If you do business in China, or advise clients who do business in China, and know anything about trademarks, you’ve likely heard that China is a first-to-file country.  This means that registration is required to establish rights to a trademark.  In addition, competing claims to a mark are resolved based on whose trademark application was first in line, not on who was first to use the trademark.  Failure to secure trademark rights in China can disrupt sales and necessitate costly litigation as was demonstrated recently by Tesla Motors and other multinationals.

For this post, let’s move beyond the basics so that your business or your clients can be smarter China trademark owners.  A smarter owner understands at least two key distinctions between U.S. and China trademark practice.

1. China’s Subclassification System

Any trademark application, regardless of the country in which it was filed, must designate one or more goods or services with which the applicant uses or intends to use its trademark.  The U.S. follows the Nice Classification, which categorizes goods and services into different “classes.”  For example, class 15 covers musical instruments.  Class 25 covers clothing, footwear and headgear.

China follows the Nice Classification as well, but it goes a step further by dividing each class of goods and services into different subclasses.  For example, in class 15 (musical instruments), subclass 1501 includes drums, while subclass 1502 includes drumsticks.  In class 25 (clothing, footwear and headgear), subclass 2507 covers shoes, while subclass 2509 covers socks.

These subclasses matter to Chinese trademark examiners, who tend to take a rigid approach to examination.  We’ve seen trademark applications approved for registration even though a substantially similar mark designating commercially related goods in the same class was already registered.  The reason was because the applied-for mark designated goods in a different subclass.

2. Proof of Use

Before a U.S. trademark registration will issue, applicants must affirm that the applied-for mark is being used with all of the goods^[1] designated on the application.  In China, by contrast, no such proof of use is required.^[2]

Since proof of use isn’t required in China, applicants can adopt a more defensive filing strategy by designating an expansive list of goods.   When effectively executed, this strategy can safeguard a trademark’s commercial distinctiveness and keep would-be trademark pirates at bay.

Bringing it all together, smarter China trademark owners don’t just seek to be first in line with their applications.  They make sure those applications designate a broad swath of goods, starting with their core product lines.  From there they designate at least one product from all adjacent subclasses.  Finally, they designate goods in other commercially related classes, making sure that every subclass within those other commercially related classes is covered as well.

This filing strategy comes at a price.  Applications generally cover one class of goods.  Every additional class that is designated thus represents a new application and an additional set of filing fees.  But as many China trademark owners can surely attest, this small investment can pay huge brand protection dividends.

_{^[1] For purposes of this post, “goods” or “products” should be understood as referring to “goods and/or services” or “products and/or services.”}

_{^[2] However, registrations can become vulnerable to non-use cancellation if use does not begin within three years after registration.}