Being copied is for every company in China a real problem. Arriving on a market and seeing a copy of your product even before launching yours is not something pleasant. It’s even really frustrating. Also, the Chinese paradox could be described as follow. The fast development of intellectual property law offers now legal protections, but a high level of counterfeiting and piracy activities is still prevalent. Therefore, many businesses are reluctant to face the potential infringement of IP rights and dilution of their brands by expanding into China. In a country where counterfeit, fake brands, and fake products are proliferating, Startups and foreign companies will have to process risk management measures to operate in the best conditions possible. Taking advantage of the Chinese opportunity with the maximum safety for your company.
Patent the Product Idea
The moment you are able to patent your idea, you should do it. You should patent your idea in the market you are going to target. How does this help? Well if your product is duplicated by China, you can prevent such products from being sold in Canada and United States by proving that you own the patent to the product.
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Registering the trademark in Chinese characters
Foreign firms entering China should be aware that their trademark in Roman characters will not completely protect them against infringement. The same or similar trademark can be registered in Chinese characters by another business. This is also key to a business’s profitability and image in China.
China has a First to File System
It is important for foreign business owners to understand that China is a first-to-file system. This means that China does not recognize international trademarks even for well-known brands. Just because a brand is recognized in another country does not mean that the trademark has legal protection in China. Instead, businesses must take the extra step and register their trademarks in Mainland China.
Selecting a Trademark in China
Trademarks identify the specific or primary use of a good or service. They help consumers distinguish their companies, products, and services from those of others. Trademarks may consist of words, letters, numbers, devices, shapes, color combinations, or a mix of all of these. To register a legal trademark in China, your selected trademark must meet the following criteria :
- It cannot be the same or similar to the name or a flag of a state or international organization
- It must be easily distinguishable from the trademark of competitors’ goods and services
- It cannot discriminate against a nationality
- It cannot promote fraudulent advertising
- It cannot provide a functional definition or refer to a technical effect
- It must be available for registration
Companies can search for existing trademarks to see if there is a match for what they are considering using for their business.
Legal Way to protect you brand in China: Get your China trademarks done
The company must either directly file an application with the China Trade Mark Office (CTMO) or file the application through the World Intellectual Property Organization (WIPO).
- Do it fast: The trademark registration system in China operates on a first to file basis, not a first to use. Therefore, the faster you can register your business, brand names and logos the better.
- It’s territorial: China has its own jurisdiction. So, as trademarks in China are territorial, to get registered protection you must apply for trademarks rights in China mainland. To be protected in Hong Kong, Taiwan, or Macau you’ll need a separate registration. And if you’re already registered in the USA or in Europe, well, it will just protect you in the USA or in Europe.
- Mind the language: we advise you to develop a Chinese language mark in China, and therefore registering both the English name and the equivalent Chinese characters as trademarks to avoid wasting time and money on litigation proceedings.
For example, when Starbucks enter the Chinese market, the literal translation of its Chinese name got copied by Xingabake, a Chinese coffee brand. Which led the company to juridical actions. Fortunately for them, they won the case and got compensated around $45,000.
- Increase your vigilance: you have to be alert for brand infringement. You may have to check on “cybersquatters” or develop a brand monitoring team to monitor trademark, your domain name registration and check on the internet for unauthorized brand usage.
Copyright the Brand
If your brand qualifies as a copyrighted work, this could provide an additional or alternative ground for protection. The Chinese trademark law recognizes that earlier copyright provides a ground for revoking a registered trademark. Ideally one should produce all the relevant drawings, sketches, assignments to prove copyright. Having a voluntary copyright registration in China or in other jurisdictions would also come in handy as evidence of ownership.
Develop a Policy
This tip is not unique to China but it is important to have a policy tailored for the Chinese system. The policy should cover matters like brand conception and design, registration, marketing monitoring (e.g. conflicting marks; counterfeits), record-keeping, licensing, contracts (e.g. distributors; manufacturers), and enforcement.
