Image: Arto Alanenpää Image: Arto Alanenpää

Mark Caddle from Withers & Rogers takes a look at how much success the Chinese government is having with its crackdown on trade mark infringers and ‘squatters’.

A recent BBC news report highlighting the production of counterfeit Lego in China will come as a blow to the domestic government which has been leading a crackdown on trade mark infringers and ‘squatters’.

Striving to position China as an exporter to the world, the last thing the Government will want to see is another embarrassing example of copycat engineering and potential infringement of trade mark rights.

Much has been achieved in China in recent years to promote the importance of globally-recognised intellectual property rights. In particular, trade mark legislation introduced on 1st May 2014 has helped to make it easier for foreign brand owners to challenge trade mark squatting – a practice which involves a Chinese company registering the name of a well-known Western business in order to force them to buy it back or take the matter to court. In a highly-significant ruling in May last year, Facebook successfully enforced its trade mark rights in China, despite being barred from operating there.

There is evidence of more progress too. The latest data from Beijing’s IP Court suggests that about a fifth of all judicial challenges brought by foreign applicants against Chinese trade mark office decisions in 2015 were successful. Gone are the days when an attempt to enforce trade mark rights in China would take years and end up being blocked on a technicality. Western businesses can now be more confident that their rights will be respected.

Alibaba’s decision last month to take legal action against two vendors selling fake Swarovski watches at its online marketplace is a further sign that Chinese corporates are taking IP matters seriously. Elsewhere in the world, other online marketplaces, such as Ebay and Amazon, have preferred not to take such a proactive approach - instead relying on brand owners to make an official complaint before blocking the sale of alleged counterfeit goods. To date, court decisions in Europe and the US have sided with the online retailers; placing the onus on the brand owner to police any breaches of trade mark legislation.

Despite clear signs of progress being made, Western businesses must remain vigilant and watch for infringements.

The laws in China permit a trade mark to cover more than one class of goods and services enabling brand owners to obtain the highest level of coverage possible with a single application. Therefore, trade mark owners should seek the broadest possible protection at an early stage in China in order to avoid creating a window of opportunity for squatters.

Mark Caddle is a trade mark attorney at intellectual property firm, Withers & Rogers

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