Vivien Chan & Co - China
The synergy between trademark strategies and marketing decisions is what makes a particular brand tick. Branding is not a task reserved only for marketing professionals – the involvement of IP specialists is also essential in formulating a comprehensive action plan to promote and protect brands.
With the proliferation of e-commerce in China, many foreign brand owners already in or trying to enter the Chinese market should take advantage of China’s expansive digital landscape to manage their corporate personality. This chapter presents strategies on how best to navigate this essential task for brand owners in the new media age.
Setting up on China’s social media and e-commerce platforms
China’s e-commerce has seen explosive growth in the past decade, with no signs of slowing down: more than half of China’s overall retail sales are expected to come from e-commerce transactions in 2021. This expansion not only benefits local brands, as foreign brands – particularly in the beauty, luxury and food and beverage industries – have also proven immensely popular in the Chinese market and have driven up retail figures in cross-border e-commerce. The covid-19 pandemic has also fundamentally changed consumer habits, and China’s social media and e-commerce platforms have been evolving to adapt to these changes.
Brand owners should proactively increase the presence of their brands on social media and e-commerce platforms. Online promotion has been developing rapidly in recent years as the marketing models on these platforms have become more sophisticated, as illustrated by:
- advertisements on search engines (eg, Baidu pay-per-click advertising);
- in-app advertising (eg, pop-up video and banner ads);
- advertisements on social media and video platforms (eg, verified WeChat/Weibo account and promotion by influencers); and
- participation in shopping festivals or lucky draws organised by online shopping platforms.
Possession of a trademark registration in China is a prerequisite for setting up an online shop on a domestic e-commerce platform. As it takes time to obtain registration in China, brand owners should plan ahead and map out a comprehensive trademark portfolio of their core products. They should also acquire protection in International Class 35, as such registration is often required if the brand owners wish to operate a shop selling the goods of others.
Brand owners should also work with these platforms to get accounts verified. A ‘blue tick’ next to the brand owner’s profile picture shows that the brand is officially endorsed by the platform as authentic and adds credibility to posted content. Algorithms also place verified profiles and posts at the top of search results, maximising brand visibility on the platform.
Protecting and localising mobile applications
Around 98% of China’s internet users connect online through their mobile devices. China’s exciting smartphone industry has been contributing to the emergence of ‘m-commerce’, with mobile devices having generated 80% of retail e-commerce in 2020.
Mobile apps are undoubtedly becoming vital IP assets for all brands. Since apps are highly customisable, they can be tailored to include features that enhance the customer experience and directly contribute to sales figures and brand loyalty, such as cutting-edge augmented reality tools that enable users to try on products, or even something as simple as a direct communication channel to customer support services.
Depending on the sophistication and reach of the app, brands may also directly launch promotional campaigns and loyalty programmes instantaneously without the confines of the established features of an existing social media platform. Protecting mobile apps should therefore be a definite part of any brand owner’s IP strategy. The app icon, app name and other distinctive features (eg, avatars and emojis) are worth a trademark registration not only in International Class 9 for software but also in the service classes, since apps are as much service and information providers as they are computer programs.
However, foreign brand owners should note that the app stores used by consumers in China may not be Google Play or Apple’s iOS App Store. Instead, different smartphone manufacturers set up their own app stores on their devices. Brand owners entering the Chinese market should therefore seek to localise their mobile apps and launch them on local app stores, such as Tencent My App Store, Huawei App Market Store and Baidu Mobile Assistant, in order to reach Chinese consumers.
Chinese consumers are creative. They often come up with nicknames for products that are indicative or suggestive of a key feature of the product, such as ‘Beetle Car (甲壳虫汽车)’ for Volkswagen Type 1, ‘Catfish Bag (鲶鱼包)’ for Celine Belt Nano and ‘Red Kidney (红腰子)’ for Shiseido’s ULTIMUNE Power Infusing Concentrate. Sometimes these nicknames catch on even more than the real product name that has been carefully devised by a senior management team. Where consumers have already made a branding choice, brand owners should be receptive to these nicknames and take the initiative to register them as trademarks as soon as possible to beat trademark squatters.
Alternatively, it might be advisable to consider having the brand’s marketing team devise a nickname at the outset to maintain a degree of control. This nickname should be precise, memorable and fit easily into a ‘#hashtag’. A good hashtag can offer a brand a high level of exposure, given its searchability and the possibility of it trending (whether promoted or not) or going viral. If the hashtag is inherently distinctive, it is advisable to secure its trademark registration.
Even if Chinese consumers have not created a cheeky nickname, brand owners should consider devising a suitable Chinese name for their brands and products. However, the name should not be so generic that it risks being inherently non-registrable as a trademark, already in use by others or, worse yet, easily forgettable. This is where synergy between the marketing team and legal counsel becomes crucial – it is strongly recommended to conduct trademark searches in China to identify key risks and formulate an action plan to clear the obstacles to successful trademark registration.
Further, brand owners should not overlook the importance of domain names, as they are one of the most unequivocal elements of a brand’s online identity. If a brand name is registered as a domain name by cybersquatters or is being used for phishing and internet fraud (both of which are fairly prevalent), this would not only dilute the distinctiveness of the brand but also negatively affect its reputation. It is advisable to conduct a due diligence search to ascertain whether brands’ domain names have been maliciously registered and to act as soon as possible. Domain name arbitration is a quick and cost-effective option that brand owners may wish to consider to take back ownership of their domain names.
