In the first part of this article we saw how trademark squatters could harm you by taking advantage of China’s first-to-file country system. In this 2nd part, we will explore a case of a fictitious company that lost its trademark to its China manufacturer. We will then see what you should do to protect your trademark in China, or eventually retrieve it when you lose it.
How can you lose your trademark without realizing it?
- Step 1:
Manufacturing your goods with Party A
You want to manufacture your waterproof earphones in China. After some research, you find James, a good Chinese manufacturer who agrees to make them for you, to be delivered to your locaton in the US in a specific packaging with your brand on it. You already registered your trademark “CHEARPHONES” back home, so you should be good. James manufactures the goods as agreed, and ships to you. Simultaneously, and without telling you, he calls up his cousin in Harbin, and asks him to file a trademark registration for CHEARPHONES. Weeks later, you receive your first order, and you start selling in the US, online and offline. You’re happy because the CHEARPHONES sell very well. You increase the size of your order month-over-month.
- Step 2: Moving your productions to party B
A year later another Chinese manufacturer from Guangzhou, Ms. Daisy, approaches you and offers exceptional quality at lower price and better terms. So you decide to switch half of your order volume from James to Ms. Daisy who is happy to start manufacturing right away. She manufactures “CHEARPHONES” for you, loads the goods into a container, and passes it over to the logistics provider who will carry it to the port.
- Step 3: Losing ownership of your trademark
Meanwhile, James learns about this deal, calls up his cousin in Harbin and asks him to file a complaint with China Customs Administration, saying someone Daisy lady is stealing his trademark and using it on her products. He provides the trademark registration documents to strengthen his case. China Customs blocks the container because it contains goods that are infringing on someone else’s trademark. Your container full of CHEARPHONES now cannot leave China. You go back to James to confront him and plead. James says he has no clue who that person in Harbin is, but that customs are always complicated, and the CHEARPHONES he produced were always able to clear customs because he has good relationship with customs authorities.
- Step 4: Trying to retrieve your trademark
You think: “I registered the trademark in my home country, and I’m pretty sure we’re covered internationally. I will call my lawyer in China and press charges against James’ cousin because he stole my brand.” Here is the bad news: If you were not the first to register your trademark in China, it is not yours. From a legal standpoint, you are the one stealing James’ cousin’s brand, not the other way around. And by the way, according to the trademark law of China, criminal action can be taken against trademark infringement.
What can you do to recover your trademark in China?
- buy it back from them,
- wait for 3 years and see if it no one used it, then file to get it,
- register it under other classes/sub-classes.
The easiest way remains to talk to your Chinese lawyer to figure out how to effectively protect your trademark in China. Make sure that
a/ The lawyer’s English is spotless. That way they understand the nuances around your IP.
b/ They can be trusted and won’t turn around and ask their cousin to register your trademark with the hope they could sell it to you later on.
Talking to an IP lawyer remains a good option, but also a pretty affordable one. It costs around USD 1,000 to register a trademark in 1 class and 10 sub-categories in China. That’s a lot cheaper than the cost of recovering a lost trademark. So to answer our initial question “Can I really protect my trademark in China?”… YES!
Since I’m not a lawyer myself, the information I provide here does not constitute legal advice. It’s based on our experience working with foreign clients sourcing from or manufacturing their products in China. Liaise with your Chinese lawyer for legal advice. Or drop me a line and I can connect you to couple lawyers that were helpful to us in previous cases.