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LimeGreenIP News

Brand Benchmarking 2018: Trademark challenges and opportunities in China

In the first of a series of articles looking in more depth at the findings of the Brand Benchmarking 2018 report, we examine trends in China and East Asia.

East Asia (comprising China, Japan, Korea and Taiwan) features prominently in the latest Brand Benchmarking report, while China specifically tops the list of challenging jurisdictions but also – more reassuringly – is rated as the country doing most to improve trademark protection.

China tops the list

In this year’s Brand Benchmarking survey of in-house trademark counsel, respondents were asked about the countries where they experience the greatest difficulties in trademark prosecution and enforcement. China topped both lists, with 23% of respondents naming it for prosecution and 30% for enforcement, putting it ahead of India and the USA.

However, China was also rated top for taking steps to improve its trademark prosecution and enforcement laws and practices in the past 5 years: 26% of respondents named it in the prosecution category and nearly half (46%) did so for enforcement.

“I fully agree that China has improved over the past 10 years,” says Helen Xia, a partner of Hogan Lovells partner in Beijing. “There is more and more awareness of the importance of IP.” In particular, she says young consumers are familiar with global brands and the Internet.

One of the common complaints in China is that trademark prosecution takes too long. But Xia says the China Trademark Office (CTMO) is aiming to reduce examination to six months from nine months, which it is at the moment. They will do this by increasing the number of examiners, and simplifying the examination procedures. In addition, the CTMO is believed to be making efforts to identify and monitor repeated bad-faith applicants.

Other areas where things are improving include the publication of Trademark Review and Adjudication Board (TRAB) decisions, which will improve transparency, and the appointment of experienced judges in the specialised IP courts and tribunals. Looking ahead, Xia says further reforms can be expected as the Trademark Office (CTMO) is collecting comments on the revisions of the Trademark Law 2014.

Big spending in East Asia

Another striking finding of the Brand Benchmarking report was that 36% of respondents said that East Asia is one of the top 3 regions for spending on trademark prosecution and enforcement, compared to 27% in the 2014 Brand Benchmarking report. This puts it ahead of all other regions.

East Asia ranked top for expenditure on trademark prosecution (45% of respondents putting it in their top 3 regions) and second, behind the EU, for expenditure on trademark enforcement.

Respondents also ranked the region top when asked to predict where they will increase expenditure on trademark prosecution and enforcement over the next 5 years: 38% of them included East Asia in their top 3 regions, compared to just 19% who said North America and 15% who said EU. Asia – other was mentioned by 16% of respondents.

The findings were similar for both prosecution and enforcement: 37% of respondents listed East Asia among the regions where they expect trademark prosecution expenditure to increase, and 40% said the same for trademark enforcement.

“East Asia is an important market – so it’s vital to invest and build up a portfolio,” says Helen Xia. In China, in particular, she says trademark applicants should be prepared to spend money on office actions and procedures to defend their marks, which can add costs even though the basic filing fee is low. “There were 5.74 million trademark applications last year, and the filing amount of the first 6 months of 2018 is 50% higher compared with the first half year of 2017, and of course China operates on the first-to-file principle,” she says.

Xia says the key to managing costs is to have a good strategy before entering the market, taking account of how broad you want your registration to be and whether or not you want to file marks defensively. “You will spend more money if you don’t have a good plan. Questions to consider are: What is your core industry? And what are the related industries and products? You need to be proactive and have a good local counsel.”

When it comes to enforcement, says Xia, infringers are becoming more sophisticated and rights owners need to be persistent and prepared to consider both administrative and court remedies. “Enforcement in China brings lots of challenges. If you don’t start with a clear plan and a good trademark portfolio, it could be difficult to enforce it.”

Authored by James Nurton