How do I prevent trademark pirates from stealing my trademark in China? What do I do if a Chinese trademark pirate is already squatting on my trademark?
Trademarks Are Critical For Brands.
Your brand is your company’s most valuable asset. It’s the heart of your advertising. It’s how your customers recognize you and how they recommend you. If you are building a real brand, you need to invest in real trademark protection. And if there’s any chance you’re building an international brand, then you need to invest in international trademark protection, particularly in China.
Trademark Rights Are National.
Trademark rights are national rights. This means You need a separate registration in every country where you do substantial business. Typically, your US trademark lawyer will coordinate the work of several international lawyers for you.
Trademark Pirates In China Will Steal Your Brand.
Early filing in China is especially important. Chinese trademark pirates are constantly searching for successful new US brands. When they find your brand, they will preemptively register your trademark in China. Then they will ransom it back to you, often for big sums. Apple was forced to pay $60 million for the trademark rights for IPAD in China. For smaller brands, I generally see payments closer to $50-100k. Filing your own China trademarks early is much cheaper and less stressful then dealing with the pirates.
If a pirate has registered your brand as a trademark in China, then they can use that registration to prevent you from selling in China, AND prevent you from manufacturing your products in China (even if they are destined for sale in other countries). These trademark squatters can record the registered trademark with Chinese Customs, and have customs seize any products bearing the mark. This turns the normal system on its head: your authentic products get seized at the pirate’s request.
How can they do this? China is a “first to file” country. This means that trademark rights in China go to the first person to file a trademark. The US is different. Here, the trademark rights generally go to the first person to use the trademark in commerce.
There are no “common law” trademark rights in China. If you want to protect your brand in China, you need a trademark registration. (There is a narrow exception for “well-known” foreign brands, which are protectable in China, but this is a very high bar to clear. Don’t expect to rely on it.)
If a squatter has stolen your trademark, you have little practical recourse. You can file an “opposition” against a squatter’s pending application, or a non-use cancellation proceeding against a trademark that has been registered for over 3 years, but not yet used in China. These proceedings are uncertain, slow, costly, and often require expensive appeals.
Unfortunately, emerging tech and CPG brands are often forced to pay the ransom to buy back their trademark rights.
Some New Trademark Laws Are Helpful, But Not Sufficient.
In 2019, China updated its trademark law to start to address pirates and bad faith trademark filings. Now (in 2023), those changes are just starting to show some results. The law:
- Provides for fines against trademark agents who represent bad faith filers. These fines can be up to ~$15k.
- Rejecting trademark applications that are filed in bad faith, particularly those filed by repeat offenders or for obviously pirated trademarks.
In addition, Chinese courts are starting to award attorneys fees against trademark pirates. These awards tend to be made only against the most egregious pirates - particularly those who try to enforce their pirated trademarks against the rightful brand owners.
The new laws are helpful, but are not stopping Chinese trademark pirates. Many are willing to risk a $15k fine to make a $50k ransom. Trademark piracy is still rampant. As always, the best defense is to file your own Chinese trademarks applications as soon as possible.
Chinese Trademark Filing Strategies.
Filing trademarks in China is complicated, and you should work with an experienced trademark attorney. Here are some of my recommended strategies:
- File early in China. If you ever plan to sell into China, or produce product in China, then file a trademark application in China as soon as you have the budget.
- Ideally, try to start selling into China within three years of your trademark registration (or else it will be vulnerable to a potential non-use cancellation). I recommend filing a trademark application in China even if you can’t start selling into China within that time, as its better to have a vulnerable China trademark registration than none at all.
- File a trademark application that covers your main goods and services, but also any potentially related goods and services.
- File for the English version of your brand, as well as the Chinese translation. A Chinese marketing consultant can help choose the appropriate Chinese characters.
- Avoid words that may be offensive to the Chinese government, may be illegal in China, or that involve drugs or other vices. I’ve seen trademark applications rejected for including the word “poppy” (because that plant produces opium).
- Filing for marks with plain letters and designs will often provide broader protection than marks set in a specific font or incorporating specific colors.
- File for Chinese copyright protection for any design marks or stylized fonts used in your branding. Copyright provides a different type of right, but it can compliment trademark rights. A copyright registration for your logo can also be used as a tool against trademark pirates.