Just like many other places in the world, trademarks in China are territorial. This means that you need a separate registration for every jurisdiction. A trademark approved specifically for Hong Kong will not necessarily be applicable to Taiwan or Hubei.
Registered trademarks serve as evidence for you to prove that a third party is infringing your brand. If such a legal issue arises, the customs officials will carefully examine the trademark before seizing the goods before they leave the Chinese port.
We also recommend registering your trademark early. This is because the trademark registration process works on a first-to-file basis. This is why you need to get your trademark registered before the business even enters China.
Human Resources as your new best friend
Brand infringement awareness is quite low among Chinese people. They may not value a brand the same way we do. So, if you have Chinese employees you need to explain to them the value of IP protection and show them that the brand is a valuable business asset worth to be protected. Educate them about confidentiality requirements and the consequences of IP violations.
You can also grant access to information according to the job title and function of employees. Control their access to sensitive data and equipment/facilities.
And when an employee is leaving your company, proceed to exit interviews to recover sensitive materials and remind them of one more time confidentiality obligation.
If you provide licenses for third parties to use your product or brand, we advise you to include a clause in the license agreement providing a dispute to be dealt with alternative jurisdiction. For this, Hong Kong may be the best choice. It’s faster and more efficient than what you’ll find in China at the moment.
In case of brand infringement, you’ll get two choices:
- Use administrative system to enforce your rights without the need to go to court. It’s usually cheaper and quicker. If found guilty, the infringer can be fine and the money earned from its illegal action will be seized.
- Use juridical system as you’ll do in our western system. Your company will sue the infringer in court which could lead to damages and injunctions. It will give you flexibility, speed and reduce the risk of adverse publicity. But its more expensive.
Among these two choices, we advise you to start with the administrative process.
Register your IP in China
Without registering your copyrights, patents, and trademarks in China, your IP has no formal protection here. You have to register an eligible IP as early as possible. Here is the full range of IP you might file:
- Patents: need to file your application with the State Intellectual Property Office (SIPO) for IP, which they view as valuable for your business for both core and fringe technology. Also, it needs to be properly translated before filing it.
- Trademarks (we saw it previously): in Chinese and in English, choosing carefully the product categories and sub-categories if needed. Check China’s online trademark database for similar trademarks filed by competitors and infringers (even in categories outside a company’s core products).
- Copyrights: its not required but you should consider registering your work with the National Copyright Administration as it will provide a public record and can serve as useful evidence in copyright disputes.
Use your fame
In China, everything moves fast but the administration system… registering your trademarks may take a long time. We’re talking here about 1 to 2 years according to your industry and products. Also, to avoid wasting time and either start operating on the Chinese market either prepare your future product launch, here are some advice for you.
China is a country focus on brand reputation. Consumers don’t care where you come from and how famous you are abroad. They probably don’t know anything about it, as they have their own communication system and therefore don’t use Google, Facebook, Instagram, and other Western social media.
If everybody knows your brand, they won’t care about products’ copy. They’ll want to buy the original one, and show it off to everybody.
How to do? Some simple steps:
- Make yourself visible: build a website in Chinese or open an official account on Weibo
- Develop your reputation: open an official account on WeChat, make some new posts about your product, your story and how great you are. Get some followers, comments and product’s reviews.
- Work on your branding! Work on Chinese social media. For example, you can open a Douyin account. Make some videos, use KOL or micro-influencers and promote your brand as much as possible. If you can make a buzz its even better. The point here will be to get as many followers as possible, reviews about people buying your product, comments, etc.
- Make sales. If you have a business license, you can start opening an account on online shopping stores like Douyin (yes, a social media but an online store as well), Tmall, Taobao, etc.
Chinese people mostly buy products that already have some sales. It’s a sign of quality products. Nobody likes to be the first one to buy a product… except your relative maybe. In China, they like two things:
- Official well-known brands
- Products that everybody buy
They follow the mass.
To resume, you have two ways to protect your brand in China. Work on your branding as fast as possible, and use legal actions.
For any questions or inquiries, feel free to contact us.
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