– buying trademarks just to show off is being stopped in China
– initiatives are taken to hinder bad faith trademark registrations, but is it enough?
In April 23, 2019 the fourth revision of the PRC (People’s Republic of China) Trademark law was issued. This revision will make it more difficult for Chinese Businesses to register foreign trademarks with the intend just to keep them until a foreign brand decides to sell their products in China.
Until now many Chinese businesses have bought a foreign business’ trademark in order to gain a profit when a foreign brand decides to sell their products in China. This revision attracted much attention because it touches upon the businesses in China who registers foreign trademarks pretending to use these but initially, they calculate to earn money sometime in the future when that particular brand wants to sell their product in mainland China. This action by Chinese businesses is now being regulated by the Standing Committee of National People’s Congress.
What value does this have for foreign brands?
Hopefully, this will reduce the buy ups of international trademarks, but it still takes a trail to retain you trademark back in China, if a Chinese company has bought your trademark. So, in conclusion we are on the right track, but it is a costly affair for at small or medium sized company to buy back your trademark in China.
With the size of the e-commerce market in China and the predicted growth rates it is highly recommendable to file for trademark of your brand in China, just to protect you brand even though you are not going to sell your products in China for the time being.
At Ehubnordic we have experienced that brands’ trademark has been bought up by Chinese companies. Most are surprised that it can happen even before they have thought of selling their products in China. There is a good chance that their trademark has already been filed and bought by a Chinese company. This obstacle only prolongs the process of entering the Chinses market because now some of the allocated budget is to be used on retaining their trademark to be able to sell their products in China. Even, for some companies the best way is to get a new name to start their sales in China because of the high costs of retaining the trademark.
The initiatives taken is a start for establishing a better international business climate in China for foreign brands, starting to sell their products in China. It also increases trustworthiness of Chinese business partners.
Source: Charles Feng, Partner Attorney-at-Law, East & Concord Partners