James & Wells Warn Against ‘Trade Mark Trolls’

James & Wells Warn Against ‘Trade Mark Trolls’

They’re insidious and they’re everywhere - the trade mark trolls who are filing trade mark applications to own New Zealand exported brands. Johnathan Chen, Head of Asia Division, James & Wells, explains. “Exporters should be aware that with the push by the Chinese Government to educate business people about Intellectual Property (IP), and the incentives they provide to help them secure IP rights, Chinese companies are becoming much savvier. And so are the trolls. They’re thinking beyond just owning export brands, they’re now also registering New Zealand trademarks that are being applied to goods manufactured in China for export to other countries.

“After securing the trade mark rights, these opportunists are filing customs notices to detain any products leaving China which carry their registered trade mark on the grounds that what is being exported infringes their trade mark registration. Under Chinese law, this is legally correct, and the onus is on the true brand owner to prove the troll’s trade mark rights are invalid. There are plenty of Kiwi companies that manufacture in China, and some are certainly finding it difficult to get their branded products out of China and back to New Zealand, or any other country, because of red tape caused by trolls. While a container load of goods is stuck on the dock in China, stock can be running out in key markets, and distributors and customers will be clamouring for products. It can end up costing plenty in lost revenue and expenses.

“While the laws in China have recently been tightened up to give NZ companies the right to invalidate trade mark registrations on the basis they were obtained in bad faith, this only works if you can establish a prior business relationship. It doesn’t work against opportunists – the sort who emails you saying a third party has registered a bunch of domain names using your brand, and would you like to buy them for a tidy sum.

“In many ways trade mark trolling has its basis in culture – the Chinese are well-known to be tough business people and tenacious negotiators, who spot the opportunities and will push everything as far as they can. You can’t learn what you need to know unless you’re there spending time getting to know the people. You also need to go in with the attitude of working together for mutual benefit, not dividing and conquering or getting the best end of the deal. If that’s not your area of expertise, hire the right people to help you – people who know the market, who know who to talk to, who are able to look at the motivation of some of the moves in the negotiation game, and who are neutral and can give you an informed, honest opinion. The good news is that things are changing in China, and the Government’s focus on several issues, including IP and anti-corruption, is helping change business culture in China. This should lead to fewer trolls in future, but for now, people need to cover all the bases.”

For more information about doing business in Asia or expert IP advice contact Johnathan on Email: johnathanc@jaws.co.nz or visit their website at http://www.jaws.co.nz .

ENDS

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