The Importance of Trade Mark Registration in China

The importance of registering a trade mark in China has been reinforced by a recent decision of the Guangzhou Intermediate People’s Court who have ordered New Balance to pay multi millions of dollars in damages to an alleged trade mark ‘hijacker’ who registered New Balance’s Chinese trade mark in Chinese characters.  It subsequently then sued New Balance for trade mark infringement.

New Balance set up a Chinese subsidiary in 2006.  Shortly thereafter it secured trade mark protection for  NEWBALANCE but did not apply for the equivalent in Chinese characters.  New Balance itself and its customers referred to the brand as Xin Bai Lun with xin meaning ‘new’ and bai lun meaning ‘balance’.

The other party sought registration of Xin Bai Lun in Chinese characters in 2008 and notwithstanding New Balance’s opposition, ultimately the trade mark was registered.

The owner then sued New Balance for trade mark infringement and prevailed.

The Court held that New Balance had committed trade mark infringement and ordered them to pay damages of RMB 98 million and issued an injunction forbidding further use of the their mark.

In recent times this has also occurred in relation to the famous PENFOLDS brand.

Conclusion

As unfair as the decision may seem, it reflects consequences faced by foreign brand owners where they fail to secure appropriate registration for their brands not only in English characters but also in Chinese characters.

Moreover, China works on a first to file rather than a first to use system.  It is common for manufacturers or distributors in China to register the trade marks on brands of the foreign companies they deal with.

In China even if products are only manufactured there but exported out of China for sale elsewhere, it still amounts to use in China.

Therefore, local Chinese parties can register trade marks of foreign companies and then seek to sue the proper trade mark owner for trade mark infringement or even attempt to have their goods seized at the wharf by Chinese customs.

For these reasons and many others it is always wise if you have any dealings with China, be it the sale of your goods or services there, or the manufacture of your products there for sale elsewhere, to protect your trade marks in China, not only in English, but the Chinese version as well.