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Business Trends

Chinese trademark filings flood foreign markets

Government subsidies for applications may encourage gaming the system

Sneakers from Chinese sportswear maker Anta Sports. Beijing has provided subsidies to Chinese companies to pursue overseas trademarks.   © Reuters

TOKYO -- Chinese trademark applications in Japan, the U.S. and Europe swelled nearly sevenfold in the three years through 2017 as government subsidies aimed at building global brands prompted a disruptive deluge of filings.

China can often be an unfriendly place for foreign companies looking to register trademarks -- an essential part of doing business. When a Japanese organization tried in 2009 to trademark Imabari towels, known for their quality, its application was rejected on the grounds that a Chinese company had already trademarked the characters for "Imabari." 

In some cases, so-called trademark trolls register valuable brand names and the like pre-emptively, then force the companies that actually use the marks to buy or sue for the rights.

At the same time, the Chinese government has encouraged companies to seek trademarks overseas, particularly since last year, when it adopted policies to further its brand trademarking strategy. A similar push in patents has made the country the world's second-largest filer.

China is poised to overtake the U.S. this year as the top source of trademark applications in Japan. The Japan Patent Office reported 8,464 Chinese filings for 2017, up more than fivefold from 2014. Chinese trademark applications filed with the European Union Intellectual Property Office more than quadrupled over the period.

The U.S. received more than 50,000 applications from China in the year through September 2017, accounting for 8.5% of all trademark filings. The eightfold surge from fiscal 2014 lifted China far above such other big filers as the U.K., Canada and Germany.

Chinese businesses that apply for foreign trademarks have been able to receive government subsidies since last year. Such payments in Zhejiang Province amount to half the cost of filing in Europe and the U.S. and 70% in emerging countries, according to local media.

Many of the applications in the U.S. come from small, obscure online retailers apparently just looking to collect the subsidies. The Wall Street Journal notes numerous cases of multiple filings using images of nearly identical products differing only in the brand on the tag.

Though competition for trademarks is far from unique to China, some analysts worry that the subsidies could distort the competitive landscape and disrupt legitimate business activity. The payments may be intended to "undermine the U.S. trademark system," writes Josh Gerben of the Gerben Law Firm, which specializes in trademark issues. The flood of Chinese filings has alarmed the Japan Patent Office as well.

"China has issues such as pre-emptive trademark registration alongside an advanced intellectual property strategy," said Rensei Baba, who heads a Japanese nonprofit organization dealing with intellectual property and other issues. "For now, poor practices inside and outside the country aren't going to disappear."

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