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The China challenge: protecting your brand in China
The following article was published in the Winter 2012 edition of Commerce and Industry, the Australian Chamber of Commerce and Industry’s national magazine.[hr_strip]
With a population of 1.3 billion, a manufacturing workforce of over 112 million workers and forecast retail spending of US$4.3 trillion by 2015, China is an enticing market for brand owners. Opportunities are not without challenges, however, and whether they are looking at manufacturing in China or selling into the Chinese market, Australian companies who ignore the Chinese trade marks and intellectual property landscape do so at their peril.
Chinese trade mark law demands that brand owners take a proactive approach. Unlike most Western jurisdictions, where trade mark rights are based on use (a ‘first-to-use’ principle), China is a ‘first to file’ jurisdiction. Registration takes priority and unregistered trade marks are not recognised, even if they have been actively used for a period of time. It is therefore paramount that companies looking to enter the Chinese market file trade mark applications as early as possible, preferably prior to market entry.
Filing early is one thing, knowing what to file is another. No matter how strong a company may consider its brand, it will still need a localised Chinese version of that brand. If it does not proactively create a Chinese version, the Chinese consumer will give it one. For example, in China, the French fashion house Hermes is known as ‘Aimashi’ – a transliteration / translation that means ‘officials who love horses’. The problem for Hermes is that while it had registered its ‘Hermes’ name as a trade mark in China, it failed to register its Chinese version. Instead, the ‘Aimashi’ trade mark was registered by a local manufacturer and Hermes’ attempts to cancel that registration and take control of its brand have so far been unsuccessful. So, in approaching the China challenge, brands must expand their view of what needs to be protected and incorporate local language and cultural considerations.
Even brands who have their manufacturing in China but who don’t actually sell into the Chinese market can’t afford to ignore Chinese trade mark law. In Australia (and in many other countries), there are laws and regulations that allow brand owners to request that Customs seize infringing and counterfeit imports at the border. Chinese custom regulations enable the holder of a Chinese trade mark to not only stop infringing imports from entering the country, they also enable infringing exports to be seized before they leave the country. This applies even if the goods are not intended for the Chinese market. So, brands who only manufacture in China cannot assume that trade mark registration is unnecessary and that they are beyond the reach of Chinese trade mark laws.
China poses some unique challenges for Australian brands. By getting a real understanding of the Chinese intellectual property law system, playing within that system and dealing with those challenges in a proactive manner, Australian companies can take and maintain control of their brand in China.
Victor Ng is a Director of Markwell Intellectual Property Lawyers and a Registered Trade Marks Attorney
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