From this post you will learn:
If importing from China is your business model, if you are one of the importers who source from China, Vietnam or India, then this topic applies to you. Let’s focus on China. If you work with companies that support imports from China, you should know that they may not have told you some important things you need to know about trademark protection in China.
China was, is and will continue to be the factory of the world. Imports from China are growing rapidly because the Chinese have invested in infrastructure and technology development for decades. That is why today, importing from China is still a popular and profitable business. And this is not going to change, because the Chinese are producing more and more interesting and advanced products.
Imports from China in value terms are growing in both models – the traditional one, when large companies source multi-container quantities of own-brand products in China, and the modern one, with a smaller unit value but a considerable total scale – i.e. the cross-border formula, also known as dropshipping.
The Chinese approach branding a little differently from the Europeans. We in the Old Continent want to buy and promote our own brands, which is quite obvious for us. The Chinese know this and do not forcefully offer us to source under their brand, assuming that it is more important to sell and make money here and now than to promote their brand. In other words, even if they have a good product with their brand ready, they will gladly produce it for you, under your brand.
For you as an importer, a factory specialising in a particular product will be happy to produce and label your goods as you wish. It will adapt even to the most stringent marking requirements, perfectly reproducing the logo on the product, labels and packaging.
And now the question arises – who owns the brand that the Chinese factory marks the goods manufactured to your sourcing order, if it is not registered in China?
If you are the one who sent the a brand information, instruction about the marking requirements, if you are clearly the one who sends him your logo and if there is a corresponding IPR ownership provision in your contract – then the brand is indisputably yours, even if it is not yet secured in China. You have clear evidence that factory ‘got’ it from you. Which is not to say that, without registering it to yourself, you have full control over it in China.
How do you know if, even at the stage of your first contacts, a potential (still then) OEM in China did not quickly file your brand for himself? He negotiated with you calling you a ‘friend’ and in the meantime signed an application to protect your mark on himself. You probably don’t know and probably won’t find out any time soon.
Imagine a situation like this – the Chinese manufacturer you are negotiating with has quietly, without your knowledge, registered your brand on itself. You start a cooperation that is going well. Both parties are keen to grow the business and increase volumes.
After a while, however, you find that their prices are too high or the quality is too poor. So you start looking for an alternative. It turns out that before sending you the price list, the new factory has checked who owns the rights to the brand. And it tells you that it cannot produce anything for you because it would be accused of infringing the trademark that formally belongs to the first manufacturer. It is not that the trademark has been stolen from you. You meekly return to the first manufacturer and realise that you are in a quandary. You say: “That’s not going to happen.” oh, come on!
Of course you can – and even must – fight to recover rights to your trademark. But you will spend a bigger budget on this than you would have spent on protecting your mark if you had acted in advance. In addition, you will lose time. Sooner or later you will also lose the relationship with your current manufacturer. And you’re out of business…
Or there will be another situation. You get to the point of turnover where you want to expand your product portfolio with new categories. The current manufacturer does not produce them, so naturally you look for a new one. Then you find out that the new one cannot produce under your brand, because it already belongs to another Chinese company that has registered it in many classes (product categories). And then what? To put it colloquially – you are in trouble, which could easily have been avoided by filing for trademark protection in China in advance. You are facing a battle to regain your trade mark rights.
Let’s consider another situation that is not at all impossible. Let’s assume that your brand in your main market is popular. What would you say if it turned out that the factory that produces under your logo has started selling on its own to other importers in that market? Or sells products through dropshipping? This is formally speaking possible. This unfortunately happens quite often the other way round, i.e. someone imports goods into China without the knowledge or consent of the trademark owner. Can this be prevented? It can be prevented! The solution is to register the trademark in China and to apply for customs recordal accordingly.
Understandably, if, after reading up to this point, you are still in doubt as to whether, when importing from China is your main business, it makes sense for you to register your brand in China. It would seem – I’m just sourcing from there, what do I care about registering my brand somewhere in China or India if I don’t plan to sell there. But…
Otherwise valid concerns, but one thing to consider – importing from China is a typical commercial transaction. If you have a registration for your trademark in China, you have the tools to fight a rogue manufacturer who sells goods under your brand to anyone but you. And it doesn’t matter if he sells locally in China or to another country.
Without a Chinese, locally issued brand protection certificate, you do not have the legal tools to prevent and combat such a practice.
