Trademark warning for China traders

Anton Blijlevens

Kiwi companies urged to register brand name before 'squatting industry' grabs it.

An intellectual property expert has some advice for New Zealand companies looking to register their trademarks in China - get in early.

Hijacking of brand names is common in the world's second-biggest economy and Anton Blijlevens, a partner with Auckland-based IP law specialists AJ Park, said a "trademark squatting" industry had sprung up there. The practice involves overseas brand names being registered in China and big payments demanded from the original owners of the trademark when they want to enter the Chinese market.

In China, as well as other parts of the world like South America, the first person to file a trademark is recognised as its rightful owner, said Blijlevens.

Christchurch food manufacturer Cookie Time and Auckland-based household products brand Ecostore are both facing lengthy battles to reclaim their trademarks in the Asian superpower.

Apple had to pay US$60 million ($69 million) in 2012 to Shenzhen-based firm Proview Technology which had registered the iPad trademark and was demanding that stocks of the popular tablet computer be removed from Chinese retailers.

Blijlevens said new Chinese IP laws come into force on May 1.

The "degree of fame" overseas brand owners are required to demonstrate their trademarks had in the Chinese market before they were registered by another entity in China was going to be lowered, he said.

"The burden is really high at the moment but that's going to be reduced."

He said that in some cases it was overseas companies' own Chinese agents or distributors who were hijacking brand names.

"The new law is going to address that pretty strongly," he said.

However, Blijlevens said he did not expect the new laws to make much of a difference to the overall trademark squatting problem and battles by overseas brand owners to reclaim their trademarks were likely to remain time-consuming and costly.

"We're telling our clients that it's way, way cheaper to register your trademarks early than it is to try and win them back," he said. "New Zealand companies, if they're even vaguely thinking about exporting product to China, should register their brands now."

He had represented New Zealand wine companies whose trademarks had been hijacked in China.

"We worked with local Chinese IP firms to try and win these trademarks back but it's not cheap," he said. "It takes many months and if you can't show that your brand is very, very well known in China before the trademark squatter filed the trademark, then basically the Chinese IP firms are saying don't bother [taking legal action], just rebrand."

IP battles
• NZ firms Cookie Time and Ecostore are trying to reclaim their trademarks in the Asian superpower.
• Apple had to pay US$60m to a Shenzhen-based firm, Proview Technology, which had registered the iPad trademark.
• Sales of illegal software in China were valued at US$9 billion in 2011, compared with a legal market of less than $3 billion, for a piracy rate of 77%.