IP Information & News

Five key considerations when protecting IP in China

Alison Cole

By Alison Cole

Senior Trade Mark Attorney

Last month, Richemont (via its online Pret a Porter and Mr Porter brands) confirmed a joint-venture partnership with AliBaba’s luxury marketplace, Tmall. This tie-up confirms for certain that luxury goods are making a significant bid for the Chinese market.

With a recent study by BCG and Tencent finding that “Chinese luxury consumers will account for 40 per cent of the global buyers (in numbers) by 2024, driving 70 per cent (in dollars) of the growth”, it’s hardly surprising that obtaining intellectual property (IP) protection in China is a high priority for most luxury firms.

Five key considerations

Registering IP in China is very different to registering IP elsewhere, such as in the UK. There are many unique challenges and so, with this in mind, here are five key things that any firm should be aware of when considering IP protection in China.

1. Make sure you file at the earliest possible opportunity

In China, it’s not considered unacceptable for your distributor, licensee or any interested party to file to protect what you consider to be your IP. As China is a country that grants IP rights to the first party to file, their actions may make it impossible for you to obtain protection. It’s also important to get your hands on the physical registration certificate, as this can be crucial when negotiating local contracts, bringing infringement proceedings or dealing with customs authorities.

2. Ensure agreements are in place regarding IP ownership from the very start

If the person filing may be your contact protecting themselves, it should be possible to obtain an assignment of the rights to you — although this is hardly the ideal way to begin a relationship. Care should be taken right at the outset of any discussions with Chinese counterparts to ensure that the ownership of existing and future IP is crystal clear. Ideally, you should file applications to protect your IP rights in China before opening discussions with third parties.

3. Don’t fall victim to malicious hoarding

If an unrelated party has simply spotted your brand and decided to register IP for you, they may attempt to hold you to ransom for a great deal of money before assigning the mark. Worse still, by owning the registered rights, the unrelated party is capable of stopping imports and exports of your own goods.

A decision from the Chinese Supreme Court in June is helping to crack down on ‘malicious hoarding’, where companies register hundreds or thousands of Chinese trade marks without any intention to use them. Intelligent analysis is being used to identify and prosecute such cases, but this is unlikely to apply if the owner has only registered a handful of marks and yours is unfortunate enough to be one of them.

4. Watch out for the aggressive marketing of domain name registration services

Whether or not you’re interested in trading in China, bots are trawling online information to find company names and email addresses. On the back of this, businesses can be contacted by a party pretending to be an official Chinese organisation.

Often, the contact will start with a line like “we’re aware of your famous brand” and will go on to say that they’ve been approached by someone who wants to register Chinese, Hong Kong or Macau domain names that include (or are similar to) your company name or trade mark. They state that they’re suspicious and are stalling the applicant in order to give you a chance to register the names instead. It’s likely that their costs for domain name registration will be highly inflated. There’s also the danger that, once they’ve established that your email address is real and monitored, it gets sold on to scammers or phishers.

5. Find a watching, monitoring and take-down partner to fight counterfeits

Although steps are being taken to address this, China is still a huge source of counterfeit goods. According to Forbes, the global sale of counterfeit and pirated goods totals $1.7 trillion per year — and China produces 80% of the world's counterfeits.

It’s therefore important to find a partner who can keep an eye on potential counterfeits of your brand to protect both your reputation and bottom line. In conjunction with an online brand protection agency, we can put together an effective watching, monitoring and take-down service.

Find out more

If you have questions or concerns about registering IP in China and around the world, or want to find out more about how we can help you spot and fight counterfeits, get in touch with me at ajc@udl.co.uk.

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