Trademark Registration and Prosecution Strategies in China
Author: Gloria Wu, Samiko Sun
The implementation of the new China Trademark Law on May 1, 2014 is the most important action in China IP industry, and it is paid lots of attention by this industry and the society. The new version of China Trademark Law is published smoothly in time, but the Regulations for the Implementation of the Trademark Law of PRC and some detailed examination criteria are not followed closely, which, no doubt, causes some vague areas for trademark application and prosecution, including the aspects of formality and substance.
Due to the different policy and principle of the Trademark application and registration in China now, the foreign applicants, who are just beginning to be familiar with the old Trademark Law, are encountering more difficulties, problems as well as confusion during the trademark prosecution at China Trademark Office (hereafter referred to as “CTMO”). Hereunder are some tips and advice for those who are planning to or already filing trademark applications in China.
Localization of Trademarks in China
As we all know, Chinese language is a totally different language system from Latin language. The most fundamental and basic elements of Latin language are the letters such as “a”, “b”, “c”; while the basic elements in Chinese language are all shapes of parts of characters. Because of such huge differences between the languages, and because of the fact that among the 1.3 billion population in China, only 1/4 of them are learning English, it would be crucial to have a Chinese version of the Latin trademark if the applicant are seriously planning to develop business in China.
So how to select the right or appropriate Chinese equivalent of the original trademark would be the first question before filing the application. Generally there will be three types: translation, transliteration and combination of both translation and transliteration.
After the applicant has selected the Chinese characters as equivalents to the brand, either as translation or transliteration or both, there is something more the applicant should note: which version of characters to choose? The simplified version or the traditional version? Usually the traditional version looks more complicated with more parts of the character. Normally, if the applicant wants to show that the brand has a very long history or there is a nostalgic sentiment to be conveyed by the brand, the traditional version may be a better choice than the simplified version; otherwise, it would be recommended to choose the simplified version, because it is more widely used and understood in people’s daily life than the traditional version.
Another task in selecting Chinese equivalent is to check how they are pronounced exactly not only in Mandarin, but also in Cantonese and other dialects in China, depending on which provinces the applicant wants to cover for business development. The reason of doing this is to avoid unexpected embarrassment because some elegant terms in Mandarin may have negative indications in other dialects, which will tarnish the brand and turn it into a black joke.
Then it comes to the design of the Chinese trademark, whether the applicant wants the standard version, or the stylized version.
So, with all these aspects in consideration, the applicant may say that it will take a long time for selecting, checking, designing and finalizing the Chinese trademark. But please also remember the “first-to-file” principle. From the first moment the English mark is used in China or is known in China, there may be Chinese versions of it given by the public if the applicant does not offer the Chinese equivalent of the mark at the same time, which will be very dangerous. The applicant may not even know that consumers are calling its brand with something foolish or indecent in Chinese; or someone else may file the Chinese version before the applicant finishes the design. So the strategy is filing a Chinese equivalent immediately and then if the applicant comes up with something better or more appropriate later, file that as trademark again, and the applicant may abandon the first one.
The broader applications for other classes as “defensive marks”, not only limited within the client’s business scope, are also usually recommendable in China. This is because as we all know, trademark squatters in China are very rampant to file other’s famous marks in other unrelated classes with the famous mark, and the real trademark owners have to spend lots of time and money to fight with them in the future by filing opposition, non-use cancellation, or invalidation application. Due to the very unrelated goods/services, such as construction materials and clothing, the main argument of the action would mainly rely on the well-known status of the prior registered mark, but it is just the hardest point in such case, since the threshold of the well-known mark is quite high, which requires the abundant use evidence. Usually, it is not easy for the foreign companies to collect evidence of use and reputation in China because of various reasons.
