to show a connection between yourself and the third party who registered your trademark in China or some form of awareness or knowledge of your trademark on the part of the third party then the prospects of successfully revoking an earlier trademark registration are extremely low.

The message is simple – be proactive and protect yourself by registering your trademark in China at a very early stage.

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