Don’t Be Caught Out By the First To File Rule – (Especially in China)

Business Planning & Strategies

Trademark protection is country specific which means that you need to know which rules apply in each country.  Each country’s government has signed up to international trademark rules which include the international classification of goods and services, however when it comes to trademark filing there are important differences.

Recognition of a trademark application in each country depends on whether they apply the First to file (FTF) or the First to use (FTU) rule.

FTF means that you are relying on being the first to register the trademark to protect your mark.  If you are FTF this means that you are in a position to ask an established user of the mark to stop using the mark.

On the other hand, FTU countries require that trademark applicants prove that they are using the mark in their business or intend to use it in the near future and that there are not existing users of the mark who may have a superior right to the mark. First to use usually requires that the applicant show that the mark was used in conjunction with the actual sale of goods and services.

Whatever the case is, it is important to register your brand as a trademark. Australia is a “first to use” country,  this means the first person to use the trade mark or, if there is no use, to apply for registration, is the owner and is entitled to seek registration. If your brand have a capital value, or may have one day, then it is a business asset that can be sold or licensed.

Well known brands have been caught out by the FTF rule. For instance, in China, Facebook and Apple’s iPAD, as well as Pfizer’s Viagra have failed to obtain registration.  These global brands have mounted legal challenges, arguing that local entrepreneurs are “squatting” on their trademarks, but do date they have not been able to overrule the trademark denial.

In fact, Apple has paid $60 million (USD) to Proview Technology (Shenzhen), a Chinese company to obtain the trademark for iPAD (including the Chinese transliteration) prior to launching the product in that country.  This oversight by Apple may be due to the fact the USA applies the “first to use” rule, but a costly lesson it was nevertheless, as the Chinese IP office did not consider Apple’s prior use of the mark in markets outside China. Closer to home, see what happened to this Hobart-based company when their name product name was stolen in China.

Even though Australia is a “First to Use” country, it doesn’t stop others from obtaining the brand by filing first. Why wait for someone to steal your name while you are still considering its value, it is more costly to defend then to apply in the first place.  If you might get upset because you are asked to change your name, or your name is your mark, then trademark it as soon as possible, especially in the FTF countries.