Though defensive applications may be vulnerable to non-use cancellation after three years of registration, there is no requirement of intent-to-use or actual use at the time of filing. Besides, re-filing the mark does not constitute any bad faith or have any negative influence to the applicant. The cost spent for the repeated trademark applications would be much cheaper than the endless oppositions or invalidations
Specifications in Trademark Application
The second issue in trademark application would be the specifications. Recently China Trademark Office has updated the Chinese Classifications of Goods & Services according to the 10th edition of Nice Classification (2015), in which one more item of “Provision of an on-line marketplace for buyers and sellers of goods and services” related to “retail and wholesale services” are added into Class 35. Even though the “retail and wholesale services” are still only limited to “pharmaceutical, veterinary and sanitary preparations, and medical supplies”, and the related services, such as the added one or “Sales promotion [for others]; Procurement services for others [purchasing goods and services for other businesses]”, do not clearly mention the “retail and wholesale services”, it would be a good start to open the “retail and wholesale services” filed in the Chinese Classifications gradually, and we could expect for the standard item for “retail and wholesale services” shown up in the Chinese Classifications of Goods and Services in the future, they are very common and frequently used services in our daily lives after all.
Please note that headings of class or subclass are still not acceptable as specifications in application, and we need to select the specific items. Another common mistake would be the scope of coverage. Some items are not as broad as they sound. For example the item “clothing” sounds like a very general concept covering everything in Class 25, but it is not true. The item “clothing” falls in Subclass 2501 and although its scope of protection could be extended to Subclasses 2501-2505, other goods such as “shoes, hats, socks, etc.” from other subclasses are considered different goods and are out of the protection scope. However, it is the CTMO’s opinion now, Trademark Review & Adjudication Board (TRAB) recently decides to change the examination criteria over the similarity of goods in Class 25, i.e. all goods in Class 25 will be considered similar to each other. Such examination criteria will be applied to non-use cancellation review and invalidation cases. There is no news from the CTMO yet, thus it is not clear whether or not the CTMO will adopt the same examination criteria in trademark application and opposition cases.
Therefore, if the applicant wants to have a broader scope of protection, it would be better to pick at least one item from each subclass in the certain Class, and pay attention to the special notes about the cross-similar items.
Office Action of Amendment over Specifications
According to the old procedure, after the trademark application is received by the Trademark Office, and a filing receipt is issued in around one month, the application will go through the formality examination, which focuses on the specifications, and the applicant may receive office actions requesting to amend certain goods or services in the specifications.
However, as per the new procedure under the new Trademark Law, the formality examination will be conducted first, the CTMO will issue the filing receipt, if no problem with the formality, or the notification of amendment, if the specifications are not acceptable, which may take around one to two months.
Recently, the examination of the specifications is stricter than before. It happens often that those goods or services acceptable in the past are rejected now because they are not exactly same as the standard items, The stricter examination criteria is not only reflected in the higher rate of the issuance for notification of amendment, but also reflected in the high rate of final rejection for the whole application only due to the unacceptable items in the response to the notification of amendment, which means that applicants now only have one chance to amend the items, and if the amended items are still not standard or unacceptable considered by the examiner of the CTMO, he/she would issue the final rejection to the whole application, then the original filing date of the application will not be maintained. Though the applicant may file an administrative reconsideration to TRAB in order challenge such final rejection decision of CTMO, there is still risk of losing the original filing date.
Such change in examination requires also change in strategy in dealing with the notification of amendment, i.e. in the past, we might try to provide explanation of the goods or services instead of amending the items at all at the first response, and if the examiner could not accept them, we might further amend to either standard or partially standard items; but now, that same strategy may be too risky considering the possible final rejection possibly caused by the first response of amendment. Therefore, it is advisable now to amend all the questioned items to the exact standard items according to the Chinese Classifications.
Official Rejection in Substantial Examination
Once the formality of a trademark application is in order, the CTMO will issue the official filing receipt and the application will move into the stage of substantial examination, which may lead to one of the three results, i.e. 1) preliminarily approved and published on the Official Gazette, 2) rejected based on absolute and/or relative ground, and 3) partially approved and partially rejected.
