National People’s Congress 2018 that took place in the month of March, has made Chinese Trademark Office as a part of the State Intellectual Property Office (SIPO). Legal experts say the onus is on companies looking to do business in China to understand how China’s trademark law works, as it differs greatly from that of the United States.
Trademark Applications in Numbers-
As China is quickly emerging one of the top-destinations for lucrative business prospects, companies from all over the globe want to start a business over here and apply for China trademark registration.
- According to the source, 3,586,000 applications for trademark registration were filed in China in the first six months of this year
- As of June 30, 2018, 31.5 million total trademark applications had been filed
- 19.4 million trademarks had been registered
- 16.8 million trademarks remained as valid registrations
- 2018 will have increased by nearly 25% from the previous year
The Problem of Bad-Faith Registrations in China-
As for trademarks, the volume of applications has consistently grown in the past 15 years. One of the consequences of this growth is the proliferation of so-called ‘pre-emptive trademark applications’, filed in bad faith. Bad faith refers to the filing of a trademark belonging to the owner of a renowned overseas company with the intention of making a profit out of it. This process commonly involves a Chinese company first registering the trademark of a foreign firm in China with the express intention of selling it back to the overseas company at a high price. Foreign companies are facing the growing problem of bad faith trademark registration in China. In practice, so called “bad-faith registration” is greatly motivated by the profits yielded from the difference between the inflated price charged by the trademark holder and the cost of registering this trademark.
The notable thing is that, in China, it completely legal for the owner of a registered trademark to sell it. In fact, in China there is an officially approved internet-based platform for selling trademarks. There is no security of your trademark in China if it is not registered. However, the good news is, Chinese Trademark office made few significant changes in order to stop the harmful practice of bad faith and offer greater protection to the foreign brands.