Businesses that manufacture and export their branded products out of China are advised to protect their trademarks in the country following a recent ruling by the Chinese Supreme Court.
The decision in Honda Motor Company Ltd and Chonqing Hengsheng Xintai Trading Co (‘HONDAKIT’) specifically impacts brand owners with Original Equipment Manufacturing (OEM) arrangements in place. However, the ruling is also another reminder for all businesses of the importance of upholding their rights in this important market.
HONDAKIT: What’s changed?
The Chinese Supreme Court’s decision marks a change with previous practice, which allowed brand owners to manufacture and export goods out of China without necessarily needing to have national trademark registrations in place. As the goods were for export only, the question of whether there was infringement of any Chinese trademark rights was not considered relevant.
HONDAKIT has marked a change to that position, as it indicates that the Supreme Court views OEM exports as trademark use in China, irrespective of whether they are sold on the Chinese mainland. This means not only that trademark registrations will be required to safely export the products, but also that their manufacture could infringe national trademark rights – even if they are registered in bad faith.
Although improvements have been made in recent years, ‘bad faith’ trademark registrations are still a particular issue for Western brand owners in China. For OEM brands there is now the added risk that the bad faith registrant will block their export by registering a Customs Recordal based on its conflicting national rights. Seeking to cancel such registrations can be an expensive and time-consuming process, and best approached before valuable goods become stuck in transit.
What do you need to do?
If you manufacture OEM products in China and do not already have a trademark registration in place, it’s important that this is remedied quickly. The same applies to any company that is active in the territory or plans to be in future, including in e-commerce marketplaces such as Alibaba and Tmall.
Such companies should also consider trademark watching or online monitoring for their company name or key brands in the country, including transliterations of those names, to ensure rights are secured and protected even if they don’t currently sell in the mainland market.
Setting a strategy for China
If you don’t already have a trademark strategy for China, now may be a good time to put one place. Please get in touch if you need support and guidance on how to:
- register your brand name and relevant transliterations in the country;
- set up a monitoring strategy and acting against existing bad faith trademark registrations;
- file Customs Recordals to ensure smooth transfer of any manufactured products;
- navigate the various Chinese e-commerce platforms; and/or
- design a tailored online brand protection strategy for the country.
For more information and guidance on protecting trademarks in China, speak to your Novagraaf attorney or contact us below.