'Brand' new protection for companies in China | 21 June 08

NORTH companies looking to do business in China should be able to benefit from greater protection for their brands and trade marks.

Leading intellectual property lawyer Alex Shiel, of law firm Ward Hadaway, says that the Chinese authorities are making a concerted effort to tighten up on preventing the counterfeiting of goods and products and the sale and distribution of faked items.

However, he warns that companies should still take care to protect their trade marks and brands, particularly by registering them in China and the Far East under local names and translated versions.

Traditionally, the perception amongst UK businesses has been that it is not possible to prevent the infringement of their intellectual property rights or the counterfeiting of their products by Chinese manufacturers. This position has changed for the better recently.

Mr Shiel, who heads up the intellectual property team at Ward Hadaway, said: “In China today, the authorities are putting a lot more weight on improving foreign companies’ ability to stop counterfeiting and protect their brands.

“But this is not just about counterfeiters inside China. Action should be taken against each step in the distribution chain, because goods made in China are transported out, distributed and then sold on to customers so there will be a number of different opportunities to take action to stop the flow of fake goods.

“The Chinese authorities have the power to carry out raids and seize counterfeit goods and they have shown greater willingness to do just that.

“With the forthcoming Beijing Olympics expected to open up China still further for foreign trade and investment, this will be a very welcome development for businesses looking to enter the market there.”

But while the authorities are clamping down on counterfeiters, companies doing business in China, particularly those using factories in the country to produce their goods or setting up retail outlets, still need to be careful when it comes to registering their trade marks and brands.

As well as registering the ‘western’ script version of their brand name, businesses are advised to also register translations of that name and the Chinese characters relating to that translation.

For example, McDonald’s restaurants in China and Taiwan are given the name ‘Mai-Dang-Lao’ in Chinese, which is meant to phonetically approximate the English name.

When McDonald’s was first introduced in these areas, this caused some confusion as the three Chinese symbols literally translate to "wheat-must-labour."

In another example, Starbucks is known in China as ‘Xing Ba Ke Ka Fei’ and is registered as such.

Mr Shiel said: “It is important to make sure you have fully registered any brand name or trade mark which you use for your products in this way.

“This is because if, for example, you are employing a local Chinese manufacturer and you don’t register your trade mark for your goods, the manufacturer can register it as their trade mark.

“If they do this, they will not only be able to claim the trade mark as their own, but they could make it difficult for you to switch manufacturers. This is one of the reasons why it is important to get the right advice when it comes to doing business in China.”

Ward Hadaway already has expertise on doing business in China, having played a key role in a support scheme designed to help companies in the region break into the market.

In 2006, the firm linked up professional services firm Deloitte and business management consultants RTC North to provide a service to give businesses the inside track on the legal, financial and organisational aspects of the Chinese market.

As part of the project, Ward Hadaway developed a relationship with Shanghai-based law firm Boss & Young.

Under the arrangement, Boss & Young works with Ward Hadaway and clients of the China service to cover legal issues such as joint venture agreements, intellectual property protection and other aspects of commercial law.