January 17, 2012

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Handle with Care

The Dos and Don’ts of Protecting Your Brand in China

Michael Mangelson and Lynn Wang

January 17, 2012

China is the fastest-growing consumer market in the world, which is not hard to believe given its population of 1.3 billion and growing middle class. This can be a great opportunity for a U.S. company with an innovative product and a strong brand. Protecting that brand in China, however, can be a problem if not handled carefully. Secure Your Trademark The first mistake is assuming that China’s system for protecting trademarks is similar to the U.S. system. Unlike the “first to use” system in the United States, China is a “first to file” jurisdiction. This means that an individual or company that first files a trademark in China will have rights to prevent others from registering and using the mark in China, regardless of whether it was first to use the mark there. You must file early to ensure proper protection. However, China is a member of the Paris Convention, so an application filed in China within six months of the U.S. filing can claim priority from the date of the U.S. application. You can use the traditional approach of filing a Chinese national application with the China Trade Mark Office (CTMO) through local counsel or file online through the U.S. Patent and Trademark office designating China under the Madrid Protocol. Both approaches have their pros and cons. The Madrid Protocol is generally less expensive if you’re designating multiple countries in the application. However, if you anticipate any complications in prosecuting the application, you should consider the traditional approach because local counsel is required to respond to CTMO Office Actions, and the CTMO currently allows only two weeks to respond. Chinese trademark registrations also use a unique subclass system for categorizing goods and services, which is more detailed than the international class system used in the United States. If you’re not careful in selecting the proper Chinese subclasses, you may discover that your registration doesn’t cover your product. This was Apple’s mistake when it first registered the iPhone mark in China. It registered the mark in International Class 009 for electronic goods, which would be sufficient in the U.S.to cover phones, but the application listed Chinese subclass 0901 (computers and software), which doesn’t include phones. A Chinese company later registered the mark in subclass 0907, which includes phones, so Apple, after losing an expensive opposition contest, ended up buying the registration from the Chinese company. You can avoid these problems with some careful planning and the use of competent trademark counsel. Spending some money up front to properly register your Chinese brand can save you a lot of money in the long run. Target the Locals Companies should also adopt and develop a strong Chinese trademark. Chinese consumers read and speak Chinese. If you don’t choose a Chinese mark, the Chinese consumer will choose one for you. Google failed to adopt a Chinese mark when it first launched its service in China, so consumers called Google 狗狗 (Gou Gou: Dog Dog). Google later adopted the mark 谷歌 (Gu Ge: Grain Song), but many didn’t like the new name, especially in light of the odd rural imagery, so they continued to call it 狗狗. Choosing a strong Chinese mark is complicated by China’s unique language and culture issues. The Chinese language includes multiple spoken dialects and thousands of characters, many of which have the same pronunciation. Never underestimate the importance of linguistic and cultural understanding in choosing a Chinese brand strategy. U.S. companies have employed a variety of successful Chinese brand strategies. One popular strategy is transliterating the English language brand into a Chinese brand that is pronounced as close as possible to the English pronunciation, such as 麦当劳 (Mai Dang Lao: McDonalds) and 可口可乐 (Ke Kou Ke Le: Coca Cola). Many companies prefer focusing on the meaning of the Chinese characters in their mark. Microsoft adopted the mark 微软 (Wei Ruan). 微 (Wei) means micro, and 软 (ruan) means soft. Some prefer adopting an entirely new brand for China. For example, Proctor & Gamble adopted the Chinese mark 宝洁 (Bao Jie: Precious Clean). Since each Chinese character has one or more meanings, it’s not possible to adopt an arbitrary mark that doesn’t immediately convey some meaning to consumers. The goal, which is easier said than done, is to adopt a Chinese character brand with a meaning that will make the right connection with Chinese consumers. This is why it’s wise to consult Chinese marketing and language experts in finding the right Chinese brand for your company and products. Understanding and planning for the intricacies of China’s evolving business environment is crucial to a successful China strategy. Undoubtedly, an essential component to this business planning is properly building and protecting a strong Chinese brand. Michael E. Mangelson is a Partner at Stoel Rives LLP and serves as chair of the firm's China group. He routinely consults clients on branding and marketing law and long-term IP strategies that help secure and protect market positioning and competitive advantages in the U.S. and abroad. Prior to joining Stoel Rives, Mangelson lived and worked in China, Hong Kong and Taiwan for six years. He can be reached at (801) 578-6903 or memangelson@stoel.com. Lynn Wang is founder and president of Emerging Brands Inc. and Of Counsel at Peksung Intellectual Property Ltd (a Chinese IP firm). Her practice focuses primarily on management of trademark, patent, copyright, and IP strategy and other IPR strategy in China. She can be reached at (650) 798-5168 or lynnw@emergingbrandsinc.com
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