The battle for the IPAD trademark in China may not have reached a conclusion, but the question of whether the mark should be assigned to Apple Inc has highlighted the issue of trademark assignment practice in China. As the Chinese market has developed, the protection of IP rights in China has been high on the agenda for foreign brand owners, with increasing numbers of IP agencies and law firms offering trademark assignment services, including negotiation and recordal.

The Trademark Law and its implementing regulations include the following provisions on trademark assignment.

Article 39 of the law states that:

"Where a registered trademark is assigned, the assignor and assignee shall sign an agreement of assignment and jointly file an application with the Trademark Office. The assignee shall guarantee the quality of the goods in respect of which the registered trademark is used.

The assignment of a registered trademark shall be published after it has been approved. The assignee shall enjoy the exclusive right to use the mark from the date of publication."

Article 25 of the implementing regulations states that:

"When a registered trademark is to be assigned, both the assignor and assignee shall jointly send an application for assignment of the registered trademark to the Trademark Office. The assignee shall go through the formalities for the application for assignment of the registered trademark. The Trademark Office shall, upon approval of the application for assignment of the registered trademark, issue the assignee a corresponding certification and publish the assignment.

Where a registered trademark is to be assigned, the trademark registrant shall assign, as a package, all of its trademarks that are identical or similar to each other in respect of the same or similar goods; if they are not so assigned, the Trademark Office shall notify it to rectify the situation within a specified time limit; if it fails to ratify it at the expiry of the said time limit, the application for assignment of the registered trademark shall be considered abandoned, and the Trademark Office shall notify the applicant in writing.

With respect to applications for the assignment of registered trademarks, which may produce misleading, confusing or other adverse effects, the Trademark Office shall refuse them, and shall notify the applicants in writing and give... reasons."

China applies the first-to-file principle to trademark registration. Therefore, trademark assignment may be a good option for obtaining trademark rights. Compared with the filing of trademark applications, which are subject to official actions such as amendments and objections, the smooth assignment of a registered trademark may be a much faster way of obtaining trademark rights, although the cost of purchasing a trademark may be higher than that of filing a trademark application.

Assignment is sometimes the only option for brand owners that want to secure trademark rights in China, but find that the same or similar trademarks have previously been registered by other parties. In these circumstances, the price to pay for the assignment of the conflicting trademarks may be far higher, leaving the purchaser with a dilemma.

In practice, trademark applications can also be assigned. However, trademark assignment involves more than merely signing an agreement to purchase the target trademark. Ignoring a single item may affect the whole assignment procedure.

Whatever the ultimate fate of the IPAD trademark, Apple has already encountered serious problems, which will serve as a warning to brand owners. The following aspects of trademark assignment in China may prove particularly significant:

  • An assignment must be recorded with the China Trademark Office by sending a joint application.
  • The assignee enjoys the exclusive rights in the registered trademark from the publication of the assignment.
  • Identical and similar trademarks in respect of identical and similar goods must be assigned together.
  • Prices for a trademark may be subject to the trademark's use and reputation, the owner's background and other factors.

Before purchasing a target trademark, the assignee should try to establish a good understanding of the trademarks owned by the assignor and the trademark owner's background, as well as the use status of the target trademark, in order to consider all necessary details and ensure that the assignment works smoothly. As in many areas of IP rights management, the involvement of an experienced, professional team can be decisive.

For further information on this topic please contact Li Yunquan at Wan Hui Da Intellectual Property Agency by telephone (+86 10 6892 1000), fax (+86 10 6894 8030) or email (liyunquan@wanhuida.com).

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.