Trademarks deceptively simple world

Philippe Deltombe, Partner China Desk. AGM Abogados

By way of introduction, let’s start with brands and logos.

They are not safe in China until you locally register them. Why? Three intertwined elements:

1. Trademark protection is territorial, and the brands are solely protected in the jurisdictions where you applied for registration.
2. The first-to-file principle allows anyone to register any unregistered brand in China. First come, first served.
3. China’s trademark applications number hit record high in 2017 (5,80 millions, up 55% year on year!). A fraction of it is considered “trademark squatting” and it feeds a notorious but flourishing “trademark trading” business.

In other words, you might need to spend a lot to use your own brands and logos in China if you failed to timely register them and somebody else did.

Two scenarios:

• If the first applicant registered your brand in good faith, the trademark will be most probably unavailable in China for the next 10 years, unless you… buy it back from the legitimate holder.
• If the first applicant registered your brand in bad faith (likely), you might either try to buy it back or file for TM cancellation and retransferring proceedings if you failed to agree on a price with the illegitimate holder (even more likely).

The long and winding road, indeed…

Your business operations in China will be stalled for a while.

Considerable financial, time and energy resources shall be needed, with uncertain chances of success, either in courts or in the buyback process.

The worst-case scenario could eventually lead you to drop your Chinese market ambitions for good.

Any –small– negligence comes with a cost!