Strategies with marks and names for foreign enterprises entering China

By Frank Liu, Shanghai Pacific Legal
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Although the pandemic has had a significant impact on economies around the world this year, China’s buoyant economy has continued to attract a significant amount of foreign investment. In contrast to foreign enterprises with mature operations in China, a new enterprise will often face the issue of a new Chinese-language enterprise name, trademark and the corresponding “.cn” domain name that it needs to do business in China.

Frank Liu
Partner
Pacific Legal

TM, domain and enterprise names

The great majority of foreign enterprises that enter China require a Chinese-language trade name. However, at present, the approval and registration of enterprise names and trademarks cannot be searched in the same system, and domain names form part of another more relatively independent registration system. Under such a circumstance, considering the one-to-one connection between an enterprise’s name in English and in Chinese, and whether consistency can be maintained between such enterprise name, and the Chinese-language trademark, are issues that are worth close attention.

The ideal state is one where consistency is maintained in an enterprise’s Chinese-language trade name, trademark and domain name. Consistency in use will inevitably strengthen the attention of the relevant public to the brand, and even for companies operating under multiple brands, maintaining consistency is extremely useful in brand promotion. However, in reality, achieving consistency among them is not easy, especially if any one of them is invalidated or cancelled.

Even if consistency is ultimately unattainable, it is still possible to have the public make a one-to-one connection between the three items with the enterprise through subsequent business activities. In this way, the different trademark, trade name and domain name will provide wider latitude for brand adjustment; and, particularly in the case of multi-brand operations, in the special circumstance where the reputation of a certain brand is impaired, the renown of the other brands and trade name can be developed. It goes without saying that such a mode of operation requires, commercially, the commitment of more resources and time to achieve results.

Matters requiring attention

When registering a Chinese-language trademark, particular attention needs to be paid to the chance of successfully registering the selected Chinese-language trademark in the core class. If there is a markedly identical or similar prior trademark in the core class, an alternative plan needs to be considered.

Accordingly, when applying, preparation of applications for multiple Chinese-language trademarks arranged in order of preference, and a backup plan, are required. If the application for the preferred Chinese-language trademark in the core class is blocked, replacing it with a backup trademark will be quicker.

It goes without saying that where the securing of a certain Chinese-language trademark is crucial, it is necessary to study in detail the prior trademark that needs to be overcome, and the appropriate approach. In the worst-case scenario, a switch to a backup trademark will ultimately be necessary.

In contrast to the situation where the validity of a trademark registration extends to the entire jurisdiction of mainland China, an enterprise name search and review, at the time of approval and registration, will generally be carried out only in the administrative division in question. Save where it is a well-known trade name or trademark, the coexistence of enterprises in different provinces, municipalities and/or autonomous regions with identical trade names is not rare.

Accordingly, when applying for an enterprise name, it is necessary to have a detailed understanding of the actual circumstances of the place of registration, look up the review criteria, and whether there is a prior enterprise name, and prepare the corresponding Chinese-language trade name and backup trade name to increase the chances of successfully registering the desired enterprise name. Where a choice of different places of registration is available, there will be greater room available for selecting the desired enterprise name.

Since the relaxation of domain-name suffix registration, a large number of suffixes is now available, but enterprises usually only need to pay attention to domain names with the core suffixes. In general, foreign enterprises will usually use such common suffixes as .com, .net, etc., but while operating in China they need to pay particular attention to “.cn” and “.com.cn” domain names.

For domain names with important suffixes, a smooth registration is the ideal, but if a prior domain name exists, an effort may be made to acquire it at an appropriate price. Where a robust prior right exists, particularly a prior trademark, recovering the domain name that has been pre-emptively registered by a third party, by way of domain name arbitration, is quite common.

Harmonising marks and names

As mentioned above, in most cases enterprises should strive for consistency in their trademark, enterprise name and domain name. When considering a backup plan for these, it is necessary to consider both the time required to secure the corresponding right, and whether a change to the alternative Chinese-language name can be made in a timely fashion, should the application prove unsuccessful.

When consistency among the three items is unattainable, the first priority should be striving for consistency between the Chinese-language trademark and trade name. As approvals of enterprise names are granted relatively quickly, the application plan for the preferred enterprise name with the highest chance of approval may be submitted at the same time as the Chinese-language trademark.

If the approval of the name is denied, a prompt switch to the backup trade name that corresponds with the trademark may be made. When consistency is achieved between the trademark and enterprise name, the effort may turn to securing a consistent domain name.

It is recommended that the application plan be kept strictly confidential before the application, otherwise a pirate registration of the trademark, enterprise name or domain name could easily arise.

In short, when a foreign enterprise develops its business in China, it must plan in advance for the corresponding IP, including trademarks, enterprise name and domain name, duly conduct a search and analysis ahead of time, and duly prepare sufficient filings. Only by arranging an action plan on this basis, and making timely adjustments based on feedback, can the relevant objectives be reached, or approached most effectively, so as to allow the IP to provide a greater boost to the business.

Frank Liu is a partner at Pacific Legal

Room 2709, 27/F, Plaza 66 II
1266 Nanjing Road West, Shanghai 200040, China
Tel: +86 21 6086 0199
Fax: +86 21 6086 0111
Email: frank.liu@shanghaipacificlegal.com
www.shanghaipacificlegal.com