Anyone operating in an internationally open Industries today and not keeping an eye on the latest developments in China in their activities risks missing out on effective protection. Long before you consider considering suppliers from China or even becoming active on the Chinese market, you need to take precautions and plan your protection.
Although there are still many poor-quality copyists in China, it is now undisputed that manufacturers have also developed that can meet the highest Western standards. These companies can become active in Western markets, provided they can introduce their goods into the distribution channels via suitable Trademarks. Western companies that do not protect their Trademarks properly put themselves in a difficult situation.
The times when you had no chance of enforcing your IP Rights (Trademarks, Patents, Designs) in China are over. Today, you not only have the legal requirements, but also the practical experience to successfully conduct litigation.
What does this mean for the brand protection strategy of a European company?
If you protect your European Trademarks and, if possible, your product design in China, you can stop illegal shipments at the Chinese port of export. This is much more efficient than having to track down and stop imports in every single European country. The Chinese customs authorities are now well equipped and willing to work with Trademarks owners to enforce the law against IP infringements. However, this is not possible without a registered Trademarks in China. Therefore, you should always cover China when protecting your trademark internationally. The effort involved in this first step is hardly worth mentioning.
If you have the trademark registration and if you have concrete fears or indications that trademark-infringing products are being exported, you can also register the trademark rights with the customs authorities. This creates the basis for rapid prosecution of unlawful exports.
If you want to use Chinese suppliers sooner or later, or have to do so for cost reasons, it is essential to protect your own Trademarks (or Patents or Designs). You should also think about a Chinese transliteration or translation of your own European Trademarks. Local trademark specialists must be consulted in order to achieve the desired effective protection.
However, it must not stop at trademark registration. Trademark Monitoring must also be installed to detect when similar third-party trademarks are registered. The fact is that Chinese registration activity has reached a high level. It is estimated that around 5 million new Trademarks will be registered in 2017. Suppliers also want to protect themselves and sometimes register the Trademarks and variations of their foreign business customers. If Chinese companies do not file oppositions against such Trademarks in good time, this can lead to major problems with the enforcement of their own trademark. The scope of protection of your own Trademarks is also narrowed over time if too many similar third-party Trademarks are entered in the register.
The proliferation of e-commerce in China not only has an impact on B2C, but also on B2B. It is therefore important to monitor and eliminate trademark-infringing offers. To do this, you must register your trademark protection rights with the online platforms so that you can report incriminating offers to the platform operator. Alibaba has recently introduced a standardized electronic Appeal Proceedings system for its various sales platforms in order to reduce the administrative burden for trademark owners. According to Alibaba, around 20 million complaints are handled each year. 97% of these are processed within 24 hours. 80% lead to the immediate deletion of the incriminating offer (left). The major platforms are making efforts to ensure that trademark infringements are suppressed and that repeated infringements can be punished. They are therefore also developing new software to detect attempts at obfuscation and circumvention (e.g. blurred and mirrored trademark images) by pirates
If you have concrete evidence of an infringer, there is no need to be unnecessarily afraid of taking legal action. Statistics show that in well over 90% of first-instance trademark infringement lawsuits, the plaintiff wins. Local protectionism” plays a much smaller role than one might think. It is more important to go to a court that statistically has a trademark protection-friendly practice.
The significantly higher upper limits for damages since 2014 and the admissibility of triple punitive damages for trademark infringement in bad faith also lead to painful consequences for the infringer. If the conditions are met to take criminal action against the infringer, there is usually a good chance of reaching a financial settlement under civil law. The threat of loss of personal freedom (imprisonment) is one of the most effective means of bringing an infringer to heel.
As a rule, the problem of legal prosecution is not unfair litigation, but obtaining evidence before the trial. There is therefore no getting around research companies that have the necessary contacts and networks to obtain the crucial information and evidence. The authorities are still cautious when it comes to seizing evidence, as they would obviously rather do nothing than something wrong.
In China, Ford China is pursuing the goal of making the prosecution of infringements worthwhile for the bottom line. Brand infringements are systematically pursued and should not only lead traffic back to the company’s own products (soft recovery) but also be financially measurable (hard recovery). Recently, the damages proceedings and settlements at Ford China have resulted in revenues that are higher than the legal costs. This shows that it makes perfect sense to consistently enforce your rights in China.
Although there are still many poor-quality copyists in China, it is now undisputed that manufacturers have also developed that can meet the highest Western standards. These companies can become active in Western markets, provided they can introduce their goods into the distribution channels via suitable Trademarks. Western companies that do not protect their Trademarks properly put themselves in a difficult situation.
The times when you had no chance of enforcing your IP Rights (Trademarks, Patents, Designs) in China are over. Today, you not only have the legal requirements, but also the practical experience to successfully conduct litigation.
What does this mean for the brand protection strategy of a European company?
If you protect your European Trademarks and, if possible, your product design in China, you can stop illegal shipments at the Chinese port of export. This is much more efficient than having to track down and stop imports in every single European country. The Chinese customs authorities are now well equipped and willing to work with Trademarks owners to enforce the law against IP infringements. However, this is not possible without a registered Trademarks in China. Therefore, you should always cover China when protecting your trademark internationally. The effort involved in this first step is hardly worth mentioning.
If you have the trademark registration and if you have concrete fears or indications that trademark-infringing products are being exported, you can also register the trademark rights with the customs authorities. This creates the basis for rapid prosecution of unlawful exports.
If you want to use Chinese suppliers sooner or later, or have to do so for cost reasons, it is essential to protect your own Trademarks (or Patents or Designs). You should also think about a Chinese transliteration or translation of your own European Trademarks. Local trademark specialists must be consulted in order to achieve the desired effective protection.
However, it must not stop at trademark registration. Trademark Monitoring must also be installed to detect when similar third-party trademarks are registered. The fact is that Chinese registration activity has reached a high level. It is estimated that around 5 million new Trademarks will be registered in 2017. Suppliers also want to protect themselves and sometimes register the Trademarks and variations of their foreign business customers. If Chinese companies do not file oppositions against such Trademarks in good time, this can lead to major problems with the enforcement of their own trademark. The scope of protection of your own Trademarks is also narrowed over time if too many similar third-party Trademarks are entered in the register.
The proliferation of e-commerce in China not only has an impact on B2C, but also on B2B. It is therefore important to monitor and eliminate trademark-infringing offers. To do this, you must register your trademark protection rights with the online platforms so that you can report incriminating offers to the platform operator. Alibaba has recently introduced a standardized electronic Appeal Proceedings system for its various sales platforms in order to reduce the administrative burden for trademark owners. According to Alibaba, around 20 million complaints are handled each year. 97% of these are processed within 24 hours. 80% lead to the immediate deletion of the incriminating offer (left). The major platforms are making efforts to ensure that trademark infringements are suppressed and that repeated infringements can be punished. They are therefore also developing new software to detect attempts at obfuscation and circumvention (e.g. blurred and mirrored trademark images) by pirates
If you have concrete evidence of an infringer, there is no need to be unnecessarily afraid of taking legal action. Statistics show that in well over 90% of first-instance trademark infringement lawsuits, the plaintiff wins. Local protectionism” plays a much smaller role than one might think. It is more important to go to a court that statistically has a trademark protection-friendly practice.
The significantly higher upper limits for damages since 2014 and the admissibility of triple punitive damages for trademark infringement in bad faith also lead to painful consequences for the infringer. If the conditions are met to take criminal action against the infringer, there is usually a good chance of reaching a financial settlement under civil law. The threat of loss of personal freedom (imprisonment) is one of the most effective means of bringing an infringer to heel.
As a rule, the problem of legal prosecution is not unfair litigation, but obtaining evidence before the trial. There is therefore no getting around research companies that have the necessary contacts and networks to obtain the crucial information and evidence. The authorities are still cautious when it comes to seizing evidence, as they would obviously rather do nothing than something wrong.
In China, Ford China is pursuing the goal of making the prosecution of infringements worthwhile for the bottom line. Brand infringements are systematically pursued and should not only lead traffic back to the company’s own products (soft recovery) but also be financially measurable (hard recovery). Recently, the damages proceedings and settlements at Ford China have resulted in revenues that are higher than the legal costs. This shows that it makes perfect sense to consistently enforce your rights in China.