Trading in China: protect your brand

Trading in China: protect your brand

The Chinese market presents incredible opportunities, but make sure you know how to deal with IPR issues or you could get stung.

For British businesses already trading in or wishing to trade in China, protection and enforcement of intellectual property rights (IPR) would undoubtedly be a major concern. Horror stories about rife infringements on all levels and industries create headaches for business plans and budgets, and in many cases actually discourage businesses from entering the Chinese market altogether.

Notwithstanding this, due to the sheer size and the (still) attractive prospects, many companies are willing to scale the Great Wall in order to enter the Chinese market. Like many commercial aspects, once the problems with IPR protection in China are familiarised and demystified, they become much more manageable and just another business concern. Here are some basic points about Chinese IP protection that would assist in your entry strategies.

Substantive Laws
By virtue of its membership of various international bodies, not least the WTO and various other IP-related conventions and treaties, China has an obligation to meet certain minimum IP legal standards. Hence, in general the basic laws relating to patents, trade marks, copyright, etc. are on the whole similar to what you will find in other jurisdictions.

For instance, copyright under Chinese law is, like in the UK, automatic and does not require compulsory registration to be enforced. But as a copyright registration system is offered by the authorities, it has become common practice to register any copyright-protected works in order to facilitate enforcement. In China the duration of copyright protection is life plus 50 years, whereas under EU law it is life plus 75 years (depending on the type of work). For businesses in the creative industries where copyright is more relevant (such as music, publishing, art, etc.) it would be advisable to register your copyright in China.

Like most other jurisdictions, patent protection in China requires registration and will last for a maximum of 20 years. The Chinese patent application system, however, operates on a strictly first-come-first-served basis, so there is very little scope to challenge a patent application filed by a third party who has no connection with the "inventor" or the inventor's employer. Furthermore, as the scope of protection depends very much on the drafting of the patent specification, care must be taken to prepare the most accurate (and effective) translation, as the Chinese patent registry only accepts Chinese language specifications.

In general trade mark laws are also very similar to those in the UK; requiring registration and renewal indefinitely. But like patents, the applicant of the trade mark can be anyone who files for registration first. Under the current Chinese laws, if a trade mark application was filed by anyone other than the "rightful owner" of the brand, it can only be challenged if the "owner" can prove substantial use and reputation in China. This creates a serious problem for companies that may have long use and a significant reputation outside China but have yet to enter the Chinese market. If an unconnected third party or a potential agent/distributor files for or has registered an earlier trade mark in China, and you now intend to make your first entry into the Chinese market, there is very little you can do to cancel that earlier registration.

A major amendment of the Chinese trade mark law that is expected to come into force later this year will bring the law much closer to what can be reasonably expected under international standards. Unfortunately the amendments proposed would not resolve the problem of "earlier bad faith" applications that many foreign companies are experiencing. Consequently, the prevailing advice is still to file your applications sooner rather than later, regardless of whether or not you have started trading in China.

Lost in translation
One aspect that does not get stressed enough to British companies trading in China is the need for linguistic localisation on every level of the business, from marketing collaterals to (in particular) the brand name. As English academic Martin Jacques argues, in the course of China's move towards globalisation there comes a point when it will stop trying to be more "Western" and the world will have to learn to be more "Chinese". In other words, if you are interested in the market in China you will have to find ways to bring your brand into the hearts and minds of the Chinese consumers.

A good case in point is none other than the world No.1 brand – Apple. Despite its popularity in China and the relative simplicity and brevity of the name, very few Chinese consumers would actually refer to it as "Apple", preferring to use the translation "pingguo".

It is well-nigh pointless to try and "educate" the Chinese consumers to familiarise with and use your English language brand name; before entering the market you need to have decided on a Chinese version of your trade mark, or else the consumers themselves may choose a random Chinese name for you!

Preparation
As expected the most sensible advice is to do all the necessary preparation well in advance, even before you have decided when to enter the Chinese market. Many of these protective steps take a significantly longer time to complete. For instance, a typical trade mark application in China would take around 4 to 5 times longer to complete than in the UK. Any translation of your marketing materials and brand name will also need to be carefully considered, with guidance from suitable professional consultants.

The key is to act early and be well-informed.

Dennis Lee is an associate at Michelmores LLP