Protecting your business – the importance of trade mark protection in China

Many businesses are aware of the benefits of trade mark registration in Australia, but for those that manufacture or sell goods overseas, consideration must also be given to whether their trade marks are protected in the international market. 

In China in particular, there are some peculiarities that mean trade mark registration is even more important and businesses are encouraged to seriously consider trade mark registration, or risk having genuine products seized by Chinese customs.

What is so important about registering a trade mark in China?

Trade mark squatters - We increasingly hear of Chinese trade mark squatters – companies which register the unregistered trade marks of international businesses manufacturing goods for export. The Chinese Trademarks Office will grant protection to the first to file an application, without considering who the first user of the trade mark was, or who manufactures the genuine goods. If a squatter applies for your trade mark before you, they will have registered protection. As a result, applying your trade mark to your legitimate products will actually infringe the trade mark rights of the registered owner i.e. the squatter.

Exporting and Chinese customs - Trade mark owners in China can prevent goods bearing an infringing mark from leaving China through customs seizure. For registered owners this can be beneficial, but if a squatter has registered your trade mark, your genuine manufactured goods may be seized at the border before export, effectively stifling your business in Australia.

Your manufacturer or distributor may require it - It is becoming increasingly common for a Chinese manufacturer or distributor to ask you to register your trade mark before they will enter into an agreement with you. These manufacturers know how common trade mark infringement is in China, and want to protect their work and income. You should register the trade mark in your own name, not that of your manufacturer, and your manufacturing or distribution agreement should license the limited use of the trade mark to your Chinese manufacturer, while setting out clear parameters around such use.

Reverse engineering - Some competitors want to copy your product and apply their own trade mark to it. If your goods have your trade mark embedded (e.g. a mould produces your trade mark on the good) anyone taking a direct copy will be reproducing the trade mark. If your trade mark is registered, you are in a position to cost effectively stop the unauthorised reproduction and export of these goods from China.

Back-door sales - It is also common in China for a manufacturer to produce more goods than you have ordered, so it can sell them on the local market. Trade mark registration and a clear licence agreement are important to avoid this.

Enforcement - You might think that it is difficult to enforce your registered rights in China, so what’s the point in registering a trade mark there? Surprisingly, China is increasingly cooperative with trade mark owners seeking to enforce their rights, including international corporations. Additionally, trade mark infringement in China is a crime, punishable with imprisonment, so the police may become involved to assist with quick enforcement and seizure of infringing goods. 

How is a trade mark filed in China and what are the costs involved?

There are two ways to obtain trade mark registration in China, either by filing an application directly or via the international trade mark system known as the Madrid Protocol. The costs and strategy will vary depending on your business needs, scope of protection and whether additional jurisdictions are of interest.

Download a PDF version of this article: Protecting your business - the importance of trade mark protection in China 

For more information on registering trade marks internationally, please contact:

Emma Mitchell
Senior Associate
Sladen Legal
03 9611 0140
emitchell@sladen.com.au