Protection of Intellectual Property in China – How to Protect Your Trademarks
Branding challenges and the fight against product piracy are just two of the hurdles that foreign companies aiming to do business in China will have to overcome. Today, there is a strong focus on the protection of intellectual property (IP), but also the peculiarities of the legal system in China become apparent. In their article, Chiang Ling Li lawyer and Jones Day partner, and Dr. Andreas Ebert-Weidenfeller, lawyer at Meissner Bolte, explain how foreign companies can protect their brand in China.
Companies that have to litigate IP cases in China when entering the Chinese Market are not necessarily worse off in court as Chinese companies because the courts in this sense are not prejudiced against foreigners; on the contrary, foreign-company plaintiffs win most relevant cases. However, the costs and risks of litigation clearly pose undesirable disruptions to companies that take their business into China. Therefore, it is important to eliminate as soon as possible all "stumbling blocks" that may lie in the way in IP matters. How this is possible especially for brands and trademarks should be briefly discussed below.
Chinese counterpart names
Foreign companies from the Western world will inevitably have trademarks and brand names that sound foreign to average Chinese citizens, who might have limited knowledge of English or other foreign languages, and who are likely to come up with their own Chinese versions of those marks and brands if the foreign companies did not provide them. More often than not, those locally grown nicknames are incompatible with the trademark owner's market image. For example, when "Quaker Oats" entered China, it became known as "Old Man Brand". Likewise, "Polo Ralph Lauren" was called "Three Legged Horse" by Chinese locals. It is therefore important to create Chinese versions of trademarks for China which develop a positive impression and fit the brand image. This can either be a version that is phonetically similar to the trademark, or in the alternative a Chinese counterpart which is not phonetically similar but particularly highlights the benefits and advantages of the products. This version in Chinese characters should necessarily also be registered for trademark protection, in addition to the protection of the "original" brand name in Latin script.
Choosing the right product description for brand protection
Registration of trademarks in China is a more rigorous process then in many other jurisdictions. The Chinese trademark registration system uses subgroups within each of the 45 generally accepted international classifications. For example, in class 25 the headings would be "clothing, footwear and headgear" which would adequately protect, for example, the products of a clothing manufacturer.
Trademark registrations for goods and services in China that do not have overlapping subgroups are considered distinct from each other. It is therefore possible to end up with identical marks to competitors registered in the same international class, so long as their subgroups differ.
An example of the risk presented by this system is the G2000 case. G2000 is a well-known clothing retailer in Asia. It had registered its trademark under class 25 for "clothing, footwear and headgear" – but neglected to include the subgroups for scarves, ties, belts and other accessories. A third party subsequently registered the mark "2000" in class 25, using subgroups that G2000's registration did not cover, then promptly sued G2000 for infringement and won a trial. Therefore, it is always important to scrutinise the company's product range which is to be registered for trademark protection also against the background of the subgroup problems in China.
Evidence in litigation
Companies that are active on the Chinese market have to learn their lessons when it comes to IP infringement cases before the courts. Doing business in China means adhering to its evidentiary rules as well. As such, foreign businesses must first understand that Chinese courts rely heavily on documentary evidence.
Furthermore, documents will not be admissible in court unless their authenticity is proven, and companies can establish this through notarization and possibly also legalization. Without proper notarization and legalization, more disputes concerning the authenticity of a document can arise.
For example, if it is decisive to refer to a website of the other party before the courts as a means of evidence, it will be necessary to print out the web pages in front of a notary public who then certifies in a statement that the documents retrieved where those displayed on the respective website. A simple printout of the website as retrieved, without such notarial statement, generally would not be accepted as evidence in court.
As a rule, though, parties should be well prepared, and obtain as much evidence as possible before asking the Chinese courts to enforce their rights.
The above examples show that the acquisition and enforcement of IP rights in China can bring with it peculiarities which are unusual and perhaps even extremely formalistic for people from the Western hemisphere. Nevertheless, it is necessary to adapt to these peculiarities in order not to become a victim of brand pirates or to act efficiently against infringers in order to enforce IP rights.
About the authors:
Chinag Ling Li is a lawyer and Jones Day partner. Since 1994, she has been focusing on China IP and pharmaceutical law .
Dr. Andreas Ebert-Weidenfeller is a lawyer with extensive experience in trademark, anticounterfeiting, design patent, and unfair competition law practice.