Is it worth protecting your brand in China?

22nd Mar 2022

New trade mark legislation has helped combat bad faith trade mark applications in China but it’s still important to file as early as possible, Jamie Rowlands told our Spring Conference.

Jamie Rowlands.jpg

“Yes”, it is worthwhile protecting your brand in China. Despite difficulties for many brands over the years protecting and enforcing rights, recently amended trade mark legislation in China is helping to combat issues such as bad faith applications.

Bumpy but workable

“China developed quite quickly” since it joined the World Trade Organisation (WTO) in 2001, “and has put in place legislation, both primary and secondary, that does make the system workable,” Jamie Rowlands, who is a partner at Gowling WLG, told delegates.  

Jamie went on to add that, despite this, the system in China can be bumpy so “local advice and early registration are vital for working in an environment which is just so different.”  

There have been some big shifts in recent years with the trade mark law in China having been amended in 2019, the fourth amendment to the legislation.

In particular, there have been updates to the rules around intention to use, a requirement for agencies to act with integrity and honesty, and increases in damages.

The updated law has “has shifted the position and are generally seen as really positive amendments,” said Jamie.  

In addition, new China National Intellectual Property Administration (CNIPA) guidelines came into effect at the start of 2022 to make the process clearer and more consistent.

The number of trade mark applications is “staggering”, remarked Jamie, with more than 9 million applications made in China in 2020 alone.

Fighting back against bad faith

Jamie described the two main types of bad faith application in China – squatting and hoarding.

“Hoarding is a real problem in China, you have filers who have absolutely no intention of using the marks filing thousands of applications in one go, just waiting to try and profit from that,” said Jamie.

Article four of the new 2019 trade mark law aimed to help fight bad faith trade mark applications on intention to use. It allows CNIPA to unilaterally reject bad faith applications for hoarding at the examination stage as an absolute right of refusal.

It is having an impact. Jamie said: “The team I work with in China has seen a dramatic drop in hoarding over the past couple years as a result.”

Although Jamie added that because of the sheer numbers of trade marks being filed, examiners are not going to pick up everything, which makes the process for third parties applying for invalidity for non use being more straightforward important.

Jamie suggested that the success rate for invalidity proceedings for bad faith was now well above 50%, moving up from around 20% a decade ago.

Registering early

“The best protection is to register trade marks as early as possible. The second thing to consider is filing as broadly as possible,” Jamie advised delegates.  

This is the case also if you are just manufacturing in China for export. If a third party, for example the manufacturer or agent, registers that trade mark in the relevant goods and services they can then record the trade mark at customs.

The goods could be held at customs while a dispute is ongoing. This is particularly dangerous if the parties have fallen out. “It could take two years and it can be costly,” remarked Jamie.  

On litigating registered trade marks in China, Jamie said: “My experience of litigating in China is that with early strategic planning and a firm idea of where you want to end up, the court system in China is workable.”