Traditionally, China has been a more or less outlier in terms of intellectual property protections, at least in terms in how they approach the enforcement of intellectual property. Now, though, the country is starting to move toward alignment with the rest of the world.

Subtle changes, possibly in response to controversial U.S. political decisions (including recent tariffs) are good news for U.S. businesses, inventors, entrepreneurs, and startups that rely on global enforcement of their technology and brands.

China’s Relationship with IP and the Rest of the World

China — particularly over the last few years — has been an economic force on the world’s stage. But unlike other major players across the globe, China has a questionable track record in its attention to enforcing IP rights, trade secrets, and the like.

This leads to counterfeit products, infringement, potential health and safety issues, and an overall bad deal for companies.

This includes those looking to either sell a product in China or manufacture a product in that country. Once you turn your product over to a Chinese manufacturer, you have very little control over what happens and who sees your sensitive product details, unless you have rigorous protections in place.

Many manufacturers — and the American public — have put up with this fact. It’s all in the name of cheap labor and cheap products. But could this business hurdle become a thing of the past?

China’s Most Recent General Institutional Reform

Possibly because of recent tariffs and other political pressures, China is showing some substantive changes when it comes to honoring trademarks and we’re starting to see it on the patent side of things as well.

A lot of these changes are due to China’s move toward some general institutional reform, including broad-based changes to the law that impact…

  • How IP is registered in China
  • Examination timelines within the Chinese intellectual property office
  • Bad faith filings in China (more on that below)

…and more.

For example, China is beginning to improve a brand owner’s ability to log and report online infringement complaints (similar to how Google, Amazon, and eBay allow you to do so). The country is putting cybersquatting laws in place. Generally, we’re seeing more robust and predictable enforcement mechanisms in court that are more reconciled with the way the rest of the world approaches IP.

While many do not agree with the tariffs and the methodology that American politicians used to encourage these amendments, most brand owners agree that it’s good for business. They are absolutely unique and even historically monumental in some cases.

If the changes are implemented and the tariffs go away, even better. The playing field becomes level.

Bad Faith Filings: The Most Important Change of All?

Historically, it’s been easy to file trademark applications in China, and the China trademark office didn’t do a lot of diligence in terms of validating whether they were legitimate filings or not. That’s changing.

The new IP law amendments state that “applications for trademark registrations in bad faith which are not intended for use shall be refused.” This nearly mimics the sworn declaration that U.S. trademark applicants need to sign when filing an application.

Some might argue that this is the most important recent revision China has made to its brand protection system, so what else does this mean for you and your IP?

  • Chinese companies will no longer be able to apply for trademarks or any commercial signs that are similar or identical to existing, well-known trademarks and commercial signs.
  • Chinese companies can no longer apply for marks that reflect a notable place name, scenic spot, or building.
  • Applying for a large number of trademarks is also in violation of the new amendments, unless a good reason for the applications can be proven.

Because of this amendment, now anyone can file an opposition or invalidation of a mark on the grounds of bad faith. Previously, in order to do so, a person or business would have needed to establish prior rights in China before filing an opposition.

Plus, infringement fines have increased substantially. Overall, this makes it easier for you and your company to defend your brand while operating overseas.

What’s Next?

We can be optimistic that these changes to how China approaches IP and the rest of the world are just the start of building better business relationships with the country.

Are the changes solely the result of tariffs? And if those tariffs are removed, could China revert back to previous behaviors? Only time will tell, but for now, business owners, startups, and entrepreneurs can feel a little more confident when approaching Chinese manufacturers and doing business in China.