I spoke with a new client yesterday regarding the importance of his company obtaining trademarks in China. At the end of the conversation, the client was so “psyched” about getting the trademarks, he asked if there are ever times a company does not need to register its brand name as a trademark in China. Though had never been asked that question, I was able to come up with a few examples.
Exceptions to the Rule: When a China Trademark Might Not Be Essential
Below I provide examples of when it might make sense for a company not to need a trademark in China. If your company does not clearly come within one of the reasons below, I would suggest you run (not walk) to get your brand-name (and perhaps your company name and logo as well) registered as a trademark in China.
1. Your company has nothing to do with China and no intention of ever having anything to do with China. This one probably seems obvious, but once or twice a year I tell someone who has been emailed regarding how someone is seeking to register the company’s brand name as a trademark in China. The last one I had like this was from a Midwestern dairy company. When I learned what this business did — it raised and milked cows and sold the milk in a few U.S. states — and confirmed that it would never be doing business in or with China, I told them they could just ignore the email.
2. You can’t afford a China trademark and both your IP risks and sales in China are negligible. This reason is rarely justified, since not registering your trademark in China allows someone else to legally claim your brand name as their own, thereby prohibiting you from using it. If you lack the resources to secure a trademark for your brand in China, it is usually better to stay out of China entirely. Remember, your brand name could evolve into your most valuable asset.
Nevertheless, for small companies operating in many countries, it may not be possible to register a trademark in each one. These companies must prioritize the countries that significantly impact their business, while continually assessing whether these priorities have shifted. Though it may right now be acceptable not to register your trademark in China due to meager annual sales there, it’s crucial to keep an eye on your China sales in case the situation changes significantly in the future. See Managing an International Trademark Portfolio. Remember, avoiding trademark registration can leave your brand vulnerable to legal claims from others.
3. You are indifferent about others using your brand without your authorization. This could make sense for certain business models, but it’s generally not advisable in countries like China that follow the first-to-file rule. In such countries, including China, anyone who first registers “your brand” can use it and prevent you from using it. If another entity successfully registers the Chinese trademark for your brand, they will have exclusive rights to “your brand” and can block you from using it entirely in China, even for export goods manufactured there.
4. Keeping your product or service confidential is crucial. I’ve had only one client for which this made sense. This was a well-known and highly regarded company that was planning to start selling one of its products in China and did not want its competitors to know this before it went to market with this product. It chose to delay trademark registration to avoid an early reveal. This made me very nervous because I was worried word would get out about my client and someone would register its product name in the meantime, and it would lose it. This was many years ago and I’m not sure I could handle the stress of another one.
5. Your company does not have a brand name to defend. I sometimes see this with companies that deal with commodities that are sold without any unique packaging or brand markers from one country to another. In such scenarios, securing a trademark in the country where the brand name isn’t utilized isn’t necessary.
Likewise, if you manufacture a product in a country, including China, but don’t apply your brand name to that product until it reaches its sales destination, you probably do not need to register a trademark in China. If you’re not using a trademark in China, it’s impossible to infringe on someone else’s.
6. Your trademark will not be approved for China trademark registration. China, like most countries, does not permit generic trademarks, and we’ve had several clients whose product names were “too generic” to secure China trademark registration. China also does not permit registering a geographic location as a trademark. There is no way you will be able to register “New York” as a trademark in China (or nearly any other country as well), but our lawyers have been able to secure geographic trademarks in China for lesser-known locations that the China trademark office did not know were locations. If your brand name is a location, you should decide whether to try for the trademark or change the name.
Debunking Common Misconceptions About China Trademark Registration
Our firm’s international trademark attorneys frequently hear two flawed arguments against registering a trademark in a foreign country. These are typically presented to us by a company that did not get a trademark and just learned that a Chinese company registered their trademark.
The most common flawed argument is that there’s no need for a China trademark for companies that have their products manufactured in China, but do not sell in China. Wrong, wrong, a thousand times wrong. The fact that you manufacture your product in China solely for export does not diminish your need to protect your trademark there. Should someone else secure “your” trademark in China, it will be able to stop your goods from leaving China – a situation that happens frequently. See Manufacturing in China: Trademark Registration Should be the First Thing You Do .
We often hear another flawed argument: “Our brand is famous, so we don’t need to register it in China.” If you really believe this to be true regarding your brand, I would urge you to read China’s Well-Known Trademarks: A Primer and then tell me that you are so confident of this that you are willing to risk expensive litigation to prove it. Even if you believe your brand is well-known in China, it’s still more cost-effective to invest the minimal amount required to register your trademark, rather than face potentially exorbitant litigation costs later defending the “fame” of your brand. If your company is anything other than Coca-Cola, you should assume your brand isn’t famous enough in China to be able to skip registering it.
Conclusion
Navigating the complex terrain of China trademark registrations can be daunting, yet it’s crucial to understand when and why China trademarks are usually necessary. Each situation is unique and carries its own potential risks and rewards. Though this post highlights scenarios where a China trademark registration might not be essential, these are exceptions to the rule. In most cases, it is highly advisable to register your brand name, company name, and logo as a trademark in China because choosing not to register your trademark in China often leads to dire consequences, such as losing control over your brand or dealing with costly legal disputes.