Docketing evidence of online use and sales
It is immensely useful to be able to demonstrate fame and reputation in enforcement, opposition and invalidation actions, or when a mark is challenged in non-use cancellation. Beyond the usual evidence such as awards and honours received, market surveys, industry rankings, evidence demonstrating online use and sales are becoming more relevant in the age of big data.
For example, website analytics reports issued by third-party data analytic companies showing web traffic directly from mainland China are cogent evidence of use. It is also recommended to archive websites regularly with dated screenshots.
Where brands have a presence on e-commerce platforms, from time to time they should export the sales data for docketing purpose. Social media and mobile app analytics also offer statistics such as view rates, click rates, number of downloads, monthly active users and users’ reviews, which would help strengthen brand owners’ arguments that their trademarks have garnered a high level of reputation.
Where sales are operated via local distributors, it is recommended to produce distributorship agreements or authorisation letters to show the complete relationship chain, as well as evidence that demonstrates the supply of goods (eg, sales agreements, VAT invoices, payment receipts and shipping and customs documents).
Such evidence must be authenticated in some way. Previously, notarisation of online evidence was often required, but Chinese courts are increasingly inclined to accept blockchain evidence and even electronic certificates issued by time-stamp service institutions (eg, UniTrust Time Stamp Authority) that are designed to demonstrate the existence, completeness and verifiability of a set of electronic data at an exact point in time. Some e-commerce platforms also issue formal reports affixed with their official company seal to confirm sales data authenticity.
Managing partnerships with influencers
The use of influencers in marketing is not unique to China. However, as the covid-19 pandemic has forced most Chinese consumers to shop almost exclusively online, China has seen the advent of ‘livestreaming e-commerce’, where influencers host livestreams that integrate product demonstrations, live Q&As, time-limited pricing promotions and instant ordering, among other things.
This particular type of marketing has gained significant traction, and all major e-commerce platforms in China have jumped on the bandwagon by adding a livestream feature (if one was not already available) so that consumers are simply one click away from buying the product promoted on the livestream. Livestream e-commerce offers exciting opportunities for brand owners not just to promote their brand but also to directly encourage sales.
How to choose a suitable influencer
While celebrities in the traditional sense (eg, actors, singers and models) are part of the influencer ecosystem and continue to play a role in informing brand image, small-scale influencers with backgrounds similar to the target consumers seem to be even more suited to the influencer marketing model. Their style of promotion tends to be more personal and genuine, and they are more capable of effectively communicating a corporate image and even embodying the personality of a brand. This is especially crucial in China where brand trust and integrity are strongly valued by consumers.
That said, brands should conduct a due diligence background check on potential collaborators, as China has a pervasive cancel culture where famous people are relentlessly scrutinised for what they say, how they act and even who they spend time with. If a particular celebrity or influencer is ‘cancelled’, it might adversely affect the brands they have endorsed, potentially leading to boycotts.
Further, brand owners should have a comprehensive written agreement in place to ensure that collaborations with influencers are properly regulated. The scope of influencers using a brand’s trademarks should be restricted, and influencers must adhere to brand style guides to ensure uniform branding. Moral clauses that give brand owners the option to terminate the agreement would be helpful in mitigating the risk posed by cancel culture.
While collaboration with influencers is an effective tool to promote a brand or trademark, measures must be taken to ensure that the fame gathered is not unwanted. When influencer marketing is properly managed, evidence of such partnerships strengthens brand owners’ claims of fame and reputation for their trademarks.
Adhering to brand style guides
A brand style guide is a rulebook that explains how trademarks and other brand elements are used and displayed across all marketing materials. It offers highly specific guidance on stylisations (eg, font, size, dimension, colour, texture, spelling and positioning) that are not just for the brand’s own use but also for their collaborators (eg, influencers). Having this rulebook in place centralises all marketing strategies and serves to develop a ‘sole corresponding relationship’ between the brand elements and the brand. In other words, a brand style guide is essential to ensuring that consumers can easily associate trademarks with the brand.
Brand reputation is not solely the effort of a successful marketing campaign. A consistent application of brand elements helps to gradually build up a corporate image. This is particularly relevant where brands are seeking to develop a secondary meaning for marks that might be deemed descriptive or not distinctive enough for registration, such as non-traditional marks (eg, colours, sounds, holograms, shapes and slogan marks).
While China remains fairly conservative in recognising non-traditional marks, there seems to be wider appetite among Chinese consumers as contemporary branding moves further away from conventional visual attraction to a more sensory experience. When marketing becomes more abstract, having a brand style guide is even more imperative to ensure that brand elements are used accurately.
To achieve this, brand owners should work closely with legal and marketing teams to keep everyone involved on the same page. Regular training and workshops should be conducted to ensure that employees understand the importance of sticking to the brand style guide, including, where possible, adherence to the brand style guide as a contractual term in licensing and partnership agreements with business collaborators and social influencers. Once a brand style guide has been agreed on, brand owners should maximise the use of their trademarks not only in promotional materials but also commercial documents, so that owners can adduce a wider variety of trademark-use evidence when needed.
Fame is an abstract concept, but there are practical steps that brand owners can take to use it from a legal perspective and to build on that fame to their advantage. There are many areas where marketing professionals and IP experts can collaborate to establish fame and evidence of fame. China’s thriving digital landscape offers a plethora of exciting opportunities for brands to adapt and evolve their marketing efforts.