Trademark Assignment vs. Licensing

There are two ways a third party can use your Chinese trademark:

• Assignment: You transfer full ownership of the mark to another entity. The assignee becomes the new owner.
• Licensing: You retain ownership but grant permission for another entity to use the mark under specified conditions.

Both require specific procedures with CNIPA, and failing to follow them can invalidate the transaction.

Trademark Assignment

Key Requirements

• CNIPA recordation is MANDATORY: An unrecorded assignment has no legal effect against third parties. Both parties must jointly apply to CNIPA for recordation.
• Similar marks must be assigned together: If you own similar marks on similar goods, they must all be assigned to the same party. You cannot split them.
• Assignment agreement: A written assignment agreement is required, specifying the marks, classes, and consideration.
• Business license impact: For foreign assignees, the mark remains a Chinese registration. The assignee must maintain a Chinese address for service.

Procedure

1. Execute assignment agreement between transferor and transferee
2. Both parties sign a joint application form
3. Submit to CNIPA with supporting documents (business licenses, POAs)
4. CNIPA reviews (2-4 months)
5. CNIPA issues assignment recordation certificate

Trademark Licensing

Types of Licenses

• Exclusive license: Only the licensee can use the mark. Even the licensor cannot use it in China.
• Sole license: Only the licensor and the licensee can use the mark. No other licensees.
• Non-exclusive (ordinary) license: The licensor can grant licenses to multiple parties.

Recordation Requirements

CNIPA recordation is not mandatory for validity but is STRONGLY recommended. Recorded licenses:

• Are enforceable against third parties
• Allow the licensee to independently sue infringers (exclusive licensees)
• Provide evidence of use for defending against non-use cancellations

Royalty Considerations

• Royalties paid to foreign licensors may be subject to Chinese withholding tax (typically 10%, reduced under tax treaties)
• Cross-border royalty payments must comply with SAFE (State Administration of Foreign Exchange) regulations
• Transfer pricing rules apply — royalties must be at arm's length