Safeguarding Your Trademark: Protecting Your Brand in China

Registration is essential for establishing exclusive rights and preventing others from using the registered trademark without permission. By successfully registering a trademark, the owner is granted legal authority to enforce their exclusive rights and take action against any unauthorized use by third parties. Additionally, once a trademark is registered, owners may file their trademark with customs to prevent others from engaging in import or export activities using the same or similar brand or trademark.

Certain sales platforms, such as online stores like Tmall.com and JD.com as well as large department stores, may also require a registered trademark as a prerequisite for conducting sales activities on their platforms. This emphasizes the importance of trademark registration not only for brand protection, but also for enabling business operations through various sales channels in China.

Registration process

To qualify for registration, the trademark must possess distinctive characteristics which do not infringe upon any pre-existing rights, and which will enable easy identification. In other words, the trademark must be unique and easily distinguishable from others to be eligible for registration.

Both individuals and companies, regardless of their nationality, are permitted to register trademarks in China and the registration process itself is straightforward. However, foreigners or foreign enterprises seeking to apply for trademark registration or handle related trademark matters must engage the services of an agent in China who is authorized by the government to act on their behalf. This requirement ensures compliance with Chinese regulations and facilitates the smooth processing of trademark applications and related procedures.

Trademark owners are required to submit individual applications for each class in which they intend to use their trademark. As a member of the Nice Agreement, which establishes a classification of goods and services for the purposes of registering trademarks and service marks, China has adopted the international classification system that divides trademarks into 45 classes. This means that if a trademark is to be used across multiple classes, separate applications must be filed for each class.

Once registered, a trademark is valid for a period of 10 years from the date of registration approval. Upon the expiration of this initial term, trademark owners have the option to renew their trademark registration for subsequent periods.

Trademark squatting and remedies

Failure to secure timely registration has contributed to the proliferation of trademark squatting in China. A typical example is so called pre-emptive registration, where individuals within China apply for trademark registration using the brand of a trademark registered outside of China (but not yet registered in China) even before the products of the Chinese trademark-applicant are officially launched or sold in the Chinese market. Pre-emptive registration poses significant challenges and risks for foreign companies seeking to protect their own foreign-registered trademarks in China.

Faced with trademark squatting, the original trademark owner of a trademark registered outside of China has several remedies available to them, including initiating opposition, invalidation, or cancellation proceedings against the squatter. These legal measures provide avenues for the original trademark owner to challenge the validity and ownership of the squatter's registered trademark.

Remedy Option 1: Opposition

Initiating opposition proceedings is generally the preferred remedy when dealing with trademark squatting in China. However, it is important to note that the opposition must be initiated during the three months’ opposition period, which occurs before the squatter's trademark is officially granted by CTMO following publication. The China National Intellectual Property Administration has even proposed to reduce this period to two months under the draft amendment to the Trademark Law published for public comments on 13 January 2023.

If the original trademark owner fails to file an opposition within the opposition period and the squatter's trademark is ultimately granted, the original trademark owner would need to pursue invalidation or cancellation proceedings against the squatter to challenge the registered trademark.

In practice, the following categories of evidence are commonly utilized when filing an opposition in China to combat trademark squatting:

1. Evidence of the use, sale or promotion of the brand's products in China prior to the application date of the opposed trademark
   First, it is common to provide evidence demonstrating the use, sale, or promotion of the brand's products within the relevant class in China over the past 3-5 years leading up to the trademark application date. The aim is to substantiate genuine use of the trademark in the Chinese market, reinforcing the case against the trademark squatter.
   Relevant evidence may include sales contracts, sales invoices, exhibition contracts, exhibition invoices, exhibition photos, advertising contracts, advertising invoices, specific details of advertisements, brochures, brochure production contracts, invoices, as well as actual product and packaging photographs.
2. Evidence on the business relationship between the trademark squatter and the trademark owner
   Second, evidence of a business relationship between the trademark squatter and the original trademark owner can support an opposition case. Examples of such business relationships include roles such as an agent, representative, or other similar positions. Such evidence strengthens the opposition case by highlighting the connection between the squatter and the trademark owner.

In many cases, foreign original trademark owners may struggle to provide evidence of the use, sale, or promotion of their brand's products in China. This is because trademark squatting often occurs before the original trademark owner even enters the Chinese market. Despite this challenge, it is still advisable to file an opposition in such situations. The trademark applicant may already be viewed as a trademark squatter with low credibility and integrity by the CTMO due to for example historical application records. If this is the case, the CTMO will usually reject the trademark squatter's application upon the filing of an opposition.

Wikborg Rein has experience with assisting Norwegian and other foreign trademark owners against trademark squatting in China, also where the original trademark owner has not previously sold their products in China. A case from 2021, where we assisted a Norwegian trademark owner filing an opposition against trademark squatting in China, illustrates this. Despite only being able to provide evidence of the use, sale, or promotion of the brand's products in Europe and Hong Kong, rather than in China, the opposition achieved a positive outcome. The CTMO rejected the squatter's trademark application due to the applicant's low personal credibility and integrity with the CTMO, as well as the compelling evidence presented by the original trademark owner regarding the creation of the trademark and the brand's sales activities in other countries. This case highlights the potential for successful opposition against trademark squatting in China, even when evidence may be limited to regions outside of China.

Remedy Option 2: Invalidation

In situations where an opposition is not filed with CTMO and the trademark is successfully registered by the trademark squatter, the original trademark owner still has the option to pursue an invalidation proceeding against the registered trademark.

The legal grounds for the invalidation proceeding are similar to those required for an opposition. However, it is important to note that certain legal grounds, such as infringement of a well-known trademark or the filing of trademark applications by an agent or representative in their own name, must be filed within 5 years from the date of registration of the trademark in China. This timeframe is crucial to consider when determining the appropriate course of action for challenging a registered trademark held by a trademark squatter.

Remedy Option 3: Cancellation

In addition to opposition and invalidation proceedings, original trademark owners also have the option to pursue cancellation proceedings against trademark squatting in cases where the registered trademark has become a generic name for the designated goods or has not been used for 3 consecutive years. It is, however, essential to note that trademark squatters often diligently manage and maintain their trademark registrations, making it more challenging to succeed in a cancellation proceeding. As a result, cancellation proceedings should be approached with a degree of caution, considering the potential difficulty in achieving success due to the proactive measures taken by trademark squatters to protect their registrations.

In summary, because trademark squatters tend to file numerous trademark applications to take advantage of trademark squatting, an opposition proceeding is the most advisable approach to combat and prevent trademark squatting in an effective manner.