Are you planning to do business in China? One of the most important, but often forgotten, aspects is the protection of your intellectual property rights (IPR). Without this protection, others can copy your product or service and sell, import, or export these without your agreement. In this article, a real-life example is analysed, we discuss the need for IPR registration, recommend the best timeframe to register, and elaborate the 15-year IPR plan. All to prepare you for business in China.
In the China business week hosted by the Rijksdienst voor ondernemend Nederland (RVO), the commercial manager of Rymax Lubricants elaborates their relation with the Chinese property right system.
At the beginning of the establishment of the brand, the first step of business for Rymax Lubricants was not to expand to the Chinese market. However, they quickly were active on the Chinese market yet without their knowledge. Due to product previews and/or showcasing their products at events, Chinese fraudsters took immediate action. They registered the trademark of Rymax Lubricants with the Chinese government and duplicated everything: from the site and the logo to the complete mirroring of the advertisement video. The Chinese company behind the fake Rymax, sold their own oil while lifting on the European brand and success of Rymax.
After a long juridic battle, Rymax remained to have no power in China. Trying to take down the Chinese website or use their European intellectual property rights to tackle the stolen trademark also bore no success. After years of battling, Rymax changed their trademark, and thus the brand name, and immediately registered their intellectual property rights in China. Nowadays, Rymax Lubricants is active in the Chinese market and is having a fruitful business in China.
Should you register you intellectual property rights?
Registering for intellectual property rights is highly recommended when doing, or planning, to do business in China. In the case of registration, you can request websites with your products to go offline, request a court order, or cooperate with Chinese customs in the case of infringements.
According to the first-to-file system in China, your intellectual property is not protected if your property or patent is not registered to the official Chinese authorities. In the case of Rymax Lubricants, the lack of property rights in China shows the territorial nature of registration. Importantly, in China, the first to file is the owner of the intellectual property right, even while this is not the original owner or inventor of the service/ product. This is called a bad faith registration and happens because there are no user requirements to register for a trademark. Be aware to also register the following aspects of your company:
- Production in China
When you are solely producing in China, it is recommended to register your trademark. Without trademark registration, there is an unnecessary risk and vulnerability that results in a higher probability of intellectual property infringement.
Registration of copyrights is theoretically unnecessary since they get automatically protected. However, to diminish challenges or disputes it is recommended to also register your copyrights.
- Brand name
Besides registering your products, it is important to register your brand name. Here it is recommended to register your original brand name and the Chinese brand name of your product.
When to register?
To ensure that you are in charge of your intellectual property, you should register the aforementioned aspects before making your product or service public. This entails before advertisements, selling your products/ service, or fairs. When this is not done in time and thus not registered by yourself but by someone else, registering in China is not possible anymore.
Remarks when registering
When registering, be aware of the following tips to make the registration process as smooth as possible:
- Be aware that there are other regulations regarding intellectual property rights in Hong Kong, Macau and Taiwan. They have differingjuridical systems than in mainland China. Meaning that different protocols are present and that different intellectual property rights registration are needed in these regions.
- Foreign appliers for registration (e.g. trademark, brand name) without a juridical presence in China need to apply via a local patent agent to successfully submit the registration request.
China’s 15-year plan
On September 22, the Chinese government announced the 15-year plan (2021-2035) to assist the development of intellectual property rights (IPR). The plan entails that the IPR protection becomes stricter, which results in a higher level of public satisfaction in the business branch, and thus a greater market value of IPR by 2025 for the Chinese market. By 2035, the IPR competitiveness within China will develop and rank among the top in the world as elaborated in the plan. The emphasis in building this IPR protection system and supporting the world-class business environment, encouraging motivation by the operating system of IPR in the market, convenient and beneficial system for the public and boosting the participation in the global IPR governance.
With this article, we hope to have you sufficiently informed about the complete picture around the Chinese trademark registration and the Intellectual property rights . As previously emphasised, and as seen in the case study, we highly recommend to not take the risks for disputes or infringements (especially in a foreign country). For more information about If interested in personal advice regarding international business advice, tax situations or consolidation (in China), Global Connect Admin B.V. can assist you with these challenges due to the rich experience and framework of connections.