January 25, 2022
E-commerce has become the dominant medium for people to trade goods and services in China. At the same time, there has been an increase in protecting products on these platforms by ensuring that no one sells counterfeit products. For this reason, platform giants such as Taobao, Tmall, and JD.com require sellers to register their trademarks.
Failure to do so can have severe consequences. In extreme cases, it may result in a ban on businesses that don’t register themselves, thereby taking away their chance of selling their products to a bigger consumer base.
The Example of Taobao
Take Taobao.com as an example. It’s an e-commerce platform that operates under the Alibaba Group. It has a unique system to encourage sellers to register their trademarks. For example, it has a three strikes and you’re out policy. Every time a seller tries to sell counterfeit products, one strike will be recorded against them. If the seller sells counterfeit goods on more than three occasions, their account will be closed for good.
However, that’s not the only measure Taobao takes when dealing with counterfeit goods. Depending on how severe the violation is, Taobao can easily take steps that involve eliminating the goods from the platform, freezing or limiting deposits, and paying liquidated damages. In addition, sellers can face penalties like credit points deduction, reducing page views, and deleting infringing goods.
If sellers persist, they may be blacklisted from major platforms and unable to sell their goods.
The Importance of Registering Trademarks Early to Prevent Malicious Complaints
When foreign sellers began selling their products beyond their borders to the global market and registering their trademark, they encountered trademark squatters. Squatters make it increasingly difficult for business owners to go about their business. Moreover, they threaten real brand owners with high license fees, exclusive dealerships, and plenty of other unreasonable demands. Due to the lack of experience, brand owners have sometimes found it difficult to deal with such people.
How to Avoid the Problem
One of the easiest ways to avoid this problem is by registering your trademark as soon as you start selling. However, before you file the applications and registration, it’s crucial to search trademark availability and discover any barriers. If you find squatters, you should make a case against them and file it as soon as possible. It’s also crucial for sellers to have documents detailing how they came up with the brand identity. This should include brand design concepts or contracts that will help to strengthen the case.
If you have trademarks that have been made using design elements, be sure to have the copyright registration certificate with you, as this would make things easier and help you win the case.
It’s crucial to be on board with trademark protection to protect yourself from fraud and ensure that your business continues to thrive on any e-commerce platform.
Please contact us (inquiries@ChinaLawSolutions.com) to get a recommendation on a firm which can assist your business with trademarks in China. All inquiries are treated as confidential.