Trademark Lessons from China: Copyright — The "Prior Right" That Could Save Your Trademark Rights

In China, careful control of your trademarks is crucial to ensuring that your brand reputation remains intact across borders. Since China's trademark system follows a first-to-file rule rather than a first-to-use rule, foreign companies seeking to enter the Chinese marketplace often find that their mark has already been registered by a trademark hijacker. This creates serious problems for legitimate business entities trying to launch new products in China because the trademark hijackers typically use the registered trademark to coerce the business into "buying back" its own mark. For example, a Chinese trademark hijacker attempted to prevent Tesla Motors from expanding into China – the world's largest auto market – by registering "Tesla," a Chinese transliteration of "Tesla," and Tesla's "T" logo design in 2006. In another case, the French winemaker Castel Frères was forced to rebrand in China after refusing a settlement offer from a Chinese trademark hijacker in 2005. There are many other notable cases like these that have made the headlines in recent years.

In situations like this where a trademark hijacker files an application to register a trademark in China before the legitimate owner does, businesses are increasingly realizing that there may be a viable copyright claim that can be used against Chinese trademark hijackers.. The "prior right" (or more aptly, "prior copyright") claim has been used successfully in the past against trademark hijackers on a number of occasions. The "prior right" claim has a firm statutory basis in the Trademark Law of the People's Republic of China: Article 32 states that "[n]o trademark application shall infringe upon another party's existing prior rights." "Prior rights" in Article 32 of the newly-enacted trademark laws (previously Article 31) include rights to one's personal name, rights to one's likeness, industrial design rights, and copyrights, among others. Logos and stylized word marks generally fall under the category of "works of the fine arts" pursuant to Article 3 of the Copyright Law of the People's Republic of China.

While Chinese courts are willing to accept a broad range of evidence as proof of copyright ownership, including proof of authorship, commission contracts, and assignment contracts, a copyright registration—considered presumptive evidence of copyright ownership—arguably serves as the best proof available. Since China is a signatory to the Berne Convention for the Protection of Literary and Artistic Works, even a copyright registration certificate obtained abroad would constitute sufficient proof of copyright ownership. However, U.S. companies should strive to register their logos and stylized word marks with the Copyright Protection Center of China (CPCC) at the earliest date possible before the onset of litigation, because doing so would confer the additional benefit of allowing a party to sidestep the requirement of having a foreign copyright registration "legalized" in China, a process analogous to authentication of evidentiary documents in U.S. courts. Finally, in addition to seeking copyright registration for logos and stylized word marks at the CPCC and the U.S. Copyright Office, U.S. businesses should keep a solid record of supporting evidence as proof copyright ownership, in case the validity of a registration certificate is challenged in court or a registration certificate is not obtained in a timely manner (i.e. before a bad faith trademark application is filed). Taking the aforementioned measures and seeking registration for eligible logos and stylized word marks can provide invaluable leverage in combatting trademark hijackers and counterfeiters in the challenging Chinese marketplace.