Protecting your Intellectual Property in China Webinar for Trade & Investment Queensland 12 May 2020 David Bennett Counsellor (Intellectual Property) IP Australia | Australian Embassy Beijing [email protected] Ecommerce in China Opportunities… …come with risks: • Bad faith trade mark applications • Bad contracts with local partners • Copycat and counterfeit products You can take steps to manage these risks before you enter the Chinese market. IP Australia • Administers Australia’s IP system IP Counsellor to China • IP Australia’s first overseas position • Purpose: to help Australians protect their IP in China • Can provide guidance and support on specific enquiries (contact [email protected]) David Bennett Counsellor (Intellectual Property) • Cannot provide legal advice or legal services Australian Embassy, Beijing [email protected] Intellectual Property 101 IP is not protected automatically (except copyright). Protect your brand, invention, or new design by applying to register relevant IP rights. Registered IP rights: • Trade marks protect a brand • Patents protect inventions • Designs (design patents) protect the visual appearance of a product • Plant variety rights protect new plant varieties Other IP rights: • Copyright protects creative works (including software source code). Copyright applies automatically to the author upon creation of the work • Trade secrets protect commercial secrets ResMed CPAP device Patents Trade marks Mask & ventilator Plain word marks Data processing Logo marks RESMED AIRMINI Designs Visual appearance of product Copyright Software source code Product images Trade secrets Advertising copy Commercially valuable Product manuals information, not disclosed in patents Lucas’ Papaw Ointment Trade marks Plain word mark: Trade secrets/know-how Formulation Lucas’ Papaw Ointment Manufacturing process Figurative mark (word/logo combination): Domain names lucaspapaw.com.au Copyright Product images Advertising text Website text and images Register IP rights in China • IP rights are territorial - a trade mark or patent registered in Australia only protects you in Australia. • To protect IP rights in other territories, you must register in those territories. Consider registering in any market you want to do business or manufacture in. • Mainland China, Hong Kong, Macau, Taiwan all require separate registration. • No such thing as an international patent or trade mark, but international systems make it easier to file in multiple countries (PCT for patents, Madrid system for trade marks). • Copyright applies automatically. China has optional copyright registration system that makes enforcement easier. Trade marks • A trade mark is a sign that distinguishes goods and/or services from others. Usually word, logo, or combination. Can also be a shape or colour. • A trade mark is used to protect a brand. For many companies, their most valuable IP right. • In order to be registered, a trade mark must be distinctive (not purely descriptive) and must not conflict with existing trade mark registrations. ✘ GREAT AUSSIE MILK - purely descriptive ✔ DEVONDALE - distinctive Word Logo Combination Shape Read more at https://www.ipaustralia.gov.au/trade-marks Register trade marks in China • Your brand is only protected in China if you have a registered trade mark in China. • China operates a first to file trade mark system. With few exceptions, the first person to apply for a trade mark gets it. • Trade mark squatters, or hijackers, register other company’s trade marks in order to seek a payout to sell the mark, or to use as cover for counterfeit products. This is the most common IP issue affecting Australian companies in China. • Thinking of doing business in China? Register trade marks in China as early as possible. Sued for infringing my own trade mark?! A real case • Australian company sold its products in China through local distributors for years. Did not register trade mark in China. • 2019: Chinese company registers the Australian company’s trade mark in China, sues them and their distributors for infringement. • Why? Chinese company either seeking to sell the trade mark, or exploiting brand reputation by using it on their own products. • Australian company must choose between long legal battle or abandoning the Chinese market. • The lesson: Register trade marks in China as early as possible. I can’t operate on the mainland?! A real case • Chinese company registered Australian company’s trade mark in China. • Australian company blocked from mainland China; could not set up flagship ecommerce stores, advertise, or use importers, distributors or physical retailers. • Access to Chinese market limited to Daigou and cross-border ecommerce channels. • Australian company operated out of Hong Kong, where