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Several weeks ago, the Trump administration formally launched a “Section 301” investigation into the “theft of intellectual property” by China. According to US Trade Representative Robert Lighthizer, the investigation will “look into Chinese laws, policies, and practices which may be harming American intellectual property rights…” China is a large market for many American companies, not only for production, but also sales. Chinese laws and policies with regard to trademarks may be confusing to many, but there are some key concepts to know and consider regarding trademarks in China.
China’s trademark law is based on the concept of “first-to-file”. Meaning, the first person to file a trademark application for the mark in China with respect to a specific subclass has priority. The subclass system is something that is peculiar to China. While China also uses the Nice Class system to classify the goods and services offered under certain trademarks, it also has its own subclass system which is confusing for many. Essentially, one can register the same mark in the same Nice Class, so long as the goods are listed under different subclasses. For example, while typically clothing and footwear items are under Class 25, China uses the same Nice Classification, but breaks goods down into sub-classes, such as 2501, 2502, 2503, etc. Technically, you could obtain a registration for a mark for clothing in subclass 2501 and someone else could obtain a registration for the same exact mark in subclass 2507 for shoes or 2508 for hats in China. This is often times in conflict with the United States and other countries’ trademark laws who base their priority on who used the mark in commerce first and use a test of “likelihood of confusion” rather than subclasses to establish whether a trademark would be in conflict.