A lot of companies that manufacture in China – both big and small – are worried about IP infringement by Chinese companies. When I used to work in the home textile and home decor industries this was a big concern for my employers, medium-sized companies with strong brands in the US markets. And as a consultant now, some of the companies I work with ask me about IP in China and how they can protect themselves.
I read a blog post the other day in in which the blogger, a lawyer who advises companies on their China strategy – was advising companies big and small to protect their designs in China by registering their trademarks there. In China the first person to register a trademark owns the trademark. In other words if you have a trademark in the US it is not covered in China unless you register it there as well. Although I think this is good advice for big companies that can afford the fees to register a trademark in China I think for many small companies this can be a major and unnecessary expense. Is $ 600.00, what it costs to register a trademark in China, a major expense ? Not really. But then you have to consider that the trademark applies to only to a certain number of “goods” in your product classification. For example, let’s say you have a logo and you want to protect this logo. If your line of product is children’s clothing then must spend between $ 500.00 and $700.00 0 to protect your logo in the clothing classification. But in the clothing classification there are over 300 separate “goods” specified, everything from shirt pockets to bonnet linings. Your initial trademark covers 10 goods only. For each additional “good” you want your trademark to cover you have to pay an additional fee ( maybe $25.00 t0 $ 50.00 per good). So you can see that it can get expensive.
The only reason you might want to consider registering a trademark is because of “trademark squatting” which is when a Chinese company takes your trademark and registers it in China under their own name. They can then prevent you from selling your product in China and/or exporting to your own country. Is this likely to happen ? Probably not unless you have a very popular product. When you read about “trademark squatting” it usually has to do with big name products like Pfizer, Coach, Adidas, etc etc. Should you as a small business be concerned ? Somewhat I suppose. And it is never a bad idea to run your situation by an IP lawyer. But if protecting your IP in China is going to be a major expense for you that will seriously impact your production, my advice would be to wait until you can afford to do something about it. And in the meantime do as a client of mine once did. We were walking the Canton Fair together and my client spotted his own products being marketed by a Chinese company. After a double take and a slight wince, he looked at me and laughed. He said, “I can’t believe it,” and then laughed again as we walked on.