they had registered trade mark. • After 10-year legal battle with multiple court appeals, finally won back trade mark in mainland China. • The lesson: Register trade marks in China as early as possible. How to register trade marks in China • Consult a trade marks attorney who has expertise and experience filing in China. • Registering trade marks in China can be complex, success rates for self-filed applications are low. Your attorney can advise the best filing method for your situation (direct or Madrid system). • How much? Costs vary widely, ask attorney for estimates. Starting from around $1000-2000 (your cheapest China insurance policy) • Most Australian trade marks attorneys will provide a free initial consultation – ask first. • Manage the registration yourself; be cautious of importers, distributors or partners who offer to take care of it for you. Searching the Chinese trade marks register There are over 24 million registered trade marks in China. Using a trade mark in Australia does not mean you can use it in China. Searching the Chinese trade marks register can help: 1. avoid wasting time on trade marks likely to be rejected 2. avoid infringing others trade marks Free online English search tool at http://wsjs.saic.gov.cn/ See our guide to searching at https://www.ipaustralia.gov.au/china A self-search has limitations but can give useful preliminary information. Your trade marks attorney can do a professional search. Chinese language trade marks • Depending on your product or service, consider developing a Chinese language brand. Several approaches: • Transliteration: Coca Cola 可口可乐 kěkǒukělè sounds very similar to Coca Cola. • Translation: Apple 苹果 píngguǒ is literally the Chinese word for apple. • Combination: Starbucks 星巴克 xīngbākè is a combination of the Chinese character for star (星 xīng) and a transliteration of bucks (巴克 bākè). • This is branding and marketing, not just translation. Branding consultants can help you develop an appealing Chinese language brand. • As part of the brand development process, check the Chinese trade mark register for existing registrations, and apply to register the trade mark in China before you reveal the brand (or else you risk someone else registering it). Chinese language trade marks – some lessons Penfolds has a strong Chinese brand, 奔富 bēn fù. Mr Muscle’s first Chinese brand, literal However when parent company Treasury Wine Estates translation 肌肉先生 sounded phonetically like went to register the 奔富 trade mark they found a “Mr Chicken meat”. Mocked by consumers, squatter had beaten them to it. After a costly legal they rebranded as 威猛先生 “Mr Powerful”. battle from 2011 to 2018, they finally invalidated the hijacker’s trade mark. Lesson: if using a Chinese language brand, Lesson: Register your Chinese language trade mark as make sure to develop a good brand. early as possible. Case Study – Skin Nutrient • Australian Health Research Development Group is a Queensland-based contract manufacturer of skin care and other products • Main brand is ‘Skin Nutrient’, with Chinese brand 澳肌莱. Goat’s Milk skincare line are most popular products. ✓ Logo mark and Chinese language trade marks registered in China ✓ Sold through Tmall flagship store, and Taobao daigou ✓ Sold on JD through an online pharmacy store, and on VIP and Pinduoduo Could improve: ‘Skin Nutrient’ is not distinctive so have had to rely on logo protection (relatively narrow). Designs (Design Patents) • A Chinese design patent protects the visual appearance of a product. Equivalent to an Australian registered design. • Design must be new, and substantially different from prior designs (or combinations of). • Design patents are granted after passing preliminary examination (3-6 months) => relatively cheap, easy and fast to acquire • Substantive examination is not compulsory, but usually required before it can be enforced. • Versatile – can protect the appearance of very diverse products. Read more at https://www.ipaustralia.gov.au/designs Copyright • Copyright protects literary, dramatic, musical and artistic works, sound recordings, films, photographs and images, software source code, and written materials such as user manuals. • Unlike most other IP rights, copyright applies automatically worldwide. China operates an optional copyright registration system, as do many countries (but not Australia). • Copyright registration simplifies enforcement. For example: – Enforcement against web pages or infringing listings on Chinese e-commerce platforms that have copied a brand owner’s copyright-protected product images. – A sufficiently creative logo can be protected by copyright and enforced against infringers. Can also be used to challenge rival trade mark registrations with respect to any goods or services.