Neil Eagleton is associate in the brands and fashion groups for law firm Sheridans.
The Chinese market is booming and, combined with the country’s strength in manufacturing, is resulting in a number of trademark ‘squatters’. China has a ‘first to file’ jurisdiction, meaning the party who files for registration first gets the trademark, while the UK uses a ‘first to use’ system, meaning they have to show they’ve either used the trademark in business or intend to use it in future.
If they do not register it as a trademark first, British businesses can have a fight on their hands to own or control their brands in China. Opportunist third parties keep watch for brands registered elsewhere but unregistered in China, and often beat the brand owners to it. They then hold the genuine brand owner to ransom, barring their entry into the market and in some cases stopping their goods from being exported or even extorting money in return for the trademark rights. Several famous brands, notably DSquared, Hermès and Burberry, have fallen victim to this.
It is equally important for new and aspiring designers that are manufacturing in China and/or hoping to sell there. Imagine losing the right to use your own name commercially in a market as important as China, or doing all the work only to be told by a manufacturer that they cannot produce your goods without proof of trademark ownership.
The landscape is complex, but the good news is that a new law came into effect in May that makes it harder for these squatters to hold onto trademarks applied for in bad faith, and gives brand owners more ways to challenge a trademark application. However, trying to oppose or invalidate a trademark is a lengthy and costly exercise.
The best advice is to take pre-emptive measures. If you manufacture, sell your goods or are doing a deal with another party in China (or intend to do any of these) then you should register your brand as a trademark. As well as registering it in English, you should also consider protecting the Chinese equivalent in a variety of categories. Implementing a strategy of IP protection and enforcement can save you time and money.