China Trademark Protection: Is Your Chinese Manufacturer a Friend or a Foe?

Navigating Trademark Protection in China

When dealing with China, protecting your brand’s identity is imperative. Every month, without fail, one of my law firm’s international IP lawyers are approached by companies facing a startling reality: their Chinese manufacturers have registered the company’s trademarks in China.*

Understanding Trademark Theft in China

The motivations behind these trademark registrations by Chinese manufacturers vary widely. Some claim altruistic intentions, like preempting squatters from capturing the trademarks first. Others, however, veer towards more malevolent goals, such as selling counterfeit goods or planning to use “your” trademark as leverage to raise product prices while making it impossible for you to go to another manufacturer without violating what has now become your manufacturer’s trademark.

More often than not, these manufacturers assert pure intentions—claims that are hard to swallow considering they never informed their international partners of their actions. The underlying truth usually surfaces: these manufacturers have acquired the trademarks to wield leverage in future business negotiations.

Legitimate Chinese Manufacturers vs. Trademark Thieves

Working with Legitimate Chinese Manufacturers

The hallmark of a trustworthy Chinese manufacturer is transparency. The most reputable Chinese manufacturers inquire about your trademark status in China early on. If you haven’t registered your trademarks, they emphasize the critical importance of doing so promptly. This guidance is not without reason; the benefits of registering your trademarks in China are manifold. See 8 Reasons to Register Your Trademarks in China. Should you decide against filing the trademark applications yourself, a genuine manufacturer will proceed with the registrations in your name, ensuring from the outset that the marks will be assigned to your company upon Chinese Trademark Office approval.

The Reality of China Trademark Theft

Contrast this with an all too common scenario: manufacturers clandestinely filing for trademark registrations without the foreign company’s knowledge. When these actions come to light, excuses abound. Manufacturers often claim legal or logistical barriers prevent them from transferring the trademark rights back to the rightful owner. Common misconceptions they propagate include:

  1. “Only Chinese entities can own a Chinese trademark.”
  2. “Transferring a trademark means the manufacturer must abandon the mark, leaving a window open for third-party claims.”
  3. “Trademark applications under examination by the China Trademark Office cannot have their ownership transferred.”
  4. “Transferring a trademark requires each party to submit a Certificate of Good Standing, authenticated by the Chinese government—a process that takes weeks.”

None of these statements is true

  1. Foreign entities are entirely capable of owning Chinese trademarks.
  2. Transferring ownership is a straightforward process, achieved by filing an assignment statement with the Chinese Trademark Office.
  3. It is possible to transfer the ownership of a trademark application under examination.
  4. Required documents for the transfer are basic and do not require authentication.

Steps for Recovering Your Trademark

Upon discovering that your Chinese manufacturer has registered your trademarks, the path forward involves negotiating for their return. This process may entail reimbursing the manufacturer for the registration costs—a fair exchange for securing your brand’s integrity.

Navigating the Trademark Assignment Process in China

Discovery and Negotiation: The first step is to open discussions with the manufacturer to agree on the terms for transferring the trademark rights.

Filing an Assignment Statement: An assignment statement must then be filed with the Chinese Trademark Office (CTMO), clearly outlining the transfer of rights from the manufacturer to your company.

Documentation: Submit the necessary proof of identity for both parties involved. This process is more straightforward than many assume, requiring no authentication by the Chinese Embassy.

Approval and Registration: Once the CTMO approves your application, the trademark rights are officially transferred, affirming your ownership of the trademark within China.

Despite the myths, the trademark assignment process in China is neither overly complicated nor prohibitively expensive.

Proactive Measures to Safeguard Your Trademarks Against China

Proactive Registration: Before you even begin manufacturing or marketing in China, ensure your trademarks are registered. China’s first-to-file system gives priority to whoever registers the trademark first, regardless of who used it first.

Comprehensive Searches: Conduct thorough searches to ensure no similar trademarks are already registered, avoiding potential conflicts.

Legal Consultation: Use internatioonal trademark lawyers who are fluent in Chinese and regularly register trademarks in China to guide you through the China trademark registration process and to help you develop a robust strategy for protecting your intellectual property. It is important that you register your China trademarks directly in China, not via Madrid.

Clear, China-Centric, Agreements with Your China Manufacturers: Your manufacturing agreements with your Chinese manufacturers should be written for China and explicitly prohibit your manufacturer from registering your trademarks without your explicit consent.

By implementing these preventive measures and understanding the correct process for addressing unauthorized registrations, companies can significantly enhance the protection of their trademarks in China.

* In fact this registration of someone else’s trademarks became so common in China, even the CCP became concerned about it and so it changed its laws to make it so that when an agent of a foreign company — such as your Chinese manufacturer — registers your trademark and you challenge that registration, it gets voided. The problem is that this merely caused Chinese manufacturers (and other agents) to stop registering the trademarks themselves, and instead have their cousin or someone else do so. In this post, for reasons of simplification (and ultimate truth), I do not make this distinction.