China’s Trademark Environment

We have long advocated for prompt China trademark registration. For companies that manufacture and export from China, registration of the English language trademark is essential. For companies that sell products and services in China, registration of the existing English language marks and the Chinese language marks for the product is essential.

China now has the largest number of trademark registrations in the world, with over a million applications submitted per year. It has now become almost impossible to do business in China without a full portfolio of registered English and Chinese language word marks and logos.

This flood of China trademark applications has made trademark registration in China more difficult. When our international IP lawyers first started doing China trademark registrations, virtually every application was approved. In fact, at that time, the Chinese authorities were often criticized for approving too many similar marks. In particular, English language marks were almost always approved except when the exact word was already being used in the exact same class.

It is now more common to receive a China trademark rejection — for both English language and Chinese marks. Since trademark rejections have become relatively common, it is risky to build business under a new mark or brand before receiving trademark approval from the China trademark office. Since China’s trademark office is slow in its decisions, this can pose difficulties for companies attempting to penetrate the Chinese market.

There are several reasons for this change in China’s trademark environment:

  1. The number of China trademark applications means fewer choices for available marks, particularly when the mark is a meaningful word.
  2. China’s trademark office takes a mechanical approach to determining conflicts. Where the same words appear, China’s trademark office normally ignores meaning and simply finds a conflict. The trademark office does not allow for adding more words to allow for differentiation. If there is any chance of conflict, the trademark office will find it. For example, if someone already has registered the name “Ace” in a particular class, the trademark office will likely reject “Ace Tool and Die Makers and Fabricators” in that same class.
  3. China’s trademark office finds conflicts where words are similar but not identical. Since there are no clear rules on how much similarity is unacceptable, China trademark office decisions are difficult to predict. For example, registering “Alberta” in a class in which “Albert” has already been registered likely will be rejected, but maybe not.
  4. The Chinese language presents additional difficulty. Though there are over 40,000 unique Chinese characters, only about 2,500 characters are commonly used. It is therefore difficult to find a succession of characters that is any way unique. Since there is no way to alter spelling/pronunciation to produce a difference, the opportunity to find a unique and intelligible combination in Chinese can sometimes be difficult.
  5. China’s trademark office now uses sophisticated search software with excellent fuzzy logic that allows it to find more near matches. These near matches get rejected in situations that would never have been noticed in the past.
  6. The China trademark office tends to reject close calls and the Chinese courts tend to do the same.

Since trademark registration is essential for China, foreign businesses must understand and adapt to China’s new trademark environment. This requires at least the following:

  1. Trademark registration require careful planning. A preliminary search should be undertaken and time allowed to do the search carefully and to deal with the results in a practical manner.
  2. For word marks, the use of meaningful words should be avoided, if possible. Coined words should be used whenever possible. Of course, a company that is using its existing foreign country name or mark often does not have a choice on the words to be used. In such a case, the foreign party must understand that if a meaningful word is used there is a decent chance a conflict will be found and your trademark rejected. This is also true of trademarks of common names. So for example, if your company is called “David’s ties” and someone has already registered David & Goliath in the same class, you will probably be rejected. We are finding that common name registrations are getting more and more difficult.
  3. Even when a search seems to show there will not be a problem with registration, it is still difficult to predict how the China trademark office will rule on any mark. This uncertainty means it is not as good idea to build brand identity on a mark until after the China trademark office has approved it.
  4. Trademark conflicts usually involves negotiating for a license or related agreement with the holder of the mark with priority. Most foreign companies have a well-deserved aversion to entering into such discussions with parties in China. However, such negotiations are becoming increasingly important.
  5. Some conflicting marks are not good marks. Some have never been used. Some have been filed with bad intent. The Chinese trademark system has a number of procedures for dealing with these bad marks. The procedures take time and money. However, they often must be used to deal with these situations.

Dealing with China’s changing trademark environment is one of the many challenges that must be overcome to reach success in an ever changing China.