IP Protection In China For The Food & Beverages Sector: Focus On GIs.

 

9 October, 2016

 

Last week China IPR SME Helpdesk organized an exciting webinar on IP protection in the food and beverages sector, focusing on the protection of Geographic Indications. As the topic was very popular, we decided to follow it up with a blog post, focusing on the protection of GIs. The blog post gives an overview of the GIs’ protection in China and offers some advice on how to register GIs. 

 

Food and Beverages Sector in China

 

The food and beverage (F&B) industry encompasses the formulation, processing, production, distribution in wholesale or retail, and delivery of food products.  Recent research shows that an increasing number of European F&B SMEs are making significant investments in emerging East Asian markets, particularly China, with new local product development and national business strategies. While this continues, changes are occurring in the industry that is redefining how companies grow, operate, and manage risk. Intellectual property rights (IPR) are a key component of these developments, thus increasing the need to protect those rights in several countries.

 

When it comes to Chinese Laws and Regulations, the F&B industry is a highly regulated sector. Foreign companies need to apply for a food production license to ensure that they meet the requirements for manufacturing capabilities and environmental regulations. Foreign products need to conform to specific standards and protocols depending on the type of products. Chinese labels need to be applied to the products to complete the Customs clearance and enter the country. In addition, a separate food and beverage distribution license is required to sell in China.

 

These mandatory legal requirements for production or importing in China do not directly involve intellectual property rights, however protecting IP has the same importance as complying with other laws and regulations – without officially registered IP rights in China, IP is not protected. Chinese companies have taken advantage of the fact that many F&B producers do not have these rights, resulting in a market rife with counterfeit and infringing products. This is also the case for Geographical Indications (GIs) such as Champagne and Parma ham. In light of this fact, F&B including GIs can be protected under trademark laws as well as China’s GI system.

 

Trade marks for F&B

 

Concerns about product quality and safety in China and the high number of counterfeit or fake goods in the market bring Chinese consumers to heavily rely on trusted brands to determine their purchases. A trustworthy brand and good business reputation are critical to success in the F&B market in China.

China uses the ‘first-to-file’ system, meaning that legal protection cannot be gained if a similar mark has already been registered within China. It is therefore essential to register trade marks before entering. It is also recommended that companies file a separate registration for a Chinese trade mark, keeping in mind the message that is intended to be conveyed by the brand instead of just translating word-for-word.

 

The Chinese Trademark Law also allows registration of 3-D marks as trade marks. It may be the shape of product or its container or packaging; however, they must be distinctive from common shapes or packaging. Although there are various forms of protection for shapes under copyright or design patents, the rights granted by trade mark registration are very strong as they can be renewed an indefinite number of times.

 

Trade marks for Geographical Indications

 

Geographical Indications refer to the name or sign used on certain products which corresponds to a specific geographical location or origin. GIs can also signify that the product possesses certain qualities, is produced according to traditional methods or acquires an international reputation. Due to this, high quality and well renowned products of GIs are often the targets of counterfeiting in all markets. GIs are as valuable as trademarks to producers and should be protected correspondingly, in this way products with GIs benefit from the protection granted by the

international legal framework, of which China is a member.

 

Under China’s trademark law GIs cannot be registered or used where the goods are not from the region indicated and where this would lead to buyers being misled. The registration of foreign geographical names well known to the public except where these have been registered as collective marks or certification marks, is also prohibited.

 

GIs that are registered as collective marks or certification marks are given the same level of economic and legal protection as provided for all other logos, names or marks that are registered as trademarks and allow for the exclusive use of the registered trademark. The registration of collective or certification marks shall be done by the GI organisation at the China Trade Mark Office (CTMO) with members then applying for a Collective Mark Use Permit or a Certification Mark Use Permit with the GI organisation.

 

Chinese GI systems

 

The protection offered by the Chinese GI systems differs according to the scope of the products that are covered as well providing complementary protection to those offered by collective and certification marks. Both of these also offer products a distinct legal status which they do not enjoy as collective or certification marks.

 

There are two GI systems within China run by different ministries with the sui generis(unique in its characteristics) GI system run by the General Administration for Quality Supervision, Inspection and Quarantine (AQSIQ) and a second GI system run by the Ministry of Agriculture (MOA) however this applies primarily to raw agricultural products.

 

The definition of GIs filed with AQSIQ applies to any goods or handicrafts, but not services; GIs registered with the Ministry of Agriculture (MOA) applies for raw agricultural products and not to industrially processed products. The agricultural GI name consists solely of the geographical location followed by the general name of the agricultural product.

 

Please note that disputes arising regarding registered GIs under these systems do not follow the ‘first to file’ principle utilised in trademark law.

 

Reputation is the key

 

The food and beverage sector is moving fast in China now, as consumers look for new trustworthy brands. This presents huge opportunities for foreign businesses, particularly in the wake of recent Chinese food safety scandals. However, it should not be underestimated how important brands and packaging are to the success of companies operating in the F&B industry. Mandatory requirements for product and label registrations are very different things from IP registration, and failure to address the latter can result in a completely failed venture. For food and beverages, reputation is almost everything, and reputation is kept safe through registered intellectual property.

 

Successful registration of trademarks or of GIs is not guaranteed and European producers who are seeking to register GI products that are already well known or famous have reported that they have encountered increased difficulty in the registration process or been declined on their initial attempt. If your GI has been registered as a trademark it is still possible to register as a GI with the AQSIQ or the MOA to gain additional and complementary levels of protection.