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Chinese Whispers

» Posted on: 25 September 2012

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The word on the street is that the IP community is becoming increasingly concerned by a worrying trend in trademark squatting in China. It has long been known that copyright owners are susceptible to unscrupulous copying of successful designs in China (view the Van Neder case here) but trademark owners are now also being attacked.

Successful companies are increasingly suffering the effects of international trademark squatters taking advantage of the “first to file” system for trademark registration in China. This means that some Chinese companies and individuals who understand the system well have been registering trademarks in China and then sitting back until foreign companies wanting to expand their business into Chinese markets realise that they have been beaten to it and are left with a choice between negotiating with the registrant for use of the mark or re-branding.

Under the UK system, opposition could be raised on the basis that there had been no use of the mark by the Chinese registrant but in China Article 31 of the Trademark Law requires an opponent to show reputation in the trademark in dispute prior to the filing date of the contested application.

"Reputation" is considered to be some degree of recognition within the relevant Chinese public, which is notoriously (and statistically) difficult to show – more opposition proceedings based on reputation are lost than won.

How can this be avoided? Anticipation is key if you intend to operate in the Chinese market. China has no common law rights for unregistered trademarks and businesses should therefore take the pre-emptive step of applying now to register their trademarks in China. The cost is relatively small and failure to register, as can be both very costly and disruptive to business (as market leaders such as John Lewis, Sainsbury’s, Asda and Dixon have already found).

For further information contact Tony Catterall – (01254 297900) or tony.catterall@taylors.co.uk.

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