Why western brands face intellectual property challenges in China

The jungle of intellectual property rights in China is full of horror stories. From trademark squatters, counterfeiters, parallel importers to brand owners fighting for the right to use their genuine names that were maliciously, yet legally, registered by others. Global fashion brands Dsquared2, Ice Iceberg, Disney Victoria’s Secret are just some of the businesses that have struggled to trademark their names and goods.

First come, first service registration system

In China, the courts rule in favour of a registration principle, which is comparable to a first come, first serve system. Anyone can apply for a trademark and obtain legal rights over that mark. Even if a brand has already traded commercially, such as being stocked by Chinese retailers, it must still file an application for registration with the State Intellectual Property Office (SIPO).

That is why the news of Manolo Blahnik winning a 22-year battle for the right to use his name in China was a landmark ruling. Mr Blahnik, who’s business is registered in the UK, has been in dispute with a company called Manolo & Blahnik since 1999.

While many brands will file for a Chinese trademark before market penetration, sometimes brands encounter rejected applications due to similar existing registrations, which in many cases is held by a trademark squatter.

World Trademark Review (WTR) explains that under Chinese law, Article 32 prohibits the use of improper means to forestall the registration of a trademark that is already being used by another party to produce a certain influence. Therefore, the rights holder may file an invalidation application within five years after the squatted trademark’s registration date, along with sufficient evidence to prove the prior trademark use in China and that significant reputation had been obtained through its use.

Unfortunately these cases tend to last much longer than five years, as Mr Blahnik will confirm, after his case ended up at the Supreme People’s Court of China.

Companies new to trademarking and international distribution will do well to apply for the right to use their marks in China as early as possible. As a “first to file” jurisdiction, fashion companies will not want to be excluded from the Chinese market, where in 2022 luxury goods are expected to grow by 15 to 18 percent.