Protect Your Brand from Trademark Theft in China - Take Action Now

Updated: Jan 12, 2019



Trademark theft and squatters are not unique to the health and wellness industry in China. In the last five years, we have seen several major U.S. sport nutrition brands, including Muscle Tech, Cellucor, Quest, and Optimum Nutrition, fight the trademark legal battles. Though some won their cases, they turned out to be very costly battles due to loss of business during the litigation period. If your brand is looking for equity partners or strategic channel partners in China, unresolved trademark issues can cast a shadow on these opportunities. While foreign businesses have gotten better at understanding how to manage their intellectual property in China, many fail to anticipate local challenges before entering the market. Whether your brand has already entered the Chinese market, or your team is in discussion with potential distributors, we highly recommend you have your trademark checked and registered in China right away.


Where and How to Check Your Trademark Status

First of all, check to see if your trademark is already registered in China. The website from the Trademark Office of the State Administration is the official source for you to find the information: http://wsjs.saic.gov.cn/ It has an English translation, but one might find it hard to navigate. Here is a great PDF guide created by Australian Government. https://www.austrade.gov.au/.../guide_to_searching_chinese_trade_marks.pdf.aspx


Which Trademark Class to Register

For sport supplement and functional food products, below is a list of trademark classes to be registered. Please note: this is not for the purpose of providing legal advice, but to provide information based on our research on the trademark status of major U.S. sport supplement brands in China.

Class 5: Pharmaceutical and veterinary preparations; sanitary preparations for medical purposes; dietetic food and substances adapted for medical or veterinary use, food for babies; dietary supplements for humans and animals; plasters, materials for dressings; material for stopping teeth, dental wax; disinfectants; preparations for destroying vermin; fungicides, herbicides.

Class 29: Meat, fish, poultry and game; meat extracts; preserved, dried and cooked fruits and vegetables; jellies, jams, compotes; eggs, milk and milk products; edible oils and fats; prepared meals; soups and potato crisps.

Class 30: Coffee, tea, cocoa, sugar, rice, tapioca, sago, artificial coffee; flour and preparations made from cereals, bread, pastry and confectionery, ices; honey, treacle; yeast, baking-powder; salt, mustard; vinegar, sauces (condiments); spices; ice; sandwiches; prepared meals; pizzas, pies and pasta dishes.

Class 35: Advertising; business management; business administration; office functions; electronic data storage; organization, operation and supervision of loyalty and incentive schemes; advertising services provided via the Internet; production of television and radio advertisements; accountancy; auctioneering; trade fairs; opinion polling; data processing; provision of business information; retail services connected with the sale of goods.


Trademark Squatter in Disguise

A particular Chinese company was involved in several trademark legal battles with U.S. sport supplement brands. Ironically, this trademark squatter is also an active distributor and importer who has been in the sport nutrition industry for over 10 years. Many brands have been working with them for years without knowing this company owns their trademark. Sometimes brands will find their brand name has been registered by a familiar entity -- your own supplier or distributor in China. If the supplier or distributor is still working with you, the excuse they give might be to prevent any rapscallion squatters from doing so first. Even if this is true, the brand owner should question why he or she is not informed by the supplier or distributor first.

If the relationship with the distributor or suppliers is positive, there is a straightforward process for the supplier or distributor to resign the trademark back to the brand owners. If not, the brand may have to take legal action to get their trademark back. Or in the case with this particular Chinese squatter distributor, some brands end up buying back their trademark.

One might wonder: what damage can the trademark squatter or the “helpful distributor” do? E-commerce channels are where sport nutrition and wellness brands have the most success with. The platforms include Taobao, Tmall and JD.com. Alibaba, the parent company of Taobao and Tmall, has put a great focus on trademark and intellectual property protection. If the brand’s trademark is registered by a distributor, the distributor is able to file a claim with Alibaba and remove the products from all other competitors’ Taobao and Tmall stores. Their goal is to be the exclusive distributor of a popular sport nutrition brand or use it as leverage to ask for a sum of money from the brand owners. Regardless of the scenario, it can be a costly and time-consuming process to fight the trademark.


Silver Lining -- Cross Border E-commerce Platform

Cross-border E-commerce platforms are online marketplaces where Chinese buyers can purchase products and services overseas that may be unavailable or prohibitively expensive in mainland China. This channel has become popular for sport nutrition and health supplements, mainly due to the fact that most supplements’ formula and certain ingredients are not in compliance with Chinese regulation, which makes it impossible to export to China through the transitional channels. This is the case with most pre-workout and fat burner products.

Cross-border E-commerce platforms only carry international brands and only require brands to provide trademark registration information issued by their country. Thus, even if a brand don’t have their trademark registered in China, sales on cross border E-Commerce sites are not impacted.


How Digital Marketing Can Help Minimize the Damage

For brands that are in the middle of trademark legal battle, there are limited channels and distributors that can sell the products in China, but they can continue to sell through cross-border E-commerce channels including Tmall Global, JD Global, Kaola, etc. Strong digital presence can prevent the brands from losing momentum. Brands can continue creating and publishing content to engage and interact with consumers. More importantly, social media marketing is a powerful tool that enables the brand to steer consumers to their preferred channels.


Tiger Social is a digital marketing agency specializing in the fitness and wellness industry. We help brands create content tailored to Chinese consumers, build brand awareness, and connect with distributors and online channels. For a free consultation, please email info@tigersocialchina.com

Disclaimer:

The materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.

Reference:

https://www.chinalawblog.com/2017/12/the-five-kinds-of-trademark-squatters.html

http://www.china-briefing.com/news/intellectual-property-in-the-food-beverage-industry-in-china/

https://resolutionlawng.com/trademark-classes-in-nigeria-and-classification-of-trademark/

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