China’s adoption of new trade mark law in August 2013 is set to come into effect on 1 May 2014. There has been much commentary on the changes to the law, some highly aspirational in our view.
One of these changes is the proposed recognition which will now be afforded to those who can show long-standing use of a trade mark in China. It would, however, be a mistake to believe that this change opens the door to a form of unregistered trade mark rights in China.
We have previously advised China is currently a “first-to-file” country meaning that a trade mark registration is the only way to secure certainty in trade mark rights in that market. Common law rights, those that a trader acquires through use of a trade mark in a territory rather than by trade mark registration, have held no weight in China. Despite having used a trade mark in China for an extensive period, a trader’s rights to that trade mark are curtailed where another entity seeks and obtains registered rights in that trade mark and that first trader will be precluded from using their brand for risk of infringement of the later registered mark.
China’s new law suggests that it might come some way to addressing this sticky situation in some very limited circumstances. Under the new law, rights based on prior use may be recognised in limited circumstances. A trader seeking to rely on its prior use of a trade mark will need to be able to show use of the mark in China before the use of the registrant and that the first trader has developed a sufficiently established reputation in the mark in order to be able to continue that use unhindered, despite the second party’s later registration of the same or similar trade mark. The first trader’s subsequent use will, however, be restricted to the ambit of its existing use and the first trader may be required to alter their existing use to ensure the respective trade marks are distinguished from one another. Hardly a “slam dunk”. A first trader with prior use who is able to show sufficient reputation to carry on its existing use (possibly a difficult ask given the language and graphic differences of that market) could potentially be caught in a time warp of their prior use, possibly unable to range, extend or vary the product in future.
Despite the introduction of prior use, the scope is somewhat limited. It is vital exporters to China and those doing business in this market are not complacent. They must still take the very important steps to gain registration of at least their key brands in China to ensure they secure the best form of protection and to put them in a strong position when it comes to enforcement of their rights. No one wants to play second fiddle to a later registrant in a market which offers significant economic opportunities for business or, worse, to be boxed in in terms of how they are able to use their brand in this important market.
There is no change to our previous advice that there is simply no substitute for early registered rights. Registration should provide a mechanism for a trader to use their trade mark unhindered and, importantly, to enforce those rights against other traders who encroach on their valuable trade mark assets, and to avoid the disastrous product seizures as unregistered brand based products cross the border to export from China to other markets. Registration remains a crucial part of your IP strategy in China.