Global Brands that Won Trademark Battle in China

China is the world’s leading manufacturing market but trademark infringement is the most common problem many foreign companies face over here. It has been noticed that trademark squatting has been a profitable and low-risk activity in China for many years. Under Chinese trademark law, only a registered trademark enjoys protection and the first person or entity to register it becomes its lawful owner, even if that trademark has already been used by others in China. Aware of the very strict “first to file” principle, they identify, apply and register trademarks belonging to competitors who have forgotten or not yet taken steps to register them. That is the primary reason China lawyers advise their clients to give utmost importance to register their trademark in China.

China’s Trademark Law is not Weak

Many people think that weak Chinese trademark law is responsible for the growing number of infringement incidents, but the reality is China’s trademark law already has a number of provisions to combat squatting. The truth is, when a foreign company comes to conduct business in China, either they don’t take trademark registration seriously or they take wrong steps on battling the trademark infringement legal disputes.

However, the good news is over the last couple of years, several foreign firms especially from the USA have won many trademark infringement cases giving hope to other overseas companies that a tougher line from Beijing is adapted to act swiftly and appropriately to the long-existing trademark squatting practice.

Here is a list of foreign companies won the trademark cases in China:

>> Alfred Dunhill– This year, British luxury label Alfred Dunhill—which specializes in menswear, leather goods, and accessories—won its trademark infringement lawsuit against Chinese brand Danhuoli.

>> New Balance– Boston, MA-based athletic shoe and apparel company New Balance had won a victory in a trademark infringement case in China against three defendants that had used the firm’s signature N logo to sell footwear under the brand name New Boom. A Chinese court has ruled that three domestic shoemakers must pay New Balance $1.5 million in damages. It the is largest trademark infringement award ever granted to a foreign business in China.

>> Michael Jordan– In 2016, China’s supreme court has ruled in favor of US basketball legend Michael Jordan in a trademark dispute.The People’s Supreme Court ruled a Chinese sportswear company must stop using the characters for Jordan’s name, read as Qiaodan in Chinese. In a ruling by the Chinese supreme court, Qiaodan Sports Co, based in south-eastern Fujian province, must stop using the Chinese characters for Qiaodan on its merchandise.

 

All these verdicts could help set a precedent for foreign companies seeking to protect their intellectual property rights, more legal action is needed for global brands to capture the upper hand in their fight against China’s copycats. According to the trademark lawyers in China, winning a legal dispute regarding your trademark in China is not as overwhelming as it may seem. The only thing foreign companies need to do is to follow the right legal steps at the right time.

The US and the European firms need to keep in mind that doing business in China is an entirely different ball game compared to do business in their home country. China is a communist country with its own sets of rules and regulations for the overseas companies. As a foreign business owner, you simply need to follow the Chinese rule.

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What is Bad-Faith Trademark Registration in China

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.

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