Absolute Ground of Rejection
Trademarks violating Article 10 of Trademark Law are not allowed to be registered or used:
Article 10: “The following signs shall not be used as trademarks:
Those identical with or similar to the State name, national flag, national emblem, national anthem, military flag, army emblem, military songs, medals and others of the People's Republic of China; those identical with the names and signs of central state organs, names of the specific locations thereof, or those identical with the names or device of landmark buildings;
Those identical with or similar to the state names, national flags, national emblems or military flags of foreign countries, unless permitted by the government of the country;
Those identical with or similar to the names, flags, or emblems of international inter-governmental organizations, unless permitted by the organization concerned or unlikely to mislead the public;
Those identical with or similar to an official sign or inspection seal that indicates control and guarantee, unless it is authorized;
Those identical with or similar to the names or signs of the Red Cross or the Red Crescent;
Those of discrimination against any race;
Those of fraud that may easily mislead the public in the characteristics such as the quality of goods, or place of production; and
Those detrimental to socialist morals or customs, or having other unhealthy influences.
The geographical names of administrative divisions at or above the county level and foreign geographical names well-known to the public shall not be used as trademarks, except for geographical names that contain other meanings or constitute parts of a collective mark or certification mark. Where a trademark bearing any of the above-mentioned geographical names has been registered, it shall continue to be valid.
The rejection due to the above reasons is usually difficult to be overcome because these are inherent defects of trademark and would be more strictly examined by the TMO and Trademark Review & Adjudication Board (hereafter referred to as “TRAB”). However, there are some exceptions in practice as long as the applicant could submit evidences proving such:
Where the rejected trademark includes word same or similar to China or any foreign country name, the word has other specific meaning, and would not cause confusion among the public, such as “Frank” or “Turkey”.
Where the rejected trademark includes word indicating China, the trademark as a whole is the name of newspaper, magazine, or officially registered entity’s name in China, such as “China Airline”.
Where the rejected trademark includes word indicating China, the trademark has other distinctive part independent from the word indicating China, and the applicant is a Chinese citizen or Chinese entity;
Where the rejected trademark includes a foreign country name, that foreign country has approved, e.g. the same trademark has been approved for registration in that country;
Where the rejected trademark includes a foreign country name, the trademark as a whole is same as the name of the applicant, such as “Deutsche Bank”, or “Singapore Airlines”.
Where the rejected trademark includes a foreign country name, the trademark has other distinctive part independent from the word indicating foreign country name, and the applicant is from that country.
Therefore, in order to overcome rejection of Article 10, the applicant needs to argue and provide sufficient evidences to convince the examiner that the trademark falls in one of the above exceptions.
Trademarks violating Article 11 of Trademark Law are not allowed to be registered.
Article 11 The following signs shall not be registered as trademarks:
Marks that only bear the generic names, devices, or model numbers of the goods;;
Marks that simply indicate the quality, main raw materials, function, use, weight, quantity or other features of the goods;
Marks that lack distinctive characteristics.
The signs referred to in the preceding paragraph may be registered as a trademark where it has acquired distinctiveness through use and is readily distinguishable.
In order to overcome rejection of Article 11, the arguments usually include:
the trademark is inherently distinctive; and
the trademark has acquired or strengthen distinctiveness through use and become readily identifiable.
In actual practice, the first argument “inherent distinctiveness” can hardly be supported since the TRAB generally shares the similar examination criteria regarding “distinctiveness” as the CTMO; as for the second argument “acquired distinctiveness”, simple use evidence alone may not be sufficient; instead, the use evidences need to be sufficient and strong enough to show that the trademark is recognized by relevant public as a sign to distinguish the origin of goods or services.
Trademarks violating Article 11 of Trademark Law are not allowed to be registered.
Article 12 Where an application is filed for registration of a three-dimensional sign as a trademark, any shape derived from the goods itself, required for obtaining the technical effect, or giving the goods substantive value, shall not be registered.
