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Why Businesses Should Remain Vigilant Against Trademark Threat in China

The threat of trademark theft is one of the gravest concerns for the businesses operating in China. And the worrying thing is according to the latest report, after a five year low, a considerable rise has been noticed in trademark infringement in China.

After the crackdown of the Chinese government on the trademark infringers and rigorous law instituted by the court, the trademark theft reports dropped a lot since 2014. On May 1st, 2014, China adopted a new trademark law with clearer guidelines on the recognition and protection of notorious trademarks in China in order to fight against trademark trolls. But over the last for years, Chinese factories have developed their unique plan to outsmart the laws again. They are continuously trying to find flaws in the rule and exploiting them for serving their needs.

According to the experienced China trademark lawyers, sometimes it is not the other company but the ex-employees, particularly the dissatisfied ones, who exploit IP registration missed by the firm, and cunningly exploit IP registrations missed by the company, and essentially hold their ex-employer to ransom. Whereby big overseas firms and MNCs have given top-priority to register their trademark in China almost the moment they start their China operations, it is the small and medium-size enterprises who are showing apathy in registering the trademark as they think it is a rather expensive undertaking.

Four options to take back a stolen trademark

  • Fight: Challenge the trademark filing.
  • Get creative: Find a workaround, trademark a different part of your product.
  • Pay up: Buy your trademark from the Chinese company.
  • Start over: Trademark a new name.

If you think, just because you manufacture your product in China and selling them in another country, you don’t need to apply for the trademark registration, then you are absolutely wrong. If another company holds your trademark, they have the right to stop your items at the border and restrict them from leaving the country. They can stop your goods from leaving China because they are the legal owner of the trademark. If you go to the court against this, quite likely you are going to pay a huge penalty as you are fighting a losing battle.

It seems that infringers have a ready plan in case they are sued by the original company and they have grown in confidence to fight a long legal battle as they can manipulate shortcomings of Chinese trademark law. Often the serious issue located is the negligent and nonchalant attitude that international businesses maintain about the realities of doing business in China. With the growing instances of trademark theft, business of all sizes operating in China should remain vigilant.

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