Reasons U.S. Companies Should Register Their Trademarks in CHINA
January 3, 2018
This is interesting and something that U.S. companies should at least be aware of, if not already.
We attended an intellectual property seminar a few years ago covering certain developments or issues in patent and trademarks. One of the presentations discussed registering trademarks in China. For companies that may only have their trademarked products manufactured in China for distribution into the U.S. and do not conduct any other commerce in China, registering their trademarks in China may have been of little consideration. However, if that U.S. company fails to register their trademarks, the mark will be available for registration by any third party. Under China's first-to-file system, if a third party registers that companies' trademarks, that third party could then enforce those Chinese Trademark Registrations against the company by, among other legal rights, seek to (i) stop that company from manufacturing or packaging their trademarked goods in China, or (ii) request from the Chinese Customs that the manufactured or packaged trademarks goods be seized, impounded, and not be allowed to leave or shipped from China, and/or (iii) a further likely scenario, request money or other compensation from the company for a license.
Since then, a recent China Supreme People’s Court (SPC) 2014 decision in Focker Security Products International Limited (Focker) has issued a favorable decision for OEM use and held that such use is widely viewed as non-infringement in China, a trend that is gaining popularity quickly. Though the Supreme Court’s decision is not binding on other courts, the opinion of the Supreme Court is widely respected. At least, courts of lower level should not decide a case with a totally contrary judgment unless the facts are dramatically different. Meanwhile, for other authorities that deem OEM use as "infringement", it is possible to win them over by providing good evidence and arguments.
While this is good news for U.S. companies (i.e., foreign brand owners using China as a manufacturing base), there may still be reason(s) to file for and register their trademarks in China:
(1) to prevent any third parties from seizing the U.S. companies' trademarked goods by Chinese Customs if a Chinese trade mark owner registers the U.S. companies' foreign brand trademarks and has a customs watch in place;
(2) to prevent possible counterfeit branded goods of these U.S. companies to be manufactured by third parties in, and exported from, China, without any ramification, if those counterfeit goods are exported to a jurisdiction where the counterfeiters have obtained a trademark registration; and
(3) currently the mainstream opinion that the evidence of OEM could serve as proof of use to defend the registration against non-use cancellation, provided that such OEM use evidence can work together to form an evidence chain and meet the formality requirements.
Thus, in view of the above, for U.S. companies who manufacture their goods in China and then export to the U.S., it still appears worthwhile to obtain trademark registration in China, so as to protect their interests as far as possible.
In the meantime, if you have any questions regarding the above, please feel free to contact us. As always, we welcome the opportunity to be of service.
David J. Hurley
Knechtel, Demeur & Samlan
525 West Monroe Street, Suite 2360
Chicago, IL 60661
Phone: (312) 655-9900
Facsimile: (312) 655-1917