Trademark Battles Against Chinese Copycats

Brands from around the world aim to sell their products in China, to its 1.4 billion-strong population. But there’s one problem business leaders, from Steve Jobs to Elon Musk, have had to deal with in exchange for that market access: copycats.

Many major brands have gotten dragged into years-long legal disputes to protect their trademarks. Sometimes, the real brands are even forced to apologize—and pay millions of dollars in compensation to their copycats.

While discussions about intellectual property protection have largely focused on large tech companies, small business owners face an uphill battle and limited resources to protect their patents. and its trademark in the Chinese legal system.

Loose enforcement

The problem with intellectual property theft in China is not a loophole, says Fred Rocafort, a former US diplomat who has worked on intellectual property issues in Asia for more than a decade. The domestic legal framework is adequate in China, Rocafort said, and Beijing has signed a number of international agreements on intellectual property.

According to Mr. Rocafort, now a lawyer at the international law firm Harris Bricken, “the problem comes when you start looking at enforcement, which happens more at the local level than at the national level.” Aggression gradually decreases to lower levels.

Combining lax law enforcement with the fact that China is the world’s manufacturing powerhouse, the result is rampant manufacturing, trade in counterfeit goods, and intellectual property theft. However, despite the challenges, Mr. Rocafort said that American businesses still successfully protect their intellectual property by operating within the Chinese legal system.

First and foremost, businesses must register their intellectual property in China to have a chance to protect their products there, Mr. Rocafort said.

China has indeed launched reforms in recent years, with Chinese President Xi Jinping making public pledges to strengthen intellectual property protection, but the US says implementation has not been enough. drastically.

Washington and Beijing are said to have made progress on the issue before trade talks collapsed in May and the trade war escalated with several new tariff hikes. The US accuses China of failing to live up to its commitments, including strengthening laws to protect intellectual property. Beijing denies that allegation.

Trade negotiators from the US and China will be held to discuss the issue of intellectual property protection.

How China is acting to combat bad faith trademarks

The 2019 amendment to the Trademark Law (the Law) sees that a bad faith trademark application that is not filed for the purpose of use shall be rejected. This provision in Article 4 of the Law provides an explicit ground upon which trademark owners may file opposition against a trademark application or invalidation against a trademark registration, but also empowers the China National Intellectual Property Administration (CNIPA) to outright refuse an application if it considers it a bad faith filing.

The provision surely did not disappoint to deliver what trademark owners expect it to do. Since the enactment of this new provision, many brand owners successfully removed bad faith application by opposition and invalidation by prevailing on this ground. More recently, bad faith applications have been outright refused by the CNIPA citing the same ground on its own initiative.

CNIPA examiners may not be able to spot such bad faith filings on their own in these circumstances. As such, it is important that brand owners set up or subscribe to watch services to monitor publication of marks similar to their marks and file oppositions against them. In such opposition (the same applies to invalidation), further investigation must be conducted in order to prove bad faith of the applicant. Such investigation will include thorough company searches against the applicant entity to find out its legal representatives, shareholders and director and to try link them to other bad faith filing activities (e.g. mass filing/trademark hoarding activities, unfavourable decision against them, etc.).

If a foreign company is used as the applicant, a foreign company search will have to be done. It is often revealed that the shareholders or directors of such foreign companies are indeed Chinese individuals, and once the identity of the Chinese controlling parties are revealed, more in-depth investigations can be continued in China to dig out further bad faith evidence.

If the applicant is a Chinese individual and the applicant’s address is a residential address, online searches will often be futile, and site-visits will have to be conducted at the applicant’s address which may assist in revealing information of familial trademark squatting syndicate.

***Other Articles***

– You could see How To Register Trademark in China here.

– You could visit here to see Procedure of Trademark in China.

– You could visit here to check Required documents of filing trademark in China.

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