China as a First-to-File Jurisdiction: Is It That Simple?

When international businesses discuss intellectual property strategy in the People's Republic of China, one fundamental rule dominates the conversation: China is a strictly "first-to-file" jurisdiction. Unlike "first-to-use" systems found in countries like the United States — where unregistered common law rights can be established simply by conducting business and using a brand name in commerce — China generally awards trademark rights to whoever submits the paperwork first. This rigid statutory framework has historically led to a proliferation of "trademark squatters," individuals or entities that preemptively register the marks of foreign brands in China, only to ransom them back when the legitimate brand attempts to enter the market.

For decades, the standard advice to any company has been absolute: if you do not file your trademark in China, you have no rights in China. But is the legal landscape truly that simple?

A landmark decision by the Beijing Intellectual Property Court in the case of Commercial Press Co., Ltd v. Sinolingua Co., Ltd. reveals that China's intellectual property framework does contain powerful, albeit narrowly tailored, exceptions. The case demonstrates that while the first-to-file rule is the baseline, Chinese courts are willing to protect unregistered marks — provided the evidentiary threshold of a "well-known" status can be met.

The Battle for the Xinhua Dictionary

To understand the nuances of China's trademark exceptions, one must look at the facts of the Commercial Press case. The plaintiff, Commercial Press Co., Ltd., is a historic publishing house that has been printing the popular Xinhua Dictionary since 1957. Over the decades, the dictionary became an absolute staple of Chinese education and culture. Between 2010 and 2015, Commercial Press maintained a market share of over 50% in the dictionary market. By 2016, the global distribution of the Xinhua Dictionary had surpassed a staggering 567 million copies, earning it Guinness World Records for both "the Most Popular Dictionary" and "the Bestselling Book."

Despite this monumental success, Commercial Press had not successfully secured a registered trademark for the name "Xinhua Dictionary" by the time the infringement occurred.

Sensing an opportunity, the defendant, Sinolingua Co., Ltd., a competing publishing agency, began producing and selling its own version of the "Xinhua Dictionary." Not only did Sinolingua use the identical name, but it also utilized a strikingly similar packaging design to the famous 11th Edition published by Commercial Press.

When Commercial Press sued for trademark infringement and unfair competition, Sinolingua mounted a defense perfectly aligned with a strict first-to-file and generic-use mentality. Sinolingua argued that "Xinhua Dictionary" was merely a national project name that had evolved into a generic, common name for a dictionary in the public domain. Because Commercial Press lacked a registered trademark for the name, Sinolingua argued the plaintiff had no legal right to monopolize the term or prohibit others from using it.

The Court's Ruling: The "Well-Known" Exception

If China's trademark system were unequivocally as simple as "no registration equals no rights," Sinolingua's defense might have prevailed. However, the Beijing Intellectual Property Court ruled decisively in favor of Commercial Press, heavily penalizing the defendant and issuing an injunction. The court's legal reasoning rested on two vital pillars of Chinese intellectual property law: the protection of unregistered well-known trademarks and the prohibition of unfair competition via trade dress.

1. The Unregistered Well-Known Trademark

Under Articles 13 and 14 of the Trademark Law of the People's Republic of China, a trademark that has not been registered can still receive judicial protection if it qualifies as an "unregistered well-known trademark."

The court rejected Sinolingua's argument that "Xinhua Dictionary" was a generic term. Instead, the court found that through decades of continuous use, the name had acquired distinctiveness and formed a "stable cognitive connection" with consumers. It maintained a mixed attribute — functioning as both a product name and a brand indicator. Because Commercial Press had spent 60 years selling hundreds of millions of copies, the court determined that the mark had achieved a highly recognizable status across the entire country. Consequently, Sinolingua's use of the identical name on identical goods (Class 16 dictionary products) was likely to cause consumer confusion and constituted trademark infringement, despite the lack of formal registration.

2. Unfair Competition and Trade Dress

Beyond the name itself, the court also addressed the physical appearance of the dictionary. Under Article 5(2) of China's Anti-Unfair Competition Law, it is illegal to use the "special package and decoration" (often referred to in Western law as "trade dress") of a famous product without authorization.

The court conducted a granular visual comparison between Commercial Press's 11th Edition and Sinolingua's product. It noted distinct similarities in the cover layout, typography, graphic design, color matching, and spine design. The court ruled that Commercial Press's specific arrangement of these elements was unique and served to identify the source of the goods. Sinolingua's imitation was deemed an act of unfair competition designed to unlawfully syphon market share and ride on the goodwill of the plaintiff.

As a result, the court granted pre-litigation injunctions to immediately halt the infringement, noting that in a fast-moving market, failing to stop the act in time would cause irreparable harm. Furthermore, utilizing a punitive 1.5x multiplier based on the defendant's calculated profits, the court awarded Commercial Press the full requested economic damages of RMB 3 million, plus nearly RMB 278,000 in reasonable enforcement expenses.

The Reality Check: Is It That Simple?

The Commercial Press case unequivocally proves that China is not just a first-to-file jurisdiction. The legal mechanisms exist to protect unregistered brands from bad-faith actors, squatters, and copycats.

However, before any business decides to rely on these exceptions in lieu of formal registration, they must look closely at the evidentiary burden required to win such a case. Commercial Press did not just show that it was a recognized brand; it demonstrated over 60 years of continuous use, a 50% domestic market share, hundreds of millions of global sales, and official Guinness World Records.

The threshold for proving a mark is an "unregistered well-known trademark" in China is notoriously high. The evidence must show profound and widespread recognition specifically among the relevant Chinese public. For the vast majority of foreign companies — even those that are highly successful in Europe or North America — achieving this level of recognized "well-known" status in mainland China is virtually impossible, especially when just entering the market.

Furthermore, relying on the Anti-Unfair Competition Law or asserting an unregistered well-known trademark requires complex, protracted, and highly expensive litigation. It involves gathering mountains of market data, consumer surveys, historical sales records, and promotional evidence. It is a grueling legal battle fought from a position of inherent disadvantage.

Conclusion

The Chinese intellectual property system is undeniably maturing, exhibiting a willingness to protect legitimate brand owners and penalize bad-faith infringement even in the absence of a registered trademark. The Commercial Press victory is a testament to a more nuanced, equitable approach by Chinese intellectual property courts, proving that the first-to-file rule is not an impenetrable shield for copycats.

Yet, the immense difficulty and high evidentiary standards required to rely on these exceptions cannot be overstated. A standard trademark application in China, on the other hand, is a straightforward administrative process that costs a mere fraction of what IP litigation demands. Having a registered mark bypasses the need to prove "well-known" status entirely, granting immediate statutory rights to enforce against infringers, block counterfeits at customs, and safely launch products. Ultimately, while exceptions exist for the giants of industry, the low cost of Chinese trademark protection makes it advisable to get a Chinese trademark in place early in the process of operating or manufacturing in China.