The rejection rate of 3-dimension trademarks is much higher than other types of trademark, especially those indicating the shape of product that is considered purely functional or common. Therefore, it is recommended to add more distinctive elements into the 3-dimension trademark when filing to increase the level of distinctiveness of the trademark as a whole.
Relative Ground of Rejection
According to Articles 30 and 31 of the new China Trademark Law, trademarks same or similar to any prior trademark either registered or pending over same or similar to designated goods or services shall be rejected.
In order to overcome such rejection, there are generally four types of arguments and measures:
Argument of dissimilarity of trademarks: in comparison of trademarks, CTMO adopts “part-to-part” examination, namely English part compares to English part, Chinese characters compares to Chinese characters and device compares to device; whereas the TRAB would usually take a more comprehensive consideration of the overall appearance meaning and pronunciation as well as distinctive part of the trademarks. Thus, the argument in the review of refusal could focus in this regard trying to convince the TRAB examiner that the likelihood of confusion is low.
Argument of dissimilarity of designated goods/services: as mentioned above, the goods/services will be deemed similar if they fall in the same subclass or cross-similar according to the special note in the Chinese Classifications. Considering the fact that the TRAB usually has the similar examination criteria over the similarity of goods/services, the argument of dissimilarity of designated goods/services can hardly be supported.
Non-use Cancellation against the cited mark: if the cited mark has been registered for over 3 years, it is available to file a non-use cancellation against it. As long as the registrant fails to provide sufficient use evidences to CTMO, the cited mark will be removed, and the rejection based on such cited mark can be overcome.
Opposition or Dispute Cancellation against the cited mark: if the cited mark was filed in bad faith or the applicant of the rejected mark enjoyed any prior right before the filing date of the cited mark, the applicant may choose to file an opposition or invalidation application in order to remove the cited mark.
Negotiation for Co-existence Agreement: the applicant may consider negotiating with the registrant of the cited mark to reach a co-existence agreement, which will be helpful to some extent to the review case. However, the examiner has final discretion as to whether or not to accept it, and the degree of similarity between the marks or goods will be considered by the examiner.
Negotiation for Trademark Assignment over the cited mark: the applicant may also consider negotiating with the registrant of the cited mark to purchase the cited mark. If the cited mark could be assigned to the applicant, there will be no conflict of interest, and the trademark will be finally approved by the TRAB.
Besides, the Article 50 of the new China Trademark Law is considered by the CTMO recently and used as one of the relative ground of rejection, namely “If a registered trademark is revoked, nullified or subject to no renewal upon expiration of the period of validity, the Trademark Office shall not approve any application for the registration of a trademark identical with or similar to the said trademark within one year as of the day of the revocation, nullification or cancellation.”. However, the TRAB has confirmed that it will not follow such provision, and if the prior mark could be cancelled, the later filed mark will be approved for registration after review of refusal, it will not wait for another year for the grant of registration.
Provisional Refusal for International Registration under Madrid System designated to China
The provisional refusal will be issued by the CTMO against the international registration under Madrid designated to China due to the unacceptable specifications as well as the absolute and relative grounds. The absolute and relative grounds and the overcome suggestions are same with the above, but the rejection based on the unacceptable specifications is different from the notification of amendment for the national mark.
The rejection based on the unacceptable specifications is only for the goods/services that are unacceptable or prohibited in China, such as “retail and wholesale services”, or gaming or gambling services; or the specifications are classified in to the wrong classes. It is infeasible to overcome such kind of rejection through the TRAB review, the only way is to amend the specifications and then re-designate the revised registration to China, or file the national application directly before the CTMO with standard and acceptable items.
Therefore, it is recommendable for the foreign applicants not to include the unacceptable specifications in the international registration if he would like to designate to China.
To sum up, there are many skills and strategies to be implemented in order to obtain trademark registration in China smoothly and with broad scope of protection. As in many other countries, filing the trademark application as early as possible is always recommended.