First step: protect your trademark in China!
The following story happened to one of our clients. The client in question is a family owned company that sells household products. They had already established some contacts in China but haven’t really gotten their products onto the Chinese market yet. After some early investigations we found out the company’s logo and name had been registered by another Chinese company. This Chinese company is also active in the same business, but it was not one of the contacts from our client.
This practice is called trademark squatting and is a very common practice in China. Chinese individuals and companies register international brand names as a trademark in China before the foreign creator even thought of it. With predominantly only one goal in mind: sell the trademark back to the original owner for a lot of money.
How was this possible you ask? Well, a couple of years ago our client received an email from a Beijing law firm claiming someone wanted to register their trademark. They thought it was one of many spam emails that goes around on the internet and therefore didn’t think too much of it. Now, many years later they found out it was actually a genuine email. Unfortunately after the registration there’s nothing that can be done anymore.
According to Chinese laws and regulations the Chinese company hasn’t done anything illegal. In China a first-to-file system is applied. This means that the individual or company that registers a trademark first will be the legitimate owner of such trademark in China. Even if the Western company has registered its trademark in another country (incl. Hong Kong or Taiwan), this doesn't make a difference and doesn't give extra protection in Mainland China.
As a conclusion: if you ever think of doing business in or with China, the first thing you need to think of is to register your trademark!! By the way, it’s also advisable to register a Chinese brand. Please contact us for more info